The Rise And Fall Of The Largest 3Rd World Bank

By Masihur Rahman

This enthralling book on BCCI written by a key executive on the bank narrates in some details the sage of this international bank - the largest in the 3rd World. Set up in 1972 this bank had Bank of America as one of its major shareholder and the Ruler of Abu Dhabi as its founder and financer. Two powerful building blocks for success.
In less than 20 years it became a global organization covering 72 countries backed by 423 offices and with assets exceeding $20 billion. Notwithstanding its awesome success it was abruptly shut down on a Friday afternoon in July 1991 by the Bank of England under pressure from a particular US Agency. WHY ?
This book will spell out the real reason and give some incredible details of the conspiracy that surrounded this event ... Read on

About the Author

Masihur Rahman is a highly qualified accountant being a Fellow of The Royal Institute of Chartered Accountant of England & Wales (FCA), a Fellow of the British Institute of Management (FBIM) and an Associate of the Institute of Cost and Management Accountants (ACMA) in the UK Rahman was born in Calcutta, India . His father was a renowned judge and well known for two reasons. One, that he was the first Muslim in undivided India to become a much vaunted ICS officer (Indian Civil Service) and second he was the first and one of only two Indians to ever earn a 100% mark in Mathematics resulting in a Foundation being created in Dhaka, Bangla Desh called “The Hall of Excellence in Mathematics” set up within the campus of the Dhaka University
Rahman was a founding member of Bank of Credit and Commerce Int. set up in 1972 by Agha Hasan Abedi and remained with BCCI till 1990 soon before its closure. Prior to this Rahman worked as an Executive Vice President of United Bank, which was also established by Mr. Abedi in 1959
As the Chief Finance Officer of BCCI, Rahman was responsible for preparing the financial statements of BCCI. He was also responsible for arranging the audit(s) of the BCCI Group which was conducted by two of the “big four” audit firms of the world - Ernst & Young and Price Waterhouse.
, Rahman had close dealings with the banking activities of BCCI - particularly during the closing period of BCCI in 1990 and1991. This gave him an in depth of knowledge of the affairs of the bank right up to its abrupt closure in July 1991. He also had access to valuable documents which helped his recollection of events relating to the bank an aided in confirming the validity of submissions made in this book.

• Language: English
• Publisher: Masihur Rahman
• Release date: May 22, 2017
• ISBN: 9789988252779

Book preview

The Rise and Fall of the Largest

3rd World Bank

The Rise and Fall of the Largest

3rd World Bank

Based on the diaries & Autobiographical notes

of masihur Rahman ex-chief finance officer of bcci

around the world

Copyright © 2017 Masihur Rahman

Published by Masihur Rahman Publishing at Smashwords

First edition 2017

All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording or any information storage or retrieval system without permission from the copyright holder.

The Author has made every effort to trace and acknowledge sources/resources/individuals. In the event that any images/information have been incorrectly attributed or credited, the Author will be pleased to rectify these omissions at the earliest opportunity.

Printed and bound by Novus Printers

Cover designed by Masihur Rahman

Website: www.reachpublishers.co.za

E-mail: [e-mail]

Scripture quotations taken from the Amplified® Bible, unless otherwise stated:

Copyright © 1954, 1958, 1962, 1964, 1965, 1987 by The Lockman Foundation.

Used by permission.

This book is dedicated to all who were inspired to put this highly readable book together.

ACKNOWLEDGEMENTS

A special note of thanks is due to several ex-colleagues of the author who worked in BCCI. Particularly, Dildar Rizvi, Anwarul Amin and Tom Thiss. Similar thanks is due to the senior partner of a major audit firm whose assistance was vital and finally to Baaba Mirekuah who helped in the editing work with great talent. I also need to express a heartfelt appreciation to Mavis Boateng who made sure that l was well cared for during my many months of strenuous efforts in writing this book.

