Bank of Credit and Commerce International

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The Bank of Credit and Commerce International was at one time the 7th largest bank in the world. It came under investigation in numerous countries worldwide in the mid 1980s for money laundering for narcotics and weapons sellers. Time magazine wrote, "Superlatives are quickly exhausted: it is the largest corporate criminal enterprise ever" and ran a cover story labeling it the World's Sleaziest Bank.[1]

In 1972 Pakistani banks were nationalized by President Zulfikar Ali Bhutto. One of these banks was United Bank, whose president was Agha Hasan Abedi. Abedi subsequently joined with Sheik Zayad, ruler of Abu Dhabi and patron of the PLO, to found BCCI. To prevent nationalization, BCCI was chartered in Luxembourg. In 1975 it split into two entities, one remaining in Luxembourg and the other established in the Cayman Islands. The Cayman Islands part became a "bank within a bank." While the legal registration was in Luxembourg and the Cayman Islands, the actual operational headquarters was moved to London.

BCCI takeover of 2 US banks

In 1977 BCCI became interested in Financial General, a Washington D.C. bank with headquarters a block from the White House. The bank was owned by an investor group led by William Middendorf II, who was Secretary of the Navy under Nixon and Ford. One member of the investor group was Jackson Stephens. Stephens then sent salesmen from his Little Rock firm Systematics to talk to Middendorf about providing banking software for Financial General, but they were firmly rejected. Stephens decided to wrest control of the bank from Middendorf.

Jackson Stephens is a billionaire from Little Rock who owns the controlling interest in Worthen National Bank as well as in Stephens Inc., one of the largest privately owned investment banks outside Wall Street. In November 1977, he introduced BCCI founder Agha Hasan Abedi. to Bert Lance, President Carter's Director of the Office of Management and Budget, whom Stephens had met through Jimmy Carter, his old roommate from the US Naval Academy. Lance also knew the people at Financial General, for it was Financial General that had sold to Lance controlling interest in the National Bank of Georgia in 1975.

Abedi in turn introduced Lance to Stanford and Harvard educated Ghaith Pharaon. Pharaon proceeded to acquire the stock of Bert Lance's National Bank of Georgia, a deal consummated on January 5, 1978, a day after Lance's $3.4 million loan from the First National Bank of Chicago was repaid by BCCI London. Pharaon was apparently acting on behalf of Abedi in the acquisition, at least in part.

By then Lance had left the Carter administration, and he and Jackson Stephens joined together to help BCCI in a hostile takeover of Financial General. Financial General filed a lawsuit on February 17 and named "Bert Lance, Bank of Credit & Commerce International, Agha Hasan Abedi, Eugene J. Metzger, Jackson Stephens, Stephens Inc., Systematics Inc. and John Does numbers 1 through 25." Systematics was represented by C.J. Giroir, Webster Hubbell, and Hillary Rodham Clinton of the Rose Law Firm of Little Rock:

"The suit was ultimately settled, but intriguingly, briefs for Systematics, a Stephens property, were submitted by a trio of lawyers including C.J. Giroir and Webster L. Hubbell and signed by Hillary Rodham"[2]

Edwin McAmis, an attorney for Financial General, deposed Lance in connection with the stockholder civil suit, and turned up a mysterious loan:

"The loan could have been for as much as $3.4 million . . . and came from London's Bank of Credit & Commerce International, on whose behalf Lance had approached Financial General with a bid for control. . . . Lance said he used it last January to pay off his celebrated $3.4 million loan from the First National Bank of Chicago . . . The latest loan, he said was arranged by Agha Hassan Abedi, an energetic Pakistani who heads B.C.C.I.

"Collateral? None.

"Documents? Well, no, though Lance's lawyer, Robert Altman, says some are being drawn up now."[3]

Bert Lance had approached Financial General on behalf of BCCI London with a bid for control of the bank. Lance was also was responsible for introducing BCCI founder Abedi to Jimmy Carter, and for bringing Clark Clifford in on the take-over attempt. Ghaith Pharaon was another investor in the deal.

