Ever since the Federal Reserve Board approved the takeover of First American Bankshares by foreign investors nine years ago, there has been talk in the banking world that the Washington-based company had fallen under the control of an aggressive and high-flying Persian Gulf bank, the Bank of Credit and Commerce International (BCCI).

Over the last decade, First American has expanded dramatically, growing to 183 branches in the Washington area alone. A hallmark of its growth was a catchy advertising campaign, including "First American Stories" -- homey tales about immigrant families that end with the bank's distinctive red logo and a voice pronouncing, "We're First American. The bank for all Americans."

Then in 1988, First American's name came up unexpectedly in a criminal trial in Miami. Evidence showed that BCCI executives had helped Panamanian leader Manuel Antonio Noriega launder drug money through an account at First American. First American officials said the bank had no knowledge of the transactions; no charges were filed against First American.

The Federal Reserve, which has primary responsibility for regulating the ownership of bank holding companies, reacted by trying to find out about the relationship between BCCI and First American, just as it did when it approved the takeover in 1981. But the inquiry ended with the same result as the previous one: The board noted, for the record, that it had allowed new investors from Kuwait, Saudi Arabia and the United Arab Emirates to acquire the company only after being promised "that BCCI would not be involved in the management."

But documents and interviews in New York, London and Washington suggest that BCCI and First American have had an extensive, long-term relationship that ppears contrary to what regulators say they understood it would be.

For example, BCCI's president participated in the hiring of three First American executives. BCCI executives helped negotiate two important First American acquisitions. BCCI helped finance First American's impressive expansion as it grew to be the nation's 51st largest bank holding company, with eight subsidiaries in six states and the District. On a regular basis, First American Chairman Clark M. Clifford and First American President Robert A. Altman flew to New York and London to brief senior BCCI executives.

Whether the particulars of BCCI's role add up to an improper "controlling influence" over First American -- as defined by federal law -- is a determination that the Federal Reserve can make only after a formal inquiry. In the cautious, button-down realm of American banking regulation, any hidden influence is cause for possible action. The influence does not have to extend to all operations. "This is not a technicality," said Virgil Mattingly, the board's general counsel.

If the Federal Reserve were to conclude that BCCI had exercised a controlling influence over First American, it could take a range of actions, including the extreme measure of forcing shareholders to sell the $11 billion holding company and its subsidiaries in Virginia, Maryland, the District, New York, Tennessee, Georgia and Florida -- a type of sanction that the board has invoked only rarely in its history.

The board's interest in the relationship between the two banks has been rekindled in recent months, in part because the Manhattan district attorney's office has opened its own investigation. A bank regulator questioned in the Manhattan inquiry said prosecutors are probing whether New York State banking officials -- who also approved the takeover of First American in a separate proceeding in 1981 -- were misled into believing that BCCI would have no influence over First American's operation.

The Federal Reserve, which relied on those same commitments in approving the takeover, is closely monitoring the New York investigation. "We have been in communication with the district attorney in New York and we have provided certain information," Mattingly said.

Whatever the outcome, investigators must wrestle at some point with the unequivocal statements of Clifford, a towering figure in Washington's legal and political circles who has served as First American's chairman since the 1981 takeover. His law firm, Clifford & Warnke, has done millions of dollars in legal work for both BCCI and First American.

Clifford declared that BCCI has not exercised any control over First American, now or in the past. "There has been no participation, directly or indirectly, by BCCI," Clifford said during more than 15 hours of interviews with The Washington Post over several months.

From the outset, he said, First American's shareholders made clear to the Fed that they intended to use BCCI as their investment adviser. To comply with the shareholders' wishes, Clifford said he has periodically briefed BCCI's top executives about First American's performance and strategic planning.

He described this as a limited, arms-length relationship that conforms to the formal assurances he gave the Federal Reserve at a special hearing in April 1981. Clifford appeared as both lawyer for the shareholders and as prospective chairman of the new holding company. "The representation we made was that BCCI would not manage or control First American," Clifford said. "At no time did we say that we would not have some contact with" BCCI.

