THE BCCI AFFAIR

EXECUTIVE SUMMARY
1. BCCI CONSTITUTED INTERNATIONAL
FINANCIAL CRIME ON A MASSIVE AND GLOBAL
SCALE.

BCCI's unique criminal structure -- an elaborate

corporate spider-web with BCCI's founder, Agha
Hasan Abedi and his assistant, Swaleh Naqvi, in the
middle -- was an essential component of its
spectacular growth, and a guarantee of its eventual
collapse. The structure was conceived by Abedi and
managed by Naqvi for the specific purpose of
evading regulation or control by governments. It
functioned to frustrate the full understanding of
BCCI's operations by anyone.

Unlike any ordinary bank, BCCI was from its earliest

days made up of multiplying layers of entities,
related to one another through an impenetrable
series of holding companies, affiliates, subsidiaries,
banks-within-banks, insider dealings and nominee
relationships. By fracturing corporate structure,
record keeping, regulatory review, and audits, the
complex BCCI family of entities created by Abedi was
able to evade ordinary legal restrictions on the
movement of capital and goods as a matter of daily
practice and routine. In creating BCCI as a vehicle
fundamentally free of government control, Abedi
developed in BCCI an ideal mechanism for facilitating
illicit activity by others, including such activity by
officials of many of the governments whose laws
BCCI was breaking.

BCCI's criminality included fraud by BCCI and BCCI

customers involving billions of dollars; money
laundering in Europe, Africa, Asia, and the Americas;
BCCI's bribery of officials in most of those locations;
support of terrorism, arms trafficking, and the sale of
nuclear technologies; management of prostitution;
the commission and facilitation of income tax
evasion, smuggling, and illegal immigration; illicit
purchases of banks and real estate; and a panoply of
financial crimes limited only by the imagination of its
officers and customers.

Among BCCI's principal mechanisms for committing

crimes were its use of shell corporations and bank
confidentiality and secrecy havens; layering of its
corporate structure; its use of front-men and
nominees, guarantees and buy-back arrangements;
back-to-back financial documentation among BCCI
controlled entities, kick-backs and bribes, the
intimidation of witnesses, and the retention of well-
placed insiders to discourage governmental action.

2. BCCI SYSTEMATICALLY BRIBED WORLD

LEADERS AND POLITICAL FIGURES
THROUGHOUT THE WORLD.

BCCI's systematically relied on relationships with,

and as necessary, payments to, prominent political
figures in most of the 73 countries in which BCCI
operated. BCCI records and testimony from former
BCCI officials together document BCCI's systematic
securing of Central Bank deposits of Third World
countries; its provision of favors to political figures;
and its reliance on those figures to provide BCCI itself
with favors in times of need.
These relationships were systematically turned to
BCCI's use to generate cash needed to prop up its
books. BCCI would obtain an important figure's
agreement to give BCCI deposits from a country's
Central Bank, exclusive handling of a country's use of
U.S. commodity credits, preferential treatment on the
processing of money coming in and out of the
country where monetary controls were in place, the
right to own a bank, secretly if necessary, in
countries where foreign banks were not legal, or
other questionable means of securing assets or
profits. In return, BCCI would pay bribes to the figure,
or otherwise give him other things he wanted in a
simple quid-pro-quo.

The result was that BCCI had relationships that

ranged from the questionable, to the improper, to the
fully corrupt with officials from countries all over the
world, including Argentina, Bangladesh, Botswana,
Brazil, Cameroon, China, Colombia, the Congo,
Ghana, Guatemala, the Ivory Coast, India, Jamaica,
Kuwait, Lebanon, Mauritius, Morocco, Nigeria,
Pakistan, Panama, Peru, Saudi Arabia, Senegal, Sri
Lanka, Sudan, Suriname, Tunisia, the United Arab
Emirates, the United States, Zambia, and Zimbabwe.

3. BCCI DEVELOPED A STRATEGY TO INFILTRATE

THE U.S. BANKING SYSTEM, WHICH IT
SUCCESSFULLY IMPLEMENTED, DESPITE
REGULATORY BARRIERS THAT WERE DESIGNED
TO KEEP IT OUT.

In 1977, BCCI developed a plan to infiltrate the U.S.

market through secretly purchasing U.S. banks while
opening branch offices of BCCI throughout the U.S.,
and eventually merging the institutions. BCCI had
significant difficulties implementing this strategy due
to regulatory barriers in the United States designed
to insure accountability. Despite these barriers, which
delayed BCCI's entry, BCCI was ultimately successful
in acquiring four banks, operating in seven states
and the District of Colombia, with no jurisdiction
successfully preventing BCCI from infiltrating it.

The techniques used by BCCI in the United States

had been previously perfected by BCCI, and were
used in BCCI's acquisitions of banks in a number of
Third World countries and in Europe. These included
purchasing banks through nominees, and arranging
to have its activities shielded by prestigious lawyers,
accountants, and public relations firms on the one
hand, and politically-well connected agents on the
other. These techniques were essential to BCCI's
success in the United States, because without them,
BCCI would have been stopped by regulators from
gaining an interest in any U.S. bank. As it was,
regulatory suspicion towards BCCI required the bank
to deceive regulators in collusion with nominees
including the heads of state of several foreign
emirates, key political and intelligence figures from
the Middle East, and entities controlled by the most
important bank and banker in the Middle East.

