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Abu Dhabi and BCCE

The Bingham Report describes him in April 1990 as "formerly the manager of BCC Emirates and believed to be close to the Abu Dhabi shareholders."² The Senate report by John Kerry and Hank Brown, the BCCI Kerry-Brown Senate Report, says he had "a close personal relationship with important members of the ruling family of Abu Dhabi arising out of his provision of intimate personal services for them in Pakistan and elsewhere."³ The same report says that within the bank Iqbal "was not considered to be an expert on much besides pleasing the Abu Dhabi ruling family," and that junior officers knew him as the man who had for years provided "singing and dancing girls" to the ruling family.³

The Kerry-Brown report based the "singing and dancing girls" passage on staff interviews with Nazir Chinoy, Abdur Sakhia, Akbar Bilgrami and Masihur Rahman. It states that in private BCCI officials described Iqbal's chief role and principal skills as those of a procurer.⁴

The journalists Jonathan Beaty and S. C. Gwynne wrote that BCCI officers procured girls for their clients in Lahore's Diamond Market, "the home of the famous 'dancing girls,'" that the girls were as young as twelve, and that "in the middle 1970s the man in charge of inspecting the girls was Zafar Iqbal, who would later become the chief executive officer of BCCI."⁵

Appointment and dates

Beaty and Gwynne's list of principal figures states that Iqbal "took over as head of BCCI in late 1990, after the firing of Abedi and Naqvi," and their text calls him the man who had recently taken over BCCI when Zayed bin Sultan AL-Nahayan summarily fired Agha Hasan Abedi and Swaleh Naqvi after seeing the October audit report.⁶ In another passage they wrote that Iqbal had "recently been named by Abu Dhabi to head BCCI," and described him as the arch-rival for power within the Emirates of Khalfan al-Mazrui, head of the Karachi office of Sheikh Zayed's Private Department.⁷ They also wrote that, after Sami Masri had persuaded Beaty that Zayed was unaware of the bank's true nature, "perhaps Zafar Iqbal was keeping this critical knowledge from the sheikh," and that it was just as likely that Ghanim Faris al-Mazrui was withholding information.⁷ Beaty and Gwynne quote Masri as saying that in Karachi, in connection with what the book calls the Black Network, "he would talk to Zafar Iqbal and Sani Ahmed."⁸ The Kerry-Brown report gives the following sequence. A series of meetings beginning in March 1990, in Abu Dhabi and Luxembourg, ended with Naqvi confessing his errors and resigning as chief executive, after which a new team was "headed by" Iqbal.⁹ The same report says that Abu Dhabi had been asked to take over the bank, because Sheikh Zayed and the Al Nayhan family had been major depositors.⁹

The Kerry-Brown report says that the Abu Dhabi interests took control of BCCI in April 1990, and that Abu Dhabi "immediately removed Naqvi from control of BCCI and replaced him with Zafar Iqbal, then head of the Abu Dhabi operation of BCCI."¹⁰ The same chapter says that BCCI's operations were moved to Abu Dhabi, along with the bank's most important records, "without objection from the Bank of England," and that the move of the headquarters from London was made with the encouragement of the College of Banking Supervisors so that the majority shareholders could begin to monitor management.¹⁰

Bingham records that Iqbal attended a Luxembourg board meeting on April 20, 1990, for the first time at that level, and that in the days that followed he "appeared to have superseded Naqvi in the day to day management of the group."¹¹

A memorandum by Robert Altman to the file, dated July 6, 1990, describes a meeting that day in London between Altman, Naqvi and a BCCI lawyer, Kim Gagne. It records that Altman had briefly seen Iqbal at the bank earlier that day, and that Iqbal said he did not know much about the First American issue in New York City because his focus was solely on BCCI's operations. Iqbal also mentioned that BCCI had loans to some First American shareholders, and expressed confidence in Clark Clifford and Altman.¹² Altman's memorandum describes the firm of Clifford & Warnke as general counsel to First American Bank.¹²

A memorandum dated July 30, 1990, with the subject "CCAH," is addressed to Naqvi with a copy to Iqbal. It sets out alternative solutions to restrictions on interstate banking, limits on foreign ownership in Virginia and Florida, deposit limits, and the status of the New York operation.¹³

Bingham records that on October 3, 1990, when Price Waterhouse delivered its report to the Bank of England, the plans to remove Naqvi and Abedi, appoint Iqbal as acting chief executive officer, and establish an investigating committee were disclosed.¹⁴

