TIME: Almanac 1993/TIME Almanac 1993.iso/time/111191/1111103.000

Text File | 1992-08-28 | 13.5 KB | 284 lines

                                                                                NATION, Page 42

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 -- With reporting by Michael
Duffy/Washington


    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.