EXCLUSIVE: How B.C.C.I. became a one-stop shopping center for criminals and spies -and how the U.S. is trying to cover up its involvement

061O-£2lBO rli ;{Il a8 £80001d SIl.lltl :JSStl NHIS #£000 06! xoa :n:3d90n~ m~ I~l~ N313H .... -. I r:""I"'1 .•"''-' r T ,-,- HH"" l:.c.(..tlu::.... V1t IltoHt'n to ~ 00 I .,., tt i Ttl T ']_r· ... ······~·~·~··+·~·T·+·T··+··.. ·l"i007fi. ;'1 .J 1'· .:;,;.. +.J.J..+.,. .... ,.." .... ".".,... _ "_' ...' .... ". FROM THE MANAGING EDITOR suading their sources to talk and finding ruses to communicate with safety. "Everybody we talked to was afraid of being killed," says Gwynne. In hotels from Washington to Abu Dhabi, Beaty of­ ten had to leave his room in the "Beaty?" early morning to return calls from "Yeah?" telephone booths. He persuaded "It's overseas-Pakistan. They several sources to meet him on say it's very important." neutral ground in Casablanca, and In the hours that led to last Fri­ learned more details there while day's closing of our cover story, dining on fish and rice in a Bedou­ correspondents Jonathan Beaty . in's tent. Beaty came right up and Sam Gwynne were holed up in against the sinister underside of an office, still tracing the weird the story when a man from the contours of one of the world's black network invited himself into most baroque financial schemes­ Beaty's hotel room in Abu Dhabi a Washington-to-Abu Dhabi in­ and threatened to kill him. trigue that matches John Ie Carre's Another challenge was "hav­ imagination for espionage, Freder­ ing to socialize with oil-rich Ar­ ick Forsyth's for terrorism and Oli­ abs in a style to which they had ver Stone's for greed. In this become accustomed," says Beaty. week's story, Jonathan and Sam Cracking B. C. c.J.: Jonathan Beaty and Sam Gwynne So there were late-night visits to have uncovered how the Bank of nightclubs in Casablanca and pur­ Credit & Commerce International "Almost all the wild things chases of exotic foods from Los used a "black network" of terror­ that were said back in February turned Angeles to London. Once, a de­ ists and self-appointed spies to out to be true." fector from the black network serve as a one-stop shopping cen­ who was being interviewed in New ter for criminals, corrupt leaders and official intelligence agencies York where he was in hiding turned to Beaty for a little spend­ around the world. "The story at the outset was a conspiratori­ ing money. "I gave him the last $100 out of my pocket," he says, alist's dream," says Gwynne. "Almost all the wild things that were "and he tipped the waitress $50." said back in February turned out to be true." Because the black network stops at nothing, not even murder, to further the bank's aims, a large part of the team's work was per- 1111111111111111111111111111111111111111111111- f------Business------I ,\\\"" """"" - ,\\' - \\~ - \'~ - ~ - ~ - ~ - COVER STORY ~ - ~ 1111111111111111111111111111111111111111111111111111111I11111111111111111111 ~ ~ - - :: - -= ...... -----~ ~ c=:::::::=--..======:::::;") The Dirtiest ..f ","11111111111111111111111111 -= .... CIA - .. Maintained - .... accounts B.C.C.I . Staff of 1,500 . .. fo r cove rt Se rvices rendered : - operation s OVERSEAS The main arm s deals, bribery, - espionage, extortion , - ce nter, in Bank of All -- drug trafficking Sheik First . . - ...... How B.C.C.I. and its "black network" became a - Kamal American il Possible - Adham B.C.CJ. ll financial supermarket for crooks and spies­ - (Sa udi) Bankshares subsidiaries "'" clients: - "'" Argentina - $313 Washington and branches China and how the U.S. is trying to cover up its role - million ~ - in 70 countries ~ Czecho- functions as a global intell igence operation - Clark Clifford, By JONATHAN BEATY and S.C. GWYNNE - ~ slovakia and a Mafia-li ke enforcement sq uad. Op­ - Cha irm an NEW YORK - Robert Altman, ~ Guatemala erating primari ly out of the bank's offices - ~ Iran - President - ~ 11111 Israel "f could tell you what you want to know, in Karach i, Pakistan, the 1,500-employee - but f must WOrty about my wife and family­ black network has used sophisticated spy :111 11111111111 ; Ubya they could be killed. " equipment and techniques, along wi th - - .. = N. Korea -a former top B.C.C.1. officer bribery, extortion, kidnapping and even, by - - = Peru - Ghaith Independ­ .. P.L.O. some accounts, murder. The black net­ - = - Pharaon ence Bank ./ ....