by Lucy Komisar

From A Game as Old as Empire
Sum­mary high­lights from Chap­ter 4: “The BCCI Game: Bank­ing on Amer­ica, Bank­ing on Jihad”

BCCI: How the Reagan-Bush-CIA team used an off­shore bank to run guns, finance Islamic jihadists, and laun­der money.

BCCI enriched the entourage of the Bushes and other Wash­ing­ton influ­en­tials. Its biggest share­hold­ers were Saudi and United Arab Emi­rates sheiks. The money it stole—somewhere between $9.5 bil­lion and $15 billion—made its 20-year heist the biggest bank fraud in his­tory. Most of it was never recov­ered. The George H.W. Bush admin­is­tra­tion, in power when the mega-fraud was dis­cov­ered, went after the bank half-heartedly and only after indict­ments by New York Dis­trict Attor­ney Robert Mor­gen­thau. It never touched the Per­sian Gulf money-men who ran the BCCI crim­i­nal enter­prise. The Bush fam­ily and its allies used and then pro­tected the world’s most crim­i­nal bank.

The Bank of Credit and Com­merce Inter­na­tional was founded in 1972 by a Pak­istani banker, Agha Hasan Abedi, with the sup­port of Sheik Zayed bin Sul­tan al Nahyan, the ruler of the oil-rich state of Abu Dhabi and head of the United Arab Emirates.

The CIA used Islam­abad and other BCCI branches in Pak­istan to fun­nel some of the $2 bil­lion that Wash­ing­ton sent to Osama bin Laden’s Muja­hed­din to help fight the Sovi­ets in Afghanistan. It moved the cash the Pak­istani mil­i­tary and gov­ern­ment offi­cials skimmed from U.S. aid to the Muja­hed­din. It also moved money as required by the Saudi intel­li­gence services.

The CIA money passed from the U.S. to the al-Taqwa Bank in Nas­sau to Bar­ba­dos to Karachi to BCCI in Islam­abad. Al-Taqwa—the name means “fear of God”—was not a real bank with bricks and mor­tar and depos­i­tors and ser­vices. It was a shell bank set up to finance the jihad.

The BCCI oper­a­tion gave Osama bin Laden an edu­ca­tion in off­shore black finance that he would put to use when he orga­nized the jihad against Amer­ica. And the CIA was well aware of its student’s capa­bil­i­ties. After 9/11, U.S. agents headed straight for al-Taqwa’s oper­a­tions in Switzer­land, Liecht­en­stein and Nas­sau and shut them down. Swiss police ques­tioned al-Taqwa’s pres­i­dent, Youssef Mustafa Nada, who was part of the Egypt­ian Mus­lim Broth­er­hood, a rad­i­cal Islamist orga­ni­za­tion, and they searched his home in Cam­pi­one d’Italia, an Ital­ian tax haven on Lake Lugano.

One day in 2002 I took the ferry from Lugano, on the Swiss side, to Cam­pi­one. Nada, a man who appeared to be in his 60s, met me at the dock and drove me up the wind­ing road to his hill­top man­sion, where lux­u­ri­ous liv­ing rooms dec­o­rated with ornate carv­ings and inlaid fur­ni­ture reminded me of the Blue Mosque in Istan­bul. An intel­li­gence source had sent me the con­fi­den­tial Nas­sau share­holder list of the al-Taqwa Bank that listed mem­bers of the bin Laden fam­ily. I con­fronted Nada with the list, and he acknowl­edged imme­di­ately that it was gen­uine. “The sis­ters of Bin­laden? The FBI knows it, Trea­sury knows it. They wrote and brought the photo of the list.”

BCCI also helped Sad­dam Hus­sein, again with the com­plic­ity of his Wash­ing­ton friends. The bank fun­neled mil­lions of dol­lars to the Atlanta branch of the Ital­ian government–owned Banca Nazionale del Lavoro, which was Baghdad’s Amer­i­can banker, so that from 1985 to 1989 it could make $4 bil­lion in secret loans to Iraq to help it buy arms.

Con­gress­man Henry Gon­za­lez held a hear­ing on BNL in 1992 dur­ing which he quoted from a con­fi­den­tial CIA doc­u­ment that said the agency had long been aware that the bank’s head­quar­ters was involved in the Amer­i­can branch’s Iraqi loans.

