BCCI

The Bank of Credit and Commerce International (BCCI), founded in 1972 by Pakistani financier Agha Hasan Abedi, was a global bank that collapsed in 1991 amid revelations of massive fraud, money laundering, and criminal activities. Its connections to the Central Intelligence Agency (CIA) involve the use of BCCI for covert operations and intelligence-gathering during the Cold War, as documented in congressional reports and declassified CIA records.

Overview of BCCI’s Operations

• Founding and Growth: BCCI was established with capital from Sheikh Zayed bin Sultan Al Nahyan of Abu Dhabi (75%) and the Bank of America (25%), registered in Luxembourg, and headquartered in Karachi and London. It grew from 19 branches in 1973 to over 400 in 78 countries by the 1980s, with assets of $20 billion, making it the seventh-largest private bank globally.

• Criminal Activities: Investigations revealed BCCI’s involvement in money laundering for drug cartels (e.g., Pablo Escobar), terrorist financing (e.g., Abu Nidal), arms deals for Iraq and Iran, and secret control of U.S. banks like First American Bankshares.

• Collapse: On July 5, 1991, regulators in seven countries, led by the Bank of England, shut down BCCI during Operation C-Chase after a Price Waterhouse report exposed widespread fraud. The collapse, costing $9.5–15 billion, was the largest bank fraud in history, with liquidators recovering ~75% of losses by 2013.

Documented CIA Connections to BCCI

The CIA’s involvement with BCCI is substantiated by congressional testimony, declassified CIA memos, and the 1992 Kerry-Brown Report (The BCCI Affair), focusing on financial transactions for covert operations, intelligence-gathering, and delayed regulatory action.

Use of BCCI Accounts for Covert Operations

◦ Congressional Testimony: In October 1991, Acting CIA Director Richard Kerr testified before the Senate Subcommittee on Terrorism, Narcotics, and International Operations that the CIA maintained “several” accounts at BCCI for “normal legal transactions” to move money for covert operations, particularly in the Middle East and Pakistan. Kerr stated the agency began phasing out these accounts in the 1980s after discovering BCCI’s illegal activities.

◦ Iran-Contra Affair: The National Security Council (NSC) used BCCI accounts to facilitate financial transactions during the Iran-Contra affair (1985–1987), a covert operation to sell arms to Iran and fund Nicaraguan Contras. BCCI handled payments, including those involving Saudi financier Adnan Khashoggi, a known BCCI customer, as documented in the 1987 Tower Commission Report and congressional hearings.

◦ Afghan Mujahideen: The CIA utilized BCCI’s branches in Islamabad and other Pakistani cities to channel approximately $2 billion in U.S. aid to Afghan Mujahideen fighting the Soviet Union (1979–1989). BCCI facilitated transfers, some of which were skimmed by Pakistani military officials, and supported Saudi intelligence operations, as noted in the Kerry-Brown Report. This provided figures like Osama bin Laden with experience in offshore financial networks.

Intelligence-Gathering and Monitoring

◦ CIA Reports: A declassified 1986 CIA memo, referenced in the Kerry-Brown Report, detailed BCCI’s clandestine acquisition of First American Bankshares, money laundering, and “narco-financing.” A 1989 30-page report by the CIA’s Directorate of Operations confirmed active penetration of BCCI to gather intelligence on drug trafficking, terrorism, and arms dealing.

◦ Terrorist Accounts: U.S. Customs Service and DEA investigations, cited in the 1991 Senate hearings, identified BCCI accounts in London linked to Libya, Syria, and the Palestine Liberation Organization, suggesting the CIA monitored these for terrorist financing intelligence.

◦ Black Network: BCCI’s covert “black network,” responsible for arms trades and drug smuggling, collaborated with Western intelligence agencies, including the CIA. A BCCI officer, who became a U.S. witness, testified in 1991 that CIA agents oversaw specific operations, such as a 1989 arms shipment from Karachi to Czechoslovakia, though declassified CIA records do not fully corroborate this claim.

Delayed Action and Regulatory Oversight

◦ CIA Knowledge: By 1985, the CIA had detailed knowledge of BCCI’s U.S. banking ambitions, sharing this with the U.S. Treasury and Office of the Comptroller of the Currency, but not with regulators overseeing First American Bankshares, as noted in the Kerry-Brown Report. This delay, possibly to protect BCCI as an intelligence asset, allowed the bank to operate until 1991.

◦ Congressional Findings: The Kerry-Brown Report criticized the CIA for providing “incomplete or untrue” initial responses to Congress about BCCI’s activities and for withholding critical information, such as details on shareholders like Kamal Adham (former Saudi intelligence chief) and Abdul Raouf Khalil, both CIA contacts. The report highlighted “ostensible gaps” in CIA disclosures, suggesting potential concealment to safeguard operational interests.

Key Figures with Documented Ties

◦ Kamal Adham: As Saudi Arabia’s intelligence chief (1963–1979) and a major BCCI shareholder, Adham served as a CIA liaison, facilitating U.S.-Saudi intelligence cooperation, including Afghan operations, as confirmed by the Kerry-Brown Report.

◦ Adnan Khashoggi: A prominent BCCI customer, Khashoggi used BCCI accounts for Iran-Contra transactions, linking the bank to CIA-sanctioned covert activities, as detailed in the Tower Commission Report.

◦ Clark Clifford: As chairman of First American Bankshares, secretly controlled by BCCI, Clifford was investigated for his role, though not charged. His prior work with Richard Helms (CIA Director, 1966–1973), a legal client, raised questions about CIA awareness, but no direct evidence implicates Clifford in CIA operations.

Critical Analysis

The CIA’s use of BCCI is well-documented through Kerr’s testimony, declassified memos, and the Kerry-Brown Report, confirming accounts for Iran-Contra, Afghan Mujahideen funding, and intelligence-gathering on criminal networks. These sources provide primary evidence of operational ties, though the extent of CIA protection remains debated. The CIA, via Kerr, maintained that its BCCI accounts were legal and that it reported illegal activities starting in the 1980s. The agency denied creating BCCI or systematically shielding it, emphasizing cooperation with regulators post-1989. Newsweek (1991) claims that BCCI was a CIA-founded bank, as suggested by some former BCCI officers.

Conclusion

The CIA’s documented connections to BCCI involve the use of its accounts for covert operations, including Iran-Contra and Afghan Mujahideen funding, and intelligence-gathering on drug, terrorist, and arms networks, as substantiated by the 1992 Kerry-Brown Report, Senate testimony, and declassified CIA memos. Key figures like Kamal Adham and Adnan Khashoggi tied BCCI to CIA activities, with the agency’s delayed reporting potentially protecting an intelligence asset.