BCCI submits guilty plea judge wavers on acceptance

January 10, 1992|By Robert L. Jackson | Robert L. Jackson,Los Angeles Times

WASHINGTON -- The Bank of Credit and Commerce International formally pleaded guilty yesterday to sweeping charges of racketeering, fraud and conspiracy, but the federal judge presiding over the case reserved decision on whether to accept the plea agreement.

U.S. District Judge Joyce Hens Green said she will announce Jan. 24 whether she will accept the plea agreement after considering objections from BCCI creditors and reviewing the settlement, which calls for the forfeiture of $550 million in U.S.-based assets.

The proposed penalty would be the largest criminal forfeiture in U.S. history.

Ira Raphaelson, the Department of Justice's special counsel for financial crimes, said the plea agreement with the scandal-scarred bank represented "a fair, just and appropriate resolution" to the world's biggest bank fraud case ever.

BCCI's operations were shut down July 5 by the United States and other countries amid charges of widespread fraud. Depositor losses worldwide have been estimated at more than $15 billion.

The bank has been linked to drug and arms deals, and money laundering.

Mr. Raphaelson said criminal investigations would continue against individuals connected with BCCI all over the world.

Indictments already have been obtained against BCCI's founder, Agha Hasan Abedi; a former bank president, Swaleh Naqvi; Ghaith R. Pharaon, a Saudi Arabian financier; and others. They have denied any wrongdoing.

Mr. Pharaon allegedly helped BCCI gain secret control of Independence Bank of Los Angeles and the National Bank of Georgia. Those purchases, which would be violations of federal banking laws, are described as racketeering transactions in the plea agreement.

Department of Justice officials disclosed the charges and their proposed settlement Dec. 19. Since then some creditors and foreign liquidators of BCCI objected to the pact. The creditors argued that they were not consulted in the negotiations that led

to the agreement.

Wednesday in New York, U.S. Bankruptcy Judge James Garrity denied a motion by foreign creditors who were seeking to block the agreement on grounds it would impede their ability to collect money owed to them.

The Department of Justice argued that the creditors, including Panama, the Bank of India and Lloyds of London, were barred by law from intervening in its criminal case.

Judge Green, however, said she would give creditors until Jan. 15 to file legal papers with her.

Under the plea agreement, $275 million forfeited by BCCI would go into a worldwide fund to pay creditors, depositors and others who are pursuing claims against the rogue institution.

Officials stressed that no funds would be paid to any BCCI customers who have been charged with hiding criminal proceeds, such as Latin American drug dealers or Manuel A. Noriega, the ousted dictator of Panama who is currently on trial on drug-smuggling charges.

The forfeiture also will provide up to $275 million for Independence Bank and for First American Bank of Washington, which the Federal Reserve Board has charged was secretly and illegally controlled by BCCI.

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