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Wackenhut corporation tied to the PROMIS software scam
The BCCI Affair, A Report to the Committee on Foreign Relations, United States Senate, by Senator John Kerry and
Senator Hank Brown, December 1992
The Crimes of Mena, by Sally Denton and Roger Morris, Penthouse, 7/95
The Inslaw Octopus, by Richard L. Fricker
The Last Circle, by Carol Marshall
The Last Days of Danny Casolaro, by James Ridgeway and Doug Vaughan
The Mysterious Death of Danny Casolaro, by David MacMichael
The Napa Sentinel Table of Contents
The Octopus, by Karen Bixman
Vince Foster Table of Contents
Virginia McCullough Interview, by Paul DeRienzo
Wackenhut Corrections Corporation, by Wackenhutcorrections.com
Wackenhut Corporation, by Wackenhut.com
Wackenhut Corporation -- A Patriot or a Partner in Executive Crime?, by Armen Victorian
Wackenhut Corporation Namebase Search Results by pir.org
When Osama Bin Laden was Tim Osman, by J. Orlin Grabbe
Whitewater Table of ContentsTHE BCCI AFFAIR
The BCCI Affair
A Report to the Committee on Foreign Relations
United States Senate
by
Senator John Kerry and Senator Hank Brown
December 1992
102d Congress 2d Session Senate Print 102-140
Table of Contents:
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EXECUTIVE SUMMARY
Introduction and Summary of Investigation
The Origin and Early Years of BCCI
BCCI's Criminality
BCCI's Relationship with Foreign Governments, Central Banks, and International Organizations
BCCI in the United States - Initial Entry and FGB and NBG Takeovers
BCCI in the United States - Part Two: Acquisition, Consolidation, and Consequences
BCCI and Law Enforcement - The Justice Deparment and the US Customs Service
BCCI and Law Enforcement - District Attorney of New York
BCCI and Its Accountants
BCCI, The CIA and Foreign Intelligence
The Regulators
Clark Clifford and Robert Altman
Abu Dhabi: BCCI's Founding and Majority Stockholders
Mohammed Hammoud: BCCI's Flexible Frontman
BCCI And Georgia Politicians
BCCI's Lawyers and Lobbyists
Hill and Knowlton and BCCI's PR Campaign
Ed Rogers and Kamal Adham
BCCI and Kissinger Associates
Capcom: A Case Study of Money Laundering
Legislative and Policy Recommendations
Appendix - Matters For Further Investigation, Witnesses and Writs
THE BCCI AFFAIR, Part 22
LEGISLATIVE RECOMMENDATIONS
1. THE SUBCOMMITTEE RECOMMENDS THAT THE UNITED STATES DEVELOP A MORE AGGRESSIVE AND
COORDINATED APPROACH TO COMBAT INTERNATIONAL FINANCIAL CRIME. THE U.S. NEEDS TO TAKE
FIRM ACTION AGAINST NATIONS WHO PERMIT THEIR PRIVACY AND CONFIDENTIALITY LAWS TO
PROTECT CRIMINALS FROM U.S. REGULATORS AND LAW ENFORCEMENT.
Both BCCI and its customers used foreign bank secrecy and confidentiality laws to commit crimes, to prevent the detection
of those crimes, and to obstruct law enforcement efforts to investigate and prosecute crimes once they were discovered.
The traditional approach of smaller nations such as the Cayman Islands and Luxembourg of offering strict bank secrecy as
an inducement to attract foreign deposits has is poor international public policy, and threatens vital interests of the United
States.
Current practices of major financial centers such as the United Kingdom and Switzerland, while providing for the exchange
of information among regulators, and some mechanisms for the exchange of information among federal law enforcement,
after criminal activity is uncovered, still impede an adequate flow of financial information concerning such activity in the
earlier, investigative phase.
The United States needs to take a more aggressive and coordinated approach to developing an international regime for the
sharing of financial information among governmental entities, and a substantial loosening in financial confidentiality and
privacy laws to insure that government investigators in the U.S. can gain adequate access to and information about, financial
transactions that cross international boundaries, but impact the U.S.
While the U.S. has become more focused in fighting drug money laundering through international cooperation in recent
years, it has continued to take the position that the process of sharing on applications between law enforcement agencies is
sufficient to protect U.S. interests, and no broad-scale changes in foreign bank secrecy laws are necessary. As Federal
Reserve counsel Virgil Mattingly testified, sixteen months after the Federal Reserve began its formal investigation of BCCI,
Swiss and French authorities were still denying it critical information as a consequence of their secrecy laws.(1) A much
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more aggressive approach by the United States to changing attitudes among the G-10 nations on this issue is essential.
Current toleration by the United States of bank secrecy and regulatory havens such as the Grand Caymans, Liechtenstein, the
Bahamas, the Channel Islands, Vanuatu, Hong Kong, Aruba, and the Netherlands Antilles needs to be replaced by a policy
that threatens to withhold access to the U.S. market for banks doing business in any nation that does not meet minimum
standards for regulation and the sharing of information with the United States.
The Treasury, as the lead agency for handling U.S. policies concerning international financial crime, needs to be much more
aggressive on these issues, to place substantial limits on the ability of criminals to use confidentiality and privacy laws as a
shield against law enforcement.
