The Underworld's Bank of Choice
THE story of the Bank of Commerce and Credit International (BCCI) is at once a great true crime tale and an ominous reflection on the times. It's a story worth knowing because, as New York District Attorney Robert Morgenthau remarked, his 1991 indictment of BCCI exposed "the largest bank fraud in world financial history." If that weren't enough, the millions of dollars BCCI's depositors lost through the bank's misdeeds symbolize the even greater crisis of global banking and the difficulties facing law en forcement in a world economy.
The bizarre charlatans who ran BCCI for two decades now seem like so much flotsam on international tides of capital and crime, but they began as idealists. Early in BCCI's history the self-proclaimed Bank of the Third World was extending services to Arab oil sheiks and hard-working Muslim immigrants in Europe, customers who were less than welcome at more conventional financial institutions. But eventually BCCI's arms-open approach meant that drug smugglers and embezzling dictators used the bank to launde r millions in illegal profits.
As described in "Dirty Money" - a spicy and readable account of the scandal written by Mark Potts of the Washington Post, who worked with English financial journalists Nicholas Kochan and Robert Whittington - BCCI became "a sort of neighborhood bank in some of the world's worst neighborhoods."
At the head of the bank's macabre parade of spies, scamps, and thieves comes Agha Abedi - "Agha Sahib" to his devoted employees, who treated Abedi like a guru. A prodigy in the Pakistani banking community, Abedi had a genius for playing people's higher principles off their instinctive aversion to regulations and taxation. When Pakistan's banking industry was nationalized in 1972, Abedi went to his contacts in the newly powerful Arab oil world and raised enough money to begin his own bank: BCCI.
Mixing Sufi mysticism and dizzying ambition, Abedi exhorted his followers to go forth and multiply deposits.
"A Full Service Bank," a second account of BCCI's dealings, written by James Ring Adams of the Wall Street Journal and Douglas Frantz of the Los Angeles Times, is filled with wonderful examples of what the authors call "Abedi-speak." At business meetings, he urged employees to "feel the force" and think of their company as a spiritually united family. When getting new capital into the bank became a religious duty, trivia like securing loans or balancing books were seen as earthly obstacles to monetary tr anscendence. One law enforcement official later complained: "This is a cult, not a bank."
Through the late 1980s, BCCI's secrecy and hunger for cash made it the bank of choice for the underworld. Western intelligence agencies like the CIA and Israel's Mossad financed covert operations out of the bank's murky vaults, and terrorists like Abu Nidal massaged BCCI accounts to leverage arms deals.
The convergence of so many sinister forces under one corporate roof has led to speculations that BCCI may have been a "proprietary," a front company that Western intelligence used to monitor (and perhaps even manipulate) the international underworld. This is far-fetched: It is surely more accurate to picture BCCI as the legendary cafe in the Khyber pass where CIA and KGB agents drank side-by-side during the Afghan war. Everyone was welcome, as long as they could stand the company.
BCCI might still be operating unmolested if its managers' desire to penetrate the huge (but heavily regulated) United States financial market hadn't led them into the maw of star-spangled justice. Through a complicated series of dummy companies and false shareholders, Abedi & Company managed to get control of First American Bankshares Inc., the largest banking company in Washington, D.C. That they did so with the assistance of Clark Clifford, a legendary and venerable figure in the Washington establishme nt, made the subterfuge all the more outrageous when it was eventually uncovered.
Both books reconstruct BCCI's US disaster. In the late 1980s, a US Customs undercover agent in Florida stumbled over Manuel Noriega's personal money pipeline that ran through BCCI branch offices. As they pursued Noreiga's drug profits back up the BCCI paper trail, US Customs uncovered the link between BCCI and First American, setting off investigations by Congress and the New York District Attorney, which would eventually bring BCCI to its knees.
"A Full Service Bank" centers on the US Customs investigation into BCCI: Readers with a taste for crime reporting may enjoy this, but other readers will find the unedited account of a white-collar sting operation tedious. On the other hand, the authors' research adds permanently to the history of the scandal: Each assertion is scrupulously footnoted.
"Dirty Money" is not as well documented, nor are the authors so inhibited about quoting speculations of unnamed sources. But it is the more lively of the two, and more international in scope.
Even taken as a pair, these intriguing books are far from the conclusive word on the BCCI scandal. As authors reasonably suggest, many "legitimate" international banks may still be involved - albeit more discreetly - in massive money laundering and revenue sheltering schemes. How much BCCI differs from its more respectable cousins is an open question. That question awaits a major government investigation, one which in these distracted and partisan times is unlikely to occur.