BCCI's Lawyers and Lobbyists
In hiring lawyers and lobbyists in the United States to help it deal with its problems, BCCI did not think small. BCCI's cadre of professional help in Washington, D.C. alone included, at various times a former Secretary of Defense (Clark Clifford), former Senators and Congressmen (John Culver and Michael Barnes), former federal prosecutors (Raymond Banoun, Lawrence Barcella and Lawrence Wechsler), and former Federal Reserve attorneys (Baldwin Tuttle and Jerry Hawke).
Still other prominent figures were recruited for BCCI's secretly-held American subsidiary, First American, such as former Senator and Democratic presidential candidate Stuart Symington and former Republican Senator from Maryland Charles Mac Mathias, who each sat on First American's board of director.
Other firms consisting of important former officials -- such as Kissinger Associates, then home to former Secretary of State Henry Kissinger, current Under Secretary of State Lawrence Eagleburger and current National Security Advisor Brent Scowcroft -- were recruited by BCCI, but refused to accept BCCI's business following its indictment on drug money laundering charges.
The revolving door between government and the private sector made it possible for BCCI to retain former government officials with intimate knowledge of how the U.S. government operates to aid BCCI's agenda. Ironically, BCCI used these former officials against the agencies they once served as instruments of its violations of U.S. laws and its attempts to slow or stop investigations of its wrongdoing.
Much of the activity of BCCI's lawyers in the United States was normal representation, often extremely aggressive, but within the borders of the kind of work the firms involved did for other clients. At other times, however, lawyers for BCCI participated in decisions to hire private investigators to investigate the private lives of government investigators pursuing BCCI; sought to use "political chits" to shut down Congressional investigations of BCCI; threatened publications considering publishing articles about BCCI with libel suits; and refused to refer BCCI foreign branches to federal law enforcement when BCCI's own employees in the U.S. believed such referrals were legally required because of the degree of the branch's involvement in money laundering.
The most aggressive activity by BCC's lawyers and lobbyists took place at the beginning and at the end of BCCI's
Two periods of activity by BCCI's lawyers in the U.S. illustrate how BCCI accomplished illegal or improper objectives were:
** Assisting BCCI and its nominees in restructuring the takeover attempt of Financial General Bankshares after the initial attempt was stopped by the Securities and Exchanges Commission (SEC), on the ground that BCCI had secretly colluded with other shareholders by purchasing 4.9% of the FGB stock each to evade securities laws requiring the reporting of their purchases at 5% or more. Among the key attorneys involved in the restructuring of the BCCI takeover were Clifford, Altman, and former Federal Reserve lawyer Baldwin Tuttle. (1978-1981)
** Structuring the purchase of National Bank of Georgia by First American from BCCI's nominee, Ghaith Pharoan. (1985-1986)
Response to Senate
Joint Defense Agreement
In hiring lawyers and lobbyists 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.
BCCI's cadre of professional help in Washington D.C. included, at various times, a former Secretary of Defense (Clark Clifford), former Senators and Congressmen (John Culver, Mike Barnes), and former federal prosecutors (Larry Wechsler, Raymond Banoun, and Larry Barcella), and former Federal Reserve Attorneys (Baldwin Tuttle, Jerry Hawke, and Michael Bradfield). Their involvement in representing BCCI, following their government employment, illustrates the perils of the revolving door, and the danger of former government officials using the expertise they gained in government at the service of private clients. Often, such former officials have no idea of the real agenda or problems their clients may be hiding. And yet their actions can, and in the case of BCCI, did, substantially impede the ability of government to do its work.
Apart from Clifford and Tuttle, this team was brou
ght in only after BCCI's indictment on drug money laundering charges in October 1988. Since the indictment, at various times, these former officials were used by BCCI to stall investigations, prevent the bank from being closed by regulators, and to stop legislation that would have mandated BCCI's closure.
Some of the questionable tactics employed by BCCI's team of former government officials included:
** Investigating government agents.
** Working outside the normal law enforcement channels to keep the bank open in Florida.
** Lobbying Senators as registered foreign agents in pursuit of their criminal defense work, in order to stop BCCI from being closed.
** Delaying and impeding an authorized U.S. Senate investigation of the bank.
** Refusing to refer BCCI customers and accounts for criminal investigation even after being advised by BCCI's own offiers that the customers and the accounts raised serious questions.
** In the case of Clifford and Altman, using the attorney work product and attorney client privileges as shields to protect their own potential cupability.
Larry Barcella is a former Assistant US Attorney who gained national prominence for his successful prosecution of Edwin Wilson, the American convicted of selling secrets to Lybia. Barcella was brought onto the BCCI case shortly after the October 1988 indictment of BCCI in Tampa, Florida. Larry Wechsler, with whom Barcella had practiced law in the US Justice Department recruited him to coordinate the bank's defense.
Although the full extent of Barcella's activities on behalf of BCCI remains unknown, he did engage in the following:
-- In 1988 Barcella tried to persuade his firm's lead partner, former US Senator Paul Laxalt, meet with Swaleh Naqvi, BCCI's CEO, in London, and to engage in lobbying on behalf of the bank on Capitol Hill. The Subcommittee has been unable to determine what, if any, services Senator Laxalt performed on behalf of BCCI.
