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  •   Clifford, Altman Indicted in BCCI Probe

    By Sharon Walsh and Mark Potts
    Washington Post Staff Writers
    Thursday, July 30, 1992; Page A1

    Legendary Washington lawyer and presidential adviser Clark M. Clifford and his law partner, Robert A. Altman, were charged in criminal indictments yesterday with lying to banking regulators, accepting bribes and falsifying records to help the Bank of Credit and Commerce International illegally acquire U.S. banks, including Washington's First American Bankshares Inc.

    Indictments against the two men by separate state and federal grand juries were announced by New York District Attorney Robert M. Morgenthau in Manhattan and U.S. Assistant Attorney General Robert S. Mueller III in Washington. The Federal Reserve Board also brought civil charges against Clifford and Altman for lying to the Fed when they said BCCI would have nothing to do with First American.

    Shortly after the indictments were announced, the 85-year-old Clifford, tall but stooped, walked slowly down the aisle into the courtroom in New York's criminal justice building, holding his trademark fedora, and said: "I plead not guilty" in a clear, strong voice. A somber Altman, 45, preceded Clifford into the state Supreme Court courtroom of Justice John A.K. Bradley and also pleaded not guilty.

    "The bringing of these indictments is a cruel and unjust abuse of the prosecutorial function," Clifford and Altman said in a joint statement. "We totally and categorically deny all charges. ... They are the result of mean-spirited suspicion and unfounded speculation. ... We shall fight to establish our innocence."

    "We are confident that our clients will be vindicated in the end," Robert S. Bennett and Carl S. Rauh, attorneys for Clifford and Altman, said in a statement. "On the level playing field of a courtroom ... the outrageousness of the government's action today will be abundantly clear."

    Clifford and Altman resigned from First American last August. The bank's stock is now held by a court-appointed trustee who is seeking a buyer for the company, and prosecutors noted yesterday that the indictments have no effect on the bank's operations.

    For more than a decade, Clifford and Altman had been at the center of a triangle of relationships involving BCCI, First American and their own law firm, Clifford & Warnke: They were BCCI's lawyers, the top executives and attorneys for First American, and representatives of the Middle Eastern shareholders who took over the bank in 1982.

    They had assured banking regulators that the walls between First American and BCCI – a shadowy, virtually unregulated international bank – would not be breached.

    But the charges announced yesterday allege that those walls never really existed and that the millions of dollars that Clifford and Altman received as lawyers and bankers were actually bribes from BCCI in return for their efforts to maintain the facade.

    Clifford and Altman have repeatedly declared that they did not mislead regulators, but in fact were duped themselves by foreign investors whom they trusted. "They were men of reputation, wealth and stature," Clifford said of First American's Middle Eastern investors in congressional testimony last year. He and Altman did not know that the investors were really front men for BCCI, he testified.

    The indictments go far beyond what Clifford and Altman should have known about the investors and charge that the two conspired with the leaders of BCCI to mislead American officials.

    According to the federal indictment, beginning in 1978, Clifford and Altman "directed the efforts by their clients to acquire {First American}," despite being "put on notice" by the Federal Reserve that regulators were concerned about any potential direct relationship between BCCI and First American.

    The investigation will be aided by an important new witness. Earlier this week, Morgenthau's office worked out a plea agreement with Sheik Kamal Adham, former head of Saudi intelligence and a key figure in the 1982 takeover of First American. Adham admitted to violating the New York bank holding company act and agreed to cooperate with prosecutors by providing testimony and documents. He also agreed to pay $105 million in fines and restitution.

    Some defense attorneys have said the government's case will be hard to prove without direct evidence. Prosecutors decline to discuss how they will make their case, but yesterday Morgenthau said one of the problems of the investigation has been "documents without witnesses and witnesses without documents."

    If found guilty, Clifford could face a prison sentence of up to eight years and Altman perhaps more if convicted on the additional New York charges, prosecutors said. There is no mandatory jail term for any of the charges. The civil charges in New York could lead to fines and restitution of $80 million for the two men. Federal Reserve officials said they were withholding penalties against the two men until the criminal cases are resolved, but may later impose fines and ban them from the banking business for their roles in the BCCI affair.

    Morgenthau, Mueller and other officials said investigations into the BCCI scandal were continuing.

    According to the indictments and civil charges announced yesterday, Clifford and Altman accepted more than $40 million from BCCI over 10 years in the form of legal fees, sham loans and rigged stock deals.

    "Clifford and Altman ... enriched themselves through secret financial arrangements with BCCI, which resulted in millions of dollars of profits to them, and then conspired to keep those arrangements from the federal regulators," U.S. Attorney General William Barr said in a statement.

    In return, the two men misled regulators, helped BCCI acquire First American and National Bank of Georgia through front men, and ran First American at the direction of Agha Hasan Abedi, BCCI's founder and former chairman, and Swaleh Naqvi, his chief lieutenant, the indictments said.

    In the separate New York indictment, the grand jury charged four foreign investors – Abedi, Naqvi, Ghaith R. Pharaon and Faisal Saud al Fulaij – with racketeering. It described them as the core "BCC Group" that set up BCCI as a worldwide criminal enterprise that bribed central bankers, government officials and others around the world to gain power and money.

