BULL STREET - The art of the Con

BCCI - A Shell Game

“The Bank of Credit and Commerce International, S. A. (BCCI) story is important not just because a lot of people stole billions of dollars but because they got away with it right under the noses of the authorities and none of these watchdogs barked….This is a story of the breakdown of our institutions.”  Larry Gurwin, Senior Investigator, The Investigative Group, Inc.   

The bank was formed by Agha Hasan Abedi whose United Bank Ltd was nationalized in Pakistan by then President Zulfikar Ali Bhutto. Abedi was a good friend of Sheik Zayed bin Sultan al-Nahayan, a highly pro-Arab billionaire from Abu Dhabi. They were joined with Bank of American as the original investors in BCCI. The total capital of the bank was $10 million with the American Bank being by far the smallest investor. It didn’t take Bank of America long to see that the Bank was not going in any direction that they would be contented with and they pulled out stating that it was a lack of trust regarding various elements of the transaction.  The bank was chartered in Luxembourg and opened their doors there in 1972. Within a short time, they had opened five addition offices in The United Arab Emirates, Britain and Lebanon. The bank probably grew faster than any previous enterprise in world history. Three years later it had almost 150 branches in over 30 countries.

The bank was set up very shrewdly with the regulators in mind. It was everywhere and then again, it didn’t seem to rest anywhere. No major country with strict banking regulations seemed to want to call it their own, so no one did and the bank was allowed to move where ever and whenever it wanted to with no one checking their business or their capital. Robert Morgenthau put the matter succinctly when he indicted the bank in 1991:

“The corporate structure of BCCI was set up to evade international and national banking laws so that its corrupt practices would be unsupervised and remain undiscovered, this indictment spells out the largest bank  fraud in world financial history”

The people that headed the bank were well versed in the game of bribery and were able to buy their way into Central Bank deposits from such countries as Barbados, Belize, Morocco, Panama and Jamaica as well as a host of others.

BCCI was even-handed in its operations. It dealt at the senior levels only in crimes of the first magnitude:  drugs and illegal military shipments from Peru and Columbia, and money laundering in Panama.  It was at the forefront in the financing of terrorism throughout the world, including Hungary, East Germany, Czechoslovakia, Yugoslavia, North Korea, and Cuba, while gaining substantial expertise in counterfeiting documents. BCCI funded atomic weapons thefts and the purchase of unconventional weapons for radical Arab regimes. They became skilled at the creation of false end certificates, the nuances of bribery and the art of covering-up kickbacks.  The bank became embroiled in countless murder investigations while serving as a front for political extremists throughout the Middle East.  Moreover, they still had time to involve themselves as a substantial investor in CenTrust, a victim of the Savings and Loan fiasco, which cost American taxpayers over $2 billion.  BCCI was even an important cog in siphoning $4 billion in U. S. Agricultural funds into Iraq which indirectly aiding Saddam Hussein’s war buildup.  ([106])

Of all of the disturbing elements to arise from the ever-unfolding BCCI drama was the use of BCCI’s airplane by the Secretary-General of the United Nations while on official business. When any entity provides amenities to heads of supposedly independent representative organizations, it shows a total lack of regulation and discipline on the part of those organizations. Ex-U. S. President Jimmy Carter’s introduction of BCCI to most of Asia was reprehensible; however, he was not representing his country when it was done. 

Many people consider BCCI the greatest business scandal in history. Years later, lawsuits by the bank’s liquidators against the accounting firm of Price Waterhouse continue.  Price Waterhouse is being sued for $3.5 billion and Ernst and Young for $1.6 billion.  The complaints allege that they are partially responsible for losses by thousands of depositors. Even the Bank of England, which was the regulator for British-based operations, has been hit with suits totaling $898 million.

It is our belief that had the BCCI scandal transpired ten years later; it would have brought down the world’s financial systems. In the early 1980s, derivatives had not yet appeared on the scene and electronic transmission had not yet matured.  The subversive power of today’s financial mechanisms would have triggered a decades-long global depression. Yet, the accounting firm’s that were auditing BCCI’s books to our knowledge never brought any of those activities to the attention of regulators.  They continued to allow the Bank to function as a going business long after they should have been closed and sent to pasture. They turned a blind eye when the bank to engaged in money laundering to such a large degree that they were cleansing funds for most major criminal organizations on the planet.

The same forces that would have turned a BCCI into the trigger for a world financial meltdown would make Credit Lyonnais’ debacle particularly dangerous.



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