A report by Norton Rose to the creditors' committee of BCCI SA, dated May 1, 1992, states that Naqvi, "who had taken over as chief executive from Mr. Abedi in 1988, was replaced by Mr Zafar Iqbal (formerly managing director of the Emirates Division)."¹⁵

Al Sayegh, who testified for Abu Dhabi, said he did not know who made the decision to install Iqbal as head of BCCI in April 1990.¹⁶

Federal Reserve review, December 1990

The Federal Reserve Board reviewed a Price Waterhouse report on loans secured by shares of Credit and Commerce American Holdings at BCCI's London office on December 10, 1990. The Kerry-Brown report says the auditor's report and a conversation that day "with the new chief executive officer of BCCI [Zafar Iqbal]" showed substantial loans outstanding secured by CCAH stock.¹⁷

A statement by the majority shareholders, printed in the Senate hearings, gives December 3, 1990, as the date of a London meeting at which "Zafar Iqbal, the acting chief executive officer of BCCI, met with the Board official ... and allowed him to read the Price Waterhouse report."¹⁸

A memo by Thomas McQueeney reports that William Ryback had met Iqbal "last week," and that Ryback "was very impressed with Iqbal, who offered to open the books of BCCI to us."¹⁹ The same memo states that Ryback "feels that BCCI has been lying to us for years," and that he did not take a copy of the Price Waterhouse report, for fear that the New York District Attorney's office would subpoena it. The memo is dated December 18, 1990 in the House hearing record and December 11, 1990 in a newspaper article reprinted in the Senate hearings, which describes McQueeney as an assistant chief examiner at the Federal Reserve Bank of New York and reports that a Fed spokesman, verifying the authenticity of the memo, said it inaccurately characterised what was happening inside the Fed.²⁰

Beaty and Gwynne's account of the same meeting calls Iqbal BCCI's president and says that J. Virgil Mattingly, the Fed's general counsel, recalled Ryback saying "We demand to see this." They write that Ryback, reading the audit in BCCI's London offices, found more than $1 billion in loans to an entity coded "XYZ Corp.," asked Iqbal whether XYZ was really First American, and that "Iqbal told him he was right." They quote the McQueeney memo, which they date December 18, 1990, and state that "Though Ryback had seen the evidence, he was forced by Iqbal to agree that he would not bring it back home," and that the Bank of England, which possessed the audit, would not let him take a copy.²¹

A chronology in the House hearings lists a letter of December 13, 1990, from Iqbal, as chief executive, to Middleton Martin of Patton Boggs & Blow, confirming that BCCI had decided to end its banking business in the United States.²²

Price Waterhouse and the deposits

Bingham records that on October 23, 1990, Iqbal confirmed that Abu Dhabi had been ruled out as a place of incorporation for the group, and suggested that the three banks in London, Abu Dhabi and Hong Kong be free-standing with no holding company. On November 26, 1990, the Bank of England told him it wished to put this three-bank proposal to the majority shareholders.²³

On December 17, 1990, Iqbal met Price Waterhouse. Bingham reports that he said his knowledge of the problems had "only come to his knowledge since 18 April 1990," and listed the means used to solve them, including loans made in the names of individuals who were unaware of them, a $600 million loan portfolio among them, and loans on terms under which the borrower had no obligation to repay.²⁴

On January 4, 1991, Iqbal told the Bank of England that the bank's deposits might be understated by some $580 million, which the government would make good once the customers' claims were verified. Bingham records seven customers, the largest of whom, later code-named "Tumbleweed," was thought to have deposited between $350 million and $575 million for Islamic commodity transactions.²⁵

Allen & Overy and Price Waterhouse were "extremely disturbed" that Iqbal had not disclosed these deposits earlier. Bingham reports that Iqbal had assured a Price Waterhouse partner in September 1990 that he had disclosed everything, and that in reply to their complaint Iqbal denied that he had known of the unrecorded deposits in April 1990.²⁶

Bingham's summary of the Price Waterhouse work names Iqbal, Chaudhry and Chowdry among those "suspected of questionable conduct."²⁷ Bingham's account of Price Waterhouse's questioning of Basheer Chowdry records that Iqbal had also been involved in the presentation to the shareholders in April 1990 and had been aware of the facts. Hasan Mahmood Kazmi gave a different explanation.²⁸