2. THE SUBCOMMITTEE RECOMMENDS THAT THE INSPECTOR GENERAL OF THE JUSTICE DEPARTMENT
INVESTIGATE THE POLICIES AND PRACTICES THAT LED TO THE JUSTICE DEPARTMENT'S
INEFFECTIVENESS IN INVESTIGATING AND PROSECUTING BCCI, AND IMPAIRED ITS ABILITY TO
COOPERATE WITH OTHER INVESTIGATIONS OF BCCI. THE JUSTICE DEPARTMENT NEEDS
FUNDAMENTALLY TO RECONSIDER ITS POLICIES IN DEALING WITH COMPLEX FINANCIAL CASES.
FUNDAMENTAL CHANGE IN HOW THE JUSTICE DEPARTMENT HANDLES INQUIRIES FROM OTHER
GOVERNMENT AGENCIES AND THE CONGRESS IS ALSO ESSENTIAL.
The problems encountered by the Justice Department in investigating and prosecuting BCCI are familiar ones. As a
consequence of a lack of understanding of the significance of the case, requests for additional resources from the Customs
Agents and prosecutors involved were ignored, broader investigated leads were abandoned, and ultimately, BCCI was
permitted to plead guilty and thereby avoid a trial that could have helped bring down the bank entirely.
Other problems compounded these original problems. Most significant was the Justice Department's unwillingness to share
information with other ongoing governmental investigations, including those of the Federal Reserve, the New York District
Attorney and the Senate. Instead, the Justice Department appeared on numerous occasions to be more concerned with
protecting its ability to control information about BCCI, than with assisting the investigative efforts of others. Related to this
problem was the lack of candor demonstrated by individual Justice Department employees in responding to inquiries of the
Federal Reserve, New York District Attorney, and Senate. In addition, there were substantial problems of coordination
between the Justice Department in Washington and its U.S. Attorneys office, as was especially demonstrated by the
breakdown in communication between the U.S. Attorney in Miami and the Criminal Division of the Justice Department in
Washington in 1991.
In response to the resource and coordination issues arising in BCCI, consideration needs to be given within the Justice
Department to the recreation of the strike force concept, abandoned during the early years of the Reagan Administration, and
used to devote substantial resources to major cases.
In response to the cooperation issues pertaining the Federal Reserve, New York District Attorney and Senate, consideration
needs to be given by the Attorney General to adopting a new set of procedures and regulations governing such contacts, to
direct Justice Department personnel to give a far higher priority to providing assistance in response to the legitimate requests
of other governmental entities, limited only by such legal requirements as the withholding of documents placed before a
grand jury.
3. THE SUBCOMMITTEE RECOMMENDS THAT THE CENTRAL INTELLIGENCE AGENCY AND STATE
DEPARTMENT TARGET FOREIGN FINANCIAL INSTITUTIONS AS SUBJECTS FOR INTELLIGENCE
GATHERING AND ANALYSIS.
Prior to BCCI's collapse, the CIA had disseminated only three analytic reports on BCCI itself, one of which was lost and of
which no original remains. While the reports demonstrate the Agency's early recognition of BCCI's systematic engagement
in money laundering and other criminality, they are also oddly limited in detail and scope, given the serious nature of the
allegations discussed, and there was little follow up by the CIA to any of them. Moreover, these reports were not provided to
the users, the Federal Reserve and the Justice Department, who most required them. Finally, these reports contained no
information concerning several individuals who were affiliated with or owned BCCI, and with whom the CIA had had or
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was still having substantial contact. These gaps would suggest a remarkable lack of information at the CIA about the basic
business dealings of important CIA contacts in the Middle East.
The State Department, by contrast to the CIA, knew almost nothing about BCCI prior to its collapse, and seemed to view the
collection of information on foreign financial institutions as largely beyond its scope of responsibilities.
Given the risk to the United States from international financial crime, both agencies need to upgrade their capabilities to
understand the strategies being employed by foreign financial institutions that may impact on vital U.S. interests, and to
begin to include such entities as targets for collection and analysis.
4. THE SUBCOMMITTEE RECOMMENDS THAT THE CONGRESS CONSIDER ADOPTING ADDITIONAL
OVERSIGHT MECHANISMS TO ENSURE THE CIA'S ACCOUNTABILITY ON THE PROVISION OF
INFORMATION.
At various times, the Central Intelligence Agency provided information to the Subcommittee during the course of its
investigation that was both misleading and untrue. Documents that existed were characterized as not existing. Information
that was provided was incomplete. It required repeated efforts by the Subcommittee, extending over a year, to obtain more
complete information, which was provided only following a meeting in February, 1992 between the Subcommittee chairman
and Director Gates. Even then, as the CIA purported to provide a full account of its knowledge of BCCI, it cautioned the
Subcommittee that its system of record-keeping could not guarantee that all information had in fact been provided.
Moreover, information regarding certain persons who were shareholders, nominees, officers, or affiliates of BCCI, was
provided solely in a summary form, containing relatively limited information and far less than is clearly in the CIA's
possession.
Staff of the officer of the Inspector General of the Central Intelligence Agency has recently requested meetings with
Subcommittee staff to discuss these issues.
It is recommended that the House and Senate Select Committees on Intelligence consider whether the current procedures and
mechanisms are adequate to ensure accountability by the CIA in its responses to Congressional requests. Of particular
concern is the lack of any practical mechanism for members who do not serve on the Committees to insure the CIA's
responsiveness to their legitimate requests, as well as the difficulties of establishing whether or not the CIA's responses to
inquiries are forthright and accurate.