He seemed mystified that questions keep cropping up about the relationship between BCCI and First American; he rejected the possibility that BCCI executives may have influenced First American without his knowledge. But he remained unshaken in his view that the facts will show that he -- not BCCI -- has been in charge of First American for the past nine years.

"I value the reputation I have for honesty and character," he said, offering to testify under oath that BCCI has never influenced his running of First American. "I have not dissembled in any way. Others, who are enemies of BCCI, who perhaps do not wish First American well, have attempted to assemble circumstantial evidence to disprove what I have told you." Figuring Out BCCI

It was not the prospect of First American being controlled by a foreign bank that worried U.S. banking regulators in 1981; it was control by this particular foreign bank.

To begin with, the regulators never felt comfortable that they understood BCCI. It was chartered in Luxembourg, headquartered in London and operated through a complex corporate structure that included subsidiaries all over the world, including such offshore banking havens as the Cayman Islands and the Bahamas. Its investors came primarily from the Persian Gulf states of Abu Dahbi, Saudi Arabia and Kuwait.

Founded in 1972 by Agha Hasan Abedi, a hard-driving banker from Pakistan who had financial backing from the ruling family of the United Arab Emirates, BCCI skyrocketed quickly into the ranks of the world's largest private banks. Until recent losses forced some cutbacks, it boasted of $20 billion in assets and 400 offices in 73 nations.

Unlike most large financial institutions, however, BCCI's far-flung network of banks was not regulated on a consolidated basis by any central bank, which meant its deposits were not guaranteed by a government. And that's what concerned U.S. regulators.

Then, too, there was BCCI's tarnished record when it came to First American. In 1977, BCCI helped organize a hostile takeover bid for First American's predecessor, Financial General Bankshares. A federal judge later ruled that he was persuaded that BCCI had intended, by buying shares for several clients and its own shareholders, to exert "influence on the management" of Financial General.

The Securities and Exchange Commission also accused BCCI and others of secretly acting as a group without disclosing their intentions, buying stock privately and thus depriving others of important knowledge that might affect the value of their stock. Admitting no wrongdoing, the accused group settled the suit by agreeing to make an open offer for the outstanding shares of Financial General.

The takeover succeeded; Financial General's principal stockholders agreed to sell.

But when the new shareholders' application to acquire Financial General arrived at the Federal Reserve's stately offices in October 1980, it raised eyebrows among banking regulators in Washington and in those states where Financial General had subsidiaries.

"I could not for the life of me figure out what the relationship was between BCCI and their investors and {First American's Virginia subsidiary}," said Sidney Bailey, Virginia's commissioner of financial institutions. New York banking regulators feared that "the Arab investors might have been acting for BCCI," said Geofredo Rodriquez, a New York regulator.

For years, BCCI had coveted a presence in the United States, specifically in New York, money center for international transactions. In the mid-1970s, BCCI had tried and failed to acquire a New York bank. Without an American subsidiary, BCCI could only open representative offices, which are restricted in the kinds of transactions they can handle.

Sorting this out fell to the Fed, which has had primary jurisdiction over bank holding companies since the 1930s, in the days when most banks were small, local institutions. Generally, the board reviews and approves applications without hearings; the board's investigative capabilities are small compared to the more enforcement-oriented Comptroller of the Currency. "There is a certain degree of accepting facts at face value," said Donald E. Kline, the Federal Reserve's associate director of regulation and supervision.

To clear the air, the board's professional staff decided to convene a special hearing so that regulators from different agencies could question Clifford, Altman and the new investors. "We wanted to establish that BCCI was not going to be acquiring a controlling interest in First American," Kline said. Passive Investors

It was a large group that gathered on April 23, 1981, for an "informal private hearing" in Room B 1215 at the Federal Reserve's headquarters at 20th and Constitution NW. Sixteen regulators, including four state banking regulators, listened as Clifford introduced the four prospective new owners of the holding company.