CONTENT

Acknowledgements

Preface

One Abedi’s Audacious Dream–A Global Bank

Two The Deserts of Abu Dhabi and BCCI’s Birth

Three The Final Creation of BCCI–The Sheikh & BOA

Four The Global Growth of BCCI

Five Episodes on the Way to BCCI’s Growth

Six Politics, BCCI & China

Seven BCCI and the Regulatory Controls Around the World

Eight Grooming tomorrow’s BCCI/Its Global Impact

Nine Abedi’s New Philosophy, The Art of Giving

Ten BCCI’s entry into the United States, the Beginning of the End

Eleven The Treasury Disaster and the Truth behind it

Twelve BCCI and the Drug Sting Money Laundering and Drug dealing

Thirteen The 1990 Crisis and the Call to Abu Dhabi For Rescue

Fourteen The New York District Attorney & His Vendetta on BCCI - Part I

Fifteen NYDA/BCCI VENDETTA - Part II

Sixteen Lord Justice Bingham and the Guardian

Seventeen NY Federal Reserve Bank’s Tussle with Bank of England

Eighteen The Sandstorm Report. A Conspiracy to Shut Down BCCI Globally

Nineteeen Senator Kerry - Senate Hearing On BCCI

Twenty BCCI and the United Nations

Twenty One The Liquidators and Staff Settlement

Twenty Two The Life and Death of Agha Hasan Abedi

Epilogue

PREFACE

Perhaps there are few, if any, banking sagas in the annals of ‘global financial disasters’ about which so much has been written in the international press, televised around the world, talked about endlessly and analyzed threadbare by ’experts’, than the ‘infamous’ Bank of Credit and Commerce International.

Nearly a dozen or so books have been churned out particularly during 1991 and 1992 with eye catching names, one falling over each other describing in infinite and gory details the multitude of wrong-doings of BCCI from the time it was conceived to its untimely death when it was barely in its 20’s. There is not a single newspaper worth its name that has not dedicated headline after headline for the four little alphabets–‘BCCI’, nor written more salacious stories as ‘factual’ reporting about this unfortunate institution, which according to the ‘wise ones’ should never have been born.

Well that was more than a quarter of a century ago. The writer of this book has been assisted by some of his senior colleagues who were ex-officers of BCCI around the world and were there to participate in and witness this tragic event first hand. They feel that the time is now ripe, the dust having settled, to bring forth "The Untold Story", if nothing else to lay out the real facts fully and comprehensively researched and backed by masses of supporting documents.

They collectively feel that this book will become a must read reference book not only to those directly affected by its fall-outs, but for generation after generation of those aspiring to become future bankers, auditors or accountants and even to thousands of casual readers.

Many parts of this story will be jaw-dropping and readers who are more persevering will seek to delve into the ‘evidence’ used to support the written narrative. They will have ready access to sufficient and convincing documents to become fully satisfied. In the future, Masi hopes Wikipedia will some day find it worth covering, just to record ‘the other side of this saga’ and to counter the many fables they have already carried.

The time is now ripe, the dust having settled, to bring forth The Untold Story of BCCI, if nothing else, to lay out the real facts fully and comprehensively.

Masihur Rahman

One

Abedi’s Audacious Dream – A Global Bank

It was the crack of dawn of a usual crisp cool day of 1 January 1974 when yet another major turmoil hit Pakistan. With it my life and those of my senior colleagues then holding key executive positions in the second largest bank in Pakistan, United Bank of Pakistan, took a new turn.

Zulfiquar Ali Bhutto, a wealthy landlord from Larkana in Sind, was educated at USC Berkley and Oxford and a barrister from Lincolns Inn in London. A wily and charismatic person who took up the pretence of being a rabid socialist. He had earlier won the national election back in December 1971 (under the banner of his Pakistan People’s Party) and came into supreme power, with no real Constitution to guide him. Zulfiquar decided to implement his ‘manifesto’, get rid of the capitalistic business men and take charge of their major industries and commercial enterprises. They were the root of all evil and the curse and suffering of the multitude of the down-trodden masses in Pakistan. Clear them out and the country will flourish.

By the end of the first phase, he had already nationalized much of the industrial sector, the iron and steel mills, the cement and petrochemical factories and others. However, in his mind, true nationalization would not be complete unless he also nationalized the ‘Financial Sector;’ the insurance companies and the banks. This new idea had been given to him by the then Minister of Finance, Dr. Mubashar Hasan, a rabid socialist like Bhutto. At the start of 1974 he launched Phase II of his plan which is where my story begins.

United Bank Limited, owned primarily by the Saigol Family (one of the ten richest businessmen in the country) was one such enterprise to be ‘nationalized’. Established in November 1959, it was managed and run by the famous (and infamous) banking prodigy of the sub-continent–Agha Hasan Abedi, a visionary of unparalleled acumen. Abedi had, prior to joining this bank, worked as one of the senior bankers in the then leading bank of Pakistan; Habib Bank Limited. It was rumoured that the reason for Abedi’s abrupt departure from a prestigious job in Habib Bank was his blatant breach of authority in the area of advancing loans to customers, large and small. With no head office authority, Abedi had granted a sizable loan to the Saigol family. This rightly earned him a personal stricture from one of the main owners of Habib Bank. Abedi’s response was his usual reaction - to walk away from his job. He then persuaded the Saigol Family to help him set up a new bank - the United Bank Limited. This is just one of many such events that chequered Abedi’s career.

