Monday, September 6, 2010

Covert Finances: BCCI

BCCI, the Bank of Commerce and Credit International, was founded in the late seventies It facilitated the activities of world intelligence agencies, the C.I.A., and unsavory elements. We know tht Richard Helms of the C.I.A. supported its founding, and one person close to its leaders, said, "What I have been told this is that it wasn't a Pakistani bank at all. The guys behind the bank weren't Pakistani at all. The whole thing was a front." On the other hand Bob Crowley, a long-time C.I.A. covert ops leader, said that the Pakistani intelligence service (ISI) had an important part in what he thought was essentially a massive ponzi scheme. He added that F. Lee Bailey fronted for it and tghat “God knows how many thoroughly rotten Congressmen” backed it. In the end, elder statesman Clark Clifford was paid to front for it and unwittingly take a fall.

In the beginning, 1972, the little bank was a front for British intelligence in Muslim lands, and later its role was vastly expanded. Joseph Trentino has written that BCCI emerged after members of the Safari Club, compised of various intelligence agencies, decided they needed their own bank .

BCCI was operated by reliable C.I.A. associates from Saudi Arabia and Central Asia, many of them Pakistanis, and it became the bank of choice for the agency. It had many layers and overalapping parts and seemed to be structured so its functions could not be monitored or regulated by governments. It relied heavily upon shell corporations and subsidiaries in lands where there were strong bank confidentiality laws. It bribedofficials in at least 71 countries. BCCI grew from a small Pakistani bank to the largest secret money network on earth. George H.W. Bush established an account there while still DCI and French police later found it when they raided BCCI. The bank was used by the mafia, all sorts of dictators, war lords, terrorists, skamsters, and criminals around the world. On June 4, 1992, The Houston Chronicle reported that Khalid bin Mahfouz , Osama bin Laden’s brother-n-law owned a large chunk of BCCI stock. He has numerous dealings with George W. Bush’s friend, James Bath. Thomas Kean, chairman of the 9/11 Commission was also a bin Mahfouz business partner. Prince Turki bin Faisal al-Saud, former head of Saudi intelligence, was another important investor. Jack Blum , a former Senate investigator, said, “This whole collection of people were wrapped up in the Bush crowd in Texas.”

It was involved in the arms and drugs trades, blackmailing politicians, and financing terrorism. It was closely tied the Pakistan’s intelligence agency, ISI, and played a central role in the drug trade. It was also the main conduit for financing the resistance to the Soviet occupation of Afghanistan. The Chinese Communists assisted the C.I.A., through BCCI, in helping the mujahedeen against the Soviets. BCCI also sent money to officers of international banks and banking regulatory agencies to further financial schemes; all of those, some say, prefigured the financial crisis of 2008.

In 1977 it began to infiltrate the U.S. banking system through the covert acquisition of banks. Agha Hasan Abedi, BCCI founder, arranged for some of his clients to purchase First American Bankshares, which had probably been a C.I.A. bank for decides. There were three other BCCI banks in the U.S. Jackson Stephens, then chair of Worthen Bank in Arkansas, played an important role bringing the bank to the US when he helped BCCI purchase First American. Doubtless, a good deal of drug money was laundered there. Eventually the ruling house of Abu Dhabi would own a substantial chunk of the bank.

A case can be made that Charles Keating had ties to the C.I.A., and a much stronger case can be made that the agency looted some S and Ls in the late 1980s and routed the proceeds through BCCI.
Some might remember that in 1990, Baltimore financier Robert Maxwell brought suite to obtain Bank of Maryland records. He claimed that his relationship with the bank was ended because he objected to the C.I.A.’s using the bank to issue illegal letters of credit to cover a covert operation. Two years later, the court ordered those records sealed. The case is interesting becaue it raises the question of whether the C.I.A. is essentially exempt from banking regulations.

BCCI operated through many layers of subsidiary entities and became the central bank for some countries and repaying leaders of those countries with bribes Pakistanis and Saudi seemed to be running it, but it is unknown who owned and controlled it. In some ways it was a giant Ponzi scheme, and its financial statements were less than transparent and honest. By the early eighties it owned banks in the US and around the world. Mohammed Hammond, who ran the Luxembourg branch also moved money for Hezballah. Manuel Noriega was instructed to route his money laundering through it, and it soon became his favorite bank’ s favorite bank. It operated at so many levels and through so many fronts that it was almost impossible to follow how it moved money. When Noriega was arrested, the US government was only able to trace the movement of $20 million of his money through BCCI’s labyrinths. BCCI was used to pay people on the C.I.A. payroll in Britain and it was used fund the insurgency against the Russian occupation of Afghanistan.

BCCI was used by the C.I.A., Mossad, and many intelligence agencies as well as organized crime. It was a key conduit for funding the right wing militias in Central America. The full extent of C.I.A. involvement in the farious frauds perpetrated by the BCCI will never be known. At the least, it must have had knowledge of of these schemes and who was being bribed . Such information would have been invaluable.