Removal and charges

The Kerry-Brown report says that Federal Reserve investigators worked in the spring of 1991 to have BCCI's top management removed, including Iqbal, who "had close ties to the Abu Dhabi shareholders." It adds that the Bank of England advised Abu Dhabi that Iqbal had to be removed, which led to a temporary stalemate over the restructuring. The stalemate ended with the Bank of England's order closing BCCI on July 5, 1991.²⁹

The report's Abu Dhabi chapter says that by late spring 1991 both United States and United Kingdom regulators insisted on Iqbal's removal, and that Al Mazrui, who had worked closely with Iqbal for many years, resisted and temporarily paralysed the restructuring plan.³⁰ After the consent orders of March 4, 1991, Senate staff had also raised with the Abu Dhabi lawyers at Patton Boggs & Blow their concern that Iqbal would remain in control of the banks throughout the restructuring. The lawyers acknowledged that they shared the concerns about Iqbal and Naqvi.³¹

Bingham records that Iqbal was told, after the College of supervisors meeting in April 1991, that he was not to continue as chief executive officer.³²

The liquidators of Credit and Finance Corporation (Deloitte Ross Tohmatsu) recorded that the restructuring agreements of May 22, 1991, were signed on behalf of BCCI by Iqbal, with Al Mazrui for Portfolio and an Abu Dhabi official for the government, and were witnessed by Allen & Overy personnel. The same record states that on June 25, 1991, Credit and Finance Corporation wrote to Iqbal, as chief executive officer of the BCCI Group, asking him to press Abu Dhabi to honour its subscription commitment.³³

Testimony by Virgil Mattingly, the Federal Reserve Board's general counsel, given on May 14, 1992, recorded that Federal Reserve investigators had spoken to Iqbal when he was in London but had been unable to reach him since the closure. Mattingly confirmed Senator Kerry's statement that Naqvi and Iqbal were under house arrest in Abu Dhabi.³⁴

Masihur Rahman testified that Mazhar Abbas, another BCCI executive, threatened him at a meeting in front of Iqbal Chaudhry, whom Rahman described as "the new CEO after all this crisis." Rahman said he had been pleading with the two men against dismissing executives.³⁵

Iqbal was detained by authorities in Abu Dhabi, along with about thirty other senior BCCI executives.³⁶

In written answers to Senator Kerry in 1992, Al Sayegh listed "Zafar Iqbal Chaudhri" among the individuals held in Abu Dhabi who were "preliminarily charged with fraudulent activities relating to BCCI."³⁷ The majority shareholders' own statement to the subcommittee says that, as a result of their complaint and other evidence accumulated by the Federal Prosecutor, eighteen BCCI officials were preliminarily charged and were subject to detention pending final criminal charges, which the shareholders said they believed would include counts of larceny, fraud and forgery.³⁸ Beaty and Gwynne wrote in 1993 that seventeen other senior officials, including Naqvi and Zafar Iqbal, were under house arrest in Abu Dhabi.³⁹ In the same period Al Sayegh told the subcommittee that Naqvi and Iqbal "and others" would be made available to Senate staff and Justice Department personnel, and that discussions on the terms were under way.⁴⁰

Sentencing, 1994

United Press International reported on June 14, 1994, that Judge Shehab Abdul-Rehman of the Abu Dhabi Court of the First Instance sentenced twelve former BCCI executives to a total of 56 years in prison and ordered them to pay the former Abu Dhabi majority shareholders civil damages of more than $9.13 billion. Of the ten defendants present, the longest sentences went to two Pakistanis, Zafar Iqbal Chaudhry, 54, and Hasan Mahmood Kazmi, 56, and a Canadian, Abdul Hafeez Mohammed Ahmed, 66, each six years.⁴¹ UPI reported that Naqvi, then 59, received four sentences totaling eleven years while in United States custody, that Abedi received six years in absentia, and that Ziauddin Ali Akbar was the third defendant sentenced in absentia. Three-year sentences were given to Imtiaz Ahmed, Ameerul Haq Siddiqui, Fakhir Hussain, Mohammed Azmatullah, Bashir Ahmed Tahir and Nasem Hassan Sheikh, and Iqbal Ahmed Rizvi was acquitted.⁴¹ In the same report, damages were awarded of $6.56 billion to the president's Private Department, $1.347 billion to the Abu Dhabi Investment Authority and $1.223 billion to the Finance Department. UPI said some eleven of the accused had been held in detention in Abu Dhabi since their arrest in September 1991, on charges including dissipation of shareholders' funds, forging of bank records and granting fictitious loans, and that all the convicted present said they would appeal.⁴¹

