RE CRIS & USDC Southern District of Texas
United States District Court for the Southern District of Texas
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Southern District of Texas Public Website Home Page
The home page for the US Courts for the Southern District of Texas. ... 02/12/10
, Court appoints Mr. Jose Angel Moreno as United States Attorney ad interim. ...
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DC CM/ECF LIVE- US District Court-Texas Southern-U.S. District Court
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Southern District of Texas ~ District Court Information & Notices
The homepage for the SDTX District Court. ... United States District Judge ...
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Southern District of Texas ~ District & Magistrate Judges
The District & Magistrate Judges list for the SDTX. ... United States ...
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United States District Court for the Southern District of Texas ...
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United States District Court for the Southern District of Texas ...
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Complaint - UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF ...
UNITED STATES DISTRICT COURT. SOUTHERN DISTRICT OF TEXAS. HOUSTON DIVISION. §.
UNITED STATES SECURITIES. §. AND EXCHANGE COMMISSION, ...
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United States Attorneys' Office - Southern District of Texas
The Southern District of Texas comprises seven U.S. District Court ... the
United States of America created the Southern Judicial District of Texas in 1902
. ...
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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS HOUSTON ...
OCT 14 2005. Michael N. Milby, Clerk. UNITED STATES DISTRICT COURT. SOUTHERN
DISTRICT OF TEXAS. HOUSTON DIVISION. IN RE APPLICATION FOR PEN REGISTER ...
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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS HOUSTON ...
UNITED STATES DISTRICT COURT. SOUTHERN DISTRICT OF TEXAS. HOUSTON DIVISION. THE REGENTS OF THE UNIVERSITY OF. CALIFORNIA, Individually and On Behalf of All ...
| united states district court for the eastern district of texas united states district court southern district of texas local rules | pacer southern district of texas |
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS HOUSTON ...
REGENTS OF THE UNIVERSITY OF. CALIFORNIA, Individually and On Behalf of All ...
http://www.universityofcalifornia.edu/news/enron/royalbank.pdf
saved as and attached as;
royalbank.pdf
http://www.universityofcalifornia.edu/news/enron/royalbank.pdf
refers to ;
Washington State Investment Board v. Lay, No. H-02-3401 on page 24
Enron Corporation: Securities Litigation Settled Or Otherwise ...
et al., Defendants. WASHINGTON STATE INVESTMENT BOARD, et al., individually and
on behalf of all others similarly situated, Plaintiffs, vs. ... H-02-3401 Civil
Action No. H-03-2240 NOTICE OF PENDENCY AND PARTIAL SETTLEMENTS OF CLASS ...
394 F3d 296 Newby v. Enron Corporation & Sc | OpenJurist
consolidated Newby and Washington State Investment Board actions and, ...
Mailed Notices of Proposed Settlements and Proposed Allocation ...
et al., Civil Action No. H-02-3401. (S.D. Tex.). THE HEARING ...
Newby, et al. v. Enron Corp., et al - UNITED STATES DISTRICT COURT
Investment Board, et al. v. Kenneth L. Lay, et al., Civil Action No. H-02-3401
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toronto cpt
members of their immediate families, any officer, director or partner of these
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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS HOUSTON ...
defendants in Washington State Investment Board v. Lay, No. H-02-3401, all ...
In re Enron Corporation Securities and ERISA Litigation 01-CV3624 ...
Kenneth L . Lay, et al., Civil Action No. H-02-3401 (S.D. Tex. ...
In Re: Refco, Inc. Securities Litigation 05-CV-8626-Declaration Of ...
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS HOUSTON ...
Action No. H-. 02-CV-3401 (S.D. Tex.) (the “WSIB Action”); The Regents of the
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Fiscal versus social responsibility: how Philip Morris shaped the ...
Investment policy should not be used to achieve social goals,” PM insisted. ....
Then, in January 1998, at WSIB's request,127 bills were introduced before the
..... Langbein J H. Langbein revision draft. 16 Jan 1991. Philip Morris. Bates
No. ...
http://www.gilardi.com/pdf/enro16not.pdf: following is the entire court document;
{See attached pdf file same name}
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In re ENRON CORPORATION SECURITIES Civil Action No. H-01-3624
LITIGATION (Consolidated)
This Document Relates To:
MARK NEWBY, et al., Individually and On Behalf of All
Others Similarly Situated,
Plaintiffs,
vs.
ENRON CORP., et al.,
Defendants.
THE REGENTS OF THE UNIVERSITY OF Civil Action No. H-04-0088
CALIFORNIA, et al., Individually and On Behalf of All CLASS ACTION
Others Similarly Situated,
Plaintiffs,
vs.
MILBANK, TWEED, HADLEY & McCLOY LLP, et al.,
Defendants.
NOTICE OF PENDENCY AND PARTIAL SETTLEMENT OF CLASS ACTION
TO: ALL PERSONS WHO PURCHASED OR ACQUIRED 7% EXCHANGEABLE NOTES OF ENRON CORPORATION DURING THE PERIOD FROM AUGUST 10, 1999 THROUGH AND INCLUDING DECEMBER 2, 2001.
PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY. YOUR RIGHTS MAY BE AFFECTED BY PROCEEDINGS IN THIS LITIGATION. PLEASE NOTE THAT IF YOU ARE A SETTLEMENT CLASS MEMBER, YOU MAY BE ENTITLED TO SHARE IN THE PROCEEDS OF THE SETTLEMENT DESCRIBED IN THIS NOTICE. TO CLAIM YOUR SHARE OF THIS FUND, YOU MUST SUBMIT OR HAVE ALREADY SUBMITTED A VALID PROOF OF CLAIM FORM.
EXCLUSION DEADLINE: REQUESTS FOR EXCLUSION MUST BE FILED SO AS TO BE RECEIVED NO LATER THAN DECEMBER 30, 2009. SECURITIES BROKERS AND OTHER NOMINEES: PLEASE SEE THE INSTRUCTIONS ON PAGE 7 BELOW.
This Notice of Pendency and Partial Settlement of Class Action (the “Notice”) is given pursuant to Rule 23 of the Federal Rules of Civil Procedure and an order of the United States District Court for the Southern District of Texas, Houston Division (the “Court”) to inform you of a proposed partial settlement of the Action (the “Settlement”) and the hearing (the “Settlement Hearing”) to be held by the Court to consider the fairness, reasonableness, and adequacy of the Settlement as set forth in the Stipulation of Settlement among the Representative Plaintiffs and Goldman Sachs (as further defined below), dated as of August 3, 2009 (the “Stipulation”), on file with the Court. This Notice is not intended to be, and should not be construed as, an expression of any opinion by the Court with respect to the truth of the allegations in the Action or the merits of the claims or defenses asserted. This Notice describes the rights you may have in connection with the Settlement and what steps you may take in relation to the Settlement and this Action. All capitalized terms not defined prior to their use in this Notice have the meanings set forth in Section VIII, below.