A Senate committee eventually described it as “the largest criminal enterprise in history.” When reports of its wrong-doing surfaced, George W. Bush had Robert Mueller of the Justice Department investigate. Witnesses and files disappeared and lower level prosecutors complained of high level pressure to “lay off” Khalid bin Mahfouz, Osama bin Laden’s brother -in-law and likely bag man escaped the net as did almost all key figures. He was later proven to be financing Al Quaeda. Today he sits on the Carlyle Group’s board along with George H.W. Bush. Two minor figures did get jail time for helping BCCI sell $1 billion worth of oscilloscopes and computer equipment to help Pakistan’s nuclear weapons. Orin Senator Orin Hatch led the effort to salvage BCCI’s reputation. He had business dealings with two men in Houston connected to BCCI. One of them, Mohammed Hammond, died mysteriously in 1990 .

BCCI bribed politicians in many countries, and among them were members of both parties in the United States. When BCCI collapsed, the Bank of England seized many of its Chicago records, and it is believed that many bribes passed through that city. A list of politicians on the take surfaced in 1991, the same year that the Bank of England took over many of its accounts. The Federal Reserve and Four Media organizations had copies of the list. But little was done with it. Until 1988, when the Chicago branch closed, bribes came to it through the Banca Nazionale del Lavore. Its Atlanta branch also loaned Saddam Huesein $5 billion. A great deal of money was laundered through the Chicago Mercantile Exchange, and commodities exchanges through the Board of Trade were used channel money to politicians. A cicero bank with links to the Vatican was also tied into some transactions. Sometimes, the politicians just received speakers fees at the exchanges, which were huge but perfectly legal. In “Operation Sour Mash,” the F.B.I. probed these operations and two members of the Chicago Board of Trade went to prison. Judge Marvin Aspen said the feds had only uncovered the “ tip of the iceberg," but little more was accomplished. It was discovered that a financial services outfit named Capcon was a BCCI front for moving money in the Chicago exchanges. Sherman Skolnick, a Chicago investigator, dug up information that George H.W. Bush was a business partner of Manuel Noriega and that they worked through the Continental Bank of Chicago. The BCCI operatives who were caught in Tampa in 1989 claimed to know about the Bush-Noriega tie and managed to get very light sentences.

Probably as part of an effort to cover its own tracks, the C.I.A. , in 1984, sent a report to many branches of government outlining BCCI’s involvement in moving drug money. Of course, it did not implicate itself. No one in power, other than John Kerry, sought to expose BCCI for 6 more years.
Days before the “surprise” arrest of five top BCCI official , some major international drug dealers withdrew their money. There was never a thorough investigation. The firms’ top lawyers became the sacrificial victims, eventually losing large amounts of stock in a bank BCCI had illegally acquired. Investigators thought top Reagan administrationofficials had warned the drug merchants. In 1991, the federal attorney in Miami was blocked by the Bush administration when he attempted to indict some BCCIofficials for tax faud. The Manhattan DA, who shut down BBI’s American branch, claimed that 16 BCCI rankingofficials died during the investigation.

When the bank’s drug money laundering operation became public knowledge, the George H.W. Bush administration prevented a thorough investigation. . The Manhattan DA, who shut down BBI’s American branch, claimed that 16 BCCI rankingofficials died during the investigation. In 1991, Attorney General William Barr refused to conduct an investigation. He and his predecessor had practically admitted that higher powers in the Bush administration had ruled out a probe. Brent Scowcroft and Lawrence Eagleburger , when working for Kissinger Associates, were BCCI consultants. They later accepted high positions in the George H.W. Bush administration. On July 5, 1991, the Bank of England formally shut down BCCI’s operations.

Eleven billion in assets simply disappeared and little was done for innocent depositors other than honor federal insurance on accounts. Asian workers in the United Kingdom and Gulf States lost a great deal and never knew what hit them. It is said that the terrorist Abu Nidal also lost money. It is hard to believe that BCCI could have operated without the protection and sponsorship of people in high places. Yet, Robert Bueller, then head of the F.B.I.’s criminal division, found that to be the case. Christopher Drogoul, manager of BNL in Atlanta, was blamed for the loss of almost half of that money. His defense was that he was told by the US government to funnel money to Saddam Hussein to finance the war against Iran. A federal judge agreed that he and his co-defendants were "pawns and bit players" in a larger drama, but the Clinton Justice Department pursued his case and he accepted a plea bargain. The Clinton administration did not look further into the BCCI scandal. In 1992, George H. W. Bush pardoned a number of people who had been convicted in connection with BCCI.

The Federal Reserve’s records manager said that a large part of the FED’s records on the BCCI disappeared in 1988 sometime after the Kerry Committee was told that Manuel Noriega’s drug money was laundered through that bank.

