Annapolitan Routed Out Bcci

Lawyer Blum Traced Scandal Over The Globe

November 20, 1991|By Lorraine Mirabella | Lorraine Mirabella,Staff writer

Jack A. Blum's an unlikely looking tough guy, routinely described inthe press as pudgy, middle-aged and slightly rumpled, with thick eyeglasses and a slow drawl.

The 50-year-old lawyer appears more at home in his swank, downtown Washington office than you'd imagine he'd be among smugglers, spies and crooks.

Yet his stubborn determination to penetrate the underworld, even while federal authorities remained indifferent, led the Annapolis resident to uncover one of the world's biggest corporate criminal enterprises ever.

Blum's investigation of the Bank of Credit and Commerce International for a U.S. Senate committee in the late 1980s sent him "chasing drug dealers, dealing with spies and crazy people and everyone with a story about the drug trade and guerrillas in Central America, a pretty exotic crowd," he says.

His work led to further investigations and finally to a New York grand jury indictment against the bank and two of its officers.

The grand jury charged the bank --founded in Pakistan, incorporated in Luxembourg and headquartered inLondon -- with carrying out the biggest bank fraud in history, through fraud, money-laundering, bribery and theft. On July 5, the Bank ofEngland and regulators in 70 other nations, including the United States, shut down BCCI's worldwide operations.

With the criminal activities in the open, including Gen. Manuel Noriega's use of the bank to launder money, and the BCCI scandal grabbing worldwide headlines, Blum has suddenly found himself in the spotlight's glare.

In recentmonths, Blum has appeared on ABC's "Nightline"; "MacNeil-Lehrer NewsHour"; "Prime Time" with Sam Donaldson; and the British BroadcastingCorp.'s equivalent of "60 Minutes."

Tonight, he'll speak to the Anne Arundel Trade Council during its annual membership dinner at Loew's Annapolis Hotel.

To any audience, Blum brings the same message:The BCCI scandal, on a monumental scale, shows how lack of regulation of the banking industry can damage the local and global economies.

And he's troubled by the U.S. Justice Department's reluctance to investigate BCCI, even after Blum and others provided investigators with key evidence.

"Why did it take so long to do so little?" he asks. "Here was the support structure for the drug industry. With all the rhetoric about war on drugs -- 'We're getting the bad guys' -- hereis a gigantic operation and no one wants to do anything about it."

For years, Blum has been asking the hard questions and making hard-to-see connections.

The Columbia law school graduate came to Washington, D.C. in 1965 to work for the Federal Communications Commission. He soonswitched to Capitol Hill, working 11 years as a Senate investigator for the Judiciary and Foreign Relations committees. In 1976, he opened his own law practice, taking on such clients as petroleum distributors and gasoline wholesalers. That's when he first heard of BCCI.

When one client tried to set up a business deal involving theArab-owned bank, an American banker told Blum, "These people are bad. I don't want any part of it."

Blum didn't pursue that until after 1987, when Sen. John Kerry, D-Mass., invited him to head a Senate investigation into narcotics trafficking and foreign policy.

The testimony of one witness in January 1988 prompted Blum's investigation of BCCI. The consul general of Panama spoke of Noriega's ties to drugtrafficking and mentioned "Noriega's bank, a key part of the criminal empire called BCCI," Blum recalls.

"We very quickly unearthed the fact that the bank was a massive criminal organization, banker to 3,000 of the world's most appalling criminals," he says.

"Its function . . . was to service the needs of large criminal organizations and people stealing money from their own governments."

From there, Blum tracked down former bank employees. After speaking to one over a four-day period in a Miami hotel room, Blum learned BCCI secretly hadpurchased shares in three American banks.

Getting ready to returnto private practice, Blum persuaded his source and another former bank official to become government witnesses. He took them to the U.S. Attorney in Tampa, Fla., where U.S. Customs agents had arrested BCCI bankers and Colombian drug dealers as part of a drug sting operation.

BCCI paid a $14 million fine for money laundering, but still stayed open. Angered, Blum took his story to New York District Attorney Robert M. Morgenthau, whose investigation led to the July indictments.

Blum has finished his part of the BCCI investigation, but remainscritical of the administration's handling of drugs.

"Street sweeps aren't solving the problem. No matter how many people you throw in jail, the drug problem gets worse. You don't solve the problem with people shooting at each other. You take the money out of it and crack down on the banks that handle the money."

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