The Settlement will result in the creation of a cash settlement fund in the aggregate principal amount of Eleven Million Five Hundred Thousand Dollars ($11,500,000) plus any interest that may accrue thereon (the “Gross Settlement Fund”), which, subject to deduction for costs of notice and administration and certain taxes and tax related expenses and for attorneys’ fees and expenses as approved by the Court, will be available for distribution to Settlement Class Members (as defined below). Your recovery from the Gross Settlement Fund will depend on a number of variables, including the number of units of Enron 7% Exchangeable Notes (“7% Notes”) you purchased or otherwise acquired during the period August 10, 1999 to December 2, 2001, the timing of your purchases and any sales, and the number of units of 7% Notes purchased by other Settlement Class Members who submit valid and timely proof of claim forms.
II. STATEMENT OF POTENTIAL OUTCOME
Representative Plaintiffs and Goldman Sachs do not agree about the issues of Goldman Sachs’s alleged liability, the claims asserted by the Representative Plaintiffs, or the average amount of damages per unit that would have been recoverable from Goldman Sachs if Representative Plaintiffs were to have prevailed on each claim asserted. The issues on which the parties disagree include (1) whether Goldman Sachs engaged in conduct that would give rise to any liability to the Settlement Class under the federal securities laws, Texas common law, or any other laws; (2) whether Goldman Sachs has valid defenses to any such claims of liability; (3) whether the Registration Statement for the 7% Notes was materially false and misleading; (4) the appropriate economic model for determining the amount by which the 7% Notes were allegedly artificially inflated (if at all) during the Settlement Class Period; (5) the amount by which the 7% Notes were allegedly artificially inflated (if at all) during the Settlement Class Period; (6) the effect of various market forces influencing the trading price of 7% Notes at various times during the Settlement Class Period; (7) the extent to which external factors, such as general market conditions, influenced the trading price of 7% Notes at various times during the Settlement Class Period; (8) the extent to which the various matters that Representative Plaintiffs alleged were materially false or misleading influenced (if at all) the price of 7% Notes at various times during the Settlement Class Period; (9) the extent to which the various allegedly adverse material facts that Representative Plaintiffs alleged were omitted influenced (if at all) the price of the 7% Notes at various times during the Settlement Class Period; and (10) whether claims based on the statements made or facts allegedly omitted were actionable under the federal securities or other laws.
III. STATEMENT OF ATTORNEYS’ FEES AND EXPENSES SOUGHT
Counsel for the Representative Plaintiffs do not intend to seek a separate award of fees and expenses in connection with this Settlement.
IV. REASONS FOR SETTLEMENT
The Representative Plaintiffs and their counsel believe that this Settlement is fair, reasonable, and adequate to the Members of the Settlement Class. The Representative Plaintiffs and their counsel have reached this conclusion after investigating and considering, among other things, the strengths and weaknesses of the Representative Plaintiffs’ claims against Goldman Sachs and Goldman Sachs’s defenses to those claims, the uncertainties of this complex litigation, and the benefit provided by the Settlement to the Members of the Settlement Class. See Section VII.
V. IDENTIFICATION OF ATTORNEYS’ REPRESENTATIVES
Any questions regarding the Settlement should be directed to a representative of Plaintiffs’ Counsel:
RICK NELSON
COUGHLIN STOIA GELLER RUDMAN & ROBBINS LLP
655 West Broadway, Suite 1900
San Diego, CA 92101
Telephone: (800) 449-4900
VI. BACKGROUND OF THE LITIGATION
Plaintiffs filed their complaint in this Action on January 9, 2004, and filed an amended complaint on February 6, 2004. Goldman Sachs was named as a defendant in the Action, which alleged a claim against Goldman Sachs under §11 of the Securities Act of 1933 and a claim against The Goldman Sachs Group, Inc. for control person liability under §15 of the Securities Act of 1933. Goldman Sachs and The Goldman Sachs Group, Inc. moved to dismiss the Action on the ground that the complaint failed to state a claim upon which relief could be granted. On December 5, 2005, the Court denied Goldman Sachs’s motion to dismiss the claim asserted against it and granted The Goldman Sachs Group, Inc.’s motion to dismiss the control person claim asserted against it. Extensive fact discovery was conducted by plaintiffs, with Goldman Sachs producing documents and Goldman Sachs witnesses being deposed. On August 1, 2006, plaintiff The Regents moved to confirm its appointment as lead plaintiff. On August 11, 2006, plaintiff Pulsifer filed a motion for class certification. On August 21, 2006, Goldman Sachs opposed the motion to confirm The Regents as lead plaintiff and filed a cross-motion for judgment on the
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VII. BACKGROUND OF THE SETTLEMENT
Counsel for the Representative Plaintiffs have conducted an investigation relating to the claims and underlying events alleged in the complaint. Counsel for the Representative Plaintiffs also have conducted considerable formal and informal discovery in the Action and in related litigation and have analyzed the evidence obtained therein, and have researched the applicable law with respect to the claims alleged in the complaint and the potential defenses thereto. The Representative Plaintiffs, by their counsel, have also conducted arm’s-length negotiations with counsel for Goldman Sachs with a view toward settling the issues in dispute and achieving the best result possible consistent with the interests of the Settlement Class.
Based upon their investigation and negotiations, counsel for the Representative Plaintiffs have concluded that the terms of the Settlement as set forth in the Stipulation are fair, reasonable, and adequate to the Representative Plaintiffs and the Settlement Class, and in the best interest of the Representative Plaintiffs and the Settlement Class, and have agreed to settle the Action as to Goldman Sachs pursuant to the terms and provisions of the Stipulation, after considering (i) the benefits that the Representative Plaintiffs and the Settlement Class will receive from the Settlement; (ii) the attendant risks of litigation; and (iii) the desirability of permitting the Settlement to be consummated as provided by the terms of the Stipulation.
Goldman Sachs has denied and continues to deny each and all of the claims and allegations of wrongdoing made by the Representative Plaintiffs in the Action and maintains furthermore that it has meritorious defenses. Goldman Sachs has expressly denied and continues to deny all charges of wrongdoing or liability against it arising out of any of the conduct, statements, acts, or omissions alleged, or that could have been alleged, in the Action, and Goldman Sachs vigorously contends that many of the factual allegations of the complaint relating to Goldman Sachs were materially false or inaccurate. Goldman Sachs also has denied and continues to deny, inter alia, the allegations that the Representative Plaintiffs or the Settlement Class Members were harmed by Goldman Sachs’s conduct alleged in the Action. Pursuant to the terms of the Stipulation, the Stipulation shall in no event be construed or deemed to be evidence of or an admission or concession by Goldman Sachs with respect to any claim of any fault or liability or wrongdoing or damage whatsoever. Nonetheless, Goldman Sachs has concluded that further litigation of the Action would be protracted and expensive, and that it is desirable that the Action be fully and finally settled in the manner and upon the terms and conditions set forth in the Stipulation.
