.. his time on the witness stand provided an invaluable public lesson in how tax evasion, money laundering, and political corruption work.
.. The ability of rich people such as Manafort and his oligarchic clients to shuffle money across borders, beyond the purview of tax collectors and law-enforcement authorities, is a huge and intractable problem. In many places, these practices are
- denuding tax bases,
- corrupting a large class of professional enablers, and
- undermining public confidence in the political and financial systems.
.. roughly $7.6 trillion, or eight per cent of the world’s financial wealth, was held in offshore tax havens. In some countries, the proportion is much higher; in the case of Russia, it is more than half.
.. . In the United States, he has estimated, the annual tax loss is about thirty-five billion dollars.
.. It is only when there is a prominent court case or a leak—such as the 2016 Panama Papers, which exposed the dealings of the law firm Mossack Fonseca—that a light is shined on this system’s hidden mechanics. What Gates provided this week was a firsthand account of how the illicit game is played.
.. Manafort’s consulting firm was paid by Ukrainian businessmen close to Viktor Yanukovych, who was elected President in 2010. Many of these figures already had bank accounts in Cyprus
.. Gates described how he and Manafort used a Cypriot law firm to establish bank accounts in the name of shell companies that they controlled but weren’t publicly associated with.
“Did these companies sell a product?” Andres asked Gates.
“No,” he replied.
“Did they have any employees?” Andres asked.
“No,” Gates repeated. “The purpose of the companies was to accept payments and to make payments.”
.. The Cypriot law firm Chrysostomides “handled everything,” Gates said, including listing the names of locals, rather than the two Americans, as the directors of the shell firms into which the fees from Ukraine flowed.
.. he arranged to have money wired from the Cypriot accounts to vendors in the United States from whom Manafort had bought expensive clothes
.. problems arose, Gates said. So, again using the Cypriot law firm, he and Manafort transferred some money to bank accounts in the Grenadines, a chain of small islands in the Lesser Antilles. But, when the banks in the Grenadines were asked to transfer money to companies in the United States, they demanded invoices for the payments—something that the Cypriot banks hadn’t bothered with. At Manafort’s direction, Gates said, he created “modified invoices” and gave them to the banks... “About 50% of the wealth held in tax havens belongs to households with more than $50m in net wealth,” Zucman, of Berkeley, noted in an article last year. “These ultra-rich represent about 0.01% of the population of advanced economies.”These were the type of people whom Manafort was working for in Ukraine, and it’s pretty clear from the life style he adopted that he wanted to join their ranks... he allegedly resorted to bank fraud rather than modify his spending patterns.Gates described how, in 2015, together with Manafort’s accountants, he helped put together bogus financial documents that Manafort then used to obtain bank loans.
.. toward the end of Andres’s questioning of Gates, the prosecutor showed the witness an e-mail that Manafort wrote to Gates in November, 2016, shortly after Trump was elected. By that stage, Gates was working for Trump’s Presidential transition team. “We need to discuss Steve Calk for Sec of the Army,” Manafort’s e-mail said. “I hear the list is being considered this weekend.”
.. When he joined the Trump campaign, he’d long been known as the ultimate swamp creature. Thanks to Mueller and Gates, we now know more about how that swamp operates.
a group of finance ministers to simulate a similar attack that shut down financial markets and froze global transactions. By several accounts, it quickly spun into farce: No one wanted to admit how much damage could be done or how helpless they would be to deter it.
.. something has changed since 2008, when the United States and Israel mounted the most sophisticated cyberattack in history on Iran’s nuclear program, temporarily crippling it in hopes of forcing Iran to the bargaining table.
.. the sophistication of cyberweapons has so improved that many of the attacks that once shocked us — like the denial-of-service attacks Iran mounted against Bank of America, JPMorgan Chase and other banks in 2012, or North Korea’s hacking of Sony in 2014 — look like tiny skirmishes compared with the daily cybercombat of today.
.. Yet in this arms race, the United States has often been its own worst enemy. Because our government has been so incompetent at protecting its highly sophisticated cyberweapons, those weapons have been stolen out of the electronic vaults of the National Security Agency and the C.I.A. and shot right back at us.
.. the WannaCry ransomware attack by North Korea last year, which used some of the sophisticated tools the N.S.A. had developed.
.. Nuclear weapons are still the ultimate currency of national power, as the meeting between President Trump and Kim Jong-un in Singapore last week showed. But they cannot be used without causing the end of human civilization — or at least of a regime. So it’s no surprise that hackers working for North Korea, Iran’s mullahs, Vladimir V. Putin in Russia and the People’s Liberation Army of China have all learned that the great advantage of cyberweapons is that they are the opposite of a nuke: hard to detect, easy to deny and increasingly finely targeted. And therefore, extraordinarily hard to deter.
.. Cyberattacks have long been hard to stop because determining where they come from takes time — and sometimes the mystery is never solved.
.. Today cyberattackers believe there is almost no risk that the United States or any other power would retaliate with significant sanctions, much less bombs, troops or even a counter cyberattack.
.. “They don’t fear us,”
.. At the State Department, the eviction took weeks, shutting down systems during negotiations on the Iran nuclear deal. The hackers were even bolder at the White House. Instead of disappearing when they were exposed, they fought back, looking to install new malware as soon as the old versions were neutralized.
.. It appears the attackers just wanted to prove they could go, and stay, anywhere in the American government’s network.
.. the United States never called out the Russians for what they were doing.
.. If Mr. Putin thought there was no price to be paid for invading White House systems, why wouldn’t he attack the Democratic National Committee?
.. By the summer of 2016, some Obama administration officials, waking to the threat, proposed counterstrikes that included exposing Mr. Putin’s hidden bank accounts and his ties to the oligarchs and cutting off Russia’s banking system. But the potential for escalation caused Mr. Obama and his top aides to reject the plan.
“It was an enormously satisfying response,” a senior American official told me later, “until we began to think about what it would do to the Europeans.”
Mr. Obama also understandably feared that anything the United States did might provoke Mr. Putin to tinker with election systems just enough to give credence to Donald Trump’s warning that the system was “rigged.”
.. Since the election, the American retaliation has included closing some Russian consulates and recreation centers and expelling spies — actions one Obama national security official called “the perfect 19th-century solution to a 21st-century problem.”
.. The wide-open vulnerabilities in America’s networks have essentially deterred the United States from credibly threatening retaliation against the Russians, the Chinese, the North Koreans and the Iranians.
.. One way to start is to make sure no new equipment goes on the market unless it meets basic security requirements. We won’t let cars on the road without airbags, so why do we do less with the systems that connect them to the internet?
.. Second, we must decide what networks we care most about defending — and make those priorities clear. Mr. Mattis’s threat to turn to nuclear weapons hardly seems credible — unless the cyberattack would create an existential threat to America. That requires an intensive public review of what is critical to our nation’s survival.
..President Trump forfeited the perfect opportunity when he decided against a commission to learn the larger lessons from the 2016 election.
.. the United States needs to end the reflexive secrecy surrounding its cyberoperations. We need to explain to the world why we have cyberweapons, what they are capable of and, most important, what we will not use them for.
.. it is in the nation’s interests to develop global norms clarifying that some targets are off limits: election systems, hospitals and emergency communications systems, and maybe even electric power grids and other civilian targets.
.. Microsoft’s president, Brad Smith, has proposed digital Geneva Conventions that begin to establish those norms, outside the structure of governments and treaties.
.. Intelligence agencies hate this idea: They want the most latitude possible for future operations in an uncertain world. But in any arms control negotiation, to create limits on others, you need to give up something.