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February 17, 2000
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Cyber nations with real repercussions

By James Knight

Visit the website and you can read the history or catch up with local affairs, but no matter how carefully you look on an atlas, you won't find the Dominion of Melchizedek anywhere. Supposedly based in the South Pacific, it is a virtual tax haven with little banking legislation and no taxes.

The dominion, a web-creation by a convicted American fraudster, lays claim to several green atolls glittering in the waters of the Pacific. On these sandy islands the virtual nation is having very real repercussions.

Rotuma is another small island in the Pacific Ocean - a far-flung part of Fiji. Recently, the issue of secession came up at a meeting of the island's council of elders. The national Fijian government took the talk seriously enough to send a delegation to the island to find out what was going on.

Rotuma had been visited by David Korem - variously known as Mark Pedley and Branch Vinedresser - the American who had set up the Dominion of Melchizedek soon after his release from a Washington penitentiary, installing his Filipina wife as President Pearlasia of the dominion. On a tourist visa, Korem had visited Rotuma and offered the council a constitution for autonomy in return for joining his cyber-nation.

A mere prank, perhaps, but one that the Fijian government was right to take seriously. Korem had entered Fiji on a Dominion of Melchizedek passport. It was not the only goverment to be fooled: in January 1999, the immigration authorities in both Singapore and Malaysia responded favorably to letters asking whether ''Melchizedek passport holders'' needed visas to visit those two countries.

Bertil Lintner explained in the Bangkok daily, The Nation, that the scam finally broke in November 1999 when three Melchizedek ''officials'' were arrested in the Philippines. They had duped hundreds of local Filipinos, Chinese and Bangladeshis to pay up to $3,500 for worthless Melchizedek travel documents they were told were ''internationally-recognized passports''.

However, the Dominion of Melchizedek is not the only such cyber-creation based in the Pacific - it competes for attention with the Realm of EnenKio, and the Republic of Howland and Baker Islands. The atoll and the islands exist on the maps, making a trap for the unwary, but the Realm and Republic are fictitious, according to American and Australian law enforcement agencies.

EnenKio has laid claim to Wake Island, halfway between Japan and Hawai'i. The island is also claimed by the real Marshall Islands to the south. Hawaii-based ''EnenKio Foreign Minister'' Kermit Rydel says that the situation is similar to Taiwan claiming sovereignty over mainland China, and denies the group is acting illegally. The US State Department, however, says that the ''Kingdom of EnenKio Atoll'' is ''fraudulent in intent and practice''.

The Republic of Howland and Baker Islands, however, is another case altogether, and confusion with less scrupulous cyber-nations has led its creator to offer a rebuttal. On its own website the Republic of Howland and Baker Islands has added a page pointing out that the republic does not exist. It is the invention of Stephen Abbott of Manchester, New Hampshire. ''I was genuinely unaware that 'micro nations' in Fiji and in the Marshall Islands had taken a more real and concrete form until I did some research into the matter,'' Abbott wrote in an email to AFP.

The republic ''is a model nation, in the sense that it is a sociological blank slate upon which economic, social, political, racial and various other societal issues can be played out in a neutral setting'', modeled on the laws and culture of Singapore.

But if Howland is just an academic exercise in ''what if . . . ?'', Australian government agencies are under no doubts why Korem has created the Dominion of Melchizedek: cyber-banking and cyber-crime is the most important challenge of the 21st century for the Australian Federal Police's Transaction Reports and Analysis Center.

Apart from offering to incorporate banks, insurance companies, trusts and private corporations for a few thousand dollars, the dominion's website also provides a wide range of services, including passports, university degrees and lawyers' certificates.

The Melchizedek ''officials'' in the Philippines had raked in an estimated $1 million before they were picked up by the police in November - but the Manila passport scam was only the latest in an astonishing series of worldwide swindles associated with Melchizedek. According to Goldhaven Consultants, in 1995, Bank of England officials raided the London premises of a company called Inner Sanctum, which offered get-rich-quick investment schemes backed by a phoney bank ''registered'' in Melchizedek.

''Getting to the truth requires a walk down a labyrinth that includes a home-brew of religion, officials' names that change with kaleidoscopic ease and a history of more legal proceedings than 'Melchizedek' has syllables,'' stated the Washington Post in 1995. ''It appears to exist mainly so that money can be whisked through shell banks.''

A US law enforcement official emphasized this aspect of the cyber-nation to Lintner: ''Their so- called banks are involved in serious fraud, and we are watching them closely. It's possible to transfer funds from one jurisdiction, via Melchizedek, and on to a real tax haven such as Gibraltar or Antigua. In this way, the origin of the money can be totally obscured.''

Law enforcement officials say that Korem has contacts and co-conspirators in several Latin American countries, in Nigeria and Australia. Cheques issued by Melchizedek banks have been discovered all over the world.

Meanwhile in Rotuma, the Fijian government has found some money for the local hospital and to repair the pier. Maybe out of the virtual politicking, the Rotumans are winning some real gains.

(Special to Asia Times Online)

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