VIII. DEFINITIONS
As used in this Notice, the following terms have the meanings specified below. Any capitalized terms not specifically defined in this Notice shall have the meanings set forth for such terms in the Stipulation. In the event of any inconsistency between any definition set forth below or elsewhere in this Notice and any definition set forth in the Stipulation, the definition set forth in the Stipulation shall control.
1. “Action” means The Regents v. Milbank, Tweed et al., Civil Action No. H-04-0088.
2. “Actions” means The Regents v. Milbank, Tweed, et al., Civil Action No. H-04-0088; In re Enron Corp. Sec. Litig., Civil Action No. H-01-CV-3624 (S.D. Tex.); Washington State Investment Board, et al. v. Kenneth L. Lay, et al., Civil Action No. H-02-CV-3401 (S.D. Tex.) (the “WSIB Action”); The Regents of the University of California v. Royal Bank of Canada, et al., Civil No. H-04-0087 (S.D. Tex.); The Regents of the University of California v. Milbank, Tweed, et al., Civil No. H-04-0088 (S.D. Tex.); and The Regents of the University of California v. Toronto-Dominion Bank, et al., Civil No. 03-5528.
3. “Authorized Claimant” means any Settlement Class Member who is entitled to a distribution from the Gross Settlement Fund pursuant to the terms of the Stipulation, any Plan of Allocation, or any order of the Court.
4. “Goldman Sachs” means Goldman, Sachs & Co.
5. “Court” means the United States District Court for the Southern District of Texas, Houston Division.
6. “Defendants” means each and all of the defendants that have been or may be named in any of the complaints in the Actions.
7. “Effective Date” means the first date by which all of the events and conditions specified in paragraph 7.1 of the Stipulation have occurred and have been met, respectively.
8. “Enron” means Enron Corporation and all of its past and present parents, subsidiaries, divisions, joint ventures, predecessors, successors, assigns, related or affiliated entities, and any entity in which any of them has a controlling interest.
9. “Judgment” means a judgment to be rendered by the Court, substantially in the form attached to the Stipulation as Exhibit B.
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13. “Notice and Claims Administrator” means Gilardi & Co. LLC or its successors.
14. “Person” means an individual, corporation, limited liability corporation, professional corporation, limited liability partnership, partnership, limited partnership, association, joint stock company, estate, legal representative, trust, unincorporated association, government or any political subdivision or agency thereof, and any business or legal entity and any spouses, heirs, predecessors, successors, representatives, or assignees of any of the foregoing.
15. “Plaintiffs’ Counsel” means Coughlin Stoia Geller Rudman & Robbins LLP (and any successors thereof), Patrick J. Coughlin, Keith F. Park, Helen J. Hodges, 655 West Broadway, Suite 1900, San Diego, California 92101.
16. “Plan of Allocation” means any plan or formula of allocation of the Gross Settlement Fund, to be approved by the Court, whereby the Net Settlement Fund shall be distributed to Authorized Claimants. Any Plan of Allocation is not part of the Stipulation and Goldman Sachs shall have no responsibility or liability with respect thereto.
17. “Proof of Claim and Release” or “Proof of Claim” mean the form sent with this Notice to Settlement Class Members, by which Settlement Class Members may make claims (if they have not previously done so by submitting an earlier proof of claim and release) against the Gross Settlement Fund for damages allegedly incurred by reason of their investment(s) in the 7% Notes.
18. “Released Claims” means any and all claims, demands, rights, liabilities, and causes of action (including “Unknown Claims” as defined below) of any nature whatsoever, asserted under federal, state, common, local law, or foreign law (including, without limitation, claims under the Securities Exchange Act of 1934 and the Securities Act of 1933, the Texas Securities Act, any analogous state securities act, and common law) that Representative Plaintiffs and/or any Settlement Class Member have, had, or may have against the Released Parties (i) based on, arising out of, or related to, directly or indirectly, the purchase or sale or other acquisition or disposition, or holding of any Enron or Enron-related publicly traded securities, and (ii) based upon, arising out of, or related directly or indirectly to all acts, facts, statements, or omissions that were or could have been alleged in the Action.
19. “Released Parties” means Goldman Sachs and its parent, The Goldman Sachs Group, Inc., their direct and indirect present and former parents, subsidiaries, divisions, affiliates, attorneys, accountants, insurers, predecessors and successors, and all of their respective current and former members, officers, directors, managing directors, principals, shareholders, employees and agents, heirs, executors, administrators, spouses, assigns and/or bankruptcy estates, in each instance only in their capacity as such, and any person or entity in which any of the above has or had a controlling interest or which is or was related to or affiliated with any of the above, but excluding the Non-Settling Defendants in the Action.
20. “Representative Plaintiffs” means The Regents of the University of California and Nathanial Pulsifer, Trustee of the Shooters Hill Revocable Trust.
21. “Settlement Amount” means the principal amount of Eleven Million Five Hundred Thousand Dollars ($11,500,000).
22. “Settlement Class” means (i) all Persons (and their beneficiaries) who purchased or acquired the 7% Notes of Enron on August 10, 1999 until December 2, 2001, inclusive. Excluded from the Settlement Class are Defendants, the officers and directors of Enron, and members of their immediate families or their successors, heirs, and legal representatives. Also excluded from the Settlement Class are those Persons who timely and validly request exclusion from the Settlement Class, to the extent that they are able to do so under Rule 23 of the Federal Rules of Civil Procedure, pursuant to this Notice.
23. “Settlement Class Member” or “Member of the Settlement Class” mean a Person who falls within the definition of the Settlement Class.
24. “Settlement Class Period” means the period commencing on August 10, 1999 until December 2, 2001, inclusive.
25. “Settling Parties” means, collectively, Goldman Sachs and the Representative Plaintiffs (on behalf of themselves and each of the Settlement Class Members).