• /./ •.. / .... / Saudi "We better not talk about this over the work-so named by its own members­ - ••...... = - (Sa ud i) Encino, - Arabia phone. We've found some bugs in offices that stops at almost nothing to further the - $500 Calif. Syria haven't been put there by law enforcement. " bank's aims the world over. - million -a Manhattan investigator probing The more conventional departments of - B.C.C.I. B.C.C.I. handled such services as launder­ - ing money for the drug trade and helping - ank-fraud cases are usually dry, dictators loot their national treasuries. The - tedious affairs. Not this one. black network, which is stiU fu nctioning, - Nothing in the history of modern operates a lucrative arms-trade business - $8 million - given to financial scandals rivals the un­ and transports drugs and gold. Accord- - Gulf shipping co mpa ny owned by B - National Jimmy Mohamed bin fo lding saga of the Bank of Credit & Com­ ing to investigators and participants - - Carter's Gokal brothers (Pa ki stani) Rashid al Maktoum (Dubal) merce International, the $20 billion rogue in those operations, it often works --11111 Bank of Georgia Global $405 million $121 million empire that regulators in 62 countries sh ut with Western and Middle East- Purchased from Bert Lance 2000 down early this month in a stunning global ern intelligence agencies. The sweep. Never has a single scandal involved strange and still murky ties so much money, so many nations or so between B.C.C.1. and the in- many prominent people. telligence agencies of several - - Superlatives are quickly exhausted: it is countries are so pervasive - - --11111111111111 Saddam Hussein, that even the White House Ma~uel 111111111111111111111:: the largest corporate criminal enterprise Noriega Ferdinand Marcos ever, the biggest Ponzi scheme, the most has become entangled. As pervasive money-laundering operation TIME reported earli er this month, and financial supermarket ever created for the National Security Council used B.C.C.I. the likes of Manuel Noriega, Ferdinand to funnel money for the Iran-contra deals, Marcos, Sad dam Hussein and the Colom­ and the CIA maintained accounts in bian drug barons. B.C.C.I. even accom­ B.C.C.I. for covert operations. Moreover, plished a Stealth-like invasion of the U.S. investigators have told TIME that the De­ _ OWNERSHIP I 1111I1 secret) banking industry by secretly buying First fense Intelligence Agency has maintained a _ CUSTOMER 1111111 secret) American Bankshares, a Washington­ slush-fund account with B.C.C.I., apparent­ THE CONNECTIONS based holding company with offices ly to pay for clandestine activities. _ DUBIOUS LOANS stretching from Florida to New Yo rk, But the CIA may have used B.c.c.1. as CHARITY DONATIONS whose chairman is former U.S. Defense more than an un dercover banker: U.S. The bank's global web was designed to Secretary Clark Clifford. agents collaborated with the black network mystify. It consisted of dozens of shell But B.C.C.I. is more than just a crimi­ in several operations, according to a B.C.C.I.: nal bank. From interviews with sources B.C.C.I. black-network "officer" who is brainchild companies, branches and subsidiaries in 70 countries. The structure close to B.C.C.L, TIME has pieced together now a secret U.S. government witness. of founder allowed the bank to operate virtually without regulation all over the Agha a portrait of a clandestine division of the Sources have told investigators that Hasan world. As a result, most of the missing money may be lost for good. bank called the "black network," which B.C.C.I. worked closely with Israel's spy Abedi 42 TIME,JULY 29, J991 agencies and other Western intelligence prodigiously corrupt division was spawned. zation, and described its wealth and politi­ groups as well, especially in arms deals. The Soviet invasion of Afghanistan in cal power, but at first they never said exact­ The bank also maintained cozy relation­ 1979 and the resulting strategic impor­ ly what the organization did." ships with international terrorists, say in­ tance of neighboring Pakistan accelerated This operative-call him Mustafa-un­ vestigators who discovered suspected ter­ the growth of B.C.C.I.'s geopolitical power derwent a year of training that began with rorist accounts for Libya, Syria and the and its unbridled use of the black network. education in psychology and the principles Palestine Liberation Organization in Because the U.S. wanted to supply the mu­ of leadership and proceeded into spycraft, B.C.C.I.'s London offices. jahedin rebels in Afghanistan with Stinger with lessons in electronic surveillance, The bank's intelligence connections missiles and other military