HOW DID SO MANY GET AWAY WITH SO MUCH FOR SO LONG?
A FULL SERVICE BANK: HOW BCCI STOLE
BILLIONS AROUND THE WORLD
By James Ring Adams and Douglas Frantz
Pocket Books -- 331pp -- $22
DIRTY MONEY: BCCI, THE INSIDE STORY OF THE
WORLD'S SLEAZIEST BANK
By Mark Potts, Nicholas Kochan, Robert Whittington
National Press Books -- 274pp -- $21.95
There has never been a bank like BCCI. And a lot of investors, depositors, and regulators hope there will never be another one. The Bank of Credit & Commerce International was at the center of history's biggest banking scandal. It pursued a startling array of skulduggery, including money-laundering, larcency, and bribery. It routinely consorted with terrorists, drug dealers, dictators, smugglers, mobsters, and spies. Regulators finally shut BCCI down on July 5, 1991. Losses to investors and depositors may reach $20 billion.
A Full Service Bank and Dirty Money are the first of several books aiming to unravel BCCI's convoluted rise and fall. Although well worth perusing, they are but first drafts of the full tale.
BCCI was founded in 1972 by Agha Hasan Abedi, a charismatic Pakistani, who saw BCCI as a bank for the Third World, especially oil-rich Middle East nations. He structured BCCI to avoid regulation. Although headquartered in London, it was chartered in Luxembourg and operated through a vast network of offshore entities. BCCI grew rapidly during the 1980s, setting up outposts in 70 countries. Its downfall stemmed from several forces: bad loans, massive trading losses, inept management, and embezzlement. Accountants suggest it may never have been profitable. The coup de grace was a belated but inexorable assault by prosecutors and regulators.
A Full Service Bank, by free-lance financial writer James Ring Adams and Los Angeles Times correspondent Douglas Frantz, is the more absorbing of the two books. It focuses on the heroes who helped bring BCCI down, particularly Robert Mazur, a dedicated U.S. Customs agent whose routine drug money-laundering investigation led to BCCI's 1990 conviction for money-laundering. Also instrumental was congressional investigator Jack Blum. Unable to interest federal prosecutors in his extensive evidence of BCCI's illicit activities, he went to New York District Attorney Robert M. Morgenthau, whose well-publicized probe finally spurred the government assault. Even though the tales of these men make for a fast-paced read, they end up overwhelming A Full Service Bank. Many of Mazur's exploits, which consume more than a third of the book, are related to BCCI only marginally.
Dirty Money, by Washington Post writer Mark Potts and British journalists Nicholas Kochan and Robert Whittington, lacks the narrative drive, graceful writing, and detailed source notes of A Full Service Bank. But it provides a much broader picture of BCCI's maneuverings, especially Abedi's political influence-peddling.
Abedi was a genius at co-opting friends and buying people. Through everything from free plane rides and interest-free loans to outright bribes, he duped or bought off political leaders around the globe. His most notable unwitting dupe was former President Jimmy Carter. Abedi used famed Washington lawyer and Presidential adviser Clark M. Clifford and his protege Robert A. Altman to engineer BCCI's secret, illegal takeover of three U.S. banks, most notably First American Bankshares in Washington. Although Clifford and Altman were top executives at First American, as well as lawyers for BCCI, they insist implausibly that they didn't know BCCI controlled First American.
For all their detail, the two books raise almost as many questions as they answer. Topping the list is why regulators, intelligence agencies, auditors, and prosecutors were so slow to take action, despite abundant signs of BCCI's chicanery for years. The Justice Dept. sought to thwart Morgenthau's probe. Lack of resources and simple oversight were partly to blame. But Dirty Money, with some justification, attributes the problem to influence-peddling, which may have been even more pervasive than is currently known. The authors say: "Perhaps the scandal reached into the highest levels of political power around the world in ways that would dwarf even the wildest conspiracy theory."
The extent of the corruption at BCCI is also unresolved. Was the bank an essentially legitimate institution that, under financial pressures, veered into criminality? Or was it, as Morgenthau put it, "a corrupt criminal organization throughout its entire nineteen-year history"? Both books are ambivalent. A Full Service Bank says: "The bulk of its business was devoted to gathering deposits from legitimate customers and financing legitimate international trade." But at another point, it calls BCCI the "world's greatest Ponzi scheme."
More BCCI books are due out later this year, including one by Jonathan Beaty and S.C. Gwynne of Time magazine and another by Peter Truell of The Wall Street Journal. They may offer more answers. But for now, much about BCCI is very unclear. As Morgenthau said at the end of 1991: "I may have exaggerated when I said we were at the tip of the iceberg last summer. We may not be that far."CHRIS WELLES