5. THE SUBCOMMITTEE RECOMMENDS THAT FEDERAL AGENCIES IMPOSE NEW REQUIREMENTS ON
FOREIGN AUDITORS TO PROTECT U.S. INTERESTS IN ANY CASE IN WHICH ANY SUCH AGENCY IS
RELYING ON AN AUDIT CERTIFIED BY A FOREIGN AUDITOR. AT MINIMUM, THIS SHOULD REQUIRE
FOREIGN AUDITORS WHOSE CERTIFICATIONS ARE USED BY INSTITUTIONS DOING BUSINESS IN THE U.S.
AGREE TO SUBMIT THEMSELVES TO U.S. LAWS.
As the Subcommittee discovered during the course of investigating BCCI, the major accounting firms, such as Price
Waterhouse, while operating globally, are structured to be independent partnerships in which no national partnership has
financial obligations or ties to any other. As a consequence, when a foreign auditor certifies the audit of an entity doing
business in the United States, the domestic auditor views itself to be not legally responsible for any of the actions taken by
the foreign auditor, nor for providing any information to U.S. regulators and law enforcement personnel that may be in the
possession of the foreign auditor. In the case of BCCI, this meant that Price Waterhouse in the United States was able to take
the position that it could not answer any questions or provide the information requested by investigators, while Price
Waterhouse in the United Kingdom -- which certified BCCI's books -- was able to take the position that it did not do
business the United States, was not subject to service of process in the United States, and was not responsible to provide
information to the United States, although BCCI was licensed as a foreign bank in several states.
The inability of U.S. regulators and law enforcement to gain access to foreign auditors who may have certified the accounts
of entities doing business in the United States substantially impeded investigations and prosecutions of BCCI. It is
recommended that the Congress develop a statutory mechanism to require all U.S. agencies to develop regulations imposing
the requirement that any entity certifying the audit of an entity which is provided to any U.S. agency in so doing submit itself
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to U.S. jurisdiction and agree to the provision of documents and records as required by U.S. law. Additional mechanisms to
insure accountability by auditors to government regulators and investigators should also be explored.
6. THE SUBCOMMITTEE RECOMMENDS THAT THE PRESIDENT AND THE SECRETARY OF STATE ADVISE
THE GOVERNMENT OF ABU DHABI THAT ITS WITHHOLDING OF DOCUMENTS AND WITNESSES
PERTAINING TO BCCI FROM U.S. FEDERAL LAW ENFORCEMENT INVESTIGATORS, THE FEDERAL
RESERVE, THE NEW YORK DISTRICT ATTORNEY AND THE CONGRESS THREATENS VITAL U.S. INTERESTS
AND WILL NOT BE TOLERATED.
As of the writing of this report, the most important remaining impediment to investigating and prosecuting the BCCI case is
the withholding of critical documents and witnesses from U.S. law enforcement and regulators by the Abu Dhabi authorities.
Given the ownership of BCCI by Abu Dhabi, and Abu Dhabi's controlling interest, through BCCI and its own shares, in
CCAH, holding company for the First American Banks, the Abu Dhabi government has engaged in substantial nonsovereign activities in the United States. Its continued suppression of evidence in the case is so serious that it should raise
some questions about the previously friendly relationship between the two nations. To date, neither the White House nor the
State Department has made any statement criticizing the Abu Dhabi government for its refusal to cooperate adequately with
the United States on this matter. The United States needs to express its deep concern over this matter, and its intention to
take further steps if the failure to provide access to the witnesses and documents is not rectified immediately.
7. FURTHER ATTENTION NEEDS TO BE GIVEN TO THE PROBLEM OF THE REVOLVING DOOR IN
WASHINGTON, AND THE IMPACT ON THE REGULATORY PROCESS AND ON LAW ENFORCEMENT OF
POLITICAL INFLUENCE IN WASHINGTON. THE SUBCOMMITTEE RECOMMENDS THE CONSIDERATION OF
LEGISLATING A FEDERAL STATUTORY CODE OF CONDUCT FOR ATTORNEYS WHO PRACTICE BEFORE
FEDERAL AGENCIES.
BCCI's political connections in Washington had a material impact on its ability to accomplish its goals in the United States.
In hiring lawyers, lobbyists and public relations firms in the United States to help it deal with its problems vis a vis the
government, BCCI pursued a strategy that it had practiced successfully around the world: the hiring of former government
officials. These former government officials played a major role both in making it possible for BCCI secretly to purchase
Financial General Bankshares, and then to evade detection and impede investigative efforts to expose what it had done.
There is something fundamentally wrong with a political system in which former government officials, as in the case of
BCCI, too frequently appear to be willing to provide assistance in circumventing U.S. laws and regulations to anyone who is
willing to pay their fee.
In theory, ethical considerations would discourage former high public officials, government prosecutors, and regulators from
using the skills and knowledge they obtained in government to assist clients who wish to circumvent, or at least, bend, the
obvious import of the laws. However, in the highly competitive day-to-day practice of law and lobbying in Washington,
D.C., it appears that such considerations are too often thrown aside to the need of the former officials to generate fees.
The problem of the revolving door and influence-peddling is serious enough when applied to domestic clients looking to
influence the legislative, regulatory, or law enforcement process. However, as with BCCI, when former government officials
provide put their expertise to use for foreign clients, even deeper problems emerge. First, the foreign clients have little stake
in our society beyond their own self-interest, and thus, there is less incentive for them to adhere to U.S. laws apart from the
threat of sanctions if they are caught breaking them. Second, some foreign clients may be accustomed to political influence
and corruption within their own countries, and therefore pay for and expect such services to circumvent laws in the United
States. Third, as in BCCI, foreign clients are less susceptible to being investigated, and prosecuted or held liable in the
United States, if something goes wrong. Fourth, it is more difficult to determine the ultimate agenda of an entity which is
based outside the United States.