hardware, it breaking and entering, and interrogation and alleged bribery of public officials needed the full cooperation of Pakistan, techniques. "Then the nature of our advis­ around the world point to an explanation across whose border the weapons would be ers changed," says Mustafa. "The pleas­ for the most persistent mystery in the shipped. By the mid-1980s, the CIA'S Islam­ antness was gone, and we moved to Paki­ B.C.C.1. scandal: why banking and law­ abad operation was one of the largest U.S. stan, where we trained with firearms. " enforcement authorities allowed the bank intelligence stations in the world. "If Mustafa's first operational assignment to spin out of control for so long. B.c.c.1. is such an embarrassment to the took him to London. "They gave us pass­ In the U.S. investigators now say open­ U.S. that forthright investigations are not ports and identification, and we moved a ly that the Justice Department has not only being pursued, it has a lot to do with the shipment of [unidentified] goods. In Eng­ reined in its own probe of the bank but is blind eye the U.S. turned to the heroin land they had more I.D. waiting for us, be­ also part of a concerted campaign to derail trafficking in Pakistan," says a U.S. intelli­ cause customs and immigration are strict, any full investigation. Says Robert Mor­ gence officer. but when we moved many places, into In­ genthau, the Manhattan district attorney, The black network was a natural out­ dia or China or Latin America, matters who first launched his investigations into growth of B.C.C.I.'s dubious and criminal were taken care of, and we just slipped B.c.c.1. two years ago: "We have had no associations. The bank was in a unique po­ through borders. We would be met. It was cooperation from the Justice Department sition to operate an intelligence-gathering always all arranged." since we first asked for records in March unit because it dealt with such figures as 1990. In fact they are impeding our investi­ Noriega, Saddam, Marcos, Peruvian Presi­ typical operation took place gation, and Justice Department represen­ dent Alan Garcia, Daniel Ortega, contra in April 1989, when a container tatives are asking witnesses not to cooper­ leader Adolfo Calero and arms dealers like ship from Colombia docked dur­ ate with us." Adnan Khashoggi. Its original purpose was A ing the night at Karachi, Paki­ B.c.c.1. was started in 1972 with the to pay bribes, intimidate authorities and stan. Black-unit operatives met the ship af­ putative mission of becoming the Muslim quash investigations. But according to a ter paying $100,000 in bribes to Pakistani world's first banking powerhouse. Though former operative, sometime in the early customs officials. The band unloaded large it was incorporated in Luxembourg and 1980s the black network began running its wooden crates from several containers. headquartered in London, had more than own drugs, weapons and currency deals. "They were so heavy we had to use a crane 400 branches and subsidiaries around the "I was recruited by the black network in rather than a forklift," says a participant. world and was nominally owned by Arab the early 1980s," says an Arab-born em­ The crates were trucked to a "secure air­ shareholders from the gulf countries, ployee who has ties to a ruling family in the port" and loaded aboard an unmarked 707 B.C.C.1. was always a Pakistani bank, with Middle East and has told U.S. authorities jet, where an American, believed by the its heart in Karachi. Agha Hasan Abedi, of his role in running one of the black units. black-unit members to be a CIA agent, su­ the bank's founder and leader until his "They came to me while I was in school in pervised the frantic activity. ouster last year, is a Pakistani, as are most the U.S.; they spoke my language, knew all The plane then departed for Czechoslo­ of the bank's former middle managers. of my friends and gave me money. They vakia, taking the place of a scheduled Paki­ And it was in Pakistan that the bank's most told me they wanted me to join the organi- stan International Airlines commercial 44 TIME, JULY 29, 1991 flight that was aborted at the last minute by who the middleman was: there was no gov­ The black network was the bank's prearrangement. The 707's radar transpon­ ernment-to-government connection be­ deepest secret, but rumors of its activities der was altered to beep out the code of a tween the Saudis and Nicaragua." filtered through the bank's managerial lev­ commercial airliner, which enabled the As an equal-opportunity