BCCI: The bank ‘that would bribe God’

“This bank would bribe God.” These words of a former employee of the disgraced Bank of Credit and Commerce International (BCCI) sum up one of the most rotten global financial institutions.

BCCI pitched itself as a top bank for the Third World, but its spectacular collapse would reveal a web of transnational corruption and a playground for dictators, drug lords and terrorists.

It was one of the largest banks cutting across 69 countries and its aftermath would cause despair to innocent depositors, including Kenyans.

BCCI, which had $20 billion (Sh2.1 trillion in today’s exchange rate) assets globally, was revealed to have lost more than its entire capital.

The bank was founded in 1972 by the crafty Pakistani banker Agha Hasan Abedi.

He was loved in his homeland for his charitable acts but would go on to break every rule known to God and man.

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In 1991, the Bank of England (BoE) froze its assets, citing large-scale fraud running for several years. This would see the bank cease operations in multiple countries. The Luxembourg-based BCCI was 77 per cent owned by the Gulf Emirate of Abu Dhabi.  

BoE investigations had unearthed laundering of drugs money, terrorism financing and the bank boasted of having high-profile customers such as Panama’s former strongman Manual Noriega as customers.

The Standard, quoting “highly placed” sources reported that Abu Dhabi ruler Sheikh Zayed Sultan would act as guarantor to protect the savings of Kenyan depositors.

The bank had five branches countrywide and panic had gripped depositors on the state of their money.

Central Bank of Kenya (CBK) would then move to appoint a manager to oversee the operations of the BCCI operations in Kenya.

It sent statements assuring depositors that their money was safe.

The Standard reported that the Sheikh would be approaching the Kenyan and other regional subsidiaries of the bank to urge them to maintain operations and assure them of his personal support.

It was said that contact between CBK and Abu Dhabi was “likely.”

This came as the British Ambassador to the UAE Graham Burton implored the gulf state to help compensate Britons, and the Indian government also took similar steps.

The collapse of BCCI was, however, not expected to badly hit the Kenyan banking system. This was during the sleazy 1990s when Kenya’s banking system was badly tested. It was the era of high graft and “political banks,” where the institutions fraudulently lent to firms belonging or connected to politicians, who were sometimes also shareholders.

And even though the impact was expected to be minimal, it was projected that a significant number of depositors would transfer funds from Asian and Arab banks to other local institutions.

“Confidence in Arab banking has taken a serious knock,” the “highly placed” source told The Standard.

BCCI didn’t go down without a fight. It accused the British government of a conspiracy to bring down the Pakistani bank.  The Sheikh was said to be furious and would later engage in a protracted legal battle with the British.

“It looks to us like a Western plot to eliminate a successful Muslim-run Third World Bank. We know that it often acted unethically. But that is no excuse for putting it out of business, especially as the Sultan of Abu Dhabi had agreed to a restructuring plan,” said a spokesperson for British Asians.

A CBK statement signed by then-Deputy Governor Wanjohi Murithi said it was keenly monitoring affairs of the mother bank and would go to lengths to protect Kenyan depositors.

“In this respect, the CBK has sought and obtained the assurance of the branch’s management that the interests of depositors are not put at risk by the difficulties facing the parent company and that the bank will meet any withdrawal instructions by depositors in the normal course of business,” said Mr Murithi.

CBK added that it had maintained surveillance of the local branch and was satisfied with its solvency and liquidity.

This was meant to stop Kenyans from making panic withdrawals.

For instance, armed policemen would be deployed at the bank’s Nairobi branch on Koinange Street after the bank had announced it would shut its Kenyan operations.

In Britain, thousands of businesses owned by British Asians were on the verge of financial ruin following the closure of BCCI.

Their firms held almost half of the 120,000 bank accounts registered with BCCI in Britain. 

The African Development Bank was also not spared from this mess, with the bulk of its funds deposited and BCCI and stood to lose every coin.

Criminal culture

In Britain, local authorities from Scotland to the Channel Islands are said to have lost over £100 million (Sh15.2 billion in today’s exchange rate).

The biggest puzzle remained how BCCI was allowed by BoE and other monetary regulation authorities globally to reach such levels of fraudulence.

This was despite the bank being under tight watch owing to the conviction of some of its executives on narcotics laundering charges in the US.

Coast politician, the late Shariff Nassir, would claim that five primary schools in Mombasa lost nearly Sh1 million and appealed to then Education Minister George Saitoti to help recover the savings. Then BoE Governor Robin Leigh-Pemberton condemned it as so deeply immersed in fraud that rescue or recovery – at least in Britain – was out of the question.

“The culture of the bank is criminal,” he said. The bank was revealed to have targeted the Third World and had created several “institutional devices” to promote its operations in developing countries.

These included the Third World Foundation for Social and Economic Studies, a British-registered charity.

“It allowed it to cultivate high-level contacts among international statesmen,” reported The Observer, a British newspaper.

BCCI also arranged an annual Third World lecture and a Third World prize endowment fund of about $10 million (Sh1 billion in today’s exchange rate).

Winners of the annual prize had included Nelson Mandela (1985), Sir Bob Geldof (1986) and Archbishop Desmond Tutu (1989).

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