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And Where It Will Stop, Nobody Knows : Clifford indictment, Saudi defection advance BCCI scandal

August 02, 1992

It looks as if the huge, breathtaking, cloak-and-dagger bank scandal known by the initials BCCI is slowly unraveling for the whole world to see. If all the wrongdoings are brought to light, nobody knows where the fingers of suspicion and guilt will stop.

For whatever good comes out of the prosecutions in this case, most of the credit probably should go not to any world authority or powerful U.S. governmental agency but to the district attorney's office in Manhattan, where Robert M. Morgenthau pressed the at-times lonely struggle to get to the bottom of it all.

The latest results were evident last week in the headline-making indictments of former Secretary of Defense Clark M. Clifford and his protege, Robert A. Altman. They are vigorously denying all charges--accusations of fraud, conspiracy and bribery related to their roles in the web surrounding the Bank of Credit and Commercial International.

A pivotal figure in the indictments against the two was a Saudi Arabian, Sheik Kamal Adham. The sheik, former head of Saudi intelligence and a major shareholder of BCCI, has agreed to cooperate with U.S. law enforcement authorities. And that may have some people, particularly in Washington, worried.

Adham's cooperation would not have occurred except for the dogged pursuit of the case by Morgenthau. Adham separately agreed to plead guilty to violating New York state banking laws, to pay $105 million in fines and to be a witness against Clifford and Altman. His revelations could well widen the global investigation.

The state and federal indictments charged that the 85-year-old Clifford and Altman, 45, committed fraud by scheming to hide BCCI's ownership in Washington's biggest bank, First American Bankshares Inc., where both men were officers. Morgenthau alleges that the two received bribes from the leaders of BCCI in the form of sham loans and stock deals for themselves and fees for their law firms. Clifford and Altman have maintained that they were duped by BCCI and were not aware that it owned controlling interest in First American.

BCCI was established in 1972 by a Pakistani, was controlled primarily by Arab shareholders and was incorporated in the banking havens of Luxembourg and the Cayman Islands but operated mainly out of London. It had offices in 70 countries. Seven nations seized BCCI a year ago when it on the verge of collapse. Its operations were said to have included laundering drug money and financing arm sales. It was used by both the CIA and terrorists. Clifford and Altman resigned their posts at First American under pressure last year.

BCCI's deliberately complex structure made it easy for it to elude close scrutiny of banking authorities in many countries. It took maximum advantage of loopholes in global bank regulations. The American probe began with separate federal grand juries convening in Washington, Miami and Tampa. But the New York district attorney's office was by far the most aggressive. The cooperation of Adham could mean disclosures that will cause further anguish for Washington power broker Clifford, a confidant of every Democratic President since Harry S. Truman. In the end the fallout from the BCCI revelations may prove painful for many around the world.

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