-- In 1989 and 1990 Barcella joined John Vardaman, a partner at Williams and Conolly and Robert Altman in warning Larry Gurwin, a freelance journalist writing an article about BCCI and First American Bank for Regardie's magazine, that it would be improper to write anything that linked the two institutions. Barcella has called Gurwin's allegations "absurd".(1)
- In early 1990, after BCCI pleaded guilty to money laundering charges in Tampa, Florida, several members of the US Congress criticized the plea bargain as to lenient on the bank. Documents obtained by the Subcommittee show that Barcella met with Senator Dennis Deconcini, one of the critics of the plea bargain, in an effort to persuade him that BCCI was not the corrupt institution that he and others had claimed.
Most recently, of course, Barcella has been hired by the House Foreign Affairs Committee to investigate the "October Surprise", the allegations surrounding a political deal for release of the US hostages held in Iran in 1980. On leave from the Justice Department to assist Barcella in his investigation is Greg Kehoe -- the Justice Department official with whom BCCi lawyers, including Barcella, negotiated the bank's plea agreement in Tampa.
Raymond Banoun is also a former federal prosecutor who was brought into the BCCI case by Robert Altman to assist in the bank's defense. At the time Banoun was with the law of Arent Fox; he is currently the head of the white collar criminal defense team in the Washington office of Caldawater, Wickersham and Taft.
Aside from Altman, the lawyer who had the most contact with the Subcommittee concerning BCCI was Banoun. In reviewing the record, the Subcommittee has concluded that Banoun may have acted unethically by willfully misleading it in an attempt to impede the investigation.
Banoun was initially charged by Altman to oversee the production of documents respondent to the series of subpoenas issued by the Subcommittee to BCCI in the summer of 1988. Among the documents under subpoena were all records relating to General Noriega's accounts in the United States. While the Subcommittee did receive some information from BCCI, it was clearly incomplete and Senator Kerry has stated publicly on several occasions that he does not believe the Subcommittee received full cooperation. In response, Banoun has made the following extraordinary comments to the press:
-- Banoun told Newsweek that he fully cooperated with the Subcommittee, but that "lawyers don't go around searching for documents for clients."(2)
-- Banoun told the National Journal that the Subcommittee had been "outlawyered." He added that "We don't allow our clients to get pushed around. This is an adversary system, not a roll-over system." (3)
-- Banoun also complained to the Legal Times that "more and more these days the government [is] wanting information obtained under the attorney-client privilege and attorney work product." Banoun stated,"It's an unfortunate and frightening sign because it erodes very seriously the ability of a lawyer to represent a client." BCCI, of course, waived it attorney client privilege.(4)
Taken together these comments suggest that Banoun's approach to the subpoenas was to advise BCCI to turn over all relevant documents, but to take no steps to ascertain whether, indeed, that had been accomplished.
The Subcommittee is also disturbed by a memo written by Roma Theus, a partner in the Florida law firm of Holland Knight, which states that Altman and Banoun "were doing everything within their power to call in political markers."(5) Banoun has called the author of the memo a misinformed "fruitcake."(6) But Theus, a highly respected lawyer, told the Subcommittee that his information came from private investigator Phillip Manuel, who had worked for Banoun's colleague, Larry Barcella. Manuel told the Subcommittee he had no idea why Theus would write such a thing and that his only information about the Subcommittee's investigation came from "journalists with who he played poker."
In the fall of 1988 Banoun was also charged with reviewing all the accounts for BCCI in Florida to determine whether criminal referrals should be made. The Subcommittee has obtained documents that suggest that despite evidence of criminal activity produced by the manager of one of BCCI Florida offices (one of BCCI's few honest officers) Banoun made no criminal referrals.
Larry Wechsler is a former government prosecutor in the Washington D.C. US Attorney's office who now practices with the Washington D.C. firm of Janis, Shuelke and Wechsler. Wechsler previously represented Albert Hakim in the Iran Contra affair
and was brought in by his close friend Robert Altman to put together a legal defense team for BCCI in Florida. Wechsler recruited Barcella and bevy of other top lawyers.
Wechsler has refused to meet with Subcommittee staff, but documents show that he and Banoun lobbied the US Senate on behalf of BCCI.
Many who serve in Congress come to public service from other professions, frequently the legal profession. So it is natural that once out of office, those with law degreees return to the practice of law.
While former public servants are entitled to pursue careers once they return to private life, all too often they remain in Washington and pursue legal careers that entail lobbying. Again, while there is nothing improper as long as ethical rules are followed, the BCCI case points out how easily it is for former lawmakers to have their reputations, and therefore the reputation of the government they served, tarnished by representation of unsavory clients.
The Subcommittee has no solution to this sticky problem, except to note that those who develop influence within the Congress, need be cautious in the exercise of that influence at all times, but especially when they leave the Congress.
