by Jon E. Lewis
BCCI’s vigorous asset-buying hid the bank’s true financial status: it was verging on insolvency. And much of whatever money BCCI was making was coming from illegal activities. By the mid-1980s the CIA, the Internal Revenue Service and the Drug Enforcement Agency were respectively informing the US State, Treasury and Justice departments that BCCI was laundering drugs money. These alarms were all ignored – possibly because some branches of the CIA itself were using BCCI for clandestine purposes – until 1987, when president Manuel Noriega of Panama was discovered to be among those using BCCI to launder drugs money. The lid could no longer be kept on. The US Senate Subcommittee on Terrorism, Narcotics and International Operations launched an investigation into BCCI under Senator John Kerry. When Kerry eventually delivered his report on “The BCCI Affair” to the Committee on Foreign Relations, US Senate, in December 1992, he recorded a catalogue of larceny by BCCI that ranged from narcotics trafficking to money-laundering.
Such a catalogue of criminality would, one might presume, have the US administration champing at the bit to close BCCI down. Not a bit of it. Which is where the allegation of “conspiracy” enters stage right. One of the companies which borrowed money from BCCI, Harken Energy, had on its board of directors one George W. Bush, the US president’s scion. BCCI lobbyists and advisers included Henry Kissinger’s consultancy, Kissinger Associates. The CIA, while denouncing BCCI on the one hand, was “float[ing] in and out of BCCI” (Kerry) on the other, was possibly using the bank to run funds to the Mujahadeen in Afghanistan, and was definitely working to some unspecified end through BCCI’s affiliate, Capcom. Even smiling Jimmy Carter and rainbow coalition leader Jesse Jackson were receivers of BCCI’s largesse. In other words, a vast number of US luminaries had a vested interest in halting Kerry’s work – which is exactly what happened in 1989, when the Justice Department stalled his investigation. According to Washington Monthly, personal pressure from no less than Jacqueline Kennedy Onassis was put on Kerry to desist. To Kerry’s credit he refused to give up completely, and approached New York District Attorney Robert Morgenthau with irrefutable evidence that BCCI was handling the accounts of the Colombian Medellin drugs cartel and diverting funds to the terrorist Abu Nidal. In 1990 the Bush administration gave BCCI a rap over the knuckles, but refused to close the bank down. That task fell eventually to the Bank of England in July 1991, although the publication of Kerry’s report (now co-authored by Senator Hank Brown) in the following year administered the coup de grâce. BCCI was indicted for money-laundering, bribery and grand larceny.
Shutting the doors of BCCI did not prevent $13 billion going missing – not that any of the monies went to the bank’s staff or small investors, the latter queueing fruitlessly to retrieve their deposits from BCCI branches. There are no answers as to where the missing monies went, although there are hints that some of the bank’s bigger clients received larger than usual remunerations in the run-up to the collapse.
An investigation by the French intelligence service found that one Osama bin Laden was a BCCI customer. It is within the bounds of possibility that bin Laden was among those who benefited in the last days of the BCCI criminal empire.
US Senator John Kerry’s investigation into BCCI was deliberately blocked by vested interests: ALERT LEVEL 9
Further Reading
J. Beaty and S. C. Gwyne, The Outlaw Bank: A Wild Ride into the Secret Heart of BCCI, 1993
Senator John Kerry and Senator Hank Brown, The BCCI Affair: A Report to the Committee on Foreign Relations, United States Senate, December 1992, 102nd Congress 2nd Session, Senate Print 102–140
Peter Truell and Larry Gurwin, False Profits: The Inside Story of BCCI, 1992
DOCUMENT: REPORT OF SENATOR JOHN KERRY ON “THE BCCI AFFAIR” TO THE COMMITTEE ON FOREIGN RELATIONS, UNITED STATES SENATE, IN DECEMBER 1992
BCCI’s unique criminal structure – an elaborate corporate spider-web with BCCI’s founder, Agha Hasan Abedi, and his assistant, Swaleh Naqvi, in the middle – was an essential component of its spectacular growth, and a guarantee of its eventual collapse. The structure was conceived by Abedi and managed by Naqvi for the specific purpose of evading regulation or control by governments. It functioned to frustrate the full understanding of BCCI’s operations by anyone. Unlike any ordinary bank, BCCI was from its earliest days made up of multiplying layers of entities, related to one another through an impenetrable series of holding companies, affiliates, subsidiaries, banks-within-banks, insider dealings and nominee relationships. By fracturing corporate structure, record keeping, regulatory review, and audits, the complex BCCI family of entities created by Abedi was able to evade ordinary legal restrictions on the movement of capital and goods as a matter of daily practice and routine. In creating BCCI as a vehicle fundamentally free of government control, Abedi developed in BCCI an ideal mechanism for facilitating illicit activity by others, including such activity by officials of many of the governments whose laws BCCI was breaking.
