Failed Luxembourg bank reportedly served CIA

July 13, 1991|By Jeff Gerth | Jeff Gerth,New York Times News Service

WASHINGTON -- The Bank of Credit and Commerc International, which was seized last week by international regulators, was used for Central Intelligence Agency operations, according to U.S. government and bank documents as well as current and former government and bank officials.

The bank was also involved in secret arms deals, including the covert sale of American arms to Iran in 1986, according to the documents and the officials.

Before its collapse, the banking company used its Luxembourg license to offer private financial services to individuals and, at its peak, operated in more than 70 countries, many of whose governments were customers of the bank.

Luxembourg allowed the $20 billion bank to operate with secrecy.

The bank's owners and managers included heads of state as well as people with ties to intelligence agencies and armed services throughout the world, according to records and former bank officials.

Evidence is emerging that in its 19-year history, a customer of the bank, Saudi arms dealer Adnan Khashoggi, helped finance secret sales of arms to Iran through his BCCI account. It is also believed that the CIA used the bank to aid Afghan rebels.

The CIA's use of the bank was confirmed by former and current officials, including William von Raab, who was the U.S. Customs Service commissioner in 1988 when a subsidiary of the banking company was indicted in Tampa, Fla., for laundering drug money.

Mr. von Raab said, "We discovered the CIA used them for its accounts for paying unnamed people, covert accounts."

After the bank pleaded guilty to the charges in 1990, it cooperated with federal inquiries into Gen. Manuel Antonio Noriega, the former Panamanian leader, who also used it for intelligence and political operations, according to congressional records, court records related to the money-laundering case in Florida and former BCCI officials.

Before the 1988 Tampa indictment, CIA officials provided Customs officials with background information about the bank, but they did not interfere with the investigation, Mr. von Raab said in an interview this week.

Mark Mansfield, a spokesman for the CIA, declined to comment on the matter. The agency routinely uses both U.S. and foreign banks to transfer funds. In its most secretive dealings, the agency uses dummy companies to mask the agency's role.

In Washington, several telephone calls seeking comment from the bank's law firm, Patton, Boggs & Blow, were not returned.

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