smuggler, the el with chilling effectiveness. Senior bank­ plane to overtly several countries without bank dealt in arms from many countries. ers voice fears that they will be financially arousing suspicion. "From Czechoslovakia "It was B.C.C.L that financed and bro­ ruined or physically maimed-even the 707 flew to the U.S.," said the informant, kered [Chinese] Silkworm missiles that killed-if they are found talking about insisting that none of the black-unit workers went to Saudi Arabia," the former official RC.C.l.'s activities. High-level bank offi­ had any knowledge of what was in the heavy says, "and those were equipped with so­ cers know what happened to a Karachi­ wooden crates. "It could have been gold. It phisticated Israeli guidance systems. When based protocol officer whom the black net­ could have been drugs. It could have been you couldn't use direct government trans­ work suspected of unreliability last year. guns. We dealt in those commodities," Mus­ fers or national banks, B.C.C.r. was there "They found he had been trying to liqui­ tafa told U.S. authorities. to hot-wire the connections between Saudi date his assets and quietly sell his house," Other informants with details about Arabia, China and Israel." The bank also says Mustafa. "So, first they killed his the black network have come forward as helped transfer North Korean Scud-B mis­ brother, and then they sent brigands to the banking disaster has unfolded. siles to Syria, a B.C.C.I. source told TIME. rape his wife. He fled to the U.S., where he "B.C.C.r. was a full-service bank," says an is hiding." U.S. investigators confirm the international arms dealer who frequently et the bank's arms business was account but have little hope he will volun­ worked with the clandestine bank units. benign compared with the black teer any secrets if he is located. "They not only financed arms deals that network's other missions. Businessmen who pursued shady deals one government or another wanted to Y Sources say B.C.C.l. officials, with B.C.C.l. are just as frightened. keep secret, they shipped the goods in their known as protocol officers, were responsi­ "Look," says an arms dealer, "these people own ships, insured them with their own ble for providing a smorgasbord of services work hand in hand with the drug cartels; agency and provided manpower and secu­ for customers and national officials: paying they can have anybody killed. I personally rity. They worked with intelligence agen­ bribes to politicians, supplying "young know one fellow who got crossed up with cies from all the Western countries and did beauties from Lahore," moving drugs and B.C.C.I., and he is a cripple now. A bunch a lot of business with East bloc countries." expediting insider business deals. of thugs beat him nearly to death, and he In Lima, where a probe of RC.C.L's When it came to recruiting and per­ knows who ordered it and why. He's not tewardship of Peru's central-bank funds is suading, the black network usually got its about to talk." Currently the black units under way, local investigators are trying to way. "We would put money in the accounts have focused their scrutiny and intimida­ trace what happened to money in an abort­ of people we wanted to seduce to work for tion on investigators. "Our own people ed B.C.C.I.-brokered deal to sell French­ us," says Mustafa, "or we would use terror have been staked out or followed, and we made Mirage jet fighters to the impover­ tactics," including kidnapping and black­ suspect tapped telephones," says a New I hed nation. Sources in the clandestine mail. "The Pakistanis were easy to terror­ York law-enforcement officer. arms trade say B.C.C.T. eventUlilly sold the ize; perhaps we might send someone his The black unit's mission eventually be­ planes to Pakistan and India. brother's hand with the rings still on it." came the pursuit of power and influence U.S. intelligence agencies were well Adds Mustafa: "We were after business for its own sake, but its primary purpose aware of such activities. "B.C.C.I. played cooperation or military or industrial se­ was to foster a global looting operation an indispensable role in facilitating deals crets that we would use or broker, and we that bilked depositors of billions of dollars. hetween Israel and some Middle Eastern targeted generals, businessmen and politi­ Price Waterhouse, the accounting firm ountries," says a former State Depart­ cians. In America it was easy: money al­ whose audit triggered the worldwide sei­ ment official. "And when you look at the most always worked, and we sought out zure of B.C.C.r. assets earlier this month, audi support of the contras, ask yourself politicians known to be corruptible." says the disarray is so extreme that the firm TIME,JULY29,l991 45 Business