Also involved in the successful BCCI takeover were Clark Clifford (lawyer for BCCI), Robert A. Altman (attorney for Bert Lance and Clifford's partner), and Kamal Adham. Kamal Adham was the former head of Saudi Arabian intelligence who was King Faisal's most trusted advisor, and whose half-sister was King Faisal's favorite wife. Kamal Adham and Ghaith Pharaon had built the Hyatt hotel in Riyadh, and Adham had originally introduced Pharaon to Abedi. Adham and Pharaon along with other partners owned KIFCO, the Kuwaiti International Finance Company.[4]

In a lawsuit filed March 18, 1978, the Securities and Exchange Commission charged Lance with violations of federal securities' law, and BCCI's application to purchase Financial General Bankshares was denied. Abedi then formed a new takeover vehicle, Credit and Commerce American Holdings (CCAH), based in the Netherlands Antilles. The largest investor in CCAH was Kamal Adham, who put up $13 million of his own money On October 19, 1978, CCAH filed for approval with the Federal Reserve to purchase Financial General. This application was dismissed on February 16, 1979, due to opposition from Financial General's Maryland subsidiary, but a new application was submitted later.

The Federal Reserve finally approved the purchase in on April 19, 1982, and BCCI renamed the bank "First American" three months later. Clark Clifford was made chairman and Robert Altman president. The head of Bank Supervision at the Federal Reserve when BCCI's purchase was approved was Jack Ryan, who later became head of the Resolution Trust Corporation, in which role he denied Rep. Jim Leach's requests, Chairman of the House Banking Committee, for documents related to Jim McDougal's Madison Guaranty Savings in the Whitewater investigation.

Agha Hasan Abedi

Agha Hasan Abedi used his connections to Jimmy Carter to publicize BCCI to heads of state around the world. Abedi made his personal 727 jet available to Carter, and accompanied the former President to Thailand, Tibet, Hong Kong, and the Soviet Union, among other places. Carter introduced Abedi to many heads of state and government from Den Xiaoping in China to James Callahan in the United Kingdom. Abedi donated a half million dollars to establish the Carter Presidential Library, and a public policy institute at Emory University.

Pakistani nuclear bomb

BCCI founder Abedi was committed to the development of an Islamic atomic bomb, even donating 500 million rupees for the creation of Pakistan's Gulam Ishaq Research Institute for nuclear development.

BCCI paid the lawyer for Dr. Abdul Qader Khan, head of Pakistan's nuclear program, who a Dutch court convicted in 1983 of stealing the blueprints for a uranium enrichment factory. Three Pakistanis indicted in Houston in 1984 had tried to buy nuclear triggers using BCCI gold. A Pakistani-born Canadian, indicted in Philadelphia in 1987 for conspiracy to export restricted specialty steel and metal to enhance nuclear explosions, paid for the materials through BCCI Toronto. Two Americans together with Hong Kong businessman were indicted by the U.S. Attorney in Sacramento, California, on charges of illegal importations of $1 billion worth of oscilloscopes and computer equipment for Pakistan's nuclear program. BCCI facilitated some of the shipments.[5]

But while BCCI founder Abedi had intended BCCI to finance the development of a Pakistani nuclear bomb, this effort was compromised at the start by the presence of Kamal Adham, who through Credit and Commerce American Holdings (CCAH) was the controlling power behind First American. Adham was both a CIA and a Mossad asset. Adham attended CIA training school with the head of the Mossad.

"Kamal Adham, who was the CIA's principal liason for the entire Middle East from the mid-1960's through 1979, was the lead frontman for BCCI in its takeover of First American, was an important nominee shareholder in BCCI, and remains one of the key players in the entire BCCI affair."[6]

Noriega and the Afghan rebels

BCCI became an important conduit for CIA intelligence and the NSA. When Norman Bailey at the National Security Council urged NSA to "follow the money" as part of the "wars" on terrorism and drugs, the NSA had BCCI as an obvious banking target. The CIA was there also to assist in the monitoring of BCCI related money flows of other intelligence and criminal enterprises. BCCI had become a giant laundry machine, and the CIA made use of BCCI for their own covert money transfers.