    While Clifford and Altman are not accused of being members of the BCC Group, they are charged with accepting bribes from the group and allowing it to influence the affairs of First American.

    The BCC Group conducted "a massive fraud," said Morgenthau. He said that the bank's worldwide activities included bribery of foreign leaders to obtain deposits from central banks in Third World countries, the defrauding of the World Bank, the International Monetary Fund and other international financial organizations, and the falsification of accounts and documents to make the chronically insolvent BCCI appear healthy. Losses to investors and depositors worldwide following the collapse of BCCI last summer are estimated to be in excess of $5 billion.

    Although BCCI's activities had virtually no direct cost to citizens of the United States, the bank regularly flouted American laws in its secret takeovers of First American and other U.S. institutions. "People have a right to know who owns their banks," Morgenthau said.

    It was that concern over ownership that led state and federal banking regulators to question the motives of the Middle Eastern investors who wanted to take over First American's predecessor, Financial General Bankshares Inc., in the late 1970s. They wanted to be sure that the investors were not representing BCCI. Clifford and Altman repeatedly assured them BCCI would not own or influence the operations of the bank.

    Regulators were not the only ones deceived, prosecutors contended. The two men also concealed BCCI's role with First American from their own law partners at Clifford & Warnke, other outside counsel to the bank and the boards of directors of First American and its parent company, Credit and Commerce American Holdings (CCAH), according to the indictments.

    The new charges came exactly one year after a New York grand jury indicted BCCI, Abedi and Naqvi on charges of fraud, money laundering, bribery and theft, which Morganthau called "the largest bank fraud in world history." At the same time, the Fed sought a $200 million fine from BCCI for secretly owning First American.

    London-based BCCI pleaded guilty in December to illegally purchasing First American and three other U.S. banks. It forfeited $550 million in U.S. assets that will be equally divided between two funds: one to shore up banks it owned illegally in this country and the other for worldwide investors who lost billions in deposits when the bank closed.

    Among the central allegations in both the federal and state indictments is that Abedi, Naqvi and other BCCI officials engineered the purchase of National Bank of Georgia through Clifford and Altman. In return for being part of that conspiracy, Clifford and Altman allegedly received millions of dollars in secret loans from BCCI on favorable terms, which they did not report to federal regulators.

    The key element in the bribery charges involves Clifford and Altman's purchase of stock in CCAH, which they have told congressional investigators was a commonplace reward for their services to the bank, whose size had grown more than fivefold under their direction and which they had run for many years with little pay.

    Both men are believed to be among the wealthiest lawyers in Washington. Altman and his wife, television actress Lynda Carter – best known for her role as "Wonder Woman" – are one of Washington's most socially prominent couples.

    The $15 million Clifford and Altman borrowed from BCCI at favorable interest rates to purchase the stock in 1986 was actually money that did not have to be repaid, according to the indictments.

    Nineteen months later, the two men sold most of the stock for more than three times what they paid, a price they said was determined by previous transactions in the shares and the relatively robust market for bank stocks in general. Their profit was $9.8 million.

    But the indictments say Clifford and Altman set the sale price themselves in an effort to boost the profit. In early 1988, according to the indictment, Altman telephoned an assistant to Naqvi and told him to calculate a price for the sale of the shares that would give Clifford and Altman after-tax profits of $3 million and $1.5 million, respectively.

    In addition, Altman dictated a letter to the assistant to be sent to Clifford as if it had been written by the assistant, saying that BCCI had found a buyer for the stock at $6,800 a share – exactly the price needed to give the men the profits they wanted.

    Morgenthau alleged the stock deal was a reward to the two lawyers for their parts in helping BCCI purchase National Bank of Georgia in 1987. BCCI had purchased NBG in the early 1980s using Pharaon as a front man, according to federal officials, but when Pharaon ran into financial trouble, BCCI became concerned that the secret ownership would be discovered.

    BCCI turned to Clifford and Altman, who arranged for First American to purchase the Georgia bank with money borrowed from BCCI, according to the indictments. In effect, BCCI was transferring National Bank of Georgia from its front man – Pharaon – to its secret subsidiary, First American.

    On several occasions, according to the indictments, Clifford and especially Altman raised concerns that First American's purchase of the Georgia bank would reveal BCCI's connection to the two banks. One staff memo, included in a letter from Clifford to Abedi, said, "The proposed structure may focus unwelcome attention on the relationship between {First American} and BCCI."

    "Altman, knowing of BCCI's role in the transaction ... took affirmative steps to conceal BCCI's involvement in the sale of NBG to {First American} from the board of governors" of the Fed, the Fed complaint alleges.

    It is as yet unclear whether New York or federal prosecutors will take the lead on the case. Morgenthau said that New York would seek as speedy a trial as possible, but noted that it took 16 months for the grand jury to sort out the complicated case, which produced about 10,000 pages of testimony.

    Staff writer Robert J. McCartney contributed to this report from New York.

    1977

    September: Clark Clifford and Robert Altman defend former Carter administration official Bert Lance in congressional hearings into Lance's financial dealings. Lance then goes to work as a consultant to BCCI and introduces Clifford and Altman to BCCI founder and Chairman Agha Hasan Abedi.

    © Copyright 1992 The Washington Post Company

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