cannot even put together a coherent finan­ move and hide money all over the world. meant serving a core clientele of what in­ cial statement. But investigators believe ~ In Guatemala the collapse of B.c.c.1. vestigators estimate to be some 3,500 cor­ $10 billion or more is missing, fully half of has triggered a government probe into a rupt business people around the world. B.C.C.I.'s worldwide assets. $30 million loan that the b.ank extended to The more B.C.C.l. became a conduit How did it happen? B.C.C.I.'s corpo­ the country in 1988-89. Government offi­ for such money, the more deposit gather­ rate structure allowed the bank to operate cials told TIME they suspect that some of ing became the bank's chief goal. At annu­ virtually without regulation all over the the money may have gone to pay bribes to al meetings, founder Abedi would ha­ world. The bank's organizational web con­ stifle a four-year-old investigation of a ma­ rangue his employees for days on the sisted of dozens of shell companies, off­ jor B.C.C.l. client, coffee smuggler and importance of luring deposits. That was shore banks, branches and subsidiaries in arms merchant Munther Bilbeisi. "If the probably because billions of dollars were 70 countries. It was incomprehensible even $30 million was given to corrupt public of­ vanishing. At the highest levels, B.C.C.I. to its own financial officers and auditors. ficials and that can be proved, then the officials whisked deposits into secret ac­ The bank's extensive use of unregulated loan should be wiped out or reduced," says counts in the Cayman Islands. These ac­ Cayman Islands accounts enabled n counts constituted a hidden bank it to hide almost anything. The ~ within B.C.C.I., known only to bank's complex organization and ~ founder Abedi and a few others. unique method of accounting­ f From those accounts, B.C.C.1. longhand in paper ledgers, written ~ would lend massive amounts to in Pakistan's Urdu language­ curry favor with governments-as make it unlikely that most of the in its 1 billion loan to Nigeria-or missing money will be traced. Nor to buy secret control of companies. is it likely that anyone will ever U.S. regulators discovered re­ know just how much Abedi, who cently that such loans had enabled has incorporated a new bank, B.C.C.I. to buy clandestine control called the Progressive Bank, in Ka­ in three American banks: First rachi, stole from the rest of the American Bankshares in Washing­ world. ton, National Bank of Georgia B.C.C.I.'s downfall was inevita­ (later purchased by First Ameri­ ble because it was essentially a can) and Independence Bank of planetary Ponzi scheme, a rip-off Encino, Calif. The latter two were technique pioneered by American Abedi, called "the Rasputin Sheik Zayed, among the bought officially by Abedi's front flimflam man Charles Ponzi in of the Middle East," started world's richest men, now man, Ghaith Pharaon, the putative 1920. B.C.C.1. gathered deposits, the bank in 1972 owns the most crooked bank Saudi tycoon who received an esti­ looted most of them, but kept mated $500 million in B.C.C.I. enough new deposits flowing in so loans in the 1970s and '80s. Those that there was always sufficient loans were secured only by shares cash on hand to pay anyone who of stock in the companies Pharaon asked for his money. During the purchased, which meant that they years of its most explosive growth were never to be repaid. in the late 1970s and mid-1980s, What Abedi got in return for B.C.C.I. became a magnet for drug such loans was de facto ownership money, capital-flight money, tax­ of three American banks, since he evading money and money from held their shares as collateral for corrupt government officials. the unrepayable loans. More im­ B.c.c.1. quickly gained a reputa­ portant, this " nominee" share­ tion as a bank that could move holder arrangement meant that money anywhere and hide it with­ B.C.C.I. itself remained invisible out a trace. It was the bank that to U.S. banking regulators. Fol­ knew how to get around foreign­ lowing its discovery earlier this exchange rules and falsify letters of year that B.C.C.I. owned both First credit in support of smuggling. As a cover for Abedi, tycoon Washington power broker American and Independence Among its alleged services: Ghaith