Bank Indicted, Probe of Clifford Continues
NEW YORK (AP) _ An investigation into ″the largest bank fraud in world financial history″ netted indictments of a scandal-scarred international bank, two of its principals and four affiliates - and isn’t over, a prosecutor said Monday.
The best-known figure linked to the Bank of Credit and Commerce International - former Defense Secretary Clark Clifford - was not named in the indictment. But Manhattan District Attorney Robert Morgenthau said he’s still looking into whether Clifford lied to state banking officials.
Also Monday, the Federal Reserve in Washington announced it is seeking a $200 million fine against BCCI and an order barring nine people tied to it from involvement with U.S. banking. Among the nine: Agha Hasan Abedi, who founded BCCI in 1972, and Swaleh Naqvi, its chief operating officer until October 1990.
The 12-count New York indictment charges that the Arab-owned bank, Abedi and Naqvi defrauded investors, falsified records and stole some $30 million, Morgenthau said.
Abedi and Naqvi were charged with grand larceny, scheming to defraud, and falsifying records.
Morgenthau said he is trying to extradite the two. Abedi, 68, is said to be ill with cardiac and other problems, and lives in his native Pakistan; Nagvi, 57, lives in the Arab emirate Abu Dhabi.
″This indictment spells out the largest bank fraud in world financial history,″ Morgenthal said.
″BCCI was operated as a corrupt criminal organization throughout its entire 19-year history,″ said Morgenthau, who began investigating the institution in May 1989. ″It systematically falsified its records.″
″It knowingly allowed itself to be used to launder the illegal income of drug sellers and other criminals,″ he said. ″And it paid bribes and kickbacks to public officials.″
The Manhattan probe stems from allegations that BCCI filed false information with New York’s state banking superintendent about the identities of the owners of BCCI and its subsidiaries.
BCCI has 43 branches in the state, Morgenthau said. Not included in that total are branches of BCCI-controlled First American Bankshares. That bank, Washington’s largest, has three branches in Manhattan.
Clifford, a former secretary of defense and adviser to Democratic presidents since Harry S. Truman, is chairman of First American. Clifford, 85, says he did not know BCCI controlled First American when it applied to New York bank regulators.
Morgenthau refused to say whether Clifford or his Washington law partner, Robert Altman, First American’s president, were grand jury targets. Neither was named in the indictment.
The prosecutor did say he has spoken to Clifford about the case, and the investigation into whether Clifford lied to state banking officials is continuing.
Clifford visited Morgenthau’s office two weeks ago.
At its height, BCCI operated in more than 70 countries, Morgenthau said. Regulators in eight countries - including the United States and Britain - began seizing assets of Luxembourg-based BCCI earlier this month.
BCCI may have funneled as much as $15 billion of depositors’ money worldwide into illicit activities, including widespread fraud and laundering of drug profits, regulators have said.
The New York indictment charges that BCCI officers paid a $3 million bribe to officials of the Central Bank of Peru in exchange for receiving deposits from the bank.
It also accuses BCCI of stealing $30 million from American Express Bank. Morgenthau said BCCI got American Express to deposit the money by falsely representing BCCI’s financial condition. Therefore, loss of the money is the same as theft, he said.
Eight counts charge that the bank failed to file reports on cash deposits of $10,000 or more as federal law requires. ″These transactions appear to be instances of money laundering,″ Morgenthau said.
Morgenthau said BCCI’s complex international structure allowed it to operate with minimal regulation and carry on a kind of global Ponzi scheme. The means money was shifted from one place to another place as needed to keep up the appearance of a healthy bank while it was being bled by its operators.
The indicted affiliates are Bank of Credit and Commerce International Overseas Ltd.; BCCI Holdings (Luxembourg); International Credit and Investment Co. (Overseas) Ltd.; and International Credit and Investment Co. Holdings.