26. “Unknown Claims” means any Released Claim that any Representative Plaintiff or Settlement Class Member does not know or suspect to exist in his, her or its favor at the time of the release of the Released Parties that if known by him, her or it, might have affected his, her or its settlement with and release of the Released Parties, or might have affected his, her or its decision not to object to this settlement or not to exclude himself, herself or itself from the Settlement Class. With respect to any and all Released Claims, the Settling Parties stipulate and agree that, upon the Effective Date, the Representative Plaintiffs shall be deemed to have expressly waived, and each of the Settlement Class Members shall be deemed to have waived and by operation of the Judgment shall have waived, the provisions, rights, and benefits of California Civil Code §1542, which provides:
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A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.Upon the Effective Date, the Representative Plaintiffs shall be deemed to have expressly waived, and each of the Settlement Class Members shall be deemed to have waived and by operation of the Judgment shall have waived, any and all provisions, rights, and benefits conferred by any law of any state or territory of the United States, or principle of common law, that is similar, comparable, or equivalent to California Civil Code §1542. The Representative Plaintiffs and Settlement Class Members may hereafter discover facts in addition to or different from those that any of them now knows or believes to be true with respect to the subject matter of the Released Claims, but each Representative Plaintiff shall expressly have, and each Settlement Class Member shall be deemed to have and by operation of the Judgment shall have, fully, finally, and forever settled and released any and all Released Claims, known or unknown, suspected or unsuspected, contingent or non-contingent, whether or not concealed or hidden, that now exist, or heretofore have existed upon any theory of law or equity now existing or coming into existence in the future, including, but not limited to, conduct that is negligent, reckless, intentional, with or without malice, or a breach of any duty, law, or rule, without regard to the subsequent discovery or existence of such different or additional facts. The Representative Plaintiffs acknowledge, and the Settlement Class Members shall be deemed to have acknowledged, and by operation of the Judgment shall have acknowledged, that the foregoing waiver was separately bargained for and a key element of the settlement of which this release is a part.
IX. THE SETTLEMENT CLASS
By Order dated October 29, 2009, the Court certified the Settlement Class pursuant to Rule 23(b)(3) of the Federal Rules of Civil Procedure, for the purpose of the Settlement only, and directed that this Notice be given to Members of the Settlement Class. If you fall within the definition of the Settlement Class set forth above at Section VIII, then you are a Settlement Class Member.
X. THE RIGHTS OF SETTLEMENT CLASS MEMBERS
If you are a Settlement Class Member, you may receive the benefit of, and you will be bound by, the terms of the proposed Settlement described in Section XI of this Notice, upon approval of the proposed Settlement by the Court.
If you are a Settlement Class Member, you have the following options:
If you have not already done so, you may submit a Proof of Claim and Release form as described below. If you choose this option, you will remain a Settlement Class Member, you will share in the proceeds of the proposed Settlement if your claim is timely, valid, and you are otherwise entitled to a distribution under the Plan of Allocation and if the proposed Settlement is finally approved by the Court, and you will be bound by the Judgment and release described below.
If you do not wish to be included in the Settlement Class and do not wish to participate in the proposed Settlement described in this Notice, you may request to be excluded with respect to all Released Claims.
To request to be excluded in accordance with the preceding paragraph, you must send a signed, written request to be excluded, postmarked no later than December 30, 2009, and addressed as follows:
c/o Gilardi & Co LLC
P.O. Box 808061
Petaluma, CA 94975-8061
If you validly request exclusion from the Settlement Class (a) you will be excluded from the Settlement Class, (b) you will not share in the proceeds of the Settlement described herein, (c) you will not be bound by any judgment entered in the Action insofar as such judgment relates to the Action, and (d) you will not be precluded, by reason of your decision to request exclusion from the Settlement Class, from otherwise prosecuting an individual claim, if timely and otherwise valid, against Goldman Sachs based on the matters complained of in the Action. If you are a Settlement Class Member, you may, but are not required to, enter an appearance through counsel of your own choosing at your own expense, provided that such counsel must file an appearance on your behalf on or before December 30, 2009, and must serve copies of such appearance on the attorneys listed in Section XVI below. If you do not enter an appearance through counsel of your own choosing, you will be represented by Plaintiffs’ Counsel.
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A settlement has been reached in the Action between the Representative Plaintiffs and Goldman Sachs, the terms and conditions of which are set forth in the Stipulation and the Exhibits thereto. The following description of the proposed Settlement is only a summary, and reference is made to the text of the Stipulation, on file with the Court, for a full statement of its provisions. You may also access the Stipulation and related documents at the Notice and Claims Administrator’s website, www.gilardi.com.
A. The Settlement Fund
The entire settlement fund (the “Gross Settlement Fund”) consists of the aggregate principal amount of Eleven Million Five Hundred Thousand Dollars ($11,500,000) in cash, plus interest thereon, that has been placed into an interest-bearing account pursuant to the terms of the Stipulation. A portion of the Gross Settlement Fund will be used to pay for this Notice, taxes, and tax return preparation expenses regarding the interest earned on the Gross Settlement Fund and the Court awarded fees and expenses of counsel to the Representative Plaintiffs.
B. Releases
If the proposed Settlement is approved by the Court, the Court will enter an order (the “Order of Final Judgment and Dismissal”) that will dismiss the Action with prejudice as to Goldman Sachs. In addition, upon the Effective Date, the Representative Plaintiffs and each of the Settlement Class Members, on behalf of themselves, their successors and assigns, and any other Person claiming (now or in the future) through or on behalf of them, and regardless of whether any such Representative Plaintiff or Settlement Class Member ever seeks or obtains by any means, including, without limitation, by submitting a Proof of Claim and Release, any distribution from the Gross Settlement Fund, shall be deemed to have, and by operation of the Judgment shall have, fully, finally, and forever released, relinquished, and discharged all Released Claims against the Released Parties and shall have covenanted not to sue the Released Parties with respect to all such Released Claims, and shall be permanently barred and enjoined from instituting, commencing, or prosecuting any such Released Claim against the Released Parties. In addition, subject to certain limitations set forth in the Stipulation, Goldman Sachs will release the Representative Plaintiffs, the Settlement Class Members, and Plaintiffs’ Counsel from any claims relating to the prosecution of the Action. The Court shall retain jurisdiction over the Action, including, without limitation, all matters with respect to implementation and enforcement of the terms of the Stipulation.
XII. PLAN OF ALLOCATION
The Net Settlement Fund will be distributed to Settlement Class Members who submit (or have previously submitted) valid, timely Proof of Claim and Release forms (“Authorized Claimants”) under the Plan of Allocation described below. The Plan of Allocation provides that you will be eligible to participate in the distribution of the Net Settlement Fund only if you have a net loss on all transactions in Enron 7% Notes during the Settlement Class Period.
For purposes of determining the amount an Authorized Claimant may recover under the Plan of Allocation, Plaintiffs’ Counsel have consulted with their damage experts and the Plan of Allocation reflects an assessment of the damages that they believe could have been recovered had Lead Plaintiff prevailed at trial.
To the extent there are sufficient funds in the Net Settlement Fund, each Authorized Claimant will receive an amount equal to the Authorized Claimant’s claim, as defined below. If, however (and as is more likely), the amount in the Net Settlement Fund is not sufficient to permit payment of the total claim of each Authorized Claimant, then each Authorized Claimant shall be paid the percentage of the Net Settlement Fund that each Authorized Claimant’s claim bears to the total of the claims of all Authorized Claimants. Payment in this manner shall be deemed conclusive against all Authorized Claimants.