First was the lead investor, Sheik Kamal Adham, former head of the Saudi Arabian intelligence service. He was followed by Faisal Saud Fulaij, the long-time chairman of Kuwait Airways, Abdul Raouf Khalil, a Saudi Arabian real estate investor, and Sayed Gohary, a Saudi Arabian businessmen.

They took turns in describing their ambitions for the company, which they planned to call First American Bankshares to correspond to names of its subsidiaries. The bank would continue to be "an American company," they stressed.

Adham said they would be "passive investors." The "ultimate management of the company," he said, would be left to Clifford and a board of directors with several distinguished Americans, including former senator Stuart Symington (now deceased) and Elwood R. Quesada, a retired Air Force lieutenant general.

Adham bristled at the suggestion that he was acting as a front for BCCI. "We don't need anybody to use us, to be a cover for them," he declared. "We are doing it for ourselves."

He said BCCI was his banker and that he often relied on it for investment advice. For example, he said, he had turned to BCCI in 1977 to decide whether to buy shares in Financial General during the earlier hostile takeover.

But some regulators still weren't satisfied. Near the end of the day-long hearing, Lloyd W. Bostian Jr. of the Federal Reserve's Richmond office, asked: "What precisely is their {BCCI} function, if any, in this proposal at the present time?"

Clifford stepped in. "None," he said. "There is no function of any kind on the part of BCCI. . . . I know of no present relationship. I know of no planned future relationship that exists."

Given such categorial assertions, the board had no reason to probe further. As the hearing concluded, the Federal Reserve's deputy general counsel, Robert Mannion, summarized his understanding: "It is represented in the application that BCCI is no longer involved in this particular proposal, although BCCI may continue to offer advice to individual investors."

On August 25, 1982, the Federal Reserve approved the takeover. The Comptroller of the Currency also signed off, providing its own version of the relationship. "It has now been represented to us that BCCI will have no involvement with the management and other affairs, nor will BCCI be involved in the financing arrangements," wrote Comptroller official C.F. Muckenfuss at the time.

New York state regulators insisted on holding their own hearing. According to Rodriguez, they would have rejected the application but for assurances that BCCI was, as he put it, "out of the picture." Briefings in London

Whatever BCCI's relationship to First American, it was not out of the picture, according to information gathered from interviews and documents.

After the takeover, Clifford and Altman flew periodically to London for meetings with Abedi, BCCI's president. Occasionally, Adham sat in, too. "This relationship developed naturally," Clifford said, "but an effort has been made to make it appear sinister."

Clifford and Abedi knew each other well. They first met during the 1978 takeover fight, when BCCI had hired Clifford and his firm to represent it. For several years during the takeover battle, Clifford flew to London regularly to discuss BCCI legal business and the takeover plans. "Sometimes we were going over once a month," he said.

The two men -- Clifford, the venerable Washington lawyer, and Abedi, the cultured Pakistani banker -- could not have come from more different backgrounds.

Clifford, then in his late 70s, was a tall, courtly man whose features seemed chiseled in granite. He had built a career around public service and the law, serving as a top adviser to President Harry Truman and as secretary of defense in President Lyndon Johnson's Cabinet. After years of representing corporations, he decided in the twilight of his career that he wanted to run one. When Adham asked him to take on the chairmanship during a meeting with Abedi, he jumped at the chance. Now 84, he retains the energy and persuasiveness of lawyers half his age.

Abedi, by contrast, was a survivor. He had lost one bank in Pakistan to nationalization, then turned right around and created BCCI. His business instincts told him that BCCI had a ready-made market in the Third World, where credit was often scarce and many Western banks were reluctant to lend. (Abedi, 69, is now ill and declined through a spokesman to be interviewed for this article. In October, he resigned as BCCI president.)

Both men relied upon proteges. Clifford left day-to-day operations of First American to Altman, his partner at Clifford & Warnke. Abedi relied on Swaleh Naqvi, his second-in-command. "Naqvi sat in a lot with Abedi," Clifford said. "Abedi was the dreamer, the conceptualist, and Naqvi was the numbers man."