Pharaon bought Bert Clark Clifford is now under Bank, the Federal Reserve or­ ~ In Panama, according to a little­ Lance's Georgia bank criminal investigation dered it to sell them off. known racketeering suit that the B.C.C.I.'s deposits also disap­ country brought against B.C.C.I., the bank Fernando Arevalo Reina of the Guatema­ peared through the black network, which systematically helped Noriega loot the na­ lan Attorney General's office. (Bilbeisi has used the money to pay bribes and conduct tional treasury. B.C.C.1. allowed the leader denied any wrongdoing.) its weapons and currency deals. According to open secret offshore accounts under the As B.C.C.I.'s influence grew, a corrupt to a former officer, B.C.C.I. bought virtual names of the Panamanian National Guard, core of middle management evolved, de­ control of customs officials in ports and air the Panamanian Defense Forces and the scribed by bank employees as "100 entre­ terminals around the world. In the U.S. Panamanian Treasury, to transfer national preneurs," usually branch officers in for­ millions of dollars flowed through funds into those accounts and then to tap eign countries who were free to pursue B.C.C.I.'s Washington office, allegedly the funds himself. their own agendas. One such was Amjad destined to payoff U.S. officials. ~ In Iraq, B.C.C.1. became one of the prin­ Awan, the B.C.C.I. officer who was con­ The bribes and intelligence connec­ cipal conduits for money that Saddam victed in Florida for the money-laundering tions may offer an explanation for the Hussein skimmed from national oil reve­ services he provided for Noriega. As long startling regulatory inaction. The Justice nues during the 1980s. According to inves­ as these remote managers kept on gather­ Department has hindered an investiga­ tigator Jules Kroll, who is tracking Sad­ ing deposits, they were given wide latitude tion by Massachusetts Senator John Ker­ dam's fortune, B.C.C.1. helped the dictator to do as they pleased, which increasingly ry, whose Subcommittee on Terrorism,

46 TIME, JULY 29, 1991 Narcotics and International Operations in transit to Washington while under guard Dhabi authorities, apparently hoping that was the first to probe B.c.c.l.'s illegal op­ by the Drug Enforcement Administration. B.C.C.L's current owner, Sheik Zayed bin erations. According to Kerry, the Justice After an internal investigation, the DEA Sultan al-Nahayan, would shore up the Department has refused to provide docu­ said it had no idea what had happened to bank. But more suspicious experts raise ments and has blocked a deposition by a the documents. questions about B.C.C.I.'s links to Western key witness, citing interference with its ~ Lloyd's of London, which is enmeshed in intelligence agencies. Leaders in Parlia­ own investigation of B.C.C.1. To date, a racketeering lawsuit against B.c.c.l., has ment have expressed outrage at the regula­ however, the Justice Department investi­ fruitlessly made offers to provide evidence tory failure, which among other things has gation in Washington has issued only one of bribery and kickbacks and has made "re­ endangered deposits from as many as 45 subpoena. "We have had a lot of difficulty peated pleas" to U.S. Attorneys in Miami municipalities and four utilities. getting any answers at all out of Justice," and New Orleans to seize B.C.C.I. records. As authorities sift through B.C.C.1. says Kerry. "We've been shuffled back Lloyd's accuses B.C.C.1. of taking part in subsidiaries around the world, they are try­ and forth so many times between bureaus, smuggling operations and falsifying ship­ ing to cope with potentially massive losses trying to find somebody who was account­ ping documents. The insurance underwrit­ of depositors' money. The Pakistani press able. These things are very serious. What's ers offered the results of their voluminous spoke of "panic withdrawals," and one pa­ shocking is that more energy hasn't been research into the bank's illegal activities. per added that "smugglers and drug bar­ expended. Somebody consciously or neg­ The Justice Department attorneys ignored ons" were desperately trying to rescue ligently took their eyes off the ball in this the offers, Lloyd's says. their offshore accounts. In such countries investigation." According to Jack Blum, ~ The U.S. Attorney General has assigned as Nigeria and Botswana, officials were Kerry's chief investigator in 1988-89, the only a handful of FBI agents to its Washing­ worried that central-bank deposits at lack of cooperation was