Marina Investors' BCCI Ties Probed : Supervisors: Board wants to know the role in scandal-plagued bank played by Saudis, who hold county leases in hotels and other interests.

By JEFFREY L. RABIN

July 31, 1991 12 AM PT

TIMES STAFF WRITER

Los Angeles County Supervisors ordered an immediate investigation Tuesday to determine the extent of the connection between Saudi investors in county-owned Marina del Rey and the scandal-ridden Bank of Credit & Commerce International.

Responding to a report in The Times, the supervisors unanimously called on the Sheriff’s Department and other county agencies to investigate the link between billionaire Saudi businessman Abdul Aziz al Ibrahim and $130 million in questionable loans from BCCI.

The Times reported Saturday that Ibrahim’s family was identified in a 1990 audit of BCCI by the Price Waterhouse accounting firm as a major holder of loans from the bank for which proper documentation could not be found.

A Washington-based spokesman for Newfield Enterprises International, the Century City company that oversees the Ibrahims’ investments in the United States, issued a statement Tuesday welcoming the county investigation and pledging cooperation with county agencies.

“We want everyone in the county to be assured of our long-term financial stability and the integrity of our investment in the marina,” spokesman Phil Armstrong said.

Last week, Newfield president Abdul Aziz Yahya confirmed that the family had done business with the troubled bank, but flatly denied having any improper loans from BCCI.

The worldwide bank was seized earlier this month by regulators in seven countries after auditors found evidence of “massive and widespread fraud” potentially running into the billions of dollars.

“This bank is also called the Bank of Crooks and Criminals,” Supervisor Kenneth Hahn said in pressing for the probe. “I want to know that . . . we’re not involved in it.”

Board Chairman Mike Antonovich, noting that BCCI and two of its founders were indicted Monday in New York, agreed that a local inquiry was necessary to determine “if the tentacles (of BCCI) do extend in this county and to what extent, if any, liabilities are present.”

Marina del Rey is owned by Los Angeles County, and businesses there operate on public land through long-term (generally 60-year) leases. The leases can be bought and sold much like conventional real estate.

Two years ago, an investment group headed by Ibrahim, a brother-in-law of Saudi King Fahd, secretly bought a 49.9% interest in leases on three hotels, two apartment complexes, offices, shops, restaurants and more than 1,100 boat slips in the marina.

To conceal the identity of the investors, the deal was structured through a dozen shell companies from Luxembourg to the Cayman Islands to California.

The supervisors approved the transaction in August, 1989, without learning the identity of the investors.

The Times subsequently identified Abdul Aziz al Ibrahim as the lead investor. He and a younger brother, Majid, control 93% of the investment group’s stock.

On Tuesday, the supervisors indicated that they wanted information about the Ibrahims and their money that went beyond simple assurances of legitimacy.

“We’re not just a private company doing business,” said Supervisor Ed Edelman. “We need to be more circumspect.”

Hahn said an investigation of the connection between Ibrahim and BCCI is necessary to ensure that the interests of the people of Los Angeles County are protected.

“Every effort must be made to ensure that underworld corruption has not and will not gain a foothold in the marina,” he said.

The Saudis are locked in a bitter battle for control of the marina holdings with developer Abraham M. Lurie, who retains a 50.1% share of the leases. But Lurie and his partnership with the Saudis have filed for bankruptcy.

If the Saudi group emerges from the bankruptcy proceedings with full control of the leases, the supervisors would need to vote on whether to accept the Saudis as majority leaseholders.

The extent of the Ibrahims’ ties to BCCI is not clear. Jack Blum, a former U.S. Senate investigator with an extensive knowledge of BCCI and the Price Waterhouse audit, said auditors described the Ibrahims as having had significant loans and deposits with BCCI for a number of years.

At the end of 1989, the Ibrahim family had deposits of about $150 million in BCCI and loans of $130 million to $132 million, Blum said.

And, as was the case with other loans, Blum said there was “no loan agreement, no notes signed, no liens against property.” Blum said it was possible that the Ibrahim loans listed by the bank had never existed, and were simply an attempt by the bank to fraudulently create assets.

Yahya, the Ibrahims’ Los Angeles representative, said last week that at no time had the Ibrahims borrowed “any money from BCCI” without the loan being well collateralized.

Ted Reed, director of the county Department of Beaches and Harbors, which oversees the marina, told supervisors Tuesday that he has no information that links BCCI with the $21.8 million the Saudis paid to buy into the marina two years ago.

“When the Saudi group came in, they paid cash,” Reed said. “There was no loan. There was nothing secured.”

In a memo to the board, Reed defended his department’s handling of the secret Saudi investment in the marina. “We did make inquiries as to whether the funds were procured through legal means (not drug money, etc.) and were satisfied that the investors were legitimate businessmen.”

Reed said he should have asked for information on their identity, background and finances. “If I had it to do over again,” he said, “I think I would have probably pressed harder.”