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Robert Morgenthau : The Man Who Took on BCCI: A Courtly DA Who Pulls No Punches

August 04, 1991|Victor F. Zonana | Victor F. Zonana is a reporter at The Times New York bureau. He interviewed Robert M. Morgenthau in the district attorney's office

NEW YORK — The word that leaps to mind when first encountering Manhattan Dist. Atty. Robert M. Morgenthau is rectitude.

The 72-year-old prosecutor, who lit a fire under the Justice Department in the mushrooming Bank of Credit and Commerce International scandal, is not some two-bit politician out to grab headlines. As the son of Henry Morgenthau Jr., Franklin D. Roosevelt's Treasury secretary, the district attorney is steeped in a heritage of public service. As such, he has nothing but contempt for those who served the rogue bank's interests in Washington and enriched themselves by trading on their government experience.

Striding into his office, the lanky prosecutor sizes up visitors with clear blue eyes that light up when he confronts the intellectual challenge of a sprawling, global investigation like BCCI. Monday, when he brought the first major indictment in the BCCI scandal, Morgenthau charged, "BCCI was operated as a corrupt criminal organization throughout its entire 19-year history." More than $5 billion was stolen from the $20-billion bank, he said.

Morgenthau has spent most of the last 30 years as a prosecutor, taking brief respites to run twice for governor, both times unsuccessfully--he is an uninspiring public speaker--and to work at a law firm. At the DA's office, which he has headed since 1975, Morgenthau has furthered his reputation as a nurturer of legal talent and an able administrator.

To be sure, his office has received some bad reviews. His 1985 reelection race was marked by criticism, primarily from blacks, that his office had mishandled the Bernard H. Goetz subway vigilante case and others involving minorities.

At an age when many would be content to rest upon their laurels, Morgenthau shows no inclination of slowing down. In fact, he is taking on the biggest case of his career. He is also creating a new family with his second wife, Pulitzer Prize-winning, former New York Times reporter Lucinda Franke, 45. The pair wed in 1977, after Morgenthau's first wife died of cancer. They are now raising a 7-year-old son, Joshua, and a one-year-old adopted daughter, Amy. He has five grown children from his first marriage.

Question: Your office was involved in the BCCI investigation for nearly 2 1/2 years. When did the magnitude of the criminal enterprise come into focus?

Answer: . . . . I guess when we got some of the internal management reports of BCCI last year, which showed how extensive the loans were, how inadequately collateralized . . . . The bank had very, very little capital. I guess it's amazing, and a tribute to the people running the bank, that they were able to keep it going as long as they did with a very, very small capital base. As of the end of 1990, the capital base was minus-$50 million.

Q: The capital base appeared to have been inflated through what you've called BCCI's "rent-a-sheik" plan--under which the bank bolstered its reputation by essentially borrowing the names of purportedly wealthy individuals in the Middle East.

A: What (BCCI) did was lend them the money, paid them for being the nominees (front men), and there was no personal liability. So, they were just straight nominees. And that was a very significant amount of their capital.

Q: Was there an analogous "rent-a-politician" plan in the U.S. and other Western nations?

A: Well, I think you could say that, yes.

Q: And will we be learning the names of some of these politicians?

A: Well, some of them have already been in the paper, like Jimmy Carter and Lord Callaghan. Some of them are already public, and I think there will probably be others.

Q: How did that system work? Did it always work the way it did with Carter, where BCCI donated money to his favorite charities, or were there bribes?

A: Well, we charge in the indictment . . . that $3 million was paid to the president of the Central Reserve Bank of Peru and the managing director. (BCCI) had a tremendous need for money. And two of the ways they got that money was by bribing officials to deposit with the bank and soliciting the traffic of drug dealers. And they bought 30 branches in Colombia.

Q: How did this case come to your attention?

A: Well, I testified before the (U.S. Senate) subcommittee on drugs, terrorism . . . chaired by Sen. (John) Kerry, in February of 1988 . . . . When I got the (subcommittee's) report, there was a statement taken from . . . a BCCI official about money laundering . . . . In March of 1989, Jack Blum, who had been the special counsel to the Senate committee, . . . said: "I think there's a lot more to the BCCI story than has come out." And he said: "I think there has been extensive money laundering through New York."

. . . . Well, as soon as I heard about the money laundering through New York, it interested me . . . . As we got into it, we learned of the allegations that (BCCI) controlled First American Bankshares. And First American Bankshares has a holding company in New York that has 43 branches . . . .

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