IN Arab businessman recalls a typical set-up at one of the many
overseas branches of Bank of Credit and Commerce International
(BCCI): a wide open room, filled with desks in no particular order.
Absent an identifiable hierarchy, he quips, it's difficult to pin
down individual responsibility.
This scenario is an appropriate metaphor for the broadest-based
banking scandal in history. BCCI's $20 billion operation, covering
some 70 countries, is now under investigation and indictment for
Branches around the world have been shut down due to allegations
ranging from laundering arms- and narcotics-sales profits to
financing clandestine nuclear-weapons programs. Investigators are
slowly uncovering the implicated governments, corporations, and
individuals; their estimates put BCCI's criminal customer base at
Observers assert that the lax international financial system,
with poor control over global banking transactions, provided a
vacuum for illicit dealings.
"Things don't work when no one has a clear sense of
responsibility," says Lawrence Summers, chief economist of the World
Bank. "And when you're (based in London,) headquartered in
Luxembourg, and you're operating all over the world, there's no one
whose fault it clearly is, if things go wrong."
Deposits and loans
Since its inception, allege international investigators, the bank
doled out more money than it took on deposit and bankrolled
commercially unviable and criminal enterprises.
BCCI branch managers often solicited deposits through bribery,
and then used those funds to cover bad loans, skimming huge profits
and falsifying records to show a positive balance sheet,
The worldwide impact of this recklessness looms large. Casualties
may include central banks from Jamaica to Cameroon that put their
nation's savings on deposit with BCCI. The nest eggs of tens of
thousands of small, African, Asian, Middle Eastern, and Latin
depositors are in jeopardy.
BCCI was ready with money for government leaders whose own
economic policies rendered their countries unacceptable for certain
International Monetary Fund (IMF) or World Bank assistance, says
Jack Blum, a former US Senate investigator into BCCI.
The bank is the largest private bank in Nigeria. "BCCI lent the
Nigerian government $1 billion to get around requirements put on it
by the IMF."
The bank has served African governments, corporations, and small
businesses from Egypt to Zimbabwe. The closure of many African BCCI
branches has hit hard a large portion of African society dependent
on BCCI financing.
In Latin America, according to Mr. Blum, BCCI encouraged capital
flight by offering to do the illegal transport and conversion of the
local currency, "destroying the opportunity of that country to
develop ... and leaving the continent with the begging bowl and the
World Bank and other public institutions which have to make up the
In Southwest Asia, Blum says, BCCI may have helped transport the
goods and finances of Afghan guerrillas involved in heroin