NAURU TO END OFFSHORE BANKING UNDER U.S. PRESSURE

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SYDNEY, Australia (PINA, Mar. 2) - Nauru President Bernard Dowiyogo, battling many crises, has signed executive orders to not renew offshore banking licenses or issue further "investor passports," the Sydney Morning Herald reported.

America’s Bush administration is angry over possible terrorist links to Nauru’s existing tax schemes and money laundering by organized crime, the newspaper said.

The U.S. fears terrorist groups such as al-Qaeda could use Nauru to launder funds. It threatened to impose tough financial sanctions and repossess Air Nauru’s only aircraft, the Sydney Morning Herald said.

The Sydney Morning Herald said a Nauru delegation was warned of retaliatory measures over its existing schemes when it appeared before a congressional committee in Washington.

Secretary of State Colin Powell also wrote to Dowiyogo, raising concerns about terrorism in relation to the country’s off-shore banks and passport operations.

Nauru, once wealthy from phosphate mining, is these days on the verge of bankruptcy as a result of years of mismanagement, waste and corruption.

Meanwhile, Dowiyogo was admitted to a Washington hospital after suffering a mild heart attack on Tuesday, the Sydney Morning Herald said. He had ousted former President Rene Harris last month in a tense leadership struggle.

The increased U.S. concern follows confirmation two men with so-called Nauru investor passports were members of a group the Americans list as a terrorist organization, the newspaper said.

The Sydney Morning Herald said thousands of passports have been provided to foreign clients over the past six years at an average cost of $20,000 each. In the last year large numbers of Nauru residency documents have also been sold in efforts to raise cash.

However, the Sydney Morning Herald said that according to well-placed sources, there are no official records in Nauru of many of these documents having been issued.

Russian organized crime figures have been major customers of Nauru’s existing off-shore banking operations, allegedly laundering tens of billions of dollars, it said. They utilize some of the 400 registered banks which only have post office boxes on the island, the newspaper said.

Dowiyogo’s executive order provides for the establishment of a task force on money laundering and the sharing of information with other countries and intelligence organizations.

It pledges to "fully investigate and commence legal actions arising from any illegal activities that have previously occurred involving the Republic of Nauru banks, corporations and passports."

March 3, 2003

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