The CIA used BCCI branches in Pakistan to launder payments to the Afghan Mujahideen, and Pakistani officials used the same bank to launder heroin profits. The finance minister of Pakistan confirmed that the bank laundered CIA contributions to the Afghan rebels, but claims it was "not even handling 1 percent of total drug money."[7]

Another example involves Manuel Noriega. Noriega had earlier gotten into trouble with the US State Department because of his drug dealing. But this changed when his support was needed in the negotiations for a new Panama Canal Treaty. US intelligence continued to use Panama as the listening post to much of South America.

American branch

Former adviser to four Democratic presidents, Clark Clifford, headed up the American branch.

The bank was called First American Bankshares and became the largest in Washington DC. Robert Morgenthau, the district attorney in New York City, disclosed that his office had found evidence that the parent company of Clifford's bank was secretly controlled by BCCI. The district attorney convened a grand jury to determine whether Clifford and his partner, Robert A. Altman, had deliberately misled federal regulators when the two men assured them that BCCI would have no control.[8]

Bert Lance and Clark Clifford

Both First American National Bank and Georgia National Bank, owned by Bert Lance, were purchased by BCCI front man and Stephens business associate Gaith Pharon. Stephens' family bank, the Worthern National Bank (later renamed Boatman's National Bank of Arkansas),[9] extended a two million dollar loan to the 1992 Clinton presidential campaign.

Stephens was named in the court records as having brought Pharon together with Stephens' close friend Bert Lance. Lance was a former OMB nominee under President Jimmy Carter who was denied confirmation due to a banking scandal.

BCCI founder Agha Hasan Abedi was introduced to Bert Lance by Stephens. Lance asked Clifford to perform due diligence on BCCI.[10] Stephens, Lance, and First American Bank director and longtime Democratic party power broker Clark Clifford all maintained that they did not know the group of Pakinstani and Saudi investors headed by Pharon, which they were dealing with, were actually fronting for BCCI.[11]

Clifford, who was 82 at the time and a figurehead who lent his name to give it an air of legitimacy, predicament worsened when it was disclosed he had made about $6 million in profits from bank stock that he bought with an unsecured loan from BCCI. A New York grand jury handed up indictments, as did the Justice Department. Clifford's assets in New York, where he kept most of his investments, were frozen.

The "Report to the Committee on Foreign Relations United States Senate" led by Senators John Kerry and Hank Brown noted that a key strategy of "BCCI's successful secret acquisitions of U.S. banks in the face of regulatory suspicion was its aggressive use of a series of prominent Americans," Clifford among them.[12] Clifford, who prided himself on decades of meticulously ethical civic conduct, summed his predicament up when he told a reporter from the New York Times, "I have a choice of either seeming stupid or venal." Indictments against Clifford had been set aside because of his failing health.

Stephens Inc and the Riadys'

Jackson Stephens, a billionaire banker in Little Rock, Arkansas, and one of presidential candidate Bill Clinton's main supporters, played a key role in setting up the illegal purchase of the American branch of the BCCI of two American banks.

In 1977 an investor group that included Jackson Stephens took over First American Bank in Washington, D.C. This bank was headquartered near the White House, and had many government employees as account holders—the perfect vehicle for gathering political intelligence. To take advantage of this fact, Jackson Stephens proposed that his software firm Systematics handle all the accounting for the bank. But the investor group refused to go along.

So Stephens, with the help of Bert Lance and others, brought in BCCI to wrest control of the bank from that group, and to put it into the hands of friendlier partners. By 1978 there were lawsuits, and Stephens' software firm Systematics was represented by Joseph Giroir, Hillary Rodham Clinton, and Vince Foster of the Rose Law Firm in 1978.

The software firm Systematics was to become the nation's biggest supplier of back-office banking software, and would eventually work closely with the National Security Agency to facilitate intelligence monitoring of banking transactions. Vince Foster would be assigned by Stephens to an oversight role on this project.