Kick­backs from 15 per­cent com­mis­sions on BNL-sponsored loans were chan­neled into bank accounts held for Iraqi lead­ers via BCCI offices in the Cay­mans as well as in off­shore Lux­em­bourg and Switzer­land. BNL was a client of Kissinger Asso­ciates, and Henry Kissinger was on the bank’s inter­na­tional advi­sory board, along with Brent Scow­croft, who would become George Bush Sr.’s national secu­rity advi­sor. That con­nec­tion makes Bush admin­is­tra­tion indig­na­tion at the Iraq’s “oil for food” pay­offs rather disin­gen­u­ous. Bush and his friends of course knew that Sad­dam was mak­ing pay­offs on their watch: their favorite crim­i­nal bank was mov­ing the money! And in another pre-9/11 inci­dent of blow­back, the weapons bought by Sad­dam with BNL funds were used dur­ing the Gulf War against Amer­i­cans and their allies.

Not con­tent with aid­ing Sad­dam Hus­sein, the Rea­gan­ites decided to arm Iran as well. A Pak­istani arms dealer, Arif Dur­rani, said that dur­ing the Rea­gan and Bush admin­is­tra­tions the CIA used BCCI to finance ship­ments of Hawk mis­siles to Iran to pro­mote stale­mate in the Iran–Iraq War. BCCI’s largest bor­rower was the Gulf Group, the fam­ily com­pany of Mustapha Gokal, finan­cial advi­sor to rad­i­cal Islamist Aya­tol­lah Khome­ini. BCCI gave the Gulf Group unse­cured loans of $800 million—more than two-thirds its total capital—and the Gokal com­pany pro­vided Iran with war mate­r­ial, food and drugs.

BCCI’s major investors were pow­er­ful sheiks and fam­i­lies in the Mid­dle East. Abu Dhabi Sheik Zayed and his fam­ily paid no more than $500,000, but they were the own­ers of record of almost one-quarter of the bank’s shares. A large part of the invest­ment was risk-free—with guar­an­teed rates of return and buy-back arrange­ments. Sheik Kamal Adham, brother-in-law of the late Saudi King Faisal, head of Saudi intel­li­gence from 1963 to 1979, and the CIA’s liai­son in the area, became one of BCCI’s largest share­hold­ers. George Bush Sr. knew Adham from his time run­ning the CIA in 1975. Another investor was Prince Turki bin Faisal al-Saud, who suc­ceeded Adham as Saudi intel­li­gence chief.

The fam­ily of Khalid Salem bin Mah­fouz, owner of the National Com­mer­cial Bank, the largest bank in Saudi Ara­bia, banker to King Fahd and other mem­bers of the rul­ing fam­ily, bought 20 to 30 per­cent of the stock for nearly $1 bil­lion. Khalid was put on the board of direc­tors. The fam­ily got $176 mil­lion in loans from BCCI.

The Arabs’ inter­est in the bank was more than finan­cial. A clas­si­fied CIA memo on BCCI in the mid-80s said that “its prin­ci­pal share­hold­ers are among the power elite of the Mid­dle East, includ­ing the rulers of Dubai and the United Arab Emi­rates, and sev­eral influ­en­tial Saudi Ara­bi­ans. They are less inter­ested in prof­itabil­ity than in pro­mot­ing the Mus­lim cause.”

The Bushes’ links to the bank passed through Texas busi­ness­man James R. Bath to bin Mah­fouz. Bath invested money in the United States on behalf of bin Mah­fouz and with a third part­ner, Ghaith Pharaon (a Saudi Har­vard MBA), shared own­er­ship of Houston’s Main Bank. In 1976, when Bush was the head of the CIA, the agency sold some of the planes of Air Amer­ica, a secret “pro­pri­etary” it used dur­ing the Viet­nam War, to Sky­way, a com­pany owned by Bath and bin Mah­fouz. Bath then helped finance George W. Bush’s oil com­pany, Arbusto Energy Inc., in 1979 and 1980.

When Harken Energy Corp., which had absorbed Arbusto (by then merged with Spec­trum 7 Energy), got into finan­cial trou­ble in 1987, Stephens helped it secure $25 mil­lion financ­ing from the Union Bank of Switzer­land (UBS). As part of that deal, a place on the board, was given to Harken share­holder Sheik Abdul­lah Taha Bakhsh, whose chief banker was BCCI share­holder bin Mahfouz.

Then in 1988, George Bush Sr. was elected pres­i­dent. Harken ben­e­fited by get­ting some new investors, includ­ing Salem bin Laden, Osama bin Laden’s father, and Khalid Bin Mah­fouz. Osama bin Laden him­self was busy else­where at the time—organizing al-Qaeda.