so pervasive and ton grand jury investigation of B.c.c.I.'s B.C.C.I. might be lost. so successful in frustrating his efforts to relationship to First American Bank­ Still to be probed, with potentially ex­ investigate B.C.C.1. that he now says he shares. The department's main probe of plosive results, is B.C.C.l.'s Washington of­ believes it was part of a deliberate strate­ B.c.c.1. itself is being handled by a sole fice. Sources have told TIME that one of gy. Says Blum: "There's no question in my Assistant U.S. Attorney in Tampa, who has B.c.c.I.'s Washington representatives dis­ mind that it's a calculated effort inside the recently been assigned another major case. tributed millions of dollars in payoffs to Federal Government to limit the investi­ Similar understaffing is evident in a Miami U.S. officials during the past decade. If that gation. The only issue is whether it's a re­ grand jury probe of the relationship be­ is true, the banker's black book may be the sult of high-level corruption or if it's de­ tween B.C.C.L and the CenTrust savings single hottest source since Deep Throat in signed to hide illegal governmen t and loan, whose failure is estimated to cost the Watergate investigation. U.S. authori­ activities." taxpayers $2 billion. This may help account ties are searching for the Washington repre­ The Justice Department denies any re­ for the fact that a 16-month investigation sentative and other B.C.C.I. protocol offi­ luctance to investigate. Said spokesman has yielded no indictments. cers, but most have fled to Pakistan. In this Dan Eramian: "We believe there has been Just as perplexing is why the Bank of investigation, many roads lead to Karachi, good cooperation between law-enforce­ England and other authorities took so long where the infamous black network is endur­ ment [agencies] in this investigation. We're to intervene. Britain's main financial regu­ ing its most desperate hour. As it falters, the often accused of dragging our feet, and part lator waited more than a year after seeing a testimony by once fearful witnesses is likely of that we believe is partisan in nature." Yet Price Waterhouse audit that raised serious to yield a succession of startling details the evidence of a cover-up is mounting: questions about B.C.C.l.'s viability before about one of history'S most ornate and ruth­ ~ In one of the most mysterious events in seizing its 25 branches in Britain. One ex­ less frauds. -With reporting by Cathy Sooth/ the case, B.C.C.I. bank records from Pana­ planation: the Bank of England was con­ Miami, Jay Branegan/Hong Kong and Helen ma City relating to Noriega "disappeared" ducting extended negotiations with Abu Gibson/London

Scandal? What Scandal? n the West, the most outrageous aspect of the crackdown I on the Bank of Credit & Commerce International is that it was so long overdue. But most Pakistanis hold a very different view of the global banking empire founded by fellow country­ man Agha Hasan Abedi. At home he is revered as a courageous Third World entre­ preneur whose bank has been hounded by racist Western fi­ nancial interests. In Karachi last week, the English-language Daily News made the extraordinary claim that "Jewish pres­ sure" led U.S. authorities to crack down on B.C.C.L's launder­ ing of drug money. Said Rubab Khan, a Karachi business exec­ utive: "This is part of the Western plot to seize all the money and assets of the Arabs and drive out the Pakistani bankers Pakistanis say the bank is the victim of anti-Muslim prejudice from international banking." Sinister theories also echoed in the Persian Gulf last week. Hussein. A senior executive with one of Bahrain's largest com­ At the Bahrain Marina Club, a Saudi computer operator ex­ panies notes that the powers closing in on B.C.C.L are "the plained, "It seems to many of us in the Muslim world that the same people who were involved in the coalition during the gulf bank is being attacked, at least in part, because of its Muslim war, mainly America, Britain and France." Many gulf resi­ ideals." Ideals? That view of B.C.C.L's criminal management dents believe, he says, that the Western coalition members are may seem strange enough, but Muslims harbor even more "not satisfied with now controlling the Middle East militarily. elaborate conspiracy theories, linking B.C.C.l.'s problems Through this action against B.C.C.I., the coalition is also seek­ with those of another onetime Muslim success story, Saddam ing to control us financially and economically." _

TIME, JULY 29, 1991 47