In the seventies, drugs came through Columbian outlets, and this trade was controlled by the proprietary known as Zenith Corporation, which was located on the grounds of the University of Miami. By the 1980s, the Panama branch of BCCI was actively seeking drug money deposits on the orders of corporation’s vice president, Alaudin Shaik It was a major handler of the contras’ drug money. BCCI, a bank that catered to the international intelligence community, drug dealers, arms merchants, and others was established at the suggestion of Jackson Stephens, head of the Arkansas Financial Group that bears his name. He contributed $100,000 to George H.W. Bush in 1980 and a like amount to the son in 1990. He played a major role in getting Swiss and Saudi investments for George W. .Bush’s Harken Oil and also helped line up for Harkin an oil deal with Bahrain. BCCI had multiple close ties to Beorge W. Bush’s Harkin Oil. According to the Wall Street Journal, “The number of BCCI-connected people who had dealings with Harken —- all since George W. Bush came on board -- raises the question of whether they mask an effort to cozy up to a presidential son."

In the 1980s, an unbelievable amount of C.I.A. money was routed out of HUD to the C.I.A.. How much of this was intentional and how much was simply stolen is difficult to determine. In 1989, Catherine Austin Fitts was assistant secretary of HUD and discovered that vast amounts were missing. Eventually it was learned that $59.6 billion was lost. Under the Clinton Administration, she was given a contract to contiune reforming HUD finances, and she did a remarkable job. Then a rival contractor accused her of stealing $3.8 million. She and her firm were subjected to 18 audits before she was cleared. Today she remains a crusader for honesty in government.

A number of investigators believe BCCI was also used to handle the profits of Saddam Hussein and George H. W. Bush in whatever racket they operated on middle eastern oil in the 1980s. Saddam also had a steak in the Carlyle Group. He was also a major stockholder in Daimler-Chrysler. He was also a major stock holder in Hachette, a foreign firm that was financing George magazine. He also owned part of the firm that produced and operated people moving systems for airports. Perhaps his most valuable assets were records on the financial activities of the Bush family, and just before the second US Iraq War, someone in his family in Switzerland released 300 Bush wire transfer records to some 25 foreign accounts.

Skolnick, using records of Banca Nazionale del Lavoro --, owned in part by the Vatican with a branch in Chicago, claims that Daddy Bush and Saddam were business partners in a number of areas, including the Middle East protection racket. Eventually, the partnership was dissolved in a Chicago case that was sealed by the court. Apparently Saddam defaulted on some loans. The two men seem to have been skimming off the oil profits that resulted from Reagan-Bush policies. Skolnick, thinks they were running an oil protection racket, which seems a little crude. The House Banking Committee, under Henry Gonzales, sought these records but to no avail.

In addition to BNL, Saddam and Bush used BCCI. Some of the sealed records were said to be the relevant Chicago branch records of both banks. Investigators claim that Bush’s share from this oil scheme and his private selling of weapons to Iraq in the 1980s went into Pennzoil, in which he has a major share. It is well-known that Ross Perot financed a massive investigation of the Bush family and some think these activities were at its center. This writer has a different theory that he cannot prove.

People of the State of Illinois ex rel Willis C. Harris, Bank Commissioner vs. the Board of Governors of the Federal Reserve System and the House Banking Committee, No. 90 C 6863, in the U.S. District Court, was the case involving the financial relationshiop between Saddam, Bush, and an Italian Bank. It was finally resolved in the 7th Circuit by a panel dominated by Chief Judge Richard Posner, a well-know right wing judge . The case was sealed and Posner issued an order barring Skolnich and his aids from federal court houses. 1990 or 1991) That led to the dissolution of the partnertship is not known. Tom Flocco notes that the F.B.I. raided the Atlanta branch of Banco Lavoro Nazionale on August 4, 1989 and that it found that the bank had loaned Saddam Hussein $4 billion. This seems to have dried up Saddam’s credit and it may have forced him to do something with partnership funds that angered Bush.

French intelligence claimed that Osama bin Laden later rebuilt the BCCI money laundering network so it could be used to launder drug money and finance Al Qaeda and the Taliban in Afghanistan. According to a “confidential ‘France only’” report of the Direction Generale de la Securitie Exterieure, the C.I.A. and MI-6 had control of Al Qaeda’s main training facility in Afghanistan as late as 1995.

The story of BCCI insolvency and scandal broke in July, 1991 when the Justice Department finally opened a half-hearted investigation of the failing institution that had lost at least $ 7 billion in deposits. The bank operated in the United States partly by illegally controlling North American Bank, whose officers claimed to know who owned their bank.

A February 23, 1992 NBC newscast described Bill Casey’s close ties to BCCI. He frequently met with BCCI head Abedi every few months at the Madison Hotel.

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