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Started by wealthy prominent men in Pakistan. Equivalent of royalty.
The Arabs' interest in the bank was more than financial. A classified CIA memo on BCCI in the mid-1980s said that "its principal shareholders are among the power elite of the Middle East, including the rulers of Dubai and the United Arab Emirates, and several influential Saudi Arabians. They are less interested in profitability than in promoting the Muslim cause."
So complex that PWH reported that $10 billion, half its assets, was missing in the financial statement
BCCIBank of Credit and Commerce International Shoaib Farooqi Tony Tran
Background Started in 1972 by Agha Hasan Abedi and Sheikh Zayed bin Sultan al Nahyan (UAE) Used by CIA to funnel $ to Afghanistan Helped Osama bin Laden, Saddam Hussein, even George W. Bush
Opportunity for Moral Hazard Financially motivated, but also religiously motivated Government regulation Pakistans state ◦ All banking nationalized Giant Ponzi Scheme
BCCI’s Financial Structure or:How I learned to stop probing and lovedecentralization Money laundering, bribery Catered to Saddam Hussein, Noriega, Columbian drug dealers Black market: ◦ Guns, and drugs, and sex slaves oh my! Assets of more than $20 Billion, making it the 7th largest private bank by assets
How to avoid Gov’t Regulation 101 # of managers, all over the world reported directly to 1 person. Holding companies, off-shore banking, branches and subsidiaries in 70 countries Accounting done longhand on paper ledgers written in Pakistani’s Urdu Unusual Accounting system: PWC for foreign, and Ernest & Young for its 2 holdings at headquarters. Constant revision of financials Frustrate investigators/auditors
Where BCCI screw up BCCI wants to expand into US market using “straws” Raises eyebrows Audited by Price Waterhouse and Ernst & Young BCCI shutdown after audits 75% of creditors reimbursed, but estimated $9.5-15 billion stolen