Newspaper article THE JOURNAL RECORD
Federal Reserve to Pin Major Fine on Bank of Credit
WASHINGTON (AP) _ The Federal Reserve announced Monday it is seeking a $200 million fine against Bank of Credit and Commerce International and an order barring nine persons tied to the bank from involvement with U.S.
The Fed announcement said its enforcement proceeding is "based on evidence of secret arrangements that were made between senior officials of Bank of Credit and Commerce International and customers of Bank of Credit and Commerce International.
"These arrangements were designed to allow Bank of Credit and Commerce International to acquire, in the names of these customers, shares of Credit and Commerce American Holdings NV, which is the parent company of First American Bankshares, Inc., Washington, D.C., the National Bank of Georgia and CenTrust Savings Bank," the announcement said.
The Fed said the secret arrangements included loans to customers to purchase shares of the companies, which the customers would not be required to repay.
"BCCI was given authority to sell the shares and retain any profits," the announcement said. "In return the customers received indemnities and fees for their participating in the transactions."
The Fed announcement came as New York Attorney General Robert Morganthau disclosed the indictment of Bank of Credit and Commerce International on charges of defrauding investors, falsifying records and stealing more than $30 million.
Also charged in the New York indictment is Agha Hasan Abedi, a founder of the bank, and Swaleh Naqvi, the bank's chief operating officer until October 1990.
Both individuals are among those the Fed is seeking to permanently bar from any involvement with U. …