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 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 Al-Kassar 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, 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 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.
(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.
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.*
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.
Grand Hotel, Washington DC
Office of the Comptroller of the Currency
Price Waterhouse (US)
Price Waterhouse (UK)
First American Georgia
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