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B.C.C.I. Scandal: Too Many Questions
But few answers about a shameless attempt to buy favor with the White House and the Justice Department's reluctance to investigate B.C.C.I.
By JONATHAN BEATY AND S.C. GWYNNE
Nov. 11, 1991
Over lunch in Washington a few weeks ago, attorney Edward Rogers seemed pleased with his new job in the private sector. After six years of seven-day weeks in G.O.P. politics and the White House, he had returned to a normal life. And while he didn't say so then, his new duties were looking extremely profitable. Rogers, who quit his job as executive assistant to chief of staff John Sununu in August, had found a gold-plated client to begin his first law practice with.
But Rogers last week had to kiss that serenity -- and a $600,000 two-year contract -- goodbye. The wealthy client: Sheik Kamal Adham, the former director of Saudi intelligence and a key figure in the Bank of Credit & Commerce International scandal. According to the U.S. Federal Reserve Bank, the well-connected Adham was a B.C.C.I. front man for the illegal purchase of Washington's First American Bank and B.C.C.I.'s main contact with Clark Clifford, the chairman of First American. Adham also received more than $300 million in B.C.C.I. loans, according to bank documents.

Rogers hastily backed out of the contract to help defend Adham from criminal probes, but not before he embarrassed George Bush. When asked what Rogers might be selling to Adham, Bush replied, "Ask him. I don't know what he's selling. I don't know anything about this man ((Adham)) except I've read bad stuff about him. And I don't like what I read about him." Though Rogers' contract with Adham was not illegal, it showed extremely poor judgment on the part of the former aide; at any rate, Bush's denunciation destroyed the value of the relationship to Adham, leaving Rogers little choice but to resign the account.

Just why Adham turned to Rogers for help remains a mystery, since Rogers was not an important voice in the White House inner circle and won few friends as Sununu's gatekeeper. But Rogers' title implied that he had significant influence, and that suggests Adham was simply following B.C.C.I.'s universal recipe for success: buy favor as close to the center of power as possible. An official familiar with both men suggested that Adham was merely trying to execute what Arabs call wasta, a sort of well-placed personnel fix, similar to Muammar Gaddafi's hiring of Billy Carter during the 1970s as a foreign trade representative.

But like the Billy Carter episode, the Rogers ploy backfired, dragging the White House into the controversy for the first time. It also raised fresh questions about the Justice Department's plodding investigation of B.C.C.I.'s U.S. affairs. Congressman Charles Schumer, chairman of the House Judiciary Subcommittee on Crime and Criminal Justice, promptly called for a formal probe of the Adham-Rogers connection. Both the White House and the Justice Department last week formally cleared Rogers of any ethics-law violations. Still, Schumer persisted in his calls for additional inquiries, in part because he says he believes that the White House may be far more involved in monitoring the B.C.C.I. case than was previously believed.

"There is a plausible case that someone told the prosecutors to slow down, to lay off B.C.C.I.," Schumer says. "I don't know if this is true, but when we've interviewed law-enforcement people in this case, Justice has insisted that someone from the White House sit in."

While officials were sorting through Rogers' records, a federal prosecutor met last week with Adham in Cairo in what might be a first step toward a possible deal with the Justice Department. Adham's attorney, Washington lawyer Plato Cacheris, denied that a plea bargain was in the works and said his client has documents to prove his innocence. "I'm not trying to plead," said Cacheris.

Like an oil spill, the B.C.C.I. affair has been slowly spreading, tarring a growing list of prominent U.S. politicians with links to the bank. They include Clifford, a former Secretary of Defense who is under criminal investigation; former President Jimmy Carter, who accepted millions in contributions from B.C.C.I. for his presidential library and his charitable foundation; former Atlanta Mayor Andrew Young, who borrowed money from B.C.C.I. and did not pay it back; and former Treasury Secretary John Connally, who bought a Texas bank with B.C.C.I. front man Ghaith Pharaon. Even Secretary of State James Baker's name indirectly came up after acting CIA Director Richard Kerr testified before a Senate panel last month. Kerr revealed that in 1985 the CIA told the Treasury Department, then headed by Baker, that B.C.C.I. secretly owned First American Bank, the largest bank in the nation's capital -- a critical piece of information that Treasury never pursued. Now TIME has learned that last May B.C.C.I. paid $1.3 million in fees to the Washington law firm of Patton, Boggs and Blow, a lobbying powerhouse that includes Ron Brown, chairman of the Democratic Party, among its partners.

The Rogers episode coincided with new evidence that the Department of Justice, through blundering or design, is continuing to hamstring its own investigation and interfere with the aggressive inquiries being pursued by New York District Attorney Robert Morgenthau. So far, the Justice Department's record is an odd mixture of passive and aggressive behavior: incuriously passive in its own pursuit of B.C.C.I. but intensely aggressive in turf battles with Morgenthau's investigators.

The mountain of bewilderingly complex information that has been made public about B.C.C.I. has made it easy to lose sight of why so many are agitated about this rogue Pakistani bank or why its connection to a former White House aide should be such an egregious sin. B.C.C.I. was the largest criminal enterprise in history, a bank whose principals stole an estimated $12 billion from their depositors. In the U.S., B.C.C.I. used Miami as a staging ground for the largest single drug-money operation yet recorded, secretly bought and helped run the largest bank in Washington, and played a key role in duping regulators about the failure of Miami-based CenTrust Savings and Loan, one of America's costliest thrift bankruptcies.

