BCCI: The World's Largest Financial Organization - Past, Present and Future

The Bank of Credit and Commerce International (BCCI) was an international bank founded in 1972 by Agha Hasan Abedi, a Pakistani financier. The bank was registered in Luxembourg with head offices in Karachi and London.

Section 1: What is BCCI?

BCCI was an international financial institution set up by Agha Hasan Abedi, a Pakistani financier and close associate of the Afghan Amir Khalilullah. Abedi also founded the leading Pakistani bank Muslim Commercial Bank and was a major shareholder in Hong Kong-based Asia Continental Bank. The bank was incorporated in 1973 in Luxembourg, and owned by the front company BCC International. For nearly 10 years, Abedi, other BCCI executives, and key financiers lived in virtual self-imposed exile in Pakistan, using the bank to launder money and funnel millions of dollars to Islamic extremists, Pakistan's nuclear weapons programme, and leaders of the Pakistan Peoples Party

In the 1970s, during the first half of the Cold War, the U.S.

Agha Hasan Abedi

founded BCCI in 1971 and served as the bank's chairman and CEO until his death in 1993. After its founding, the bank became known as a "major player in global financial transactions." In addition to providing loans and securities to businesses around the world, it provided banking services to political leaders, and was deeply involved in several scandals in several countries, including those related to the Iran–Contra Affair, and the Bhopal disaster.

Beginning in the late 1970s, BCCI expanded its business into Eastern Europe, particularly in Poland, by opening new branches and setting up financial advisory and construction businesses.

The Early Years of BCCI

Agha Hasan Abedi (1916–2004) was a Pakistani-born Indian. He was a prominent investor and supporter of Pakistan's policies. While a Pakistani, he funded the film industry, hosted Indian actors and presented a special honour to the then President of India, Rajendra Prasad.

Born in Chandigarh, India, he married a Turkish woman named Sabiha, and had a son, Yahya Abedi. Together they emigrated to Pakistan after the partition of India.

During the 1970s and 1980s, he was an investor in textiles in Pakistan, before founding BCCI. He was also an informal adviser to Indira Gandhi, before she was assassinated in 1984.

BCCI's expansion

A little over a year later, in July 1992, the United States Justice Department concluded that BCCI was a criminal organization, with the indictment of a senior BCCI official charging that the bank was used for crimes that included a Mafia-type "old boy network" involving the world's major drug traffickers and drug smugglers.

The US government sought the bank's assets in the United States and obtained, under the Asset Forfeiture Act of 1989, the physical and personal assets of its leaders, making them vulnerable to legal action. In addition to the 15 arrests made by the FBI and the Department of Justice, the United States courts froze the assets of several non-US bank executives and account holders in foreign countries.

BCCI branches around the world

The pursuit of the BCCI was controversial, given the bank's significant business operations. BCCI had branches in territories that included Bahrain, Mauritius, Iran, India, Pakistan, South Africa and the United States, and had branches in the embassies of Panama and the United Arab Emirates in the United Kingdom. One of the major players in this effort was Rajendra Sathaye, who was the chief investigator for the Prime Minister of India. This period became known as the BCCI Operation, although the operation was soon shut down, with only a handful of arrests made. These arrests did little to stem the tide of the bank's operations, and in 1990, it merged with the Bank of Credit and Commerce International of Montreal to form Bank of Nova Scotia, one of the largest banks in the world.

Money laundering and other crimes

Investigators alleged that BCCI laundered billions of dollars of drug money. In February 1987, FBI director Louis Freeh told a Senate committee, "In light of the BCCI case, I have told the Office of the Attorney General that we should revise the 'one strike and you're out' law to the effect that failure to promptly report money laundering transactions should be regarded as a federal crime." According to a report by the British House of Commons Home Affairs Committee, the US began investigating BCCI and other money-laundering institutions in the mid-1980s, and that BCCI admitted to laundering money for the IRA. Several bank employees and directors were convicted of laundering drug money.

Operation C-Chase

C-Chase was a worldwide regulatory effort which began in 1988 to close down BCCI after allegations that it was involved in significant criminal activity. A similar global law enforcement campaign was conducted to close down the Banco Ambrosiano after the assassination of Roberto Calvi in London. These scandals sent shockwaves through the global banking system. The operations of BCCI were largely based in offshore banks around the world,[4] including accounts in Switzerland, Liechtenstein, Bermuda, and Luxembourg, and in New York City.

In April 1992, BCCI directors Abu Hafs and Malik were found guilty of fraud, false accounting, and embezzlement. They were sentenced to 75 years and 12 years in jail, respectively, and were subsequently released on appeal.

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