Equally important to 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, beginning with Bert Lance,
and continuing with former Defense Secretary Clark
Clifford, former U.S. Senator Stuart Symington, well-
connected former federal bank regulators, and
former and current local, state and federal
legislators. Wittingly or not, these individuals
provided essential assistance to BCCI through
lending their names and their reputations to BCCI at
critical moments. Thus, it was not merely BCCI's
deceptions that permitted it to infiltrate the United
States and its banking system. Also essential were
BCCI's use of political influence peddling and the
revolving door in Washington.

4. THE JUSTICE DEPARTMENT MISHANDLED ITS

INVESTIGATION AND PROSECUTION OF BCCI,
AND ITS RELATIONSHIPS WITH OTHER
GOVERNMENT AGENCIES CONCERNING BCCI.

Federal prosecutors in Tampa handling the 1988 drug

money laundering indictment of BCCI failed to
recognize the importance of information they
received concerning BCCI's other crimes, including its
apparent secret ownership of First American. As a
result, they failed adequately to investigate these
allegations themselves, or to refer this portion of the
case to the FBI and other agencies at the Justice
Department who could have properly investigated
the additional information.

The Justice Department, along with the U.S. Customs

Service and Treasury Departments, failed to provide
adequate support and assistance to investigators
and prosecutors working on the case against BCCI in
1988 and 1989, contributing to conditions that
ultimately caused the chief undercover agent who
handled the sting against BCCI to quit Customs
entirely.
The January 1990 plea agreement between BCCI and
the U.S. Attorney in Tampa kept BCCI alive, and had
the effect of discouraging BCCI's officials from telling
the U.S. what they knew about BCCI's larger
criminality, including its ownership of First American
and other U.S. banks.

The Justice Department essentially stopped

investigating BCCI following the plea agreement,
until press accounts, Federal Reserve action, and the
New York District Attorney's investigation in New York
forced them into action in mid-1991.

Justice Department personnel in Washington lobbied

state regulators to keep BCCI open after the January
1990 plea agreement, following lobbying of them by
former Justice Department personnel now
representing BCCI.

Relations between main Justice in Washington and

the U.S. Attorney for Miami, Dexter Lehtinen, broke
down on BCCI-related prosecutions, and key actions
on BCCI-related cases in Miami were, as a result,
delayed for months during 1991.

Justice Department personnel in Washington, Miami,

and Tampa actively obstructed and impeded
Congressional attempts to investigate BCCI in 1990,
and this practice continued to some extent until
William P. Barr became Attorney General in late
October, 1991.

Justice Department personnel in Washington, Miami

and Tampa obstructed and impeded attempts by New
York District Attorney Robert Morgenthau to obtain
critical information concerning BCCI in 1989, 1990,
and 1991, and in one case, a federal prosecutor lied
to Morgenthau's office concerning the existence of
such material. Important failures of cooperation
continued to take place until William P. Barr became
Attorney General in late October, 1991.

Cooperation by the Justice Department with the

Federal Reserve was very limited until after BCCI's
global closure on July 5, 1991.

Some public statements by the Justice Department

concerning its handling of matters pertaining to BCCI
were more cleverly crafted than true.

5. NEW YORK DISTRICT ATTORNEY

MORGENTHAU NOT ONLY BROKE THE CASE ON
BCCI, BUT INDIRECTLY BROUGHT ABOUT BCCI'S
GLOBAL CLOSURE.

Acting on information provided him by the

Subcommittee, New York District Attorney Robert
Morgenthau began an investigation in 1989 of BCCI
which materially contributed to the chain of events
that resulted in BCCI's closure.

Questions asked by the District Attorney intensified

the review of BCCI's activities by its auditors, Price
Waterhouse, in England, and gave life to a moribund
Federal Reserve investigation of BCCI's secret
ownership of First American.

The District Attorney's criminal investigation was

critical to stopping an intended reorganization of
BCCI worked out through an agreement among the
Bank of England, the government of Abu Dhabi,
BCCI's auditors, Price Waterhouse, and BCCI itself, in
which the nature and extent of BCCI's criminality
would be suppressed, while Abu Dhabi would commit
its financial resources to keep the bank going during
a restructuring. By the late spring of 1991, the key
obstacle to a successful restructuring of BCCI
bankrolled up Abu Dhabi was the possibility that the
District Attorney of New York would indict. Such an
indictment would have inevitably caused a swift and
thoroughly justified an international run on BCCI by
depositors all over the world. Instead, it was a
substantial factor in the decision of the Bank of
England to take the information it had received from
Price Waterhouse and rely on it to close BCCI.

6. BCCI'S ACCOUNTANTS FAILED TO PROTECT

BCCI'S INNOCENT DEPOSITORS AND CREDITORS
FROM THE CONSEQUENCES OF POOR
PRACTICES AT THE BANK OF WHICH THE
AUDITORS WERE AWARE FOR YEARS.

BCCI's decision to divide its operations between two

auditors, neither of whom had the right to audit all
BCCI operations, was a significant mechanism by
which BCCI was able to hide its frauds during its early
years. For more than a decade, neither of BCCI's
auditors objected to this practice.