Daily Times

For me, there are two houses
in Karachi that have always stood out over every other in height and splendour. One is the palace by the coast constructed for Sheikh Zayed bin Sultan Al Nahayan, always so empty, with only graffiti on the exterior providing some purpose to its existence. The other house is not so far of, a mansion built on the road slope behind Defence Graveyard, so alike to the palace in architecture and colour, as if some deep link once existed. Childhood, however, never correctly answered as to who owned the latter.

But time in all its mysteriousness answered more than a decade and a half later when my intrigue had died quite a few deaths. “So who has heard of BCCI?” asked Basharullah Muhammad from the class of Finance 341A at the Lahore University of Management Sciences (LUMS). “Also known as the Bank of Crooks and Criminals?” he offered to us in laughter. This was the first time I heard of Agha Hasan Raza Abedi.

Abedi was Jinnah’s own banker in India and used to maintain deposits for the Muslim League at the Habib Bank. After the partition, the Habibs relocated to Pakistan and Abedi helped expand the bank’s operations in West Pakistan. But his desire for growth and iconoclastic management ideas were not suited to a seth (tycoon) owned bank. He bade them goodbye in 1958.

With blessings from the State Bank and financial backing from the Saigol family, Abedi founded United Bank Limited (1959) and opened branches adjacent to those of Habib. United Bank became the next generation bank in just 10 years as it experimented with ideas of customer protocol and superior branch facilities; now competition for the Habibs came hard and fast as the charismatic Abedi won the favour of the rich Bedouin sheikhs and started managing their money. Money management was but an honest prelude to managing their entire hunting trips, building mansions and relocating investments to Pakistan. Abedi had now become indispensable to them.

When Bhutto assumed power, he toyed with the idea of nationalising banks along with many other industries. When he heard of his friend Abedi planning to upscale into an international bank, he nationalised United Bank (1971) and placed Abedi under house arrest. He meted out similar treatment to another friend of his: Ardeshir Cowasjee and his East and West Steamship Company. Whereas Cowasjee was destined to become the most read columnist of Pakistan, the very relentless Abedi was destined to take over the world of banks.

Abedi immediately went on to found the Bank of Credit and Commerce International (BCCI) with initial $ 2.5 million equity from the Bank of America and another $ 0.5 million from Abu Dhabi. The Saigol and Gokal business families shifted gigantic sums into the BCCI and in favour attained almost unlimited borrowing lines with an ever negotiable maturity of loans. Alongside, the Bedouin sheikhs extended all out support for the bank in the eyes of the world as equity investors, yet in reality only as lenders with favoured premiums on their petro-dollar deposits. The crafty shenanigans of the BCCI had begun.

The BCCI can be best described as a complex spider web of corporate entities, banks within banks, funds within funds, founded in the Grand Cayman and Luxembourg (banking havens of secrecy and confidentiality) and controlled by Abedi, often through concealed nominees and front men. As per Senator John Kerry’s report (1992), the bank’s expansion techniques were based on courting and bribing government officials in host countries, management of prostitution, thoroughly laundering and trafficking drug money for cartels, creating financial flows for terrorists, doctoring books with circular transactions, obliging and gratifying its auditors and using any means possible to eschew regulations. Most unacceptable was its hidden funding of Pakistan’s nuclear programme (not something our establishment would willingly acknowledge).

Only in the four years following 1973, the bank grew from 19 to 146 branches, with overall asset growth climbing from $ 200 million to $ 2.2 billion. By the mid-1980s, BCCI became the seventh largest bank in the world with branches in 73 countries, and assets totaling $ 22 billion. The world gaped in surprise and awe as Abedi redefined the word exponential, his hands and feet well placed in global power corridors. The sky was his limit and nothing seemed impossible.

Alongside, Abedi pioneered the concept of corporate social responsibility as he created charities and trust funds, most notable of which was the BCCI Foundation. To the third world and Pakistan, he gifted hospitals, funded universities and scholarships, and heavily invested in upcoming technology. Abedi was an eccentric man, a very dominating leader whose greatest purpose was the redistribution of wealth, backed by his equally eccentric life philosophy, which amalgamated Sufism, humility, the divine and the greater good.

But Abedi had long stepped overboard: beginning in 1977, with the help of secret frontmen and bribed assurances by top American government officials, BCCI covertly acquired a controlling interest in First American Bank, in stark violation of American banking law. On the one hand, Abedi maintained an extremely warm relationship with American President Jimmy Carter, while on the other his bank served Palestinian freedom fighters like Abu Nidal. Abedi seemed everywhere and omnipotent as he carried his bags full of cash to different parts of the globe, relieving 17 African countries of World Bank debt, playing guest to the Pope and serving as a financial adviser to premiers all across. His bank was a truly international bank, a challenge to western interests and the old world order.

But by 1985, BCCI had started incurring losses all across the board and the bank seemed to operate more like a sophisticated Ponzi scheme. The bank had now grown beyond bounds and auditors found it extremely difficult to extricate transactions between its various known and unknown entities. In 1988, Abedi’s health began to fail and he suffered a heart attack; alongside, the bank was indicted in Tampa, the US, on charges of money laundering. It was now in the limelight, and further investigation revealed its secret ownership of First American, reason enough for the Federal Reserve to intervene and prevent any attempts by Abu Dhabi to restructure the bank.

Regulatory authorities worldwide did not wait either; a secret insider account of BCCI’s fraud created by BCCI’s own auditor Price Waterhouse, was provided to the Bank of England around 1990. This ‘Sandstorm Report’ was the final evidence that led to the shutdown of BCCI globally on July 5, 1991. More than 14,000 employees lost jobs and more than one million depositors lost an overall $ 20 billion as liquidators took control of the bank. Interestingly, liquidation time outrivalled the life of its subject matter; little did these liquidators know that they were being engaged on a 21-year assignment with liquidation earnings amounting to $ 656 million.

Abedi died a quiet death on August 5, 1995, leaving behind only water vapour and smoke. Some allege that only a handful attended his funeral and one does pause to think whether the world’s love of money was mistaken for this man’s charisma. Not many remember Abedi for who he was or what he did. Of the very few that do, they either praise him without bounds or vilify him without pause. There is no consensus.

I have always found it hard to offer any personal conclusion to Abedi. But when I walk down the corridors of the LUMS Academic block and see the name of BCCI Foundation inscribed on the main donors list, I grin at the thought of Robin Hood Pakistani. The man still is everywhere.

The writer is studying at the Lahore University of Management Sciences and
can be reached at k.alizubair@hotmail.com