MEED reported on June 24, 1994, that twelve senior executives were sentenced to a total of 61 years in prison (the UPI figure is 56 years) by an Abu Dhabi court on June 14. It named Abedi, who was in Pakistan, and Naqvi, who was on trial in the United States, among those sentenced, and reported that the court ordered the twelve convicted executives to pay $9,000 million for their part in the losses.⁴²

Footnotes

Kerry, Senator John, and Senator Hank Brown. The BCCI Affair: A Report to the Committee on Foreign Relations, United States Senate. December 1992, ch. 14, "Abu Dhabi: BCCI's Founding and Majority Stockholders." https://irp.fas.org/congress/1992_rpt/bcci/14abudhabi.htm ↩︎
Inquiry into the Supervision of the Bank of Credit and Commerce International, ordered by the House of Commons to be printed October 22, 1992, paras. 2.198, 2.201. https://archive.org/details/InquiryIntoTheSupervisionOfTheBankOfCreditAndCommerceInternational ↩︎
Kerry and Brown, ch. 14, as in note 1. ↩︎
Kerry and Brown, ch. 14, note 38. ↩︎
Beaty, Jonathan and Gwynne, S. C. The Outlaw Bank: A Wild Ride into the Secret Heart of BCCI. New York: Random House, 1993, p. 143. https://archive.org/details/outlawbank00jona ↩︎
Beaty and Gwynne, The Outlaw Bank, "Cast of Characters," p. xvi (entry for Zafar Iqbal), and p. 103. ↩︎
Beaty and Gwynne, The Outlaw Bank, p. 86. ↩︎
Beaty and Gwynne, The Outlaw Bank, p. 81 (Masri's statement to Beaty; the book's index lists pp. 81, 86, 103, 143 and 354 under Zafar Iqbal). ↩︎
Kerry and Brown, ch. 10, text on the Abu Dhabi takeover, March 1990. https://irp.fas.org/congress/1992_rpt/bcci/10accounta.htm ↩︎
Kerry and Brown, ch. 14, "Attempt At Restructuring 1990 and 1991." https://irp.fas.org/congress/1992_rpt/bcci/14abudhabi.htm ↩︎
Inquiry into the Supervision of the Bank of Credit and Commerce International, paras. 2.198, 2.201. ↩︎
Kerry and Brown, ch. 13, note 132, "Altman Memorandum to the File, Clifford and Warnke, July 6, 1990," text at ch. 13, "Altman's Assessment of His Conflict of Interest Pertaining To First American and BCCI." https://irp.fas.org/congress/1992_rpt/bcci/13clifford.htm. The memorandum's account of the earlier meeting with Iqbal is also reprinted in BCCI Hearings before the Terrorism, Narcotics, and International Operations of the Committee on Foreign Relations, vol. 6 (archive.org copy). ↩︎
Memorandum dated July 30, 1990, subject "CCAH," addressed to Swaleh Naqvi with a copy to Zafar Iqbal, reprinted in BCCI Hearings before the Terrorism, Narcotics, and International Operations of the Committee on Foreign Relations, vol. 3 (archive.org copy). https://archive.org/details/BCCIHearingsBeforeTheTerrorismNarcoticsAndInternationalOperationsOfTheCommitteeOnForeignRelations ↩︎
Inquiry into the Supervision of the Bank of Credit and Commerce International, para. 2.254. ↩︎
Norton Rose, report to the members of the BCCI SA Creditors' Committee, May 1, 1992, para. 9, printed p. 588, reprinted in BCCI Hearings before the Terrorism, Narcotics, and International Operations of the Committee on Foreign Relations, vol. 5 (S. Hrg. 102-350, pt. 5). https://archive.org/details/BCCIHearingsBeforeTheTerrorismNarcoticsAndInternationalOperationsOfTheCommitteeOnForeignRelations ↩︎
Kerry and Brown, ch. 14, note 65, citing Al-Sayegh testimony, S. Hrg. 102-350, pt. 5, pp. 759-770. ↩︎
Kerry and Brown, ch. 12, "The Regulators," text and note 33, citing S. Hrg. 102-379, p. 120. https://irp.fas.org/congress/1992_rpt/bcci/12reg.htm ↩︎
Statement of the majority shareholders, section II, "Cooperation by the Majority Shareholders with U.S. Law Enforcement and Regulatory Investigations," reprinted in BCCI Hearings before the Terrorism, Narcotics, and International Operations of the Committee on Foreign Relations, vol. 5 (S. Hrg. 102-350, pt. 5). ↩︎
