BCCI Los Angeles Office 'Clean,' Its Ex-Manager Says

By GREGORY CROUCH

Aug. 9, 1991 12 AM PT

TIMES STAFF WRITER

The intrigue ensnarling the Bank of Credit & Commerce International reached as far as its Los Angeles outpost, where the clientele included an international arms smuggler who claimed ties to Iran-Contra mastermind Lt. Col. Oliver North, a mysterious Saudi businessman and Panamanian dictator Manuel A. Noriega.

In a two-hour interview this week, the bank’s last local manager, Geoffrey C. Abbott, acknowledged BCCI’s ties to an unsavory--and provocative--cast of international characters. Nonetheless, he defended BCCI’s Los Angeles office as a “clean,” “law-abiding” operation. “Let’s put it very bluntly,” said Abbott, who is now employed by the state banking department to help its investigators sift through records. “No bank operates over the years . . . that doesn’t have some clients that have some problems.”

Pakistani weapons dealer Arif Durrani, for instance, had a $2-million line of credit at BCCI Los Angeles and used deposits in his mother’s account there to finance an arms smuggling operation to Iran between June and September, 1986, according to bank records obtained by federal prosecutors.

In an October, 1986, indictment, they charged that Durrani--who lived at the time in Thousand Oaks--purchased Hawk missile parts and then sent them to Tehran using deposits from a local BCCI account. His BCCI credit line was used to purchase other products with military applications that were shipped to Iran in violation of a U.S. embargo at the time, prosecutors said.

Durrani admitted that he sold the missile parts to Iran, but claimed in court that he did so with the knowledge and consent of North and other staff members of the National Security Council as part of the secret Iran-Contra plan to trade arms for hostages.

Iran was in dire need of Hawk missile parts as its military infrastructure began crumbling in an eight-year war with neighboring Iraq. The parts that Durrani sold to Iran were crucial to the missile’s guidance system used to zero in on targets.

A federal jury in Bridgeport, Conn., convicted Durrani in 1987; he was sentenced to 10 years in prison and fined $2 million. He has filed a motion for a new trial, contending that the first one wasn’t fair. Federal officials, he argues, refused to release classified documents critical to his defense.

BCCI Los Angeles was unaware of Durrani’s activities, according to Abbott.

“He had a commercial loan here for normal purposes,” Abbott said. “Whatever he did that got himself into hot water with the authorities did not touch on this office.”

Federal agents taped several of Durrani’s conversations with the Los Angeles office, including one in which he asked an employee to send him a cashier’s check for $148,000 by overnight mail.

“He had a very close working relationship with BCCI,” Assistant U.S. Atty. Holly Fitzsimmons said.

Founded in 1983, BCCI Los Angeles used its $137 million in assets primarily to finance small businesses in the garment, paper and rug industries, Abbott said. Because of BCCI’s Pakistani origins, many of its clients were from the Indian subcontinent; a few were from China and North Korea, Abbott said.

Banking regulations allow the office, known in banking parlance as an “agency,” only to accept deposits from foreign sources and to make commercial loans.

In addition to providing letters of credit for import-export companies and exchanging foreign currencies, the BCCI Los Angeles agency was a conduit for West Coast funds bound for BCCI branches around the world.

For instance, Abbott said some Los Angeles banks transferred funds from local charities to BCCI Los Angeles with instructions to send the money to BCCI branches overseas so that they could be used to buy food or supplies.

Abbott, a 51-year old international banker, became BCCI’s senior manager responsible for all of the bank’s West Coast business starting in January, 1989. Besides the Los Angeles office, Abbott supervised BCCI offices in San Francisco and Beverly Hills that closed shortly after his arrival.

BCCI Los Angeles was seized July 5 as part of a worldwide crackdown on the Luxembourg-based banking group triggered by suspicions that customer deposits were used to finance terrorism, drug dealing, illegal weapons shipments and similar schemes.

Some regulators are calling BCCI the biggest bank fraud in history. One federal investigator testified before a Senate subcommittee last week that BCCI served primarily as a piggy bank for “3,000 high-net-worth criminal clients.”

According to Abbott, the Los Angeles office received a satisfactory rating from Federal Reserve examiners in 1989 and subsequently passed muster with state regulators too. State banking officials had stepped up their monitoring of the Los Angeles operation after the indictment of BCCI’s Florida office on money-laundering charges in 1988.

“The last three years have been nothing but examinations and reviews of this office,” said Abbott, a bespectacled Yale University alumnus. “I don’t think there’s been shown or proven to us anything of a nefarious nature that has transpired through California.”

Yet four years ago, he acknowledged, BCCI employees were asked to serve as valets for Noriega--ordered by bank higher-ups to find the Panamanian strongman a limousine he could use during a previously unreported trip to the Southland.

