Piercing The Scam's Heart

The Rolls-Royces and Bentleys pulling up in front of B.C.C.I.'s opulent London office on March 14, 1990, could have signaled a routine meeting of bank directors and officers. The occasion turned out instead to be the darkest day in the high-flying private bank's 18-year history. Key officials received the startling news that the world's fastest-growing international bank, no longer headed by its financial genius founder, was in deep trouble. Hundreds of millions of dollars was missing from its capital accounts, and hundreds of millions more consisted of loans granted to insiders to buy stock in Agha Hasan Abedi's banks. Such loans were never meant to be repaid, and now the accumulating interest charges had grown so large they could not be ignored. The reason for the grim announcement was an audit by the British office of the Price Waterhouse accounting firm that revealed for the first time the rot at B.C.C.I.'s core -- a black hole consisting of at least $1.7 billion and perhaps far more.

According to the audit, much of the money disappeared after being passed to International Credit & Investment Co. Overseas Ltd., a secret, unregulated Cayman Island subsidiary known to only a handful of B.C.C.I. officials. Depositors who thought they were placing money -- apparently hundreds of millions -- into B.C.C.I.'s Cayman bank didn't realize that it was being whisked into the I.C.I.C. bank to disguise its true origins and eventual destinations. From there the money trail evaporated in a series of loans and undocumented transfers.

Price Waterhouse in the Cayman Islands, an entity separate from the British firm, had earlier performed another fascinating audit. TIME viewed an Oct. 18, 1985, Report of the Auditors to the Members of International Credit & Investment Co. (Overseas) Ltd., which said, "Customer deposits consist of confidential accounts which are not conducted as open accounts requiring periodic dispatch of statements. Furthermore, because of company policy we have not been able to confirm any deposit balances directly with customers, and therefore it is not possible for our examination of such accounts to extend beyond the amounts recorded." With this highly unusual qualification, the firm signed off on the accounts of the entity through which millions passed into a banking limbo -- including the unrepaid loans used by First American's shareholders to buy the stock of Clark Clifford's bank.