John Culver, a former US Senator, was another partner at the law firm of Arent Fox who did work on behalf of BCCI. While Culver's involvement was relatively limited, he did contact the Subcommittee in the winter of 1989 in an attempt to gain an advance copy of the Subcommittee's report on narcotics trafficking, which included references to BCCI. He also lobbied the Subcommittee with Banoun, Weschler and Altman, assuring Subccommittee staff that the bank was fully cooperating, and that, save events in Florida, a sound and honorable institution.
Senator Mathias became a director of First American holding company after leaving the Senate in 1986. Mathias also became chairman of the board of directors audit committee.
On August 2, 1991, mathias wrote to lark Clifford and urged him and Robert Altman to resign. According to the Wall Street Journal, Mathias told Clifford, "In recent weeks, there has been a worrisome outflow of deposits which continues to this day." He added, "you and Bob are perceived as the link between BCCI ...and First American."(7)
Barnes, a former US Congressman from Maryland, is a partner in the Washington D.C. law firm of Arent Fox. In the spring of 1990, Barnes was called in by his colleague Ray Banoun, who was concerned about the impact of a pending article on First American bank by freelance journalist, Larry Gurwin for Regardies Magazine. Barnes called William A. Regardies to complain about the article. Regardies published Gurwin's work anyway.
The Federal Reserve is a quasi independent government insitution which has enormous power in setting the economic agenda for the country. Because of its unique status, it is somewhat insulated form direct accountbility to the legislative and executive branches of government. While government ethics laws apply to the Fed in a similar fashion as to other government agencies, the BCCI case suggests the Fed has become too much of a club where former employees are able to lobby current employees on critical banking issues.
Balwdin Tuttle served as the deputy general counsel at the Federal Reserve during the mid- 1970's. After leaving the Federal Reserve Tuttle moved to private practice where he became the outside counsel to Clifford and Altman for their BCCI related work. He is currently a resident partner in the Washington D.C. office of Milbank, Tweed, Hadley and McCloy.
Tuttle represented the middle eastern investors along with Clifford and Altman at the 1981 Federal Reserve hearing on the takeover of Financial General Bankshares. That hearing was chaired by Robert E. Manion, now at the law firm of Arnold and Porter. Manion had been one of Tuttle's former subordinates and replaced Tuttle when he left as the Fed's deputy general counsel.
Besides Manion, Tuttle knew Jack Ryan, the director of the division of banking supervision and regulation. Tuttle fielded most of the tough questions at the hearing and it is clear that his representation impressed his former colleagues at the Federal Reserve.
Tuttle also filed the investors application to the Federal Reserve. In that application, he represented that BCCI "neither is it a lender, nor will it be" to First American's Middle-eastern purchasers. That, of course, has been shown to have been completely untrue.
Tuttle provided legal advice to BCCI and the Middle-Eastern investors throughout the 1980's. The Federal Reserve, in its civil complaint against Clifford and Altman, noted Tuttle's involvement in the NBG takeover in 1986. In a "brief and hostile" meeting, Altman castigated Tuttle for questioning the proprietary of the takeover and warned him that he if he ever raised the issue again, he would be fired. Apparently Tuttle heeded Altman's advice, and never made his concerns known to bank regulators.
Jerry Hawke, a former general counsel to the Federal Reserve, is currently a partner with the Washington D.C. law firm of Arnold and Porter where he specializes in banking law.
Hawke was hired by First American Bank to lobby the federal reserve against the creation of a trust for the bank to facilitate its sale. Apparently, the management at First American Bank believed that they and not an independent trustee should handle the sale. As the Washington Post reported, "That means Virgil Mattingly, general counsel at the Fed who is personally handling the trust issue, is being lobbied by the man he once worked for."(8)
Michael Bradfield, a former counsel at the Federal Reserve, is with the law firm of Jones, Day, Reavis and Pogue in their Washington D.C. office. During the 1980's Bradfield responsibilities at the Federal Reserve included monitoring First American bank. In 1989 he became a partner in Jones, Day where he does work for First American pertaining to BCCI's interest in the bank holding company. His firm has also done work for the bank's oversight committee.
1. Clark Clifford and a Legal Armada Gave BCCI a Patina of respectability," by Jill Abramson, the Wall Street Journal, August 1, 1991. Also, BCCI's British solicitors wrote Gurwin about an article he did for the Economist. British solicitors threatened to sue and based their charges on information they had received from the Washington lawyers who had spoken to Gurwin. At this point Gurwin had only spoken to Wechsler and Barcella.
2. "The Influence Game," Newsweek, August 26, 1991, p.20.
3. "BCCI's Washington Web," by Paul Starobin, The National Journal, 9/7/91, p.2131.
4. "Top Lawyers are Subpoenaed in BCCI Probe," by Linda Himelstein, The Legal Times, April 27, 1992, p.1.
5. Memo to the files, Roma Theus, August, 1990.
6. Starobin, p.2131.
7. "Revolving Door between Fed and First American," by Peter Truell, The Wall Street Journal, September 6, 1991, p.A10.
8. "First American: Drop Trustee Idea," by Sharon Walsh, the Washington Post, April 14, 1992, p.D1.
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