A claim will be calculated as follows:
A 7% Note purchased during the Settlement Class Period and prior to October 17, 2001, must have been held through October 16, 2001, to participate in this plan. The claim for a 7% Note will be the purchase price of the note (but not more than $22.25) less the sales price (but not more than $22.25) if sold on or after October 17, 2001, and prior to December 3, 2001, or, if held on December 3, 2001, the purchase price (but not more than $22.25) less $4.12.
The date of purchase or sale is the “contract” or “trade” date as distinguished from the “settlement” date.
For Settlement Class Members who made multiple purchases or sales of 7% Notes during the Settlement Class Period, the first-in, first-out (“FIFO”) method will be applied to such purchases and sales for purposes of calculating a claim. Under the FIFO method, sales of units during the Settlement Class Period will be matched, in chronological order against units purchased during the Settlement Class Period.
A Settlement Class Member will be eligible to receive a distribution from the Net Settlement Fund only if a Settlement Class Member had a net loss, after all profits from transactions in Enron 7% Notes during the Settlement Class Period are subtracted from all losses. No distributions will be made to Authorized Claimants who would otherwise receive a distribution of less than $10.00.
The Net Settlement Fund from this settlement with Goldman Sachs will be distributed ONLY to Persons who purchased or acquired 7% Notes of Enron Corporation during the period August 10, 1999 through December 2, 2001. To participate in the distribution of the Net Settlement Fund you must EITHER (a) complete and submit the Proof of Claim form that accompanies this Notice; OR (b) have completed and submitted the Proof of Claim form that accompanied the Plan of Allocation Notice dated December 20, 2007 that was previously mailed to Settlement Class Members commencing on December 21, 2007. To share in the distribution of this Net Settlement Fund, you need only complete and submit one Proof of Claim form. If you are submitting the claim form that accompanies this Notice, you must complete, sign, and mail the Proof of Claim form, postmarked on or before February 16, 2010, addressed as follows:
Notice and Claims Administrator
c/o Gilardi & Co. LLC
P.O. Box 808061
Petaluma, CA 94975-8061
If you completed and submitted the Proof of Claim form that accompanied the Plan of Allocation Notice dated December 20, 2007 that was previously mailed to Settlement Class Members commencing on December 21, 2007, you need not complete and submit another Proof of Claim form to share in the distribution of the proceeds of the Net Settlement Fund. Those Settlement Class Members who do not need to submit a Proof of Claim form but who the Notice and Claims Administrator determines are entitled to distributions from proceeds of the Net Settlement Fund shall receive distribution checks, to which will be attached a document containing the same release set out in the Stipulation of Settlement and Proof of Claim and Release form. The back of the check will contain language acknowledging that by endorsing the check, the Settlement Class Member(s) is (are) releasing all “Released Claims” (including “Unknown Claims”) against the “Released Parties” and that such endorsement and release shall operate as if they had been included in the Proof of Claim such Settlement Class Member(s) previously submitted, all as more particularly defined and set forth in the document attached to the check and in the Stipulation of Settlement between Goldman Sachs and Representative Plaintiffs dated August 3, 2009.
XIV. NOTICE TO BANKS, BROKERS, OTHER NOMINEES AND UNDERWRITERS
All nominees who hold 7% Notes purchased during the period beginning on August 10, 1999 through and including December 2, 2001 for the beneficial ownership of another, including each of the underwriters that sold the 7% Notes to initial purchasers during the initial period beginning on August 10, 1999, are requested to send this Notice to all such beneficial owners and initial purchasers, respectively, no later than twenty days after receipt of this Notice. Additional copies of the Notice will be provided to such nominees upon written request sent to:
Notice and Claims Administrator
c/o Gilardi & Co. LLC
P.O. Box 808061
Petaluma, CA 94975-8061
XV. APPLICATION FOR ATTORNEYS’ FEES AND EXPENSES
Counsel for the Representative Plaintiffs do not intend to seek a separate award of fees and expenses in connection with this Settlement.
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A hearing (the “Settlement Hearing”) will be held on February 4, 2010, at 1:30 p.m., before the Honorable Melinda Harmon, United States District Judge, United States District Court for the Southern District of Texas, at the Bob Casey United States Courthouse, 515 Rusk Avenue, Houston, Texas 77002, for the purpose of determining (a) whether the proposed Settlement as set forth in the Stipulation is fair, reasonable, and adequate and should be approved by the Court; and (b) whether an Order of Final Judgment and Dismissal, substantially in the form of Exhibit B to the Stipulation, should be entered herein. The Court may adjourn the Settlement Hearing from time to time and without further notice to the Settlement Class.
Any Settlement Class Member who has not requested exclusion may appear at the Settlement Hearing and be heard on any of the foregoing matters; provided, however, that no such person shall be heard unless his, her or its objection is made in writing and is filed, together with proof of membership in the Settlement Class and copies of all other papers and briefs to be submitted by him, her or it to the Court at the Settlement Hearing, no later than December 30, 2009, and showing due proof of service on Plaintiffs’ Counsel:
KEITH F. PARK
HELEN J. HODGES and upon the following counsel for Goldman Sachs:
COUGHLIN STOIA GELLER RUDMAN MAX GITTER
& ROBBINS LLP CLEARY GOTTLIEB STEEN & HAMILTON LLP
655 West Broadway One Liberty Plaza
Suite 1900 New York, NY 10006
San Diego, CA 92101
Inquiries regarding the Action should be addressed to Plaintiffs’ Counsel at the address set forth above.
DATED: October 29, 2009
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
8
In Re: Refco, Inc. Securities Litigation 05-CV-8626-Declaration Of ...
***************************
http://securities.stanford.edu/1035/RFX05_01/200698_r03d_058626.pdf
200698_r03d_058626
REFCO CRIS 200698_r03d_058626 (See attached file pdf)
taken from page 1
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
In re REFCO, INC. SECURITIES LITIGATION 05 Civ. 8626 (GEL)
Exhibit A Notice of Pendency and Partial Settlement of Class Action
dated February 4, 2005, relating to a settlement with defendant
Bank of America Corp. in the matter known as In re Enron
Corporation Securities Litigation , C.A. No. H-0 1-3624 (S .D.
Tex.), as printed from the claims administrator's website :
www. gilardi .com/pdf/enro5not .pdf
Exhibit B Order of Final Judgment and Dismissal as to Bank of America,
entered on October 19, 2005 in the matter known as In re
Enron Corporation Securities Litigation , C.A. No. H-01-3624
(S.D . Tex.), as printed from that court ' s electronic document
filing system.
page 3
CERTIFICATE OF SERVICE
I hereby certify that on September 8, 2006 , the attached document was filed with the
Clerk of Court using CM/ECF which will send notification of such filings to the following
parties:
Bradley E . Lerman, Esquire
Bruce Roger Braun, Esquire
Linda T. Coberly, Esquire
WINSTON & STRAWN
35 West Wacker Drive
Chicago, IL 6060 1
Emails: blerman@winston.co~n
bbraun@winston.com, lcoberly(winston .com
Counsel to Defendant Grant Thornton LLP
David Emilio Mollon, Esquire
James David Reich, Jr ., Esquire
Beth A. Tchlinguirian, Esquire
WINSTON & STRAWN LLP
200 Park Avenue
New York, NY 10166
Isl Megan D. McIntyre
Megan D. McIntyre
Stuart I. Friedman, Esquire
Ivan O. Kline, Esquire
Elizabeth D. Meacham, Esquire
FRIEDMAN & WITTENSTEIN P .C .