Lippo Group and ADFA

Jackson Stephens, meanwhile, proposed, developed, and financed a plant for hazardous waste facilities, called Waste Technology Inc, beginning in 1979. This project became a bottomless pit as a money loser, so at one point, the financially-strapped Stephens made a deal with Indonesian Mochtar Riady of the Lippo Group to set up a money-laundering operation in Arkansas. Stephens and Riady had previously formed Stephens Finance Ltd. in Hong Kong in 1976.

Stephens bought 9.3 percent of Worthen bank while Lippo purchased 9.4 percent. Lippo paid about $16 million for its share, and installed James Riady as a bank director in 1984. Stephens-Lippo continued to increase their share of Worthen stock, up to 36.7 percent.

This union came about just as the Mena, Arkansas, drug-and-arms trade was creating a vast local demand for money-laundering services. At the Asian end, with Mochtar Riady, Stephens purchased Seng Heng Bank in Macao, the "Oriental Las Vegas", where gambling is the primary source of government revenue. Stephens' Systematics supplied software to the Banco Nacional Ultramarino, the cashier and treasury bank of the Macao government and the bank that issues the local currency. Macao is located less than 40 miles from Hong Kong, the center for heroin trade.

Stephens' principal motive in bringing BCCI to America was to connect up his own financial institutions to a global system of money laundering—not only First American Bank, but those in Little Rock also. To avoid the type of SEC scrutiny involved in the Financial General takeover, Webster Hubbell was employed to draw up the charter for the Arkansas Development Finance Authority (ADFA). The structure for the laundry was then in place.

Money laundering for Mena

Main article : Mena airport

One form of Stephens' laundry worked through front companies set up by bond broker Dan Lasater. These companies would deposit cash in banks such as Stephens' Worthen Bank, which would not fill out reporting forms. In return for this service, the companies would be obligated to buy bonds issued by the ADFA, and underwritten by Stephens' investment bank Stephens Inc. Stephens would thus be compensated for the laundering service in the form of an investment banking fee.

The money from the bond issue, meanwhile, would go back to the same front companies. That is, in effect the companies bought their own bonds and paid Stephens a fee for the service.

The participation of the ADFA, a state government institution, eliminated SEC scrutiny. ADFA formally issued and "guaranteed" the bonds, and thus collected a fee in the process. Some of these fees were translated into "loans" to the political friends of Governor of Arkansas, William Jefferson Clinton, now President of the United States.

At other times ADFA was itself the core of the laundry. At the end of December 1988, for example, the ADFA deposited $50 million in Fuji Bank in the Cayman Islands. Fuji Bank subsequently purchased the industrial development loan of POM, Inc., a parking meter and arms production company owned by Seth Ward, Webster Hubbell's father-in-law. Hubbell was also POM's corporate attorney.

Harken Energy

Stephens and his Worthen National Bank invested in Harken Energy, a Texas company in which George W Bush was a board member. "The money Stephens invested came through the Swiss BCCI subsidiary."[13]

Systematics, Hillary Clinton and Vince Foster

Jackson Stephens was the American front man for BCCI. When Stephens group tried to take over Washington Bank Holding Co., the SEC blocked them at the time, partly because they were insisting that Systematics be brought in to do data processing for this multistate bank holding company in Washington DC. Hillary Clinton represented Systematics in that action.[14] Systematics for many years had been laundering covert funds for the CIA and the intelligence community - legally at the time, as well.

In the early takeover maneuvers Financial General Bankshares, First American's predecessor company, brought a 1978 lawsuit naming 'Bert Lance, Bank of Credit & Commerce International, Agha Hasan Abedhi, Eugene J. Metzger, Jackson Stephens, Stephens Inc., Systematics Inc. and John Does numbers 1 through 25.' The suit was ultimately settled, but intriguingly, briefs for Systematics, a Stephens property, were submitted by a trio of lawyers including C.J. Giroir and Webster L. Hubbell and signed by Hillary Rodham.[15]

Hillary Clinton was the intellectual property lawyer for Systematics.[16] Part of this "intellectual property" would involve a banking transaction software system based on the stolen PROMIS software. A federal bancruptcy court had ruled in 1987 that the US Justice Dept. 'stole' the PROMIS software from small company called Inslaw Inc when the DOJ refused to pay Inslaw for it. US intelligence took the PROMIS software and added a hiden "backdoor" for monitoring banking transactions and money laundering. Systematics was the marketing firm the National Security Agency (NSA) was using to get the PROMIS software with the hidden backdoor into the hands of banks worldwide. The intellectual property that Hillary handled and that Systematics was marketing had been stolen from Inslaw.