By 1982, according to Clifford, he was traveling to London "four or five times a year." Clifford said that he and Altman briefed BCCI executives on First American's recent performance, its budgets and any major plans for expansion. "We kept our investors informed through Abedi," Clifford said.

Once or twice a year, Abedi visited New York, where BCCI had a representative office. On those occasions, Clifford or Altman traveled to Manhattan and met Abedi at his preferred hotel, the Helmsley Palace.

Adham said BCCI is "in the middle to convey suggestions from Washington to the owners who are in the gulf." Then, he said, "We ask him {Abedi}, 'What's your opinion?' . . . When he says it is a good move, people in the gulf listen to him."

Bank regulators such as Bailey said they were surprised to learn of these extensive discussions involving BCCI and Abedi "I received positive, absolute assurances that there would be no such relationship with BCCI," Bailey said. Advice From Abedi

Abedi's presence was most visibly felt in New York, where BCCI had always wanted a presence of its own. He played a major role in the hiring of Bruno Richter as chief executive officer of First American's New York subsidiary, according to Richter.

In the spring of 1983, Richter said in an interview, he was working at the Bank of America when he was approached by a BCCI executive, Khasuro Elley. At first, Richter said, he thought they were looking him over for a BCCI job. He met three times with Abedi, once in New York and then twice in London; at the second meeting, he said, Abedi "asked me if I want to consider joining First American."

At the end of their third meeting, Abedi told him, "We want you to meet with Clifford and Altman in Washington," according to Richter.

Clifford and Altman then offered him the job. Upon taking over, Richter said, he discovered that BCCI had considerable input over certain management decisions, especially hiring of key personnel. On Abedi's recommendation, he hired a former BCCI employee, Aijaz Afridi, as his executive vice president. Richter said he wanted to attract as much business as he could from BCCI's subsidiaries and asked Abedi to "send me one of your people."

At Altman's request, Richter said, he sent another top choice, David Palmer, to London to meet Abedi. "They were checking out my resume," Palmer said of his visit to BCCI headquarters. He said he was offered a job on his return to New York.

Kline, the Federal Reserve official, said he did not understand why BCCI would participate in the hiring of key personnel: "I don't see there would be any role of BCCI in selecting the managers of individual subsidiaries."

Robert G. Stevens, the holding company's chief executive officer for seven years, said that he met Abedi at Clifford's law office when he was being interviewed for the top management position. Stevens said Clifford told him Abedi was "an adviser to the investors and he would therefore have an interest in who they were hiring as president."

Clifford said, "I thought it would be appropriate if Abedi met Stevens" so the BCCI president could "see the kind of man we were bringing in to be CEO of the holding company." But he added: "Mr. Abedi did not screen Mr. Stevens."

Stevens said he had little contact with Abedi or BCCI during his time at First American. "There certainly wasn't any relationship with BCCI at my level," Stevens said. "Whether there was a relationship at BCCI and Clifford's level, I don't know." Asking For Money

In determining whether a bank has a "controlling influence" over another bank, the Federal Reserve also looks for signs of involvement in how a bank raises and spends capital. In this area, too, there seems to be a difference between what happened and what regulators expected.

Adham said in an interview that he borrowed money from BCCI for some of the capital to buy shares in First American's parent holding company, Credit and Commerce American Holdings NV (CCAH). The shares themselves secured the BCCI loans.

Clifford said he was unaware that any of the money was borrowed from BCCI. "I do not know what the financial relationship was with the shareholders and BCCI. We were never told that."

There were six infusions of new capital over seven years: $12 million; $89 million; $45 million; $190 million; $15 million and $50 million. Clifford said the money typically arrived from the shareholders' accounts at BCCI and that First American then issued new shares, sending them directly to the shareholders or to BCCI for distribution. (CCAH also borrowed $20 million from a BCCI subsidiary, records show, earmarked for "growth and expansion." Altman said it was a routine loan of money used as working capital for First American.)

The takeover application seemed to rule out this kind of role for BCCI, saying: "Neither is it a lender, nor will it be, with respect to the acquisition by any of the investors of" shares in the holding company.