Unbeknown to me, there had been a pre-dawn radio announcement that morning about the ‘nationalization’ of all banks and financial institutions. Innocently, I had headed in a leisurely fashion to my fancy office at the prestigious head office building of UBL located in McLeod Road at the heart of the business district of Karachi, the biggest city of Pakistan. When I arrived chaos seemed to prevail. There were policemen of all shapes and sizes carting away various senior most executives of the bank. My turn came as I entered the building and along with some of my remaining colleagues we were hustled into a police van and driven to the office of The State Bank of Pakistan. I saw a large number of bankers, some of whom I recognized and others whom I did not. I saw no sign of Abedi and wondered if he had been forewarned and thus avoided his arrest. Various executives were taken away in different directions. I was told I should go back to the Head Office of UBL and await instructions. I followed that instruction and returned back to my office. I was distressed to see that nearly all my senior colleagues were missing.

A day or two passed and I was called again to the State Bank premises. On reaching there, I was ushered into a small meeting room where about a dozen other people were already present, none of whom I recognized. Finally an official of the State Bank came in looking grave. He delivered a brief directive. It had been decided by the Bhutto government that there was a ‘wasteful’ number of banks with extensive networks of branches. To the best of my recollection there were, at the time, 13 banks with 2,330 branches, many of which were on top of each other at various locations. Quite rightly a ‘poor country’ like Pakistan could ill afford such duplication and waste. The new government felt a total of 5 banks with about 400 branches would be adequate to serve the needs of the country and its banking population. A ‘Task Force’ was established to assess which banks should be merged with which and which branches should be closed and merged with others selected for an area. I was to be part of the team as its financial member, given my background as an experienced Chartered Accountant. I wondered though why as a Bengali citizen, inadvertently based in Pakistan, I had been selected in the midst of conflict with the emerging nation of Bangladesh. There were no other Bengalis in the Working Group to the best of my knowledge.

I sensed that the exercise would be a complex and subjective one, if one was really seeking to assess all related issues in a totally unbiased manner. The financial structure of each bank, the size, and suitability of the location of each branch was reviewed. The aim would be to determine which bank should merge with which, and which branches should be closed. Broad guidelines had been given to the team by the State Bank. The assignment, which was already complex became even more so. Many discrete ‘political pressure’ was put on the team clearly directing us to reverse a decision about the closure of a particular branch as an important member of the PPP has vested interest in it.

This exercise dragged on for months. During the time, I was seeking to find out, as discretely as possible, the fate of Abedi. Finally I was informed that he, like other chairmen and presidents of banks and financial institutions, had been placed under ‘house arrest’. I knew Abedi’s house to be a luxurious and furnished residence in Clifton–an upmarket part of Karachi, having visited the house on several occasions during my UBL days. I was comforted with the thought that he was not suffering any hardship and continued to struggle with my given assignment.

One fine morning during a busy work day, I was contacted by an ex UBL officer who informed me of Abedi’s desire for me to visit him on an urgent matter. I quietly consulted some of my remaining (ex) UBL executives and some middle ranking officers as to whether I should indeed call on Abedi. One and all advised that as a ‘Bengali’ I must not ever seek to meet Abedi as I may be under watch. Days went by and I received another ‘urgent’ missive from Abedi. I decided I must take the risk and meet him. I had nothing but the highest regard and respect for him. Indeed it was he who had persuaded me to leave my senior Government Sector job with The East Pakistan Industrial Development Corporation (EPIDC), where I was then its Chief Finance Officer to join UBL as one of only 5 Executive Vice President (EVP)–reporting directly to Abedi. I was in my early 30’s and by far the youngest of the EVP’s, with the others ranging between 55 and 70 years.

I decided to get the special visit permit required to call on someone who was then a persona non grata and under house arrest. With some delay I finally got a 1 hour permit. I availed of it post haste and rushed to the Clifton home of Abedi. It was surrounded by several armed police men. They checked me carefully and the permit my driver had handed over – stamped it for time (I noted it was 11.15 am on a Tuesday of February 1974).

I walked into the house and Abedi, in his usual warm and courteous manner, greeted me at the front double door. He walked me into his sumptuous drawing room, all glistening with sprawling white carpets and plush white sofa sets. Tea and biscuits arrived in minutes carried in by immaculately dressed house servants.

Abedi spoke in his gentle voice: Thank you for coming Mr Rahman, it must have been difficult getting a visit permit. How are you? How is your wife and children? How is your family in East Pakistan? (Bangladesh was still an alien concept in the Pakistani psyche. Though some leaders in Bangladesh had already ‘declared’ independence, but not yet accepted by Pakistan). Are you being treated well? ….et al"

I responded: Mr Abedi, I am very well, so is my family and everybody. I have a limited one hour permit. Please tell me why you needed to meet me.