Systematics was founded in 1968 by University of Arkansas graduate Walter Smiley, who learned of the high software costs and other difficulties faced by small banks in trying to use data processing software from his experiences working with IBM and in the banking industry. Smiley recognized a niche that could be filled for medium-sized banks in this space, and sought funding to start his own company.[17] Through Jon Jacoby, Smiley was introduced to the Stephens family, who agreed to invest $400,000 in Walter and Systematics in return for 80% equity stake.[18] Jon Jacoby is the father of Mary Jacoby, wife of Glenn Simpson,[19] the founder and owner of FusionGPS.

Hillary obtained access to important materials from Systematics clients, such as the operating system for a new national security computer at E-Systems of Dallas, Texas.

Vince Foster had a professional reputation for integrity. In the early 1980s Foster started cooperating with Israeli intelligence. But Foster began playing a dangerous game in the mid 1980s when he became the link between Systematics and the NSA,[20] the main US government agency that was looking for fronts to market the stolen Inslaw software. Foster had a Swiss bank account and was making one-day trips to Switzerland every six to eight months.[21] Foster was the bagman for the Arkansas political machine. When he was serving in the White House, on July 1, 1993, Foster purchased a round-trip ticket to Switzerland. This prompted surveillance by CIA counterintelligence, NSA, FBI, and a four-person IRS team, putting a tremendous amount of psychological pressure on him. Foster became alarmed that he was under investigation when he phoned ahead of time and discovered the Swiss bank account had been drained of the $2.73 million deposited there. The account had been drained by ex-CIA hackers who placed the funds in an escrow account for the CIA.[22][23] Foster hired James Hamilton, a high-powered Washington lawyer specializing in white-collar crime who handles cases before Congressional committees.

A weekend meeting was held with Webster Hubbell and both their wives at the estate of Michael Cardoza who later headed the Clinton Legal Defense fund. George Stephanopoulos is also said to be at this meeting.[24] $286,000 was deposited into the account of Vince's wife, Lisa Foster, shortly before the meeting. The money was paid evidently as hush money, and for legal fees. The hope apparently was that Foster would not break under stress and name names of others in the Clinton administration.[25]

Systematics also came to be represented by Beryl Anthony, a partner at the Washington law office of Winston and Strawn, former treasurer of the Democratic National Committee, former chairman of the Democratic Congressional Campaign Committee, and husband of Vince Foster's sister Sheila Foster Anthony. It was Sheila Anthony who, while Assistant Attorney General for Legislative Affairs at the Justice Department, effected a $286,000 transfer to Lisa Foster from a Democratic National Committee account held at Mellon Bank, just four days before Vince Foster met his death. Upon Foster's death, Hillary Clinton directed the removal of files from Foster's office.

Inslaw Inc and the PROMIS software

Part of the "intellectual property" Hillary Clinton handled involved a banking transaction software system based on the stolen PROMIS software. The US Justice Department contracted with a small firm, Inslaw Inc, to develop the sophisticated software then refused to lay for it. In lengthy court battles spanning nearly two decades the courts ruled the United Ststes government had 'stolen' the software and sold pirated copies to banks, intelligence agencies, and others worldwide.

A telecommunications "backdoor" for intelligence eavesdroppers to the PROMIS software was designed by Michael Riconosciuto of Wackenhut, an NSA subcontractor. Riconosciuto gave an affidavit in support of Inslaw claim against the government, saying the copy of the PROMIS software he received was given to Wackenhut by US Justice Department official Peter Videnieks. Earl Brian, acting through Wackenhut, then gave it to Riconosciuto.

Disposition

The American banking assets including First American Bank were sold to First Union Bank. On September 1, 2001, First Union merged with Wachovia, and later Wachovia merged with Wells Fargo.[26] Wells Fargo had its own banking scandal in 2016.