[. . .]
Among BCCI’s principal mechanisms for committing crimes were shell corporations, bank confidentiality and secrecy havens, layering of corporate structure, front-men and nominees, back-to-back financial documentation among BCCI controlled entities, kick-backs and bribes, intimidation of witnesses, and retention of well-placed insiders to discourage governmental action.
[. . .]
However daunting the task of explicating the full extent of BCCI’s criminality, it is essential to recognize that at core, BCCI was not a bank which made an adequate return on investment through lending out depositors’ funds like other banks, but a “Ponzi scheme,” which used new depositors’ funds to pay current expenses and to repay earlier depositors, creating a pyramid of mounting obligations that ultimately and inevitably would bring about BCCI’s collapse.
[. . .]
From the beginning, BCCI President Abedi conceived of BCCI as a machine with two driving mechanisms – asset growth and faith. The latter was essential to prevent a day of reckoning when depositors and creditors alike would cause a run on the bank. The former was necessary to sustain the latter through bad times. Together, they worked to sustain the illusion that BCCI was solvent, when in fact, it is unlikely BCCI was ever solvent.
On 18 December 1991, in an agreement with the Justice Department and New York District Attorney, BCCI’s liquidators pleaded guilty to having engaged in a criminal conspiracy through financial fraud, and thereby constituting a Racketeering Influenced and Corrupt Organization (RICO), whose entire assets, legitimate and illegitimate, were subject to confiscation by the government. Specific crimes admitted to by BCCI’s liquidators in the agreement included:
Seeking deposits of drug proceeds and laundering drug money
Seeking deposits from persons attempt to evade US income taxes
Using “straws” and nominees to acquire control of US financial institutions
Lying to regulators and falsifying regulatory documents
Creating false bank records and engaging in sham transactions to deceive regulators.
[. . .]
The New York District Attorney found that among the major actions taken by BCCI to carry out its fraud were:
Employing the ruling families of a number of Middle Eastern states as nominees for BCCI, who pretended to be at risk in BCCI but who were in fact guaranteed to be held harmless by BCCI for any actual losses.
Using bank secrecy havens including Luxembourg and the Cayman Islands to avoid regulation on a consolidated basis by any single regulator of BCCI, and thereby to permit BCCI to transfer assets and liabilities from bank to bank as needed to conceal BCCI’s true economic status.
Paying bribes and kickbacks to agents of other banking and financial institutions, thereby avoiding the scrutiny of regulators.
[. . .]
Money-Laundering
From the time of BCCI’s indictment on drug money-laundering charges in Tampa, Florida in October, 1988, there was little doubt to anyone looking at the facts tha
t BCCI had been used to launder drug money.
The Customs agents working on the “C-Chase” case against BCCI moved millions of dollars in US currency, representing the proceeds of cocaine sales, through BCCI Panama, BCCI Luxembourg, and LOANS Switzerland as a result of the knowing participation of several BCCI officials.
As Robert Mazur, the Customs agent in Tampa who selected BCCI as the target of the Customs money-laundering sting testified, BCCI bank executives volunteered methods to enhance and improve his techniques for money-laundering, and shortly before the sting ended the operation, offered to introduce Mazur to other potential “cash” customers for money-laundering services from Bogota, Colombia.
