Ex-BCCI chief executive admits fraud, conspiracy

July 09, 1994|By New York Times News Service

WASHINGTON -- Over the strenuous objection of the Manhattan district attorney, a federal judge Friday accepted the guilty plea of the chief executive of the Bank of Credit and Commerce International on sweeping charges of fraud, racketeering and conspiracy.

The executive, Swaleh Naqvi, admitted responsibility for $255 million in losses in the United States, and faces a sentence of six to nine years in federal prison as a result of his role in BCCI.

Almost $12 billion in depositors' funds around the world were drained in the scandal, one of the biggest bank frauds in history.

The international bank's collapse also raised troubling questions about why American regulators had failed to act against it and about the bank's influence in political and intelligence circles.

The plea agreement accepted Friday represents the most significant conviction obtained by prosecutors since they began their investigations three years ago. But it was sharply criticized by Manhattan District Attorney Robert Morgenthau in an unusual letter to the judge calling the deal too lenient.

Morgenthau's office has aggressively pushed for vigorous prosecution of the case.

The district attorney said Naqvideserved a far longer sentence because he had been a leading figure in a fraud of such huge proportions, and argued that Naqvi had not provided significant new information to investigators about the scandal.

Under the terms of the agreement, Naqvi, 61, may be out of prison in less than six years.

The deal reopens a rift between federal and New York prosecutors involved in the long-running investigation of the bank and promises to complicate a state indictment against Naqvi.

Defense lawyers are expected to try to get that indictment thrown out on the grounds that it involves crimes covered in the plea bargain and therefore violates the double-jeopardy clauses of the U.S. and New York constitutions.

After the bank collapsed in 1991, Morgenthau charged Clark Clifford, a former secretary of defense and adviser to Democratic presidents, and his law partner, Robert A. Altman, with conspiring with BCCI executives to illegally take over an American bank.

The charges against Clifford were later dropped because of his ill health, and Altman was acquitted last year.

Federal prosecutors, responding to Morgenthau's criticism Friday, described the plea agreement as an important breakthrough that would open a new window on the bank scandal by requiring Naqvi to divulge all that he knew of how the shadowy banking empire was run.

The agreement requires Naqvi to cooperate with federal authorities and gives prosecutors the right to return to court within a year to seek a reduction in the prison sentence if he is helpful.

Naqvi's lawyers asserted that the district attorney was only venting his frustration because Naqvi had not implicated high-profile figures in the banking scandal.

"Mr. Morgenthau's concept of cooperation is far from any we ever understood when we were prosecutors," wrote the lawyers, Joseph diGenova and Victoria Toensing, both former Justice Department attorneys.

"He has basically said that unless Mr. Naqvi can provide evidence that some United States senator, Cabinet official or state government official was involved in criminal activity, he will not find Mr. Naqvi 'fully cooperating.' Mr. Naqvi will not fabricate evidence about a person to obtain some 'better deal' from Mr. Morgenthau," they said.

Friday, Naqvi acknowledged that he had been responsible for losses of about $255 million in the United States that was at the core of the indictment.

He had been the bank's second-in-command, rising in the last few years of his tenure to the position of chief executive. He served for more than 20 years as the deputy to Agha Hasan Abedi, the top bank executive and founder of BCCI. Abedi is said to be in ill health in Pakistan.

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