See also

References

  1. http://content.time.com/time/covers/0,16641,19910729,00.html
  2. Who is Jack Ryan? The Wall Street Journal , August 1, 1994
  3. Another 'Loan' for Lance, Time magazine, April 3, 1978
  4. James Ring Adams & Douglas Frantz, A Full Service Bank: How BCCI Stole Billions Around the World, Pocket Books, 1992, p. 52
  5. Rachel Ehrenfeld, Evil Money, Harper Collins, 1992
  6. Senator John Kerry and Senator Hank Brown, The BCCI Affair: a Report to the Committee on Foreign Relations, United States Senate, December 1992
  7. Financial Times, July 25, 1991
  8. Summary of Charges, US Board of Governors of the Federal Reserve, No. 91-043, July 29, 1992, pp. 1-11.
  9. http://www.ffiec.gov/nicpubweb/nicweb/InstitutionHistory.aspx?parID_RSSD=883249&parDT_END=99991231
  10. BCCI IN THE UNITED STATES, 1992."According to [Bert] Lance, he then turned to Clark Clifford, who had represented him in Congressional hearings into Lance's activities in Georgia, and asked Clifford to do due diligence on BCCI. When Clifford called Lance back to tell Lance that Abedi was "a man of integrity and character," Lance agreed to meet with Abedi and Naqvi in London, and there became BCCI's agent for its forays into the U.S.(15) Thus, by Lance's account, Clifford first had contact with BCCI on behalf of Lance in October, 1977."
  11. http://fas.org/irp/congress/1992_rpt/bcci/06early.htm
  12. The BCCI Affair, A Report to the Committee on Foreign Relations, 102d Congress 2d Session Senate, December 1992.
  13. Rachel Ehrenfeld, Evil Money
  14. Hillary Clinton and Web Hubbell represented Systematics during the BCCI takeover of First American, by Orlin Grabbe
  15. Who is Jack Ryan? Wall Street Journal, August 1, 1994
  16. According to The American Lawyer, July 1992: "[Hillary] Clinton also was attracted to intellectual property litigation. 'We did not have any intellectual property expertise when she joined us,' says [Vince] Foster, who adds that Clinton got involved in this area through her work for the firm client, Systematics Inc., a company based in Little Rock that provided computer systems for financial institutions. 'She became sort of self-taught in all of this,' explains Foster. 'And you don't find a lot of intellectual property subspecialists in Arkansas. Quite frankly, the rest of us here thought of it as a foreign language.'"
  17. http://walton.uark.edu/abhf/walter-v-smiley.php
  18. http://www.stephensgroup.com/our-portfolio-partners/case-studies
  19. http://library.fora.tv/speaker/6818/Glenn_Simpson
  20. Allegations Regarding Vince Foster, the NSA, and Banking Transactions Spying, by Orlin Grabbe
  21. An FBI interview report by agent Russell Bransford and a handwritten note from the Office of Independent Counsel found at the National Archives refer to Vincent Foster's Swiss bank account. FBI Agent Bransford interview report April 21, 1994 and Independent Counsel notes November 13, 1995. The account was at the Banca Della Svizzera Italiana in Chiasso, Switzerland.
  22. Jim Quinn interview with James Norman, WRRK Radio Pittsburgh, December 7, 1995.
    Editor's note: James Norman of Media Bypass Magazine published Fostergate, an article detailing the background and circumstances of Vince Foster's death. Norman, formally a Senior Editor of Forbes magazine, was terminated due to Fostergate's controversial and national security concerns regarding Foster being investigated for espionage, and Foster's link to a foreign intelligence organization. Fostergate originally had been written for Forbes magazine.
  23. Fostergate, Media ByPass, October, 1995
  24. Letter from James R. Norman, Senior Editor at Forbes Magazine to Michael D. McCurry, Press Secretary at the White House, April 17, 1995
  25. Jim Quinn interview with James Norman, December 7, 1995
  26. First Union is Now Wells Fargo. Retrieved on October 23, 2016.