[. . .]
Given BCCI’s size and dispersion, money-laundering at BCCI would have been inevitable under any circumstances. Given BCCI’s never ending quest for assets and its management’s attitude towards laws, it was ubiquitous. As Akbar Bilgrami explained, Abedi was constantly telling BCCI employees that the only thing that mattered was the generation of assets. When Bilgrami was in Colombia in the mid-1980s [sic], a period when Colombia had already developed the reputation as the center for cocaine smuggling and drug money, Abedi told him that he needed to increase BCCI’s activity in Colombia to $1 billion in local currency in deposits, and $1 billion in US denominated deposits – funds which obviously could only be generated, directly or indirectly, from the drug trade.
[. . .]
The degree of BCCI-US’s reliance on money-laundering as a principal business was demonstrated by what happened when BCCI put into place a “compliance program” as part of its January 1990 plea agreement resolving the Tampa money-laundering case: business dropped noticeably, especially referrals from other BCCI locations, because neither BCCI nor its customers wanted to provide details about the customers’ businesses.
BCCI’s clients for money-laundering included Panamanian General Manuel Noriega, for whom it managed some $23 million of criminal proceeds out of its London branches; Pablo Escobar, of the Medellin cartel; Rodriguez Gacha, of the Medellin cartel; and several members of the Ochoa family.
Bribery
Bribery was a key component of BCCI’s strategy for asset growth worldwide, from the earliest days of the bank. In some cases, the recipients of funding from BCCI may not have considered the payments to be “bribes,” but simply a mechanism by which BCCI obtained what it wanted from an official, and in return the official helped BCCI, such as BCCI’s payments to two of the Gulf emirs in return for the use of their names as nominees for the purchase of First American. In other cases, the bribes were naked and direct quid pro quos, such as BCCI’s payments to Central Bank officials in return for Central Bank deposits in countries like Peru. In other cases, BCCI made campaign contributions to politicians, such as it did with General Zia in Pakistan and Carlos Andres Perez in Venezuela. In still other cases, BCCI’s payments came in the guise of charitable contributions, and provided BCCI with an entree to generate deposits from others, as in the case of President Jimmy Carter. Among the Americans who BCCI provided with financial assistance in addition to Carter were US Ambassador to the United Nations Andrew Young, Bert Lance, and Jesse Jackson. Abroad, important figures with extensive contact with BCCI included former British Prime Minister James Callaghan, then United Nations Secretary General Javier Perez de Cuellar, Jamaican prime minister Edward Seaga, Antiguan prime minister Lester Byrd; a large number of African heads of state; and many Third World central bank officials.
[. . .]
Support of Terrorism and Arms Trafficking
BCCI’s support of terrorism and arms trafficking developed out of several factors. First, as a principal financial institution for a number of Gulf sheikhdoms, with branches all over the world, it was a logical choice for terrorist organizations, who received payment at BCCI-London and other branches directly from Gulf-state patrons, and then transferred those funds wherever they wished without apparent scrutiny. Secondly, BCCI’s flexibility regarding the falsification of documentation was helpful for such activities. Finally, to the extent that pragmatic considerations were not sufficient of themselves to recommend BCCI, the bank’s pan-third world and pro-Islam ideology would have recommended it to Arab terrorist groups.
Arms trafficking involving BCCI included the financing of Pakistan’s procurement of nuclear weapons through BCCI Canada, as documented in the Parvez case, involving a Pakistani who attempted to procure nuclear-related materials financed by BCCI through the United States.
In a letter of 22 November 1991 to the Subcommittee, the CIA stated that “the Agency did have some reporting [as of 1987] on BCCI being used by third world regimes to acquire weapons and transfer technology,” but was unwilling to elaborate on the nature of this activity in public.