Electronic mail, "BCCI," from Thomas McQueeney, headed December 18, 1990, in BCCI Hearings before the Committee on Banking, Finance, and Urban Affairs, House of Representatives, vol. 2. https://archive.org/details/BCCIHearingsBeforeTheCommitteeOnBankingFinanceAndUrbanAffairs ↩︎
Newspaper article quoting the McQueeney memo as dated December 11, 1990, reprinted in BCCI Hearings before the Terrorism, Narcotics, and International Operations of the Committee on Foreign Relations, vol. 2 (archive.org copy). ↩︎
Beaty and Gwynne, The Outlaw Bank, p. 103. ↩︎
Chronology, entry for December 13, 1990, in BCCI Hearings before the Committee on Banking, Finance, and Urban Affairs, House of Representatives, vol. 1. https://archive.org/details/BCCIHearingsBeforeTheCommitteeOnBankingFinanceAndUrbanAffairs ↩︎
Inquiry into the Supervision of the Bank of Credit and Commerce International, paras. 2.272, 2.274. ↩︎
Inquiry into the Supervision of the Bank of Credit and Commerce International, para. 2.281. ↩︎
Inquiry into the Supervision of the Bank of Credit and Commerce International, para. 2.297. ↩︎
Inquiry into the Supervision of the Bank of Credit and Commerce International, paras. 2.299-2.300. ↩︎
Inquiry into the Supervision of the Bank of Credit and Commerce International, para. 2.443. ↩︎
Inquiry into the Supervision of the Bank of Credit and Commerce International, para. 2.354. Chowdry is identified as the official questioned in the same paragraph, which also refers to Kazmi. ↩︎
Kerry and Brown, ch. 12, text on the spring 1991 removal effort, the Bank of England stalemate, and the order closing BCCI of July 5, 1991. https://irp.fas.org/congress/1992_rpt/bcci/12reg.htm ↩︎
Kerry and Brown, ch. 14, text and note 52 (staff interview with Masihur Rahman, August 26, 1992). ↩︎
Kerry and Brown, ch. 14, text and note 51 (Winer memorandum, March meeting with Patton, Boggs, and Blow). ↩︎
Inquiry into the Supervision of the Bank of Credit and Commerce International, paras. 2.360-2.361. ↩︎
Statement of the liquidators of Credit and Finance Corporation Limited (Ian Wight and Robert Axford of Deloitte Ross Tohmatsu), para. 90 (agreements of May 22, 1991) and para. 68 (letter of June 25, 1991), reprinted in BCCI Hearings before the Terrorism, Narcotics, and International Operations of the Committee on Foreign Relations, vol. 5 (S. Hrg. 102-350, pt. 5). ↩︎
Testimony of James Virgil Mattingly, Jr., general counsel of the Federal Reserve Board, May 14, 1992, S. Hrg. 102-350, pt. 5, exchange with Senator Kerry. ↩︎
Testimony of Masihur Rahman, former chief financial officer, BCCI, London, BCCI Hearings before the Terrorism, Narcotics, and International Operations of the Committee on Foreign Relations, vol. 1 (archive.org copy). ↩︎
Newspaper article reprinted in BCCI Hearings before the Terrorism, Narcotics, and International Operations of the Committee on Foreign Relations, vol. 2 (archive.org copy). ↩︎
Written answers by Al Sayegh, answer to question 46, reprinted in S. Hrg. 102-350, pt. 5, p. 832. ↩︎
Statement of the majority shareholders, reprinted in BCCI Hearings before the Terrorism, Narcotics, and International Operations of the Committee on Foreign Relations, vol. 5 (S. Hrg. 102-350, pt. 5), p. 754. Position of the majority shareholders. ↩︎
Beaty and Gwynne, The Outlaw Bank, p. 354. ↩︎
Kerry and Brown, ch. 14, text and note 70, citing S. Hrg. 102-350, pt. 5, pp. 756-757. ↩︎
Hussain, Thomas. "UAE jails and fines BCCI executives," United Press International, June 14, 1994. https://www.upi.com/Archives/1994/06/14/UAE-jails-and-fines-BCCI-executives/7650771566400/ Its twelve-defendant total (56 years) differs from MEED's (61 years). ↩︎
"BCCI executives sentenced," MEED, June 24, 1994. https://www.meed.com/bcci-executives-sentenced/ ↩︎

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