Kline of the Federal Reserve said: "That is a very clear-cut statement," which he interpreted to mean that BCCI was "not going to loan to anyone to buy the shares." Altman disagreed, saying that statement was limited to the purchase of shares during the takeover itself.

Clifford described how the capital infusions took place. "On those rare instances when we had to go to {the investors} for money, we would make the case and, each time, we got the support of Kamal Adham and of Abedi."

But, Clifford stressed, this did not mean Abedi or BCCI had any control over the money. "We make all the decisions," he reiterated.

Quesada, who retired from CCAH's board last year, had a different perception. "They {Clifford and Altman} would go to BCCI with the capitalization amount and make sure they wanted to invest," he said. "See, they were the owners of the bank, so naturally we would have to go to them for consent on matters of major magnitude. Just like an American company."

Quesada, during three interviews last fall, said he always understood that BCCI had "a controlling influence of First American Bank in Washington." According to Quesada, who served on the board until last year, BCCI had the authority to give consent to First American's plans, including expenditures. "Or withhold it," Quesada said. "They had that option."

Clifford said Quesada's perception was wrong. "I don't know how in the world he ever got that idea."

Yesterday, Quesada called The Post after talking with Altman and said that he had left the wrong impression during the interviews. "If I said what you said I have, and I may have, then I misinformed you."

BCCI, for its part, has given two responses: In a statement to The Post in September, BCCI said it "does not own any shares of First American, nor does it control, or manage First American in any way." Asked last week for any additional comment, a BCCI attorney responded yesterday: "At the direction of BCCI's new management, a review of BCCI's relationship with a number of financial institutions is underway. BCCI is therefore unable to comment on the matter at this time." Expanding in New York

Soon after the takeover was complete, First American turned its attention to building up its New York subsidiary, which at the time was headquartered in an office at 350 Park Ave. in Manhattan. It had no established branches in New York City to serve its customers.

The official record shows that First American bought two branches from Bankers Trust Co. in 1983. According to Bankers Trust officials who handled the sale, however, the initial negotiations were conducted primarily by BCCI's Khasuro Elley.

On March 25, 1983, Elley approached Bankers Trust about buying several branches then for sale. Throughout negotiations that spanned several months, Bankers Trust officials said, they thought they were dealing with BCCI, acting on behalf of a subsidiary. "We understood that he {Elley} was representing the parent as well as First American," said Theodore Kesselman, former chief financial officer at Bankers Trust.

An initial offer -- submitted May 5 in the name of First American -- was rejected as too low. Ralph Perry, the Bankers Trust official handling negotiations, reported to Kesselman that Elley claimed he could not bid any higher without consulting BCCI officials in London.

Several days later, Elley and Aboli Helmi, a BCCI mergers and acquisitions specialist, met again with Perry. "After he {Elley} saw the numbers and his advisers did his homework, so to speak, I went up to the BCCI office and we sat down and talked about the whole thing," Perry said. ". . . I remember we wrote on a yellow pad some basic principles we agreed upon and initialed it."

The formal $3 million bid for the branches came later from Altman, on First American stationery. Altman said Elley was acting at his direction, not BCCI's. Altman said he "may have" first learned of the Bankers Trust branches from Abedi, who possibly told him "BCCI has looked at this and you may be interested in it."

But Altman added, "That's about as far as it went. He {Abedi} never told us to buy."

Two weeks after the offer, Elley became a senior vice president at First American. He disputed Perry's account, saying Perry did not understand the arrangement he had with First American. "There was a period of transition in which I assisted First American with the acquisition of those branches, while I was still at BCCI, but I had taken the decision to leave BCCI," Elley said. " . . . I can't recall the exact sequence of events."

Clifford, who said he made the decision to pursue and buy the Bankers Trust branches, said he was puzzled by Perry's and Kesselman's account. "The fact is that these people, who have no motive not to be truthful, recall that BCCI was behind the whole deal," Clifford said. "Does that mean that BCCI was necessarily controlling First American? I don't think that logically follows."