In early August, 1991, the Committee was provided with documents from the Latin American and Caribbean Region Office (LACRO) of BCCI, describing the offer for sale by the Argentine air force of 22 Mirage aircraft for $110 million. The planned sale was to have been made to Iraq, as part of Saddam Hussein’s massive military build up prior to the Gulf war. BCCI was acting as the broker for the transaction, which was to take place in August or September of 1989, but not completed as a result of a dispute within the Argentine military itself. Arms sales involving BCCI from Latin America to the Middle East remain, as of April 1992, under active investigation by US law enforcement.
Abu Nidal
In the United Kingdom, a key window on BCCI’s support of terrorism was an informant named Ghassan Qassem, the former manager of the Sloan [sic] Street branch of BCCI in London. Qassem had been given the accounts of Palestinian terrorist Abu Nidal at BCCI, and then proceeded, while at BCCI, to provide detailed information on the accounts to British and American intelligence, apparently as a paid informant, according to press accounts based on interviews with Qassem.
As of 1986, the information obtained about Abu Nidal’s use of BCCI was sufficiently detailed as to justify dissemination within the US intelligence community.
[. . .]
Other terrorist groups continued to make use of BCCI, including one “state sponsor of terrorism,” and the Qassar brothers, Manzur and Ghassan, who have been associated with terrorism, arms trafficking, and narcotics trafficking in connection with the Government of Syria, and with the provision of East Bloc arms to the Nicaraguan contras in a transaction with the North/Secord enterprise paid for with funds from the secret US arms sales to Iran.
[. . .]
Prostitution
BCCI’s involvement in prostitution arose out of its creation of its special protocol department in Pakistan to service the personal requirements of the Al-Nahyan family of Abu Dhabi, and on an as-needed basis, other BCCI VIPs, including the families of other Middle Eastern rulers. Several BCCI officers described the protocol department’s handling of prostitution to Senate investigators in private, and two – Abdur Sakhia and Nazir Chinoy – confirmed their general knowledge of the practice in testimony. The prostitution handled by BCCI was carried over from practices originally instituted by Abedi at the United Bank, when, working with a woman, Begum Asghari Rahim, he cemented his relationship with the Al-Nahyan family through providing them with Pakistani prostitutes.
BILDERBERG GROUP
The problem with being rich, powerful and influential these days is that ordinary people just don’t understand you; it’s only other rich, powerful, influential people to whom you can really relate, spend quality time with. So along with the invitation to party on down at the Bohemian Grove comes membership of a very exclusive, no-holds-barred talking shop, the Bilderberg Group.
The Group’s meetings take place once a year at a luxurious hotel somewhere nice, safe, civilized and very secret. The steering committee of around 20 members draws up a list of 100 people they think reflect the great and the good, one or two up-and-coming politicians or business people and even the odd NGO representative if it seems to make economic sense. Once gathered, the chosen ones are catered by hand
-picked chefs, have the venue checked by the CIA and are guarded by mercenaries. Those, however, are all the details we have. As soon as the delegates sit down together, the media blackout begins. No one speaks about what has been discussed at the Group’s meetings, no details are leaked, no paparazzi stalk the place with their long lenses. So the kind of privacy any royal or celebrity would kill for is accorded to an innocent group of concerned and informed individuals chatting about new directions in world politics and business.
Seems fishy? Plenty of people think so. The Group is distrusted by the ultra-right, who believe it’s part of a Zionist plot to rule the world, while the far left deeply distrust its capitalist credentials. Hardline conspiracy theorists claim the Bilderberg Group has caused wars and recessions, ordered murders, ousted leaders such as John F. Kennedy and Margaret Thatcher, and dictated national policies. Unsurprisingly, the Group is also accused of having the achievement of the New World Order at the top of its secret agenda. The promotion of free trade and the elimination of protectionist policies are the first steps in its dastardly plan to undermine individual nationality, followed by a series of international conflicts which would destabilize national boundaries still further and reward its acolytes with bulging profits (lucrative Iraqi reconstruction contracts, anyone?).
The list of ready believers in this conspiracy, disturbingly, includes Osama bin Laden, Timothy McVeigh, the perpetrator of the Oklahoma City Bombings, and convicted London nail-bomber David Copeland – all apparently convinced that Bilderberg pulls governments’ strings.