Foreign investment in the United States may in some respects be an essential component of long-term prosperity, and in any
case inevitable. Yet the continued willingness of so many attorneys and lobbyists in Washington to represent foreign clients
without regard to the special problems they pose, suggests that consideration needs to be given to legislation that would
force lawyers and lobbyists who represent foreign interests to adhere to a higher standard of practice, adequate to protect
U.S. interests.
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At present, essentially no mechanism exists whereby sanctions can be imposed on attorneys who fail to meet basic ethical
obligations to regulatory bodies. Serious attention needs to be given to the development of a federal code of professional
conduct, that would supplement the industry code adopted by the American Bar Association. Such a code would set forth
minimum ethical standards for the practice of law before federal regulatory bodies, including requiring certain disclosures to
the government by the attorney in cases in which the attorney has reason to believe the client may have made false
statements to the government. The code would allow for any party, including the regulators themselves, to seek revocation of
a lawyer's right to practice before that regulatory body for an infraction of the code, or before any federal regulatory body for
a serious such infraction.
8. THE SELF-REGULATION OF THE U.S COMMODITIES MARKETS BY THE COMMODITIES FUTURES
TRADING COMMISSION, THE CHICAGO BOARD OF TRADE, AND THE CHICAGO MERCANTILE EXCHANGE
IS INADEQUATE TO PROTECT THOSE MARKETS AGAINST MONEY LAUNDERING INVOLVING TRADES
FROM ABROAD. THE SUBCOMMITTEE RECOMMENDS THAT THE EXCHANGES MAKE MONEY
LAUNDERING ILLEGAL, AND DEMAND THAT THIS REQUIREMENT BE ACCEPTED BY FOREIGN
COMMODITIES EXCHANGES WITH WHOM THEY DO BUSINESS, AS A CONDITION OF ACCESS TO US
EXCHANGES.
As the Subcommittee investigation found, commodities regulators with the responsibility for investigating Capcom showed
little interest in conducting a thorough investigation of its activities, and in 1989 allowed Capcom to avoid such an
investigation through agreeing to cease doing business in the United States. While the exchanges have developed
sophisticated mechanisms for detecting money laundering that takes place within the U.S. markets, those markets interact
with foreign commodities markets in a manner that makes detection of money-laundering that crosses international
boundaries very difficult.
At present, the laundering of money, in and of itself, does not violate commodities regulations, and is not grounds for
expulsion from the exchanges.
Commodities regulators in the U.S. need to push for the definition and criminalization of money laundering in all
commodities exchanges with whom they deal, including those in foreign countries, and develop procedures for "spot" checks
of various investment houses to detect money laundering. They also need to develop mechanisms with foreign commodities
regulators to insure that mirror imaging and similar techniques for money laundering are not tolerated simply because the
mirror images are separated by national borders.
9. THE SUBCOMMITTEE RECOMMENDS THAT FURTHER STEPS BE TAKEN TO INSURE ADEQUATE
ACCOUNTABILITY OF FOREIGN FINANCIAL INSTITUTIONS DOING BUSINESS IN THE UNITED STATES,
INCLUDING REQUIRING THAT FOREIGN BANKS FORM SEPARATELY CAPITALIZED HOLDING COMPANIES
IN THE UNITED STATES AS A CONDITION OF LICENSE AND THE ESTABLISHMENT BY THE FEDERAL
RESERVE OF A MINIMUM STANDARD FOR CONSOLIDATED REGULATION THAT EXCLUDES BANK
REGULATORY HAVENS.
While foreign bank regulation in the United States has already been substantially strengthened as a result of the BCCI affair,
foreign banks doing business in the United States are still treated differently from domestic banks, and to the competitive
detriment of domestic banks. Under the changes in law implemented last year through the passage of the Foreign Bank
Supervisory Enhancement Act as part of the banking reform bill, foreign banks are now effectively regulated, supervised,
and examined at a level equivalent to U.S. banks. However, they are not separately capitalized within the United States, and
are merely required to maintain certain levels of reserves here as a means of protecting U.S. creditors.
The result is that U.S. regulators have no means for determining the nature, source, and backing of these reserves, or the real
ability to keep such reserves in the U.S. in the event of a crisis involving the foreign bank. The Treasury has already
recommended that foreign banks engaging in the sale of securities and other expanded-banking activities be required to
establish separately capitalized holding companies in the U.S. This approach should be adopted for all foreign banks as a
matter of enhancing overall accountability.
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In addition, the Federal Reserve needs to move forward with a certification process which reaches a determination as to
whether the home country supervision of a foreign bank meets a base-line standard sufficient to justify granting banks
regulated by that country the right to operate in the United States.
Under current law, any foreign bank operating on a consolidated basis regulated by any home country bank regulator is on
an equal footing with all other foreign banks similarly regulated in seeking permission to operate in the United States. With
the passage of the Foreign Bank Supervisory Enhancement Act last year, the Congress has implemented a number of
suggestions made by the Federal Reserve to strengthen U.S. regulatory oversight of such institutions, which includes the
ability of the Federal Reserve to differentiate among such institutions based on the quality or extent of regulation by the
home state regulator. The Federal Reserve needs to make use of the authority granted in the Foreign Bank Supervisory
Enhancement Act to specify what the baseline requirements for consolidated regulation are, and which jurisdictions do and
which do not meet these requirements.
