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Magazine
B.C.C.I. Banking A Trail of Coffee and Cash
The
dubious deals of a Jordanian bean merchant illuminate the workings of the
corrupt B.C.C.I. empire
By JONATHAN BEATY AND S.C. GWYNNE WASHINGTON
Jun. 24, 1991
When times were golden for Florida coffee importer Munther
Ismael Bilbeisi, he would tell friends his business was so important that the
Bank of Credit & Commerce International set up a special branch in Boca
Raton just to handle his accounts and those of a few other high rollers. His
boast was not unfounded. During the 1980s his Coffee Inc. sold millions of
pounds of Central American beans to American buyers. A Mercedes, a Porsche and a
Rolls-Royce sat in the driveway of the expatriate Jordanian's $1.8 million home.
Today Bilbeisi's relationship with the shadowy $30 billion bank is no longer
a source of pride but a vivid page from a worldwide scandal that began with
B.C.C.I.'s indictment in 1988 for money laundering. Investigators now view
B.C.C.I. as the largest criminal corporate enterprise in modern history, a
secret banking network that served drug smugglers, tax evaders, arms dealers and
rapacious tyrants, including Panama's Manuel Noriega. Four grand juries are
probing the bank, while investigators from the New York district attorney's
office, Congress and the Department of Justice are grappling with mountains of
seized records. Most prominent among those embroiled in the scandal is former
Defense Secretary Clark Clifford. He is chairman of the largest bank in
Washington, which was secretly owned by B.C.C.I.
A grand jury is
investigating Bilbeisi, and last month a Florida court issued a warrant for his
arrest on income tax evasion charges. The eroding fortunes of Bilbeisi and the
bank are not coincidental: he was precisely the kind of customer B.C.C.I. sought
in its quest to build a global empire. Bilbeisi, who claimed friendship with
Jordan's King Hussein, presented a respectable front.
Bilbeisi is also
an arms dealer who has peddled used Jordanian and new East European weaponry to
South Africa and Latin America under dubious terms. The $35 million worth of
coffee he sold to American companies was contraband smuggled into the U.S.
Financing for those deals, including letters of credit and falsified documents,
is the sort of business no legitimate bank would touch, so Bilbeisi needed
B.C.C.I. He was happy to kick back cash to his bankers for such services,
including the laundering of his gains.
His mistake was to cross swords
with Lloyd's of London. When coffee prices plunged in 1986, leaving him exposed,
he handed the insurers $6 million in claims for the alleged theft of a Song
dynasty vase and commercial losses on an undocumented coffee shipment.
Underwriters refused to pay, so Bilbeisi sued them for punitive damages,
prompting Lloyd's to launch a deeper investigation. Result: last December
Lloyd's filed a civil racketeering suit against Bilbeisi and B.C.C.I., charging
the two with a long list of illegal acts, including coffee smuggling, arms
dealing, customs violations, money laundering and paying bribes and kickbacks.
That suit was followed by the grand jury investigation into charges by the IRS
that Bilbeisi cheated on his taxes as well.
Bilbeisi's smuggling scheme,
undetected by U.S. authorities, began with bribes to coffee growers in
Guatemala, Honduras and El Salvador to obtain beans not subject to tariff
agreements. The coffee, available at bargain rates, was ostensibly for domestic
consumption or export to nontariff nations. To move the contraband through
Central America, Bilbeisi's agents, financed by B.C.C.I. letters of credit, paid
bribes to truckers, checkpoint officials and port officials. The coffee was
marked for delivery to Jordan or Syria but was routed through Miami or New
Orleans, where it was secretly off-loaded. Former U.S. shipping agents who
testified before the Florida grand jury told TIME they accepted $4.5 million in
bribes from Bilbeisi for providing phony cargo manifests to fool U.S. customs
officials. The shipping agents say they were able to dodge U.S. taxes because
B.C.C.I. created false loans and transfers, then deposited the bribes in secret
accounts in London.
The Bilbeisi scheme reaches into corporate America
as well. The grand jury is investigating Arthur Berman, who was president of
Chase & Sanborn in 1981-84 and Chock Full o' Nuts in 1984-85. The Lloyd's
lawsuit contends that the executive, knowing the coffee was smuggled, accepted
"substantial commissions" from Bilbeisi and Coffee Inc. to facilitate sales to
Chase & Sanborn and Chock Full o' Nuts. Bilbeisi's company ledgers show
$160,000 in cash and checks paid to Berman. In a 1988 deposition, Berman denied
the payments were illegal commissions, insisting they were merely loans that he
used to support "a young lady" and pay gambling debts.
Lloyd's
investigators have also probed Bilbeisi's role as an arms broker. In one
transaction Bilbeisi proposed the sale of U.S.-built Jordanian fighter jets and
helicopters to Guatemala. According to documents from a Bilbeisi company, three
helicopters were delivered at hugely inflated prices, and part of the proceeds
was kicked back to high-ranking Guatemalan officers and the brother of former
President Vinicio Cerezo. B.C.C.I. financed the deal for a $400,000 commission.
Guatemala has brought criminal charges against Bilbeisi, and is seeking his
extradition from Jordan.
Meanwhile B.C.C.I.'s far-flung empire is
imploding. According to investigators, as much as $10 billion is missing from
the company's books. Sheik Zayed bin Sultan al-Nahayan, the ruler of Abu Dhabi,
has pumped in $1 billion to keep the bank afloat since taking it over last year
and has dismissed hundreds of the Pakistani bankers who ran B.C.C.I. in its
heyday. Abu Dhabi, the Bank of England and the Federal Reserve are struggling to
come up with a workable restructuring plan that will satisfy regulators amid
continuing disclosures of illicit banking activity.
B.C.C.I.'s banking
practice throughout the world was to co-opt government officials and influential
businessmen with bribes, contributions and stakes in lucrative but dubious
deals. Agents now sifting through B.C.C.I. records are learning that America was
no exception.
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