Uncovering BCCI's armed 'city-state' to find $20 billion in global fraud

April 18, 1993|By Neal Lipschutz


Jonathan Beaty and S. C. Gwynne.

Random House.

399 pages. $25. The Bank of Credit and Commerce International was a conspiracy theorist's dream.

It was a worldwide network of covert and illicit doings, accused of helping run drugs and guns and influencing governments. Because of the many faces of BCCI and its far-flung leaders, it's likely we'll never know the bank's deepest secrets, leaving fertile ground for those who would postulate about interconnections and cover-ups.

What has been widely reported is bad enough. BCCI allegedly laundered drug money for former Panama strongman Manuel Noriega, acted as an intermediary in countless shady arms deals and secretly controlled U.S. banks. Much of this took place under the nose of U.S. law enforcement agencies.

This last point captivated Time magazine reporters Jonathan Beaty and S. C. Gwynne, who, through their magazine, greatly helped expose how far the tentacles of BCCI stretched.

In this book, the two make clear that BCCI was not simply an international bank gone wrong or even a straightforward Ponzi scheme, in which deposits must constantly be raked in to paper over massive frauds.

The authors argue that BCCI was at the same time much more than a bank and never really a bank: "Taken collectively, it was more of an armed renaissance city-state of Machiavelli's era than a modern corporation. This 'bank' possessed its very own diplomatic corps, intelligence network and private army."

This is not the first book about BCCI (whose operations were mostly shut down by bank regulators around the world in July 1991) and almost certainly won't be the last.

One BCCI-related trial, that of Washington attorney Robert Altman, is now under way. What the authors add to this complex and disturbing saga is an attempt to get answers to a critical question that plagued so many involved in the case: Why were U.S. authorities so slow to bring BCCI to justice?

To make sense of this, they take us on an entertaining journey filled with journalistic derring-do and stretching from Washington London to Abu Dhabi. We meet self-described members of BCCI's "Black Network" of thugs and "Deep Throat"-type sources highly placed in the U.S. government.

Investigative reporters, of course, don't have to live by the standards of prosecutors. But at the very least, these two make a credible argument that earlier prosecution of BCCI in the United States would not have been in the interests of some in the U.S. intelligence community because BCCI was used to achieve foreign policy initiatives made outside the purview of Congress.

The authors have no airtight case, and at times they require leaps of faith. They propose that the late director of the Central Intelligence Agency, William Casey, was near the center of covert U.S.-BCCI entanglements, and he obviously is not in a position to make a defense. But Mr. Beaty and Mr. Gwynne deserve much credit for taking on the toughest part of the BCCI story and coming away with well-researched and plausible scenarios.

They also deserve credit for making what can be an eye-glazing story of money laundering, secret stock holdings and the like into often entertaining reading. That's achieved by spending much of the book retelling how they reported the BCCI story for Time, letting the reader experience the round-the-world

adventures that went into putting the story together.

Mr. Beaty, a veteran investigative reporter, seems at times to be more spy than journalist. Secret photographs are made of documents in Moscow, unsavory sources are shepherded through the Middle East, threats are inferred and international intelligence operatives parade in and out of his house.

Once you get past the authors' awkward references to themselves in the third person ("Beaty said this" and "Gwynne thought that"), their personal story is fascinating and fast-moving.

They do go over some parts of the BCCI story chronicled elsewhere: the circumstances that led to Pakistani banker Agha Hasan Abedi's creation of BCCI in 1972; how his vision of a Third World bank to rival Western financial giants and his excellent contacts in the Middle East coincided with the start of great Arab oil wealth; his high-profile contributions to the charities favored by former President Jimmy Carter; the registration of the bank in Luxembourg and the Cayman Islands to avoid the jurisdiction of bank regulators in the major industrial nations.

Like many investigative reporters, Mr. Beaty and Mr. Gwynne have their heroes, who also are important sources of information. One such hero is Jack Blum, the Senate investigator who believed his probe into BCCI in the late 1980s was being blocked. Tipping Mr. Beaty to the BCCI story, Mr. Blum begins dramatically: "It's a long and complicated tale, and if you have any plans for the future, I guarantee hearing it will ruin your life."

"Ruin" might have been too strong, but BCCI certainly consumed Mr. Beaty's life for quite some time.

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