As a result of Morgenthau’s inves­ti­ga­tion, in July 1992 a New York grand jury indicted Khalid bin Mah­fouz and an
aide for defraud­ing BCCI and its depos­i­tors of as much as $300 mil­lion, using depos­i­tors’ money to buy his bank shares. The U.S. Fed­eral Reserve alleged that he breached bank­ing reg­u­la­tions. But bin Mah­fouz could not be touched by Amer­i­can crim­i­nal law in Saudi Ara­bia, and Mor­gen­thau dropped the charges in 1993 after bin Mah­fouz agreed to set­tle for $225 mil­lion. He and the National Com­mer­cial Bank also made a $253 mil­lion deal with BCCI’s cred­i­tors to resolve their claims. Kamal Adham, the for­mer Saudi intel­li­gence chief, agreed to pay a $105 mil­lion fine. The fines in the end topped $1.5 bil­lion, a frac­tion of the amount that had dis­ap­peared, and nobody went to jail. The Jus­tice Depart­ment didn’t go after Bush fam­ily friend and money source bin Mah­fouz at all.

What hap­pen to the bil­lions of dol­lars sucked out of BCCI and never repaid to depos­i­tors? Inter­na­tional banks’ com­plic­ity in the off­shore secrecy sys­tem has effec­tively cov­ered up the money trail. But in the years after the col­lapse of BCCI, Khalid bin Mah­fouz was still flush with cash, and the for­mer financier of George W. Bush became a financier of Osama bin Laden. In 1992, bin Mah­fouz had estab­lished the Muwafaq (“blessed relief”) Foun­da­tion in the off­shore Chan­nel Islands, pro­vid­ing it with as much as $30 mil­lion. The U.S. Trea­sury Depart­ment called it “an Al-Qaeda front that receives fund­ing from wealthy Saudi businessmen.”

His $21 bil­lion National Com­mer­cial Bank was the world’s largest pri­vate bank. NCB was affil­i­ated with Inter-Maritime Man­age­ment SA, a sub­sidiary of the Bank of New York-Inter Mar­itime Bank in Geneva. By coin­ci­dence, another Inter-Maritime sub­sidiary, Unimags Trad­ing, had shared a Geneva address with SICO, the Saudi Invest­ment Com­pany run by Yeslam Bin­laden. SICO is the hold­ing com­pany of the Saudi Bin­laden Group (SBG), the largest Mid­dle East con­struc­tion com­pany, which oper­ates though a web of off­shore com­pa­nies and is owned by the extended bin Laden fam­ily. Yeslam is the half-brother of Osama bin Laden.

In 1998, the U.S. com­plained to Saudi Ara­bia that the National Com­mer­cial Bank was fund­ing Osama bin Laden’s activ­i­ties in Afghanistan and Chech­nya, and the Abu Sayyaf guer­ril­las in the Philip­pines. Bin Mah­fouz was a board mem­ber of the Dar al-Mal al-Islami (DMI), the House of Finance of Islam, a Geneva-based bank charged with dis­trib­ut­ing sub­si­dies of the royal fam­ily in the Mus­lim world. DMI, founded in 1981 and with assets of an esti­mated $3.5 bil­lion, also had con­nec­tions to the bin Laden fam­ily: its 12-member board of direc­tors included Hay­dar Mohamed bin Laden, Osama bin Laden’s half-brother.

The con­nec­tions are inter­est­ing. The bank’s pres­i­dent, Mohammed al-Faisal, was also an investor and board mem­ber of al-Shamal Bank, which held al-Qaeda mem­bers’ accounts. In tes­ti­mony dur­ing U.S. tri­als of sus­pects in the 1998 attacks on Amer­i­can embassies in Kenya and Tan­za­nia, an al-Qaeda col­lab­o­ra­tor, Essam al-Ridi, recounted how bin Laden trans­ferred $230,000 from al-Shamal Bank to a bank in Ari­zona to buy a plane to fly Stinger mis­siles from Pak­istan to Sudan. Com­ing full cir­cle, al-Faisal’s DMI was a major share­holder of al-Taqwa.

In 1999, U.S. inves­ti­ga­tors look­ing into the attacks on the U.S. embassies in Africa, found sus­pi­cious trans­fers of tens of mil­lions of dol­lars from NCB to “char­i­ties” believed to fun­nel money to Osama bin Laden. Some of the “char­i­ties” were run by the bin Mah­fouz fam­ily. The Saudis ordered an audit and con­firmed the trans­fers. Alto­gether, $2 bil­lion was miss­ing from the National Com­mer­cial Bank. The Saudis put bin Mah­fouz under house arrest and forced him to sell his shares.

But the money he ran still flowed to Osama bin Laden.