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.