As BCCI demonstrated, lax regulation in such jurisdictions as Luxembourg and the Grand Caymans can enable an institution
bent on fraud to engage in manipulation of accounts and assets at a significant level as a means of securing legitimate
deposits. The U.S. remains a key market for foreign banks, and few nations would be willing to give up the right for their
banks to operate in the United States. A certification process under which the Federal Reserve sets criteria under which
home country regulation is deemed adequate, and excludes banks regulated by "havens" which fail to meet those standards,
would have no impact on banks regulated by countries that met basic standards for such regulation. The adoption of such a
process, including the creation of an approve and non-approved list of country regulators, is essential to protect U.S. banking
from being infiltrated by criminals.
10. THE SUBCOMMITTEE RECOMMENDS THAT FOREIGN INVESTORS WHO PURCHASE SUBSTANTIAL
SHARES OF U.S. BUSINESSES BE REQUIRED TO APPEAR PERSONALLY IN THE UNITED STATES AS
INSURANCE THAT THE FOREIGN INVESTOR IS NOT ACTING AS A NOMINEE FOR SOMEONE ELSE.
Currently, U.S. lawyers are allowed to establish a nominee company on behalf of foreign investors. While there are certain
disclosure requirements for investors who purchase over 5% of a company, there exists no requirement that the individual
appear in the United States. Nominees whose names are used to purchase businesses on behalf of others is a common
practice in much of the world, especially Latin America and the Middle East.
A requirement that any foreign investor who purchase more than 5% of a U.S. company, business, bank or financial entity,
appear personally before the appropriate regulatory authority, with a waiver for investors who met certain defined criteria,
such as showing adequate assets in the United States to meet judgments against them personally, would help to curtail the
practice, as illustrated in the BCCI case, of nominee shareholders.
If the investor refuses to be present at a hearing, the legislation could required that the investment be made provided the U.S.
attorney is willing to waive the attorney/client privilege and incur liability should the investment subsequently prove to be
fraudulent in any way.
11. TURF WARS CONTINUE TO SEVERELY DAMAGE THE ABILITY OF LAW-ENFORCEMENT AGENCIES IN
THE UNITED STATES TO DO THEIR JOB. THE SUBCOMMITTEE RECOMMENDS THE ESTABLISHMENT OF A
COMMITTEE OF LAW ENFORCEMENT OFFICIALS WHOSE JOB IT IS TO CONDUCT OVERSIGHT OF,
PREVENT, AND RESPOND TO FAILURES OF COOPERATION IN LAW ENFORCEMENT.
Turf wars in the BCCI case were evident everywhere, including within the U.S. Customs Service itself, among competing
federal law enforcement agencies, within the Justice Department and U.S. Attorneys' Offices, and between federal law
enforcement, the Federal Reserve, the New York District Attorney, and the Congress. These bureaucratic battles had a
substantial and negative impact on investigating and prosecuting BCCI. They are not unique to the BCCI case, but endemic,
and some structural response is essential.
This Subcommittee previously encountered this problem during the course of its investigations in 1987 and 1988. Since that
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time, the problem has not improved, and the Subcommittee has seen no signs that it is effectively being responded to by
federal law enforcement.
It is recommended that the Congress establish, by statute, a law enforcement committee, reporting annually to the Justice
Department and the Congress, which focuses on developing solutions to the continuing "turf wars" in the sharing of
information and coordination of prosecutions among law enforcement entities in the U.S. The committee would consist of a
representative from the Justice Department, a U.S. Attorney, a state Attorney General and a District Attorney, all appointed
by the President and each subject to confirmation by the Senate.
12. THE SUBCOMMITTEE RECOMMENDS THAT A STATUTORY MECHANISM FOR THE RECEIPT BY
CONGRESS OF FOREIGN FINANCIAL INFORMATION BE ESTABLISHED.
The Justice Department has for a number of years taken the position that U.S. treaties with foreign jurisdictions for the
sharing of information in criminal, regulatory and investigative matters does not encompass the Congress, even when Mutual
Legal Assistance Treaties (MLATs) have been entered into with those countries which do not by their language exclude the
Congress. Accordingly, the Justice Department refused to assist the Subcommittee, and will not in general assist
Congressional requests for information, including the enforcement of Congressional subpoenas, to the extent that they seek
information that is held abroad. This position has recently been modified so that the Justice Department will cooperate in
such assistance in cases in which the Foreign Country has already explicitly agreed to provide it to the Congress.
As the Iran-Contra Committees found in 1987, and as this Subcommittee has found during its work from 1988 through 1992,
the inability of the Congress to obtain information from abroad either directly or through the Executive Branch due to the
lack of procedures has substantially impeded the Congress' constitutional responsibilities in fact-finding and oversight of
U.S. foreign policy and other extra-territorial activities.
Two possible legislative solutions would be a statute explicitly adding the enforcement of legislative branch subpoenas as a
matter of U.S. domestic law to the mutual enforcement responsibilities of the Executive Branch under mutual legal
assistance treaties with foreign countries; and a statute providing for direct application by the Congress to the foreign
government for enforcement of the subpoena, backed by some form of limitation on Executive Branch cooperation with that
foreign government in the event of non-compliance.