600 Lexington Avenu e
New York, NY 10022
Emails : sfriedmangfriedmanwittenstein .com,
emeachamgfriedmanwittenstein .cam,
ikline@friedmanwitte-nstein.com
Counsel to William Sexton
Richard E. Nathan, Esquire
NATHAN LAW FIRM
123 South June Street
Los Angeles, CA 90004
Email: renathan@att.net
Counsel to Dennis Klejna
Emails: jreich(aiwinston.com,
dmollon winston.com
Counsel to Defendant Grant Thornton LLP
Helen B. Kim, Esquire
BAKER HOSTETLER
333 South Grand Avenue, Suite 1800
Los Angeles, CA 9007 1
Email: hkim bakerlaw.com
Lead Counsel to Dennis Klejna
Mark D. Powers, Esquire
BAKER HOSTETLER
666 Fifth Avenue
New York, NY 10103
Email : mpowers@bakerlaw.com
Counsel to Dennis Klejn a
Holly K. Kulka, Esq.
HELLER EHRMAN WHITE &
MCAULIFFE, LLP
Times Square Tower
7 Times Square
New York, NY 10036
Email : hkulLca@hewm.com
Counsel to Phillip Silverman
Melissa Sarafa, Esquire
Norman L. Eisen, Esquire
ZUCKERMAN SPAEDER LLP
1540 Broadway, Suite 1604
New York, NY 10036
Email : msarafa@zuckerman .com
Counsel to Tone Grant
page 4
John V. H. Pierce , Esquire
Robert Bruce McCaw, Esquire
Dawn M. Wilson, Esquire
Lori A. Martin, Esquire
Michael L . Feinberg, Esquire
Michael H. Park, Esquire
WILMER, CUTLER & PICKERING
399 Park Avenue
New York, NY 10022
Emails: robert.mccaw@wilmerhale .com,
jolm.pierce@wilmerhale. com,
lori .martin ,wilmerhale .com,
dawn.wilson@wilmerhale .com,
michael.feinberg@wilmerhate .com
Michael.park@wilmerhale. com
Counsel to Defendants Credit Suisse First Boston LLC,
Goldman Sachs & Co., Bank of America Securities LLC,
Merrill Lynch Pierce Fenner & Smith Inc., Deutsche
Bank Securities Inc., JP Morgan Securities Inc., Sandler
O'Neil Partners LP, HSBC Securities (USA) Inc.,
William Blair & Company LLC, Harris Nesbitt Corp.,
Samuel A. Ramirez & Company, Muriel Siebert & Co.,
Inc., The Williams Capital Group, Utendahl Capital
Partners and CMG Institutional Trading LLC
Greg A. Danilow, Esquire
Robert Francis Carangelo, Esquire
WEIL, GOTSHAL & MANGES LLP
767 Fifth Avenue
New York, NY 10153
Counsel to Defendants Thomas H. Lee, David Y.
Harkins, Scott L . Jaeckel, Scott A . Schoen, Nathan
Gantcher, Leo R. Breitman, Ronald L. O'Kelley, Thomas
H. Lee Partners, L .P., Thomas HLee Equity Fund V
L.P., Thomas H. Lee Parallel Fund V., L.P., Thomas. ,.H
Lee Equity (Cayman) Fund V., L.P., THL Equity
Advisors V., LLC, Thomas H. Lee Investors Limited
Partnership, The 1997 Thomas H. Lee Nominee Trust
Email : greg.danilow@weil .com
robert.carangeloc weil.com
Barbara Moses, Esquire
Rachel Marissa Korenblat, Esquire
MORVILLO, ABRAMOWITZ, GRAND,
IASON ANELLO &BOHRER, P.C .
565 Fifth Ave .
New York, NY 10017
Counsel to Robert Trosten
Emails : bmoses.maglaw.com
Ykorenblat@maglaw.com
I hereby certify that on September 8, 2006, the attached document was sent via Overnight
Mail to the following parties :
Matthew Sava , Esquire
Yoram Jacob Miller, Esquire
SHAPIRO FORMAN ALLEN SAVA &
MCPHERSON LLP
380 Madison Avenu e
New York, New York 1001 7
Counsel to Defendant Gerald Sherer and
Joseph J. Murphy
Michael T. Hannafan, Esquire
Blake T. Hannafan, Esquire
Nicholas A. Pavich, Esquir e
MICHAEL T. HANNAFAN & ASSOCIATES
One East Wacker Drive, Suite 120 8
Chicago, IL 6060 1
Counsel to Defendant Tone N. Grant
Jeffrey T . Golenbock, Esquire
Adam C. Silverstein , Esquire
GOLENBOCK EISEMAN ASSOR BELL &
PESKOE LLP
437 Madison Avenu e
New York, NY 10022-7302
Counsel to Defendants Refco Group Holdings, Inc.,
Phillip Bennett and The Phillip R . Bennett Three Year
Annuity Trust
Richard Soto, Esquire
Hunton & Williams LLP
200 Park Avenue, 53rd Floor
New York, New York 10166
Counsel to Santo Maggio
page 5
Westminster-Refco Management LLC Andrew Levander, Esquire
One World Financial Center DECHERT LLP
200 Liberty Street, TowerA 30 Rockefeller Plaza
New York, New York 10281 New York, NY 10112-2200
Email: andrew.levander@dechert.com
Counsel to BAWAG P.S.K Bank fur Arbeit and
Wirtschaft and Osterreichische Postsparkasse
Aktiengesellschaft.
Refco Managed Futures LLC
One World Financial Center
200 Liberty Street, Tower A
New York, New York 10281
Southern District of Texas
ENTERED
OCT 19 2005
Michael N . Milby, Clerk
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
CLASS ACTION
This Document Relates To :
MARK NEWBY, et al ., Individually and On
Behalf of All Others Similarly Situated ,
Plaintiffs,
vs.
ENRON CORP., et al .,
Defendants.
THE REGENTS OF THE UNIVERSITY OF
CALIFORNIA, et al ., individually and On Behalf
of All Others Similarly Situated ,
Plaintiffs ,
vs.
KENNETH L. LAY, et al .,
Defendants
[Caption continued on following page.]