The Bankers Trust purchase was completed just about the time that Richter was hired to head the New York operation. His chief priority was to build an international banking operation. Richter said Abedi was an "advisor to First American" in this area. He said Abedi asked him how much new capital he would need. "I said I wanted $100 million," Richter said. Within a year, he said, $100 million arrived -- $89 million in new capital, the rest from the sale of another First American asset.

Clifford disputed Richter's charaterization of Abedi's role. He said that First American was merely trying to cultivate BCCI as a client because BCCI could channel foreign banking business into First American. He said he first discussed the capitalization with Adham, who came up with the figure of $100 million. "I think, again, there is a misperception," Clifford said.

The Bankers Trust acquisition demonstrates a gap in the regulatory system: To acquire the two Bankers Trust branches, First American had to file applications with the New York State Banking Department and the FDIC -- but not with the Federal Reserve Board.

Those applications summarized the Bankers Trust negotiations, noted the capitalization and mentioned plans to develop a "substantial international banking business." BCCI is not mentioned on the applications.

Kline, the Fed associate director, said he does not think the 1981 representations about BCCI allow for contacts between BCCI and First American subsidiaries. "Certainly not in terms of influencing the policies or operation of a subsidiary," he said. A Takeover in Georgia

In 1987, four years after the Bankers Trust deal, First American acquired the National Bank of Georgia (NBG). Here, too, BCCI was involved from beginning to end: helping with the negotiations, arranging for the financing and participating at closing.

NBG was owned by Saudi financier Ghaith Pharaon. He had once been BCCI's largest shareholder and continued to rely upon Abedi for financial advice.

Clifford said the negotiations began with a conversation between himself and Abedi, and were thereafter handled by Altman. "I dealt with Pharaon," Altman said. "I dealt with Abedi. . . . I talked to him {Abedi} on the telephone. I informed him of where we were on the deal. I explained to him our bidding. Were we asking for approval to do it? We certainly were not."

Altman said Abedi had two limited roles: as a go-between who could persuade Pharaon to take First American's offer over a competing offer and as a "communications link" with the First American shareholders who were providing the $190 million that First American needed to buy NBG.

But BCCI also acted on behalf of First American as pledge agent. This meant that BCCI held the NBG stock during an option period; and then, at closing, was allowed to use the purchase funds to satisfy Pharaon's outstanding loans with BCCI.

Clifford said there was nothing unusual in BCCI's role. "It's the most natural result that one could expect," he said. "BCCI was Pharaon's bank," and both sides were comfortable with BCCI serving as midwife to the transaction.

The application for Federal Reserve approval of the NBG purchase does not mention BCCI and its various roles. If it had, "that would have triggered a red flag for us," Mattingly said.New and Old Questions

A red flag did go up in September 1988 when a federal agent in Miami caught a BCCI executive on tape in the Noriega money-laundering case.

The executive, Amjad Awan, was secretly recorded as he talked about BCCI's operations in the United States. Awan, who was later convicted of money-laundering and sentenced to 12 years in prison, began describing his view of the relationship between BCCI and First American's shareholders from his vantage point as head of BCCI's Latin American division.

"BCCI was acting as adviser to them," Awan told the federal agent. "But the truth of the matter . . . is that the bank belongs to BCCI. Those guys {the First American investors} are just nominee shareholders."

Clifford dismissed Awan's account, saying Awan had no way of knowing the facts. "I can see how this would grab you," he said. "I can only say he is totally incorrect."

Altman said Awan and other mid-level BCCI officials mistakenly assumed that BCCI controls First American because the two banks have certain investors in common. "I've heard that officers of BCCI have made those statements, that they have this relationship to First American," Altman said. "They don't understand what the situation is."

After the money-laundering charges became public, Fed officials said, the board delayed a pending First American acquisition in Florida until a "special inquiry" was completed.

On Feb. 16, 1989, the board signed off on the Florida acquisition, concluding that First American had "adhered to their original commitments" in the 1981 hearing. "All we can do is say we looked," Mattingly said.