1. S. Hrg. 102-350 Pt. 5 p. 153. THE BCCI AFFAIR, Part 23
APPENDICES
Matters For Further Investigation
There have been a number of matters which the Subcommittee has received some information on, but has not been able to
investigate adequately, due such factors as lack of resources, lack of time, documents being withheld by foreign
governments, and limited evidentiary sources or witnesses. Some of the main areas which deserve further investigation
include:
1. The extent of BCCI's involvement in Pakistan's nuclear program. As set forth in the chapter on BCCI in foreign countries,
there is good reason to conclude that BCCI did finance Pakistan's nuclear program through the BCCI Foundation in
Pakistan, as well as through BCCI-Canada in the Parvez case. However, details on BCCI's involvement remain unavailable.
Further investigation is needed to understand the extent to which BCCI and Pakistan were able to evade U.S. and
international nuclear non-proliferation regimes to acquire nuclear technologies.
2. BCCI's manipulation of commodities and securities markets in Europe and Canada. The Subcommittee has received
information that remains not fully substantiated that BCCI defrauded investors, as well as some major U.S. and European
financial firms, through manipulating commodities and securities markets, especially in Canada, the Netherlands, and
Luxembourg. This alleged fraud requires further investigation in those countries.
3. BCCI's activities in India, including its relationship with the business empire of the Hinduja family. The Subcommittee
has not had access to BCCI records regarding India. The substantial lending by BCCI to the Indian industrialist family, the
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Hindujas, reported in press accounts, deserves further scrutiny, as do the press reports concerning alleged kick-backs and
bribes to Indian officials.
4. BCCI's relationships with convicted Iraqi arms dealer Sarkis Soghanalian, Syrian drug trafficker, terrorist, and arms
trafficker Monzer Al-Kassar, and other major arms dealers. Sarkenalian was a principal seller of arms to Iraq. Monzer AlKassar has been implicated in terrorist bombings in connection with terrorist organizations such as the Popular Front for the
Liberation of Palestine. Other arms dealers, including some who provided machine guns and trained Medellin cartel death
squads, also used BCCI. Tracing their assets through the bank would likely lead to important information concerning
international terrorist and arms trafficker networks.
5. The use of BCCI by central figures in arms sales to Iran during the 1980's. The late Cyrus Hashemi, a key figure in
allegations concerning an alleged deal involving the return of U.S. hostages from Iran in 1980, banked at BCCI London. His
records have been withheld from disclosure to the Subcommittee by a British judge. Their release might aid in reaching
judgments concerning Hashemi's activities in 1980, with the CIA under President Carter and allegedly with William Casey.
6. BCCI's activities with the Central Bank of Syria and with the Foreign Trade Mission of the Soviet Union in London.
BCCI was used by both the Syrian and Soviet governments in the period in which each was involved in supporting activities
hostile to the United States. Obtaining the records of those financial transactions would be critical to understanding what the
Soviet Union under Brezhnev, Chernenko, and Andropov was doing in the West; and might document the nature and extent
of Syria's support for international terrorism.
7. BCCI's involvement with foreign intelligence agencies. A British source has told the Bank of England and British
investigators that BCCI was used by numerous foreign intelligence agencies in the United Kingdom. The British intelligence
service, the MI-5, has sealed documents from BCCI's records in the UK which could shed light on this allegation.
8. The financial dealings of BCCI directors with Charles Keating and several Keating affiliates and front-companies,
including the possibility that BCCI related entities may have laundered funds for Keating to move them outside the United
States. The Subcommittee found numerous connections among Keating and BCCI-related persons and entities, such as BCCI
director Alfred Hartman; CenTrust chief David Paul and CenTrust itself; Capcom front-man Lawrence Romrell; BCCI
shipping affiliate, the Gokal group and the Gokal family; and possibly Ghaith Pharaon. The ties between BCCI and Keating's
financial empire require further investigation.
9. BCCI's financing of commodities and other business dealings of international criminal financier Marc Rich. Marc Rich
remains the most important figure in the international commodities markets, and remains a fugitive from the United States
following his indictment on securities fraud. BCCI lending to Rich in the 1980's amounted to tens of millions of dollars.
Moreover, Rich's commodities firms were used by BCCI in connection with BCCI's involving in U.S. guarantee programs
through the Department of Agriculture. The nature and extent of Rich's relationship with BCCI requires further
investigation.
10. The nature, extent and meaning of the ownership of shares of other U.S. financial institutions by Middle Eastern political
figures. Political figures and members of the ruling family of various Middle Eastern countries have very substantial
investments in the United States, in some cases, owning substantial shares of major U.S. banks. Given BCCI's routine use of
nominees from the Middle East, and the pervasive practice of using nominees within the Middle East, further investigation
may be warranted of Middle Eastern ownership of domestic U.S. financial institutions.
11. The nature, extent, and meaning of real estate and financial investments in the United States by major shareholders of
BCCI. BCCI's shareholders and front-men have made substantial investments in real estate throughout the United States,
owning major office buildings in such key cities as New York and Washington, D.C. Given BCCI's pervasiveness
criminality, and the role of these shareholders and front-men in the BCCI affair, a complete review of their holdings in the
United States is warranted.