ORDER OF FINAL JUDGMENT AND DISMISSAL AS TO BANK OF AMERICA
Case 4:01-cv-03624 Document 4049 Filed 10/18/2005 Page 2 of 7 [actually page 17 of 22]
WASHINGTON STATE INVESTMENT
BOARD, et al ., On Behalf of Themselves and
All Others Similarly Situated,
Plaintiffs,
vs.
KENNETH L. LAY, et a! .
Defendants.
dated February 4, 2005, on the application of the Settling Parties for approval of the settlement (the
"Settlement") set forth in the Stipulation of Settlement dated as of October 28, 2004 (the
"Stipulation"), and due and adequate notice having been given to the Settlement Class (as defined in the Stipulation) as required in said Order, and the Court having considered all papers filed and
proceedings had herein and otherwise being fully informed in the premises and good cause
appearing therefore, IT IS HEREBY ORDERED, ADJUDGED AND DECREED that:
1 . This Order incorporates by reference the definitions in the Stipulation, and al l
capitalized terms used herein shall have the same meanings as set forth in the Stipulation .
Notwithstanding anything in the Stipulation or any other document to the contrary, the exclusion
from the Settlement Class of Defendants shall not include Defendants who purchased or acquired
any publicly traded equity or debt securities of Enron in a representative capacity, such as trustee,
agent, custodian or otherwise, on behalf of Persons who are or were neither Defendants, officers or
directors of Enron, nor members of their immediate families or their successors, heirs and lega l
representatives .
2. This Court has jurisdiction over the subject matter of the Actions and over all
Members of the Settlement Class .
3 . The notice given to the Settlement Class of the Settlement and the other matters se t
forth in the Stipulation was the best notice practicable under the circumstances, including individual
notice to all Members of the Settlement Class who could be identified through reasonable effort .
Said notice provided due and adequate notice of these proceedings and of the matters set forth in the Stipulation, including the proposed Settlement, to all persons entitled to such notice, and said notice fully satisfied the requirements of Rule 23 of the Federal Rules of Civil Procedure and due process .
February 4, 2005, or this Order of Final Judgment and Dismissal is to be construed as precluding any Person who remains a Settlement Class Member or who requests exclusion from the Settlement Class from either being a member of any other classes, subclasses or settlement classes certified by the Court in the Actions or opting out of or seeking exclusion from membership in any such classes .
5 . Pursuant to Rule 23 of the Federal Rules of Civil Procedure, this Court hereb y
approves the Settlement as set forth in the Stipulation, finds that said Settlement is, in all respects ,
fair, reasonable and adequate with respect to the Settlement Class, and directs that the Settlement be consummated in accordance with the terms and conditions set forth in the Stipulation .
6. This Court hereby dismisses the Actions in their entirety as to BofA and against th e
Representative Plaintiffs and the Settlement Class, with prejudice and without costs (except a s
otherwise provided in the Stipulation) .
7. Upon the Effective Date, the Representative Plaintiffs and each of the Settlemen t
Class Members, on behalfofthemselves, their successors and assigns, and any other Person claiming (now or in the future) through or on behalf of them, and regardless of whether any such
Representative Plaintiff or Settlement Class Member ever seeks or obtains by any means, including, without limitation, by submitting a Proof of Claim and Release, any distribution from the Gross Settlement Fund, shall be deemed to have, and by operation of this Order of Final Judgment and Dismissal shall have, fully, finally, and forever released, relinquished, and discharged all Released Claims against. BofA and shall have covenanted not to sue BofA with respect to all such Released Claims, and shall be permanently barred and enjoined from instituting, commencing, or prosecuting any such Released Claim against BofA .
8. BofA agrees that, if there are any Non-Settling Defendant(s), BofA will, as part of
any later settlement by Representative Plaintiffs with any such Non-Settling Defendant(s), provide
principals, officer or directors, to the extent they arise out of the claims in the Action, including but
not limited to, claims for contribution, indemnity, malpractice, negligence or otherwise arising under
federal or state law . The release set forth in the foregoing sentence shall be conditioned on
Representative Plaintiffs obtaining comparable releases for BofA from any other Defendants i n
Newby who settle with Representative Plaintiffs,
9. All Persons, including without limitation the other Defendants in the Actions and any
other persons or entities later named as Defendants in the Actions, are hereby permanently enjoined, barred and restrained from commencing, prosecuting or asserting any action, for contribution, indemnity or otherwise, against BofA seeking, as damages or otherwise, the recovery of all or any part of any liability or any settlement which they pay or are obligated to pay or agree to pay to the Settlement Class, as a result of such persons' participation in any acts, facts, statements or omissions that were or could have been alleged in the Actions (whether under the Securities Act of 1933 or the Securities Exchange Act of 1934, state law, foreign law or otherwise) as claims, . cross-claims, counterclaims, third-party claims or otherwise, whether asserted in the Actions in this Court or i n any federal or state court or any other court, arbitration proceeding, administrative agency or other forum in the United States or elsewhere.
10. Upon the Effective Date, all obligations of BofA to the Representative Plaintiffs and
the Settlement Class Members arising out of, based upon, or otherwise related to the transactions and occurrences that were alleged, or could have been alleged, on behalf of the Representative Plaintiffs and the Settlement Class Members in the complaints in the Actions shall be fully, finally, and forever discharged, and all Persons shall be permanently barred and enjoined from instituting,
prosecuting, pursuing or litigating in any manner (regardless of whether such Persons purport to act
individually, representatively, or in any other capacity and regardless of whether such Persons
other claims) any such obligations .
11 . Any Person so barred and enjoined shall be entitled to appropriate judgment reductio n
in accordance with any applicable statutory or common law rule. In addition, nothing in this Orde r
shall preclude any Person so barred and enjoined from developing evidence in discovery o r
presenting evidence or arguments at trial in support of such a reduction .
12. Upon the Effective Date, BofA shall be deemed to have, and by operation of thi s
Order of Final Judgment and Dismissal shall have, fully, finally and forever released, relinquished
and discharged each and all of the Settlement Class Members and counsel to the Representative
Plaintiffs from all claims (including Unknown Claims), arising out of, in any way relating to, or in
connection with the institution, prosecution, assertion, settlement or resolution of the Actions or th e
Released Claims except to enforce the releases and other terms and conditions contained in th e
Stipulation .
13 . This Order of Final Judgment and Dismissal is a final judgment in the Actions as to
all claims among BofA, on the one hand, and the Representative Plaintiffs and all Settlement Clas s
Members, on the other. This Court finds, for purposes of Rule 54(b) of the Federal Rules of Civi l
Procedure, that there is no just reason for delay and expressly directs entry ofjudgment as set forth
herein.
14. Without affecting the finality of this Order of Final Judgment and Dismissal in an y
way, this Court retains continuing jurisdiction over (a) implementation of the Settlement ; (b) any
award or distribution of the Gross Settlement Fund, including interest earned thereon; and (c) all
other proceedings related to the implementation and enforcement of the terms of the Stipulation
and/or the Settlement .