Turmoil continues at BCCI. Last year, it pleaded guilty in the money-laundering case and paid a $14 million fine. Several managers have gone to prison, scores have resigned or been fired. Recently, the bank announced the resignations of Abedi and Naqvi.

Meanwhile at First American, where the bank is profitable and all seems calm, Clifford and Altman wish the questions would stop. "We think that the Fed totally understands the relationship with BCCI," Altman said.

On a wall inside First American's tastefully furnished board room at its 15th and H streets NW headquarters, is a portrait of Clifford placed directly behind his seat at the conference table. This image -- that of a distinguished American presiding over a healthy, well-managed bank -- is more than just corporate symbolism; it is the bank's best defense.

"This has been an exceedingly personal operation," said Clifford. "I would not have taken {the job} if I had not been assured that I had total authority to run that bank. And at no time has that authority been interfered with."

Staff researchers Lucy Shackelford and Bruce Brown contributed to this report.

The Bank of Credit and Commerce International (BCCI) is founded by Agha Hasan Abedi, a banker from Pakistan, backed by money from the ruling family of the United Arab Emirates. 1975

BCCI, seeking a presence in U.S. banking, tries and fails to acquire a small New York bank owned by Financial General Bankshares, a holding company based in Washington, D.C. 1977

BCCI helps organize a hostile takeover attempt of Financial General, acting on behalf of four longtime clients from the Middle East; other participants in the takeover effort include Bert Lance, former director of the Office of Management and Budget under President Jimmy Carter. BCCI also helps Saudi financier Ghaith R. Pharaon, a longtime client, acquire the National Bank of Georgia from Lance. 1978

The Securities and Exchange Commission files civil charges against BCCI and the other members in the takeover group, accusing them of failing to make the proper disclosures required by law. BCCI hires former secretary of defense Clark M. Clifford to defend it. Some Financial General shareholders file a lawsuit to stop the takeover. The SEC charges are settled and the lawsuit is dropped when the takeover group agrees to make a public tender offer for the outstanding shares. The Financial Times of London, reporting on an interview with the BCCI president, says Abedi asserts he is "not sure yet who will make the offer, but whoever makes it and if it succeeds, BCCI will probably manage Financial General." 1980

Financial General's shareholders agree to sell. Clifford attends a celebratory lunch in London with Abedi and the new controlling shareholder of Financial General, Sheik Kamal Adham, the former chief of Saudi intelligence. At the lunch, Adham asks Clifford to run the holding company, according to Clifford, and promises him "total authority." Adham and the other investors seek Federal Reserve Board approval of their takeover of Financial General. 1981

Federal regulators and their counterparts in the states where Financial General has subsidiaries hold up approval of the takeover while they try to find out more about the relationship between BCCI and the new company, to be named First American Bankshares. At a special hearing, Clifford and Adham assure the regulators that BCCI will have no involvement in the management of the holding company. The takeover is approved; Clifford becomes chairman. 1983

First American decides to expand its New York operations by buying two Manhattan branches from Bankers Trust Co. for $3 million; it creates an international banking operation in Manhattan funded by a $100 million infusion of capital. 1986

First American agrees to purchase the National Bank of Georgia from a corporation controlled by Pharaon, once BCCI's largest shareholder. 1986

BCCI is indicted on charges of helping Panamanian leader Manuel Antonio Noriega launder drug money through various U.S. banks, including First American. BCCI pleads guilty to the charges and pays a $14 million fine; no charges are filed against First American, which says it had no knowledge of the transactions. 1989

Because of the BCCI prosecution, the Federal Reserve holds up First American's application to acquire the Bank of Escambia in Pensacola, Fla. After conducting a special inquiry into the relationship of the two banks and finding no evidence of BCCI exerting any improper influence over First American, the Federal Reserve approves the application. 1990

Two business publications, Regardie's and the Wall Street Journal, publish articles that note the extent to which BCCI and First American have shareholders in common. Clifford and First American President Robert A. Altman reiterate their long-standing position that BCCI has no influence over First American. During extensive interviews with Washington Post reporters, Clifford and Altman say that BCCI serves only as a "communications link" with First American's foreign investors.