Gangs (33 page)

Diamonds, as Marilyn Monroe once sang, are a girl’s best friend but they are also, increasingly, the best friend of criminals, international terrorists and money-launderers the world over. Infinitely more manageable than gold or cash, as well as being far less easy to trace, diamonds have become the chosen currency of the global underworld.

Apart from a recent commitment to avoid trade in what are termed ‘conflict diamonds’ (uncut diamonds sold by various guerrilla movements and corrupt governments in Africa, in return for arms) by authenticating and certifying rough diamonds, the industry imposes few restrictions on the identification and movement of cut diamonds. Such distinguishing marks that are put on some diamonds – like the hallmarks put on gold – are easily polished off, making cut diamonds untraceable.

According to Hatton Garden jeweller Joel Grunberger, stolen and illegally smuggled diamonds do end up in the hands of the shops there. ‘Hatton Garden has a number of people whose history is not exactly squeaky clean.’ Grunberger was a consultant on the Guy Ritchie gangster film,
Snatch,
which begins with the robbery of an Antwerp diamond dealer. ‘Honest dealers work cheek-by-jowl with the villains. I don’t mean that they sell to the villains, but there are unscrupulous people. Everyone knows the Brinks Mat gold haul came to Hatton Garden,’ he says.

Like Rick the cocaine dealer, Laurence finds moving the money from one place to another one of the most difficult aspects of his work. One of the many tricks up his sleeve is to use something called
hawala,
an ancient system developed in India before the introduction of Western banking practices. A similar system exists in the Chinese community where it is known as ‘chit’ or ‘flying money’.

Hawala
works by transferring money without moving it. If a man in London wants to send money to his family back in Bombay he simply approaches a
hawala
dealer and hands over his cash. The dealer gives the customer a password, then makes a call to an associate in Bombay who, on being given the correct password by the family, hands over the equivalent sum of cash – minus a fee.

‘It’s all done on trust and it works like a charm,’ says Laurence. ‘It was never intended as a system for laundering money, but a lot of people are using it just for that because it’s so good. You don’t have to worry about getting the cash over to Europe or into a high-street bank, you just walk into one of these places. They’re everywhere, in the back of little cafés, travel agents – places like that.

‘It’s quick and efficient, and the real beauty of
hawala
is that if someone is trying to follow a money trail and you bounce money from one bank account to another to try to lose them, they’re still going to catch up eventually. Taking it out of the banking system and putting it into
hawala
means it’s lost for good. There’s no way these transactions can ever be traced.’

As the waitress appears to take our lunch things away, Laurence asks if I want to make use of his services. I tell him that I’ll need to think about it, that I’ve worked hard for my money and I don’t feel I know him well enough to hand it all over.

He nods and tells me he understands. ‘A lot of people, especially some of the older ones, long for the days when they could just stuff it in their mattress and spend it as and when. But those days are gone. If you want to be able to spend the cash, you need to get it professionally laundered. At the end of the day, you need to find someone you can trust.’

And that trust goes both ways. Launderers enjoy many of the benefits of criminal activity but have a better chance of staying out of the police spotlight. Those who are caught, however, can often provide rich detail about the dozens of criminal gangs for whom they work.

In 1998 diamond merchant Solly Nahome was shot outside his north London home. A professional hitman pumped four bullets into him before escaping on a waiting motorcycle. As well as having an office in Hatton Garden, Nahome was financial adviser to the notorious A team.

Nahome was known to the police as an international criminal specialising in fraud and money-laundering. He was said to have met with the A team three or four times a week and arranged for £25 million to be hidden in property deals and offshore accounts. It is thought that he was shot after rumours surfaced that he had been seen talking to police officers.

Although they may be some of the wealthiest criminals around, money-launderers always play a dangerous game. Some more dangerous than most.

 

I’m sitting on a hard wooden bench just behind the witness box of Woolwich Crown Court in south-east London.

Some seventy-five feet below me is a tunnel leading directly to HMP Belmarsh, which occupies the land alongside the court. Belmarsh is, by all accounts, the most secure prison in the country. It features a special unit used to hold high-risk prisoners, and also houses suspected terrorists who are detained without trial under emergency legislation. There has yet to be an escape. Or an attack.

The whole building has been designed with security in mind. There are ranks of metal-detectors and X-ray machines at the main entrance, and once more at the entrance to the court building. Inside, high Perspex screens around the dock eliminate the possibility of any prisoner making a break for it. For reasons like this and many more, Woolwich is fast taking over from the Old Bailey as the best venue for trials that need to take place under the strictest security possible.

Behind me, a number of police officers with flak jackets and Heckler and Koch carbines held against their chests are on patrol. Grey-wigged barristers wait eagerly and the judge sits at his bench, his hand resting on his chin. One other journalist and I are the only reporters there. Everyone in the place turns and looks as the door swings open and the main prosecution witness – the reason for all the extra security – swaggers in. Overweight and ungainly, dressed in a sharp business suit with his lank hair swinging above his shoulders, this is Michael Michael, chief money-launderer of a £150 million international drug-smuggling operation.

Constantine Michael Michael was born in Brighton on 25 November 1957, the eldest son of Greek-Cypriots who had traveiled to England in search of a better life. By the time his brother, Xanthos, came along in 1962, Michael’s shoemaker father, John, and mother Maria had moved to north London to run a small fish-and-chip shop.

Michael attended the hard Highbury Grove School in Islington and quickly dropped his ‘sissy-sounding’ first name in favour of something more conventional. His teachers remember him as an affable, well-mannered boy who, despite an obvious talent for mathematics, showed little interest in studying. None were surprised when he left school without gaining a single qualification.