“General Noriega visited here. . . . As a courtesy to a client of the bank, we were asked, ‘Will you please arrange a car for him?’ ” Abbott said. “We did it. . . . I cannot say totally that we had nothing to do with the gentleman.”

Internal bank records obtained by The Times show that in January, 1987, BCCI’s Los Angeles office issued two separate checks totaling $764.75 to Elegant Limousine Service to hire two stretch limousines for Noriega and four male associates.

BCCI Los Angeles later was reimbursed for Noriega’s limos by its sister office in Washington, the records show. Noriega and his contingent stayed in Los Angeles only a few days before heading to Hawaii.

Besides BCCI’s relationship with Noriega and Durrani, the Los Angeles office in the mid-1980s held millions of dollars on deposit under the name of Abdul Khalil. Khalil is a Saudi businessman said by the Federal Reserve to have held a secret stake in the parent corporation of First American Bank, the Washington bank that federal regulators charge was secretly controlled by BCCI.

The Wall Street Journal has reported that some “U.S. investigators question whether Mr. Khalil actually exists.” The newspaper said a former lawyer for BCCI hasn’t been able to find Khalil since 1987. The Federal Reserve moved last week to ban Khalil from the U.S. banking industry.

“This (Khalil’s money) was referred here by the London office,” Abbott said. “They would have put money in an office giving the best rate of interest on that day for that period of time and we took the money.

“It’s not a big deal,” Abbott insisted. “Again--nothing, to use the term, nefarious about it at all.”

But on at least one occasion, criminal funds did pass through BCCI Los Angeles, if only briefly.

Federal investigators in Los Angeles say $3 million in proceeds from a massive Orange County telemarketing fraud was funneled to BCCI Panama via BCCI Los Angeles. The money, they say, was wired there by BCCI Los Angeles at the instruction of Security Pacific National Bank. Investigators have been unable to trace most of the money further.

“Southern California banks used BCCI Los Angeles to transfer money to BCCI branches around the world,” Abbott said. “If we get money from Security Pacific . . . to transfer to BCCI Panama, we don’t question the bona fides of the transaction or where the money is coming from or where it is going to.”

Security Pacific issued a brief statement about its relationship with BCCI earlier this week. “We had a clearing agent relationship with BCCI. We have no loss exposure whatsoever, and we’re not prepared to provide any further details,” spokeswoman Deborah Lewis said.

Although BCCI Los Angeles executed about 20 wire transfers a day, Abbott said the agency has been barraged with subpoenas, and none of the resulting searches turned up anything similar to the Orange County case.

At first glance, perhaps the most striking thing about the local office is its location.

Prominently situated on the ground floor of an office building at 6th and Olive streets, BCCI was directly across 6th Street from the downtown branch of Independence Bank, the Encino institution that the Federal Reserve claims that BCCI secretly controlled.

Fed officials contend that BCCI in 1985 illegally purchased Independence through a Saudi Arabian front man because regulators would never knowingly have granted it the right to own an American bank.

The fact that BCCI and the Independence branch downtown are neighbors “just happens to be the greatest of all coincidences,” Abbott said.

“I haven’t been to that office. That manager over there hasn’t been to this office. . . . The location doesn’t have any meaning. If it did, I would have been on the phone with him, meeting him. We would have been in cahoots. . . . Now please take my word for that.”

Still, BCCI Los Angeles shared more than a street corner with Independence.

The local agency became a partner in three Independence real estate loans--an arrangement it had with no other bank, according to Abbott. Though two of those loans were consummated before his arrival at BCCI, Abbott said all three were negotiated with an Independence official in Encino.

“We got into some loans at their introduction,” Abbott said. “ Their introduction.”

Abbott is annoyed with the constant bombardment of media speculation, ranging from questions about the relationship between BCCI and Independence to a published report describing a secret network of 1,500 BCCI operatives sent out to assassinate the bank’s enemies.

“I call them the ‘BCCI ninjas,’ ” Abbott joked. “This is crazy. There aren’t that many people working for BCCI in Pakistan.”

BCCI “had the potential to be a good bank,” he said. “I think what really happened with BCCI was that it got too big for itself. . . . If someone had a loss here, they tried to cover it up by doing something there--and then it got worse and worse and it snowballed.”

Times staff writer Douglas Frantz in Washington contributed to this article.

* BCCI AND TAXES

The Bank of Credit & Commerce International escaped taxation in Pakistan, its birthplace. A1

BCCI Los Angeles at a Glance

* Established: Feb. 7, 1983

* Location: 6th and Olive streets

* Final manager: Geoffrey C. Abbott

* Assets: $137 million*

* Employees: 19**

* Transactions: Foreign currency exchange, lines of credit, foreign collections

* Industry clients: Garment manufacturers, paper brokers, rug dealers

* Regulatory action: California Banking Department issues a light warning against BCCI Los Angeles in February, 1989