Abedi looked at me intently I have watched you work. You are so intense and hardworking, so wrapped up in whatever you do and I greatly admire that. I need professional people like you on whom I can rely on. Would you be interested to join me? You already have a good job. In a knee-jerk reaction, with no clear idea of what I was saying, I blurted out: I would certainly like to work with you again, whatever your plans.

Then come with me and I will share my dream with you. So saying he took my hand and guided me to his inner sanctum, a large and spacious office room with a huge table and several cushioned chairs and beautiful paintings. He leaned over the table which had a triple size long sheet of paper laid out across it which took up the whole desk. I noted instantly that across this sheet of paper there were a number of circular ‘doodles’ of different sizes, made obviously by turning over various sizes of cups and tumblers. It struck me though there were only pencil-drawn lines from circle to circle, that the hurriedly sketched drawing reflected a global map. Surely, I thought to myself he is not contemplating something global!

Are you planning a world-wide bank? I asked hesitantly.

"Yes" he said firmly. I was aghast.

"Agha sahib… aren’t you somewhat late? There are several dozen global banks, Bank of America (BoA), Chase, Citi, Barclays, BNP, Societe General, Deutsche Bank, Swiss Banking Corporation and others…surely the world does not need another ‘Global Bank’..." was my astonished answer.

Abedi looked me in the eye. He said: "Mr Rahman, you are wrong. Yes there are indeed many ‘international’ banks, but look deeper into their structure. They are nothing but American banks, British banks, French banks, German banks and others. They spread out their branch network in all parts of the world, but their real motive is simple and selfish. Set up offices in different countries, secure the business of their national companies based in that country–US, British, French, whatever and then serve some high net worth businessmen in such countries (who find it a matter of prestige to have a foreign bank as ‘their banker’). They then take their local profits back home to distribute to their shareholders. They have little interest in that country–except that there should be peace and quiet so they can get on with their business of making more profits…"

He continued: My vision is different. I want to set up a ‘brotherhood’ of banks in every country around the globe, both throughout the Developing World as well as in selected countries of the Developed World. Each ‘local bank’ will be managed locally and run by the most experienced professionals of that country headed by a local Director who has been at the top of a government department –an ex Central Bank executive, even an ex-Governor of the Central Bank, an ex-Finance Minister and such noteworthy people. All their local currency resources and businesses will be self-managed. We will become their ‘parent organization’, based in Europe and providing them a substantial foreign currency credit line–the very life blood of a ‘local bank’ seeking to be a semi-international bank. This is not a dream. I hope to get funding for this project from the Middle East including Sheikh Zayed al Nahyan of Abu Dhabi. I am also going to seek some funding from Bank of America.

All this was too much for me to absorb. I instinctively thought, this DREAM was do-able! My only reply was: Agha Sahib, I have known you for years and admire your vision, boldness and limitless energy, but you are under house arrest. Should you not concentrate first on getting yourself released?

Abedi just laughed. He said in a soft tone Mr Rahman, I know my country. I know my people and the politicians of the day. All this will pass. You just concentrate on how soon you can unwind yourself from your current assignment, and how soon you can join Swaleh Naqvi who is already setting up an office in Abu Dhabi and in a few other locations. He is waiting for you. (Unbeknown to me, Naqvi who had been the General Manager of UBL in East Pakistan, had somehow wangled himself out of East Pakistan with the help of the remnants of the Pakistan Army then occupying East Pakistan).I will do that at the earliest... I assured Abedi.

If you are serious I need to share a secret with you which must never be discussed while you are still in Pakistan said Abedi. Of course I am serious I replied. Abedi responded "You have come to see me now in 1974. You will be aware that Bhutto started the nationalization program from December 1971, immediately after his election. Initially he focused on nationalizing the heavy industries and left the finance sector alone. It was only later in 1974 that his socialist bent Finance Minister – Mubashar Hasan persuaded him to extend the nationalization to the finance sector. In between, I was free to move around. However, I was firmly convinced that the days of banking in the private sector would be short lived. Hence all the plans I have been discussing with you is out of date. I have already travelled to Abu Dhabi

Reviews for The Rise And Fall Of The Largest 3Rd World Bank

[krbhatti · Rating: 5 out of 5 stars]

This is the first time someone gave out the other side of BCCI story. Though, I feel the author as CFO is blaming the auditor for something which he should have done himself, yet the book is quite enlightening. There was not such a calamity that the bank could not have been saved. But it seems that a third world successful bank was too much for Old Colonial powers.