His parents insisted he make something of himself so Michael enrolled at Southgate Technical College to study fashion – ‘like a good Greek boy’ – but found the subject tedious. He began missing more and more of his classes and, after falling in love with Georgina, a Greek-Cypriot girl from Leicester, he dropped out altogether. Within six months, Georgina had become Mrs Michael.

The newlyweds moved to the Midlands and set up home with Georgina’s parents, who also ran a fish-and-chip shop, but almost immediately the marriage fell to pieces. Within eight months Michael had returned to London and was living with his own parents again. ‘I had to come back,’ he told them. ‘I couldn’t stand her. We weren’t compatible.’

Michael started work as a driver for a local VW dealer, doing little more than moving vehicles about. Keen to boost his earnings, he did a little buying and selling in his own time but soon came a cropper. He was given a Porsche 928 and sold it for a tidy profit, only to discover it had never belonged to him. Charged and convicted within the space of a few weeks, Michael spent four months at Brixton prison.

It was his first brush with the law and, initially, the experience left him shell-shocked. But at the same time Michael found himself irresistibly and inexplicably drawn to the characters that populated the criminal underworld. He made a number of firm friends and would later brag that he had lost all three elements of his gangland virginity – first arrest, first charge and first time in prison – in one fell swoop.

Soon after his release he met and married another Greek-Cypriot girl, Alexandra, following a second whirlwind romance. Around the same time he joined forces with a friend who was launching an accountancy business and set up a dual partnership, trading under the name Michael
&
Co and specialising in arranging mortgages and pensions.

The firm was legitimate, but Michael’s private clients were not. Using some of the contacts he had made while in prison he began keeping the books of businesses that operated just on the wrong side of the law. There were pubs and bars that got their alcohol off the back of lorries from the continent, car dealers who sold more ringers than anything else, and brothels masquerading as saunas or massage parlours. He also specialised in giving references and providing fake paperwork for people who didn’t have legitimate jobs but needed to show banks that they had a steady income before being granted a mortgage. From there it was a short leap to arranging mortgages for people who didn’t exist. In 1989 Michael set up a scam in which he helped arrange £3 million worth of bogus loans, earning himself a commission of around thirty thousand pounds.

Before long the second Mrs Michael got sick of it all and left. Michael promptly took up with Lynn Baker, a former vice girl, whom he had met while keeping the books of a Highgate brothel. Blonde, busty and cocky with it, Lynn had many childhood friends and acquaintances who had grown up on the edge of the world of organised crime. Despite this and the fact that, to his mother’s horror, she wasn’t Greek, Michael was smitten.

Within three months they were living together and Michael became more and more involved in the day-to-day running of the sauna that Lynn co-owned. Seeing an opportunity for expansion and even greater profit, the pair soon went into business together, pooling their resources to buy more saunas and start their own little empire.

Then it all started to go wrong. The mortgage fraud was uncovered, and just as Lynn announced she was pregnant, Michael was arrested again and that was when he began travelling down the path that would make him a multi-millionaire and one of the most powerful figures in the British underworld.

With dozens of detectives poring over his financial records in the aftermath of the mortgage-fraud case, Michael was terrified that the police would soon shut down all his saunas – fast becoming his chief source of income. Out on bail, he arranged to meet up with the police officer who had first arrested him. ‘Even though he was the one who nicked me, I didn’t bear a grudge. I thought the guy had been fair to me. I actually quite liked him.’

The feeling proved mutual and, as the pair talked and a cautious friendship developed, Michael saw a way of striking a bargain. Through his work and his time in prison he had got to know a number of high-ranking criminals – armed robbers, drug-dealers and the like. He would often get to hear about raids that were being planned, drug shipments that were arriving, and even underworld murders that were being set up. It was all because Michael was seen as a man with good connections, the gangland equivalent of the
Yellow Pages.
If you needed a fake passport, a stolen car or a few kilos of cocaine, Michael was a good man to ask. He didn’t get involved in anything, but he always knew someone who did and was happy to make the introduction.

Although most people imagine the underworld is very secretive and closed, that’s not always the case. If, for example, you come into possession of a large quantity of gold bars, the only way to convert them to money is to find people willing to buy them. And the only way to do that is to put the word out. Once you achieve a certain level of trust and credibility, usually by having been in prison, the underworld becomes awash with requests for information, buyers, drivers for robberies and so on. It meant Michael had access to the kind of information any policeman worth his salt would give his right arm for, and Michael knew it.

A deal was soon struck: Michael would become an informant, passing on details of the criminal enterprises of those around him. There would be occasional payments for the information but his main reward was that the saunas would be allowed to flourish.

A top-secret file was opened and, working first under the codename ‘Andrew Ridgley’ then later ‘Chris Stevens’, Michael talked. As the information flowed, it soon became clear that, far from being a nuisance, the brothels were a valuable source of intelligence. Whenever Michael met big-time drug-traffickers he would get them drugs and then, ‘I’d introduce them to the girls and make sure they had a good time,’ he says. ‘The saunas were a very good cover. When people are totally relaxed in a steam bath, they drop their guard and tell you things they’d never tell you anywhere else.’

Michael threw himself into his new role with surprising enthusiasm. In his first few weeks he gave the police details of the people who had laundered the proceeds of his mortgage-fraud scam; he told them about being approached to nobble a juror in a high-profile trial, about a group of burglars who were committing violent robberies, and the men believed to have killed a prostitute whose body had been found in Epping Forest.

Also, he continued expanding his chain of brothels and broadening the range of financial services his company offered. ‘Maintaining the saunas and the accountancy office was an integral part of my ability to provide. The way the police viewed it was that I lived the right sort of lifestyle, drove the right sort of cars. I could converse with criminals on their level so it was a good opportunity for me to get bits and pieces, which I would then pass on to the police.’