No Scandal Found in Saudi Investment in Marina del Rey : Inquiry: Billionaire used fraud-plagued BCCI legitimately, say investigators for the county, which owns the coastal site.

By JEFFREY L. RABIN

Nov. 15, 1991 12 AM PT

TIMES STAFF WRITER

A Saudi Arabian billionaire used $7.7 million from accounts at the Bank of Credit & Commerce International to finance part of a major investment in Marina del Rey but was not involved in any wrongdoing at the scandal-plagued bank, Los Angeles County investigators have concluded.

After a three-month inquiry, county officials determined that the group of investors headed by Abdul Aziz al Ibrahim are legitimate businessmen and that no further investigation of their connection with BCCI is necessary.

“There is no evidence of any wrongdoing by the Ibrahim family in connection with the activities of BCCI,” investigators said in a report sent Thursday to the Board of Supervisors. “The Ibrahims’ association appears to be only that of a customer of BCCI.”

BCCI was seized by authorities in Europe and the United States in July after auditors found evidence of massive and widespread fraud potentially running into billions of dollars.

County supervisors ordered the investigation after it was reported in July that auditors for the bank found that Ibrahim and his family had $132 million in questionable loans from BCCI at the end of 1989.

Ibrahim, a brother-in-law of Saudi King Fahd, was among a small group of predominantly Middle Eastern investors who had large loans on the bank’s books for which little or no documentation could be found.

Auditors from the accounting firm of Price Waterhouse expressed concern about this “absence of critical information” and the lack of any liens against the Ibrahims’ substantial deposits in the bank. Price Waterhouse said the Ibrahim loans ranged from a low of $125.2 million at the end of 1987 to a high of $210.8 million at the end of 1988.

The investigators’ conclusions may improve the Ibrahim group’s chances of winning control of three hotels, two apartment complexes, restaurants, shops, offices, more than 1,100 boat slips and the last undeveloped piece of property in the county-owned marina.

The Saudis are locked in a bitter legal battle in federal bankruptcy court with their financially troubled marina partner, developer Abraham M. Lurie. With far deeper financial pockets than Lurie, the Ibrahim group is seeking to gain complete control of nearly 20% of the marina.

Marina del Rey is owned by the public and businesses there operate on long-term leases--generally 60 years--with the county.

Ted Reed, director of the county Department of Beaches and Harbors, said the investigation, which was conducted by representatives of several county agencies, should eliminate questions about the Saudi investors’ connection to BCCI.

But Reed said he will continue to insist on more detailed financial and personal information from the Ibrahims before the county will consider approving a takeover of the Lurie properties.

In August, 1989, county supervisors approved the sale of a 49.9% stake in Lurie’s marina holdings without learning the identity of the investor. The deal was structured through a dozen shell companies in Luxembourg, the Cayman Islands and California.

The Times later identified Ibrahim as the lead investor and Marina del Rey as the latest addition to his expanding portfolio of U.S. real estate, which includes Ritz-Carlton hotels in New York, Washington and Houston, a Ritz-Carlton under construction in Aspen, Colo., a hotel and office complex near Chicago’s O’Hare International Airport, undeveloped property in the hills high above Bel-Air and largely vacant land near Disney World in Florida.

The Times reported in September that Ibrahim used funds from accounts at BCCI to help finance production of the as-yet unreleased movie, “Brenda Starr,” starring Brooke Shields.

The seven-page investigative report to the supervisors said the initial marina investment of $22.7 million came from Ibrahim’s account at Banque Indosuez in Geneva.

For the first time, investigators confirmed that $7.7 million invested later at the marina was wired to Los Angeles from an Ibrahim account at BCCI’s Green Park branch in London.

That finding contradicted a statement made in September by Abdul Aziz al Shehail, the director of Ibrahim’s business operations. In an interview with The Times, Shehail insisted that no money from BCCI was invested in the marina.

Although county investigators found that 25% of the Ibrahim money invested in the marina came through BCCI, they concluded, “There is no indication that funds invested in Marina del Rey came from other than legitimate sources.”

In determining that the Ibrahims had no role in any wrongdoing at BCCI, county officials relied heavily on a sworn statement from Masihur Rahman, former chief financial officer of BCCI. The statement was arranged by an Ibrahim attorney in London, a spokesman for Ibrahim said.

Rahman headed an investigative team inside BCCI that was organized after Price Waterhouse auditors reported “irregular and illegal transactions in the bank.”

While confirming that loans to the Ibrahims appeared on the bank’s books, Rahman said Ibrahim “at all times maintained deposits with the bank which substantially exceeded those amounts.”

He concluded that “the loans . . . are not valid since they are not supported by any written documentation, nor confirmed by . . . Ibrahim.”

Shehail said in a statement that the county’s findings “put to rest these false allegations” concerning Ibrahim and his relationship with BCCI.

“We have said from the outset that the sheik and his family were victimized by the apparent fabrication of loans by BCCI officials,” al Shehail said.

The Ibrahims’ own internal auditors found that the family had $200.1 million in deposits at BCCI at the end of 1989 and $48.5 million in what were termed “overdrafts and drawings.”

Published reports have said Ibrahim has close personal and business ties with the Saudi royal family. His sister, Moona, is one of King Fahd’s wives, and according to press reports, Ibrahim and his brother, Khalid, manage the financial affairs of the king’s youngest son, Prince Abdul Aziz al Fahd. Saudi officials have categorically denied that the Ibrahims handle any financial matters for the teen-age prince.