TIME reported in July that the Justice Department was understaffing FBI and U.S. attorneys' teams assigned to the case. Morgenthau's complaints that Justice was withholding potential witnesses and blocking access to critical records led then Attorney General Richard Thornburgh to pledge greater cooperation. That promise has not been kept, according to Morgenthau's investigators and Justice Department officials in the field, who have declined to speak on the record for fear of retaliation. "It seems more effort has gone into hunting anyone leaking information to the press," says a Senate investigator.

Although the Justice Department announced in September the indictment of six former B.C.C.I. officials in Tampa on racketeering and money-laundering charges, those indictments sprung from investigations started in 1986. Other long-standing grand jury probes of B.C.C.I. in Miami and Washington have languished, some for as long as two years without visible progress.

The frustration has spread to the ranks of federal law enforcement. In October a U.S. Customs officer wrote to Senator John Kerry of Massachusetts, ( chairman of the Senate subcommittee on terrorism, narcotics and international operations, and complained that "tons of documents were not reviewed . . . and the CIA put a halt to certain investigative leads" in a 1988 Florida inquiry that eventually led to the indictment of five mid-level B.C.C.I. officers. "We had drug traffickers, money launderers, foreign government involvement, Noriega and allegations of payoffs by B.C.C.I. to U.S. government political figures. I will not elaborate on who these U.S. government figures were alleged to be, but I can advise you that you don't have all of the documents. Some were destroyed or misplaced."

Similar reports, coupled with the Justice Department's heavy censoring of B.C.C.I.-related documents subpoenaed by the Senate, have angered Kerry, who claims that the Justice Department is stonewalling his investigation. Kerry, who has held several hearings into the B.C.C.I. affair, is battling a Justice Department decision to prohibit him from taking testimony from former U.S. Customs Service agent Robert Mazur.

Mazur, who led the undercover sting operation that produced the first indictments of B.C.C.I. in 1988, quit the agency to work for the Drug Enforcement Administration. He reportedly was disgusted over the government's failure to pursue leads concerning secret B.C.C.I. ownership of U.S. banks and alleged payoffs to U.S. politicians. Although Kerry has declined to release correspondence from Mazur, sources who have seen Mazur's allegations about a cover-up say they are political dynamite.

"There is a feeling that somebody in Washington is trying to cut a deal on B.C.C.I.," says a senior official, "that they really don't want the U.S. Attorney's offices to actually return indictments because that would muck up their ability to do some kind of an overall package deal, where we cut off the hands of a few Pakistanis and paint it as if they were really all the big folks. They'll get out charts and graphs to absolve the Sheik ((Sheik Zayed, the ruler of Abu Dhabi, who oversees the shuttered B.C.C.I. empire)) and then let the bank reopen overseas" to repay its foreign debts.

There is logic to this complaint: B.C.C.I. losses are put at $12 billion, and officials in this country and Britain have been pleading with Zayed, one of the world's richest men, to make good on the losses. Meanwhile, in Abu Dhabi, Zayed has placed under house arrest many of the bank officers wanted for questioning by U.S. officials.

Several federal attorneys and agents contend that they have been told by Justice Department officials that B.C.C.I. is a "political" case and that prosecutorial and investigative decisions must be made in Washington. "We are constantly flabbergasted that the Justice Department says we should go forward and yet we never get the permission from Washington," says a senior investigator. Others complain that applications to subpoena witnesses, suspects and records have backed up in Washington. Reporters on the B.C.C.I. story find as they interview former officers of the bank who possess critical knowledge that these people have never been contacted by law-enforcement officials. "None of us can figure out why the department has become a roadblock on B.C.C.I.," says another high-level investigator. "Why hasn't there been a departmental priority on B.C.C.I.?"

But according to the Justice Department official who heads the B.C.C.I. investigation, such bickering from the field is the result of Washington's efforts to centralize and coordinate the far-flung investigation. "The orders from the top are to aggressively pursue this investigation and not to spare resources," says Robert S. Mueller, head of the Justice Department's criminal division. "There may be people who are frustrated, but the investigation is not being held up, it's being coordinated. We've got some blemishes, but we have not covered up." Mueller, who revved up the investigation last July by adding more manpower, also says his department is trying its best to work with other probes, in particular with the New York grand jury investigation. "I've told Morgenthau that I'm only a phone call away," he says. "I've done everything to cooperate."

Whatever the reason, Justice's inaction is even more extraordinary in light of other recent revelations. According to officials close to the case, the Justice Department in 1989 abruptly suspended its inquiry into B.C.C.I.'s secret ownership of First American. In testimony in the Senate two weeks ago, acting CIA Director Richard Kerr added yet another piece to the puzzle by declaring under oath that between 1983 and 1985 the CIA had circulated "several hundred" reports to government agencies, including Justice, chronicling B.C.C.I.'s illegal activities.

The question that has not been answered is why the Justice Department has limited its inquiry and allowed the law-enforcement community to believe the B.C.C.I. case is too sensitive to be handled in a routine manner. Former ; B.C.C.I. officers have told investigators that they believe the bank's extensive U.S. intelligence connections -- which figured importantly in such undertakings as the Pakistan-based supply operation to the Afghan rebels, the bank's role in the covert resupply of the Nicaraguan contras, and the sale of arms to Iran -- help explain why the Justice Department is treating the inquiry so gingerly.

Some former B.C.C.I. employees also point to the allegations of political payoffs as the reason for the slow pace. Congress has remained uncharacteristically silent on the subject, with only a handful of legislators demanding action. It may be too early to consider a special prosecutor; indeed there are no allegations of specific criminal activity yet to pursue. But in view of Kamal Adham's blatant attempt to buy White House influence, perhaps the time has come to appoint an independent investigator.

— With reporting by Michael Duffy/Washington
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