12. BCCI's collusion in Savings & Loan fraud in the U.S. The Subcommittee found ties between BCCI and two failed
Savings and Loan institutions, CenTrust, which BCCI came to have a controlling interest in, and Caprock Savings and Loan
in Texas, and as noted above, the involvement of BCCI figures with Charles Keating and his business empire. In each case,
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BCCI's involvement cost the U. S. taxpayers money. A comprehensive review of BCCI's account holders in the U.S. and
globally might well reveal additional such cases. In addition, the issue of whether David Paul and CenTrust's political
relationships were used by Paul on behalf of BCCI merits further investigation.
13. The sale of BCCI affiliate Banque de Commerce et de Placements (BCP) in Geneva, to the Cukorova Group of Turkey,
which owned an entity involved in the BNL Iraqi arms sales, among others. Given BNL's links to BCCI, and Cukorova
Groups' involvement through its subsidiary, Entrade, with BNL in the sales to Iraq, the swift sale of BCP to Cukorova just
weeks after BCCI's closure -- prior to due diligence being conducted -- raises questions as to whether a prior relationship
existed between BCCI and Cukorova, and Cukorova's intentions in making the purchase. Within the past year, Cukorova
also applied to purchase a New York bank. Cukorova's actions pertaining to BCP require further investigation in Switzerland
by Swiss authorities, and by the Federal Reserve New York.
14. BCCI's role in China. As noted in the chapter on BCCI's activities in foreign countries, BCCI had extensive activity in
China, and the Chinese government allegedly lost $500 million when BCCI closed, mostly from government accounts.
While there have been allegations that bribes and pay-offs were involved, these allegations require further investigation and
detail to determine what actually happened, and who was involved.
15. The relationship between Capcom and BCCI, between Capcom and the intelligence community, and between Capcom's
shareholders and U.S. telecommunications industry figures. The Subcommittee was able to interview people and review
documents concerning Capcom that no other investigators had to date interviewed or reviewed. Much more needs to be done
to understand what Capcom was doing in the United States, the United Kingdom, Egypt, Oman, and the Middle East,
including whether the firm was, as has been alleged but not proven, used by the intelligence community to move funds for
intelligence operations; and whether any person involved with Capcom was seeking secretly to acquire interests in the U.S.
telecommunications industry.
16. The relationship of important BCCI figures and important intelligence figures to the collapse of the Hong Kong Deposit
and Guaranty Bank and Tetra Finance (HK) in 1983. The circumstances surrounding the collpase of these two Hong Kong
banks; the Hong Kong banks' practices of using nominees, front-companies, and back-to-back financial transactions; the
Hong Banks' directors having included several important BCCI figures, including Ghanim Al Mazrui, and a close associate
of then CIA director William Casey; all raise the question of whether there was a relationship between these two institutions
and BCCI-Hong Kong, and whether the two Hong Kong institutions were used for domestic or foreign intelligence
operations.
17. BCCI's activities in Atlanta and its acquisition of the National Bank of Georgia through First American. Although the
Justice Department indictments of Clark Clifford and Robert Altman cover portions of how BCCI acquired National Bank of
Georgia, other important allegations regarding the possible involvement of political figures in Georgia in BCCI's activities
there remain outside the indictment. These allegations, as well as the underlying facts regarding BCCI's activities in Georgia,
require further investigation.
18. The relationship between BCCI and the Banca Nazionale del Lavoro. BCCI and the Atlanta Branch of BNL had an
extensive relationship in the United States, with the Atlanta Branch of BNL having a substantial number of accounts in
BCCI's Miami offices. BNL was, according to federal indictments, a significant financial conduit for weapons to Iraq. BCCI
also made loans to Iraq, although of a substantially smaller nature. Given the criminality of both institutions, and their
interlocking activities, further investigation of the relationship could produce further understanding of Saddam Hussein's
international network for acquiring weapons, and how Iraq evaded governmental restrictions on such weapons acquisitions.
19. The alleged relationship between the late CIA director William Casey and BCCI. As set forth in the chapter on
intelligence, numerous trails lead from BCCI to Casey, and from Casey to BCCI, and the investigation has been unable to
follow any of them to the end to determine whether there was indeed a relationship, and if there was, its nature and extent. If
any such relationship existed, it could have a significant impact on the findings and conclusions concerning the CIA and
BCCI's role in U.S. foreign policy and intelligence operations during the Casey era. The investigation's work detailing the
ties of BCCI to the intelligence community generally also remains far from complete, and much about these ties remains
obscure and in need of further investigation.
20. Money laundering by other major international banks. Numerous BCCI officials told the Subcommittee that BCCI's
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money laundering was no different from activities they observed at other international banks, and provided the names of a
number of prominent U.S. and European banks which they alleged engaged in money laundering. There is no question that
BCCI's laundering of drug money, while pervading the institution, constituted a small component of the total money
laundering taking place in international banking. Further investigation to determine which international banks are soliciting
and handling drug money should be undertaken.
WITNESSES
(All witnesses testified in public session or in published depositions printed by the Subcommittee, except witnesses with *,
who testified at hearing conducted within Subcommittee on Consumer and Regulatory Affairs of Senate Committee on
Banking, Housing and Urban Affairs in coordination with this investigation, May 23, 1991.)
Robert A. Altman, former president, First American Bankshares and attorney for BCCI.
Fausto Alvarado, Member, Peruvian House of Deputies.
Fernando Ramon Marin Amaya. Investigator retained by Attorney General of Guatemala to investigate BCCI's activities in
Guatemala.
Amjad Awan, federal prisoner, former BCCI official who handled accounts of Panamanian General Manuel Noriega.
