Bank of Credit and Commerce International

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The Bank of Credit and Commerce International (BCCI) was a major international bank founded in 1972 by Agha Hasan Abedi, a Pakistani financier. [1] The Bank was registered in Luxembourg with head offices in Karachi and London. Within a decade BCCI touched its peak. It operated in 78 countries, had over 400 branches, and had assets in excess of US$20 billion, making it the 7th largest private bank in the world by assets.[2][3] It was transformed by Pakistani ISI into "the biggest clandestine money network in history."

The US intelligence agencies used BCCI to funnel drug money to Afghan Mujahideen in their fight against Soviet invasion and to terrorists such as Nicaraguan Contras. After the decline of Soviet Empire when the US no longer needed to fund the Afghan Mujahideen, in the late 1980's BCCI became the target of a two-year undercover operation conducted by the US Customs Service. This operation concluded with a fake wedding that was attended by BCCI officers and drug dealers from around the world who had established a personal friendship and working relationship with undercover Special Agent Robert Mazur. After a six month trial in Tampa, key bank officers were convicted and received lengthy prison sentences. Bank officers began cooperating with law enforcement authorities and that cooperation caused BCCI’s many crimes to be revealed.

BCCI came under the scrutiny of regulatory bodies and intelligence agencies in the 1980s due to its perceived avoidance of falling under one regulatory banking authority, a fact that was later, after extensive investigations, proven to be false. BCCI became the focus of a massive regulatory battle in 1991 and on July 5 of that year customs and bank regulators in seven countries raided and locked down records of its branch offices.[4]

Investigators in the U.S. and the UK revealed that BCCI had been "set up deliberately to avoid centralized regulatory review, and operated extensively in bank secrecy jurisdictions. Its affairs were extraordinarily complex. Its officers were sophisticated international bankers whose apparent objective was to keep their affairs secret, to commit fraud on a massive scale, and to avoid detection."

The liquidators, Deloitte & Touche, filed a lawsuit against Price Waterhouse and Ernst & Young - the bank's auditors - which was settled for $175 million in 1998. A further lawsuit against the Emir of Abu Dhabi, a major shareholder, was launched in 1999 for approximately $400 million. BCCI creditors also instituted a $1 billion suit against the Bank of England as a regulatory body. After a nine-year struggle, due to the Bank's statutory immunity, the case went to trial in January 2004. However, in November 2005, Deloitte convinced creditor Abu Dhabi to drop its claims against the Bank of England, except for a claim for return of its deposits, in that Abu Dhabi owned 77% of the bank shares at closing, and was therefore also facing a major lawsuit. [2] To date liquidators have recovered about 75% of the creditors' lost money.[5] A decade after its liquidation, its activities were still not completely understood.[6]

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