CIA reported BCCI owned Washington bank in '86

August 01, 1991|By David E. Rosenbaum | David E. Rosenbaum,New York Times News Service

WASHINGTON -- The Central Intelligence Agency said yesterday that it prepared a report in 1986 stating that Bank of Credit and Commerce International acquired control of Washington's largest banking company in 1982.

Government officials outside the intelligence agency said the information on First American Bankshares Inc.'s ownership was distributed at the time to the State and Treasury departments and possibly to other agencies.

The CIA report is important because it shows that at least five years ago government agencies had clear warning that the rogue international bank secretly owned First American. Officials at the Federal Reserve have said they would never have permitted BCCI to own an American bank if they had known about it.

Federal Reserve officials said yesterday they did not remember seeing the CIA report in 1986.

Until yesterday, the Fed and other authorities have said they could not document the foreign ownership of First American until last January. Clark Clifford, the prominent Washington lawyer and Democratic adviser who is chairman of First American, has said he was unaware that foreign interests controlled it.

In a 100-page report the Fed released Monday, central bank investigators contend that BCCI bought control of three American banks in Washington, Georgia and Florida by passing funds to a group of Arab agents who acted on behalf of BCCI.

There is no evidence, however, that BCCI's ownership influenced the operations of First American or compromised its soundness.

What is significant from a regulatory standpoint is that the CIA calls into question the vigilance with which bank regulators monitored the ownership of the bank, which has operations in Maryland, Virginia, New York, Florida, Georgia and

Tennessee as well as Washington.

A Senate subcommittee preparing for a hearing on BCCI scheduled for today obtained the report, and the chairman, John F. Kerry, D-Mass., got the intelligence agency yesterday to declassify the part dealing with the Washington bank.

Mr. Kerry issued this statement: "BCCI's secret ownership of First American was illegal and in direct violation of the conditions under which an Arab group purchased the bank. Yet, despite the fact that anumber of U.S. agencies were told about the secret ownership of First American by BCCI, apparently no one did anything about it. The question is, why?"

The government also had earlier evidence that First American was owned by BCCI. During a Customs Service investigation of money laundering in Florida by BCCI, which led to a guilty plea by BCCI, an official of the international bank, Amjad Awan, confided to undercover government agents that First American "belongs to BCCI."

Customs officials later gave that information to federal law enforcement and bank regulatory officials.

As the scandal involving BCCI has unfolded, many questions have been raised on Capitol Hill and elsewhere as to why the Justice Department and bank regulators did not move more swiftly as evidence mounted. So far, the Justice Department has said it is continuing to investigate.

According to past and present government officials, CIA reports like the one on BCCI are usually given to the Federal Reserve as well as the state and treasury departments.

Generally, such a report would go to the treasury secretary, who has considerable influence over bank regulation. James A. Baker III, who is now secretary of state, was treasury secretary in 1986. He is in the Middle East and could not be reached about the report last night.

A spokeswoman for the Treasury Department said: "We do not discusscommunications from the CIA that we may or may not have received."

The matter has special political significance because Mr. Clifford, who was defense secretary in the Johnson administration and an adviser to every Democratic president since World War II, is a central figure in the case.

Mr. Clifford was the lawyer for BCCI and the Arab investors who bought the banking company. He has served as the chairman of First American for several years.

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