Sidney Bailey, Virginia Commissioner of Financial Institutions, Richmond, Virginia.*
Robert R. Bench, Partner, Price Waterhouse, Former Deputy Comptroller for International Relations and Financial
Evaluation.
Gerald Beyer, Executive Vice President, Chicago Merchantile Exchange.
Akbar Bilgrami, federal prisoner, former head of Latin American and Caribbean Regional Office, BCCI, Miami.
Jack Blum. A private attorney at the firm of Novins, Lamont & Flug. Formerly special counsel to the Foreign Relations
Committee for the investigation of the Subcommittee on Narcotics, Terrorism, and International Operations into Drugs, Law
Enforcement, and Foreign Policy, 1987-1988.
Parker W. Borg. Deputy Assistant Secretary of the Bureau of International Narcotics Matters at the Department of State.
James Bruton, Acting Assistant Attorney General, Tax Divisin, Department of Justice.
A. Peter Burleigh, Coordinator for Counter-Terrorism at the Department of State.
Jorge Del Castillo, Member, Peruvian House of Delegates.
Pedro Cateriano, Member, Peruvian House of Deputies.
Nazir Chinoy, federal prisoner, former General Manager, BCCI Paris.
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Clark M. Clifford, formerly, chairman of First American Bankshares and attorney for BCCI.
Andrea Cocoran, Director of Planning and Compliance, Commodities Futures Trading Commission.
Michael Crystal, Queen's Counsel, representing English court-appointed liquidators of BCCI.
George Davis, President and CEO, First American Bankshares, Washington, D.C.
James F. Dougherty, Attorney, Miami Florida. Representing Lloyds of London in litigation concerning alleged fraud
involving BCCI.
Scott M. Early, General Counsel, Chicago Board of Trade.
Lourdes Flores, Member, Peruvian House of Deputies.
Robert Genzman, U.S. Attorney for the Middle District of Florida.
Wendy Gramm, Commissioner, Commodities Futures Trading Commission.
John Heimann, former New York State Bank Supervisor and Comptroller of the Currency.*
Mark Jackowski, Assistant U.S. Attorney for the Middle District of Florida.
Nicholas de B. Katzenbach, Chairman, First American Bankshares, Washington, D.C.
Gregory Kehoe, First Assistant U.S. Attorney, Criminal Division, for the Middle District of Florida.
Richard Kerr, Acting Director, Central Intelligence Agency.
Alan J. Kreczko. Deputy Legal Advisor at the U.S. Department of State.
T. Bertram Lance, Former Director of the Office of Management and Budget.
Dexter Lehtinen, Former U.S. Attorney, Southern District of Miami, Florida.
Richard A. Lehrman, Esq., attorney, Miami, Florida. Represented Lloyds of London in case involving BCCI commmodities
fraud.
Ricardo Llaque, Deputy Director of Exchange Operations, Federal Reserve Bank of Peru.
Paul Maloney, Deputy Assistant Attorney General for Criminal Division, U.S. Department of Justice, Washington, D.C.*
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Virgil Mattingly, General Counsel, Board of Governors, Federal Reserve System.
Robert Mazur, Undercover Agent for Operation C-Chase, Drug Enforcement Administration.
Douglas P. Mulholland, Assistant Secretary for Intelligence and Research, Department of State.
Robert Morgenthau, District Attorney, County of New York, New York.*
Robert S. Mueller, III, Assistant Attorney General, Department of Justice, Washington, D.C.
Fernando Olivera, Member, Peruvian House of Deputies.
Laurence Pope, Associate Coordinator for Counter-Terrorism, Department of State.
William Von Raab. An attorney at the firm of William H. Bode Associates. Formerly Commissioner of the United States
Customs Service, 1985-1989, oversaw Customs' handling of the sting operation that targeted BCCI, Operation C-Chase.
Masihur Rahman, Former Chief Financial Officer, BCCI London.
Mark Richard, Deputy Assistant Attorney General, Criminal Division, Department of Justice.
Edward M. Rogers, Jr., former White House aide.
Jesus Rodriguez, Member, Chamber of Deputies, Argentina.
Abdur Sakhia, former head, BCCI Miami.
Ahmed Al Sayegh, Director, Abu Dhabi National Oil Company.
Raul Alconada Sempe, former Secretary of Defense and former Secretary for Special Projects, Foreign Ministry, Argentina.
Grant Smith, Deputy Assistant Secretary, International Narcotics Matters, Department of State.
Brian Smouha, Court Appointed Fiduciary for BCCI Holdings (Luxembourg) SA and Bank of Credit and Commerce
International, S.A., London, England.
John W. Stone, Chief of Enforcement, Federal Deposit Insurance Corporation.
William Taylor, Staff Director, Division of Banking Supervision and Regulation, Federal Reserve, Washington, D.C.
WRITS AND SUBPOENAS AUTHORIZED DURING INVESTIGATION
WRITS AUTHORIZED (4)
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Amjad Awan
Akbar Bilgrami
Nazir Chinoy
Ian Howard
SUBPOENAS AUTHORIZED (17)
Sani Ahmed
BCCI
Roy Carlson
Kerry Fox
Grand Hotel, Washington DC
Abol Helmy
Kissinger Associates
Office of the Comptroller of the Currency
Price Waterhouse (US)
Price Waterhouse (UK)
First American
First American Georgia
Robert Magness
David Paul
Robert Powell
Ed Rogers
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Larry Romrell
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