Bcci: Justice May Finally PrevailMark Maremont
As a team of U.S. investigators jetted to Geneva in early January for talks with Abu Dhabi officials, they were painfully aware that the probe into the 1991 collapse of Bank of Credit & Commerce International badly needed a boost. Only a few bit players in the U.S. and Britain had been convicted of any crimes associated with the $12 billion fraud. The most prominent U.S. prosecution, of Robert A. Altman and Clark M. Clifford, collapsed last August with Altman's acquittal and Clifford's failing health. The main problem: Nearly all of the crucial records and witnesses were in Abu Dhabi. The Emirate--which owned 77% of BCCI--wasn't being terribly cooperative.
Four days later, the U.S. authorities flew home with a blockbuster deal that could reignite the BCCI investigations and help speed a partial payback to depositors. In return for dropping all criminal and civil actions against Abu Dhabi officials and entities, U.S. authorities obtained access to all BCCI files, including the secret records of Swaleh Naqvi, BCCI's former CEO. Just as important, Naqvi will be extradited to the U.S. And the Abu Dhabi government waived claims to $400 million being held in the U.S. Most of that will be used to compensate BCCI depositors. "This is a huge, huge development," says Jonathan M. Winer, an aide to Senator John F. Kerry (D-Mass.) who spent two years investigating BCCI.
TURBO CHARGE. The story behind the deal involves a colorful cast of characters, including a Federal judge and a cantankerous former banker. The Geneva talks were only the last act in tortuous negotiations with Abu Dhabi authorities that began more than a year ago. But the talks made little progress until late last year, when a series of events put severe pressure on the Emirate's representatives.
The first important event was the arrival in early November of Gerald M. Stern as the Justice Dept.'s new special counsel for financial institution fraud. A former general counsel for Occidental Petroleum Corp. and a savvy negotiator, Stern says when he arrived, the talks "were not going fast enough." Since U.S. negotiators had been unable to get access to documents in Abu Dhabi, Stern decided to push for a broad settlement. At a Dec. 10 meeting in Manhattan District Attorney Robert M. Morgenthau's office, Stern hammered out a tough new negotiating stance that satisfied Justice, Morgenthau, and the Federal Reserve.
On Dec. 13, Stern presented the new offer to lawyers at Patton, Boggs & Blow, Abu Dhabi's U.S. attorneys. It arrived just as the Abu Dhabi side was getting battered from an unexpected quarter: two civil lawsuits relating to BCCI. The most important was a $1.5 billion racketeering claim brought by Harry W. Albright Jr., trustee for First American Corp., the parent of a BCCI-controlled bank that had been seized by Federal authorities.
In both cases, Abu Dhabi was trying to claim immunity from many aspects of U.S. civil law, arguing that its U.S. investments had been made by an arm of the Abu Dhabi royal family. But District Court Judge Joyce Hens Green in Washington, who was hearing both cases, issued rulings that undermined the immunity claims. She permitted the Justice Dept. to subpoena some Abu Dhabi documents--something the Emirate wanted to avoid. And she left open the possibility that Abu Dhabi ruler Sheikh Zayed bin Sultan al-Nahayan might not be accorded head-of-state immunity, as Abu Dhabi's lawyers wanted.
BIG STICK. The immunity issue was crucial to the Abu Dhabi government. Denied immunity, all of its considerable U.S. assets could have been at risk, and Sheikh Zayed, his sons, and other government officials could have been subject to embarrassing criminal indictments. "It was a big piece of leverage to use against us," says a source close to the Abu Dhabi government. Further, on Dec. 23, Saudi banker Khalid bin Mahfouz settled charges for $225 million and agreed to cooperate with U.S. authorities. A key BCCI banker, he could have given politically damaging evidence against Abu Dhabi.
The Geneva negotiations were grueling. Persuading Abu Dhabi to forfeit the $400 million was the easiest issue, U.S. participants say. The hardest was getting the Emirate to deliver Naqvi, now on trial in Abu Dhabi along with 12 others. For the U.S. side, winning Albright's agreement proved the biggest headache. The crusty former chairman of Dime Savings Bank demanded $50 million to fund his racketeering suit against other defendants. He finally got the money.
The agreement could help BCCI liquidators in Europe, who are trying to collect compensation from Abu Dhabi. A tentative $2.2 billion settlement was thrown out by a Luxembourg court last October. But the U.S. deal calls for Abu Dhabi to settle with the liquidators by Apr. 1 or turn over all BCCI documents to them.
The real coup for the U.S. is getting Naqvi. Using the six charges already filed against him as leverage, prosecutors hope to pursuade Naqvi to guide them through warehouses full of documents. They're hoping to find evidence that implicates prominent U.S. officials and makes possible new charges against Altman and Clifford. They also hope to find evidence of wrongdoing by BCCI clients, who included drug kingpins and Third World dictators. And they hope to gain a better understanding of just how the most corrupt bank ever was able to operate with impunity for 19 years.