U.S. suspects BCCI tip-off in '88 probe Drug dealers withdrew millions before arrests of 5 bank executives

October 27, 1991|By Dean Baquet | Dean Baquet,New York Times News Service J

In 1988, days before federal agents made a surprise arrest of five Bank of Credit and Commerce International executives after a long undercover operation, some of the world's most powerful drug dealers quietly withdrew millions of dollars from their BCCI accounts, according to internal bank records.

Some government investigators are now suspicious that the politically connected bank or its customers were tipped off by sources inside the U.S. government.

If there was a leak, the source of it is one of several mysteries surrounding the bank and the government's bungled efforts to investigate its activities in the United States.

But the very possibility that some of the world's most notorious drug dealers could learn of a long, highly secret investigation into money-laundering -- generally defined as concealing the source of illegally obtained funds -- heightens concerns that BCCI may have used an extraordinary network of political and intelligence connections to evade serious scrutiny.

In addition to raising questions whether the investigation was compromised, the bank documents examined by the New York Times, including records of hundreds of accounts and correspondence by the bank's own lawyers, underscore the enormous amounts of money that were being cleansed at BCCI branches in Panama, Miami, New York and other cities.

In turn, these activities raise still more questions as to why the bank was able to settle for a relatively modest $15 million penalty for what was then the largest money-laundering charge in history.

In all, the bank records, along with interviews with government agents, show that drug dealers made a run on the bank, withdrawing at least $10 million in the few weeks before the undercover operation made its arrests in Tampa, Fla.

As money poured out of the bank, the almost daily movement of millions of dollars of drug money from other BCCI accounts also seemed to come to an abrupt halt.

Most tellingly, on Friday, Oct. 7, 1988 -- the day before the undercover arrests -- two men described by the government as lieutenants in a large Colombian drug ring contacted BCCI's Panama City branch and insisted that their accounts, totaling about $2 million, be immediately closed. That same day, drug ring members withdrew $1 million from a separate bank account in the Panama branch.

Government officials have portrayed the probe that led to the BCCI arrests in Tampa as one of the most successful money-laundering cases ever, resulting in more than 70 indictments across the country.

But in recent months, with the disclosure that BCCI was involved in international fraud and corruption on a scale far grander than ever imagined, the investigation has been the subject of bitter debate in Congress, with the Treasury Department, the Justice Department and the Federal Reserve Board fending off allegations -- unproven so far -- that BCCI's connections to politicians and intelligence agencies prevented federal investigators from going after its top executives.

Customs Service officials acknowledged evidence that the Colombia-based Don Chepe organization, one of the world's largest drug-smuggling rings, may have learned of the undercover operation, known as C-Chase.

But they said this probably resulted from an incident, apparently a blunder, that exposed the investigation's cover, rather than a tip-off. They say that the length of the probe, more than two years, coupled with the fact that reporters and some members of Congress were let in on it, widened the possibility of leaks.

"There was a lot of information coming out of Customs headquarters, and who knows how far it went?" said Peter K. Nunez, assistant treasury secretary for enforcement. Mr. Nunez said he was not aware of the withdrawals until he was contacted by the Times. "I guarantee, if the agents had known of the pattern of closing accounts, they would have done something."

In a series of recent interviews, some of the lawyers and agents who worked most intimately on the case said they thought the investigation had been compromised.

One federal agent, Orin Oakes of the Internal Revenue Service, who took the witness stand during the 1990 money-laundering trial of BCCI officials, testified that on the Friday before the weekend arrests, aides to the drug ring's leader, Gerardo Moncada, removed $1 million from a BCCI account in Panama.

After that testimony, Robert Scola, a lawyer for Rudolph Armbrecht, reputed to be a cartel member, asked Mr. Oakes, "Would that indicate to you that Moncada somehow found out about this investigation?"

Mr. Oakes replied, "I know there was a leak out of Washington, D.C., that made some of the -- or a lot of the -- information available to people other than government employees." He added, "And that was before the 7th" of October.

Some, like Mr. Oakes, are convinced there was a leak, while others say they think a series of blunders blew the operation's cover.

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