15 . Pursuant to §21D(c)(1) of the Private Securities Litigation Reform Act of 1995, th e
Court hereby finds that each Settling Party, and his, her, or its respective counsel, has complied with
each requirement of Rule 11(b) of the Federal Rules of Civil Procedure as to all complaints,
responsive pleadings, and dispositive motions related to the Released Claims, and that insofar as
they relate to the Released Claims, the Actions were not brought for any improper purpose and are
not unwarranted by existing law or legally frivolous .
16. In the event that the Effective Date does not occur, this Order of Final Judgment and
Dismissal shall be rendered null and void and shall be vacated nuncpro tune, and the provisions o f
¶7.5 of the Stipulation shall apply .
17 . Without further order of the Court, the parties may agree to reasonable extensions o f
time to carry out any of the provisions of the Stipulation .
IT IS SO ORDERED .
DATED. October 28 2005, . _______________________________
UNITED STATES DISTRICT JUDGE
-5-
Welcome to the REFCO website
small company to a world wide renowned supplier of Refrigeration Service ...
Ex-Refco directors forfeit $39 mln tied to fraud | Reuters
By Jonathan Stempel NEW YORK, May 7 (Reuters) - Two former ...
Ex-Refco directors forfeit $39 mln tied to fraud
* Money to go to Refco victims
By Jonathan Stempel
NEW YORK, May 7 (Reuters) - Two former Refco Inc directors have agreed to forfeit $39 million that prosecutors said is traceable to fraud at the now defunct futures and commodities broker.
Edwin Cox, 63, and William Graham, 61, agreed to the forfeiture to resolve a civil forfeiture complaint filed on Thursday, U.S. Attorney Preet Bharara in New York said.
Cox, a resident of Athens, Texas, was a Refco director from Sept. 1998 to June 1999, while Graham, a Dallas resident, was on the board from April to August 1999, prosecutors said.
Prosecutors said the $39 million was awarded to resolve a dispute over how to distribute the proceeds of a 2004 leveraged buyout in which private equity firm Thomas H Lee Partners LP [THL.UL] paid $1.9 billion for a majority stake in Refco.
Steven Kobre, a lawyer representing Cox, declined to comment. Marc Weinstein, who represents Graham, did not immediately return a call seeking comment.
Refco and 23 affiliates filed for Chapter 11 protection from creditors in October 2005.
The filing came two months after the New York-based brokerage raised $583 million in an initial public offering and one week after it revealed that onetime Chief Executive Phillip Bennett hid $430 million of debt.
While Refco's fraud did not surface until that October, prosecutors believe it began as early as the mid-1990s. The bankruptcy remains one of the largest in U.S. history.
Several onetime Refco executives entered guilty pleas or were convicted for their participation in the company's activities.
Bennett pleaded guilty to securities fraud and other charges and is serving a 16-year prison sentence. Former President Tone Grant, the only top Refco executive to stand trial, is serving a 10-year prison term.
Bharara said the proceeds of Cox's and Graham's forfeiture will go to victims of Refco's fraud. Neither Cox nor Graham admitted wrongdoing in agreeing to settle.
The civil forfeiture case is U.S. v. $35,100,000 in United States Currency et al, U.S. District Court, Southern District of New York, No. 10-03743. (Reporting by Jonathan Stempel; editing by Andre Grenon)
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News for refco
Town HallAustrian bank fraud case to see retrial - 4 days ago
BAWAG, or Bank Fuer Arbeit und Wirtschaft AG, loaned former Refco CEO Phillip Bennett several hundred million dollars (euros) just before the brokerage ...Washington Post - 159 related articles »
http://www.washingtonpost.com/wp-dyn/content/article/2010/12/23/AR2010122301411.html
Austrian bank fraud case to see retrial
Thursday, December 23, 2010; 7:02 AM
VIENNA -- Austria's Supreme Court has ordered the retrial of seven people convicted in a major Austrian bank fraud case linked to the 2005 collapse of New York-based commodities brokerage Refco Inc.
In July 2008, Judge Claudia Bandion-Ortner, now justice minister, found nine defendants responsible for euro1.4 billion ($1.8 billion) in losses at BAWAG, one of the Alpine republic's main banks.
Thursday's decision applies, among others, to several former BAWAG executives and investment banker Wolfgang Floettl.
BAWAG, or Bank Fuer Arbeit und Wirtschaft AG, loaned former Refco CEO Phillip Bennett several hundred million dollars (euros) just before the brokerage filed for bankruptcy protection in October 2005.
Refco - Wikipedia, the free encyclopedia
broker of commodities and futures contracts. It was founded in 1969 as "Ray E.
...
Welcome to the REFCO website
small company to a world wide renowned supplier of Refrigeration Service ...
http://en.wikipedia.org/wiki/Refco
Refco was a New York-based financial services company, primarily known as a broker of commodities and futures contracts. It was founded in 1969 as "Ray E. Friedman and Co." Prior to its collapse in October, 2005, the firm had over $4 billion in approximately 200,000 customer accounts, and it was the largest broker on the Chicago Mercantile Exchange. The firm's balance sheet at the time of the collapse showed about $75 billion in assets and a roughly equal amount in liabilities. Though these filings have since been disowned by the company, they are probably roughly accurate in showing the firm's level of leverage.
Refco became a public company on August 11, 2005 with the sale of 26.5 million shares to the public at $22. It closed the day over 25% higher than that, valuing the entire company at about $3.5 billion. Investors had been attracted to Refco's history of profit growth—it had reported 33% average annual gains in earnings over the four years prior to its initial public offering.
Refco, Inc.
| Type | Defunct as of 2005 |
|---|---|
| Industry | Financial services |
| Founded | 1969 |
| Headquarters | New York, New York |
| Key people | Phillip R. Bennett, CEO & Chairman |
Contents |
The Scandal
Refco, Inc. entered crisis on Monday, October 10, 2005, when it announced that its chief executive officer and chairman, Phillip R. Bennett had hidden $430 million in bad debts from the company's auditors and investors, and had agreed to take a leave of absence.
Refco said that through an internal review over the preceding weekend it discovered a receivable owed to the company by an unnamed entity that turned out to be controlled by Mr. Bennett, in the amount of approximately US$430 million. Apparently, Bennett had been buying bad debts from Refco in order to prevent the company from needing to write them off, and was paying for the bad loans with money borrowed by Refco itself. Between 2002 and 2005,[1] he arranged at the end of every quarter for a Refco subsidiary to lend money to a hedge fund called Liberty Corner Capital Strategy, which then lent the money to Refco Group Holdings. Bennett's company then paid the money back to Refco, leaving Liberty as the apparent borrower when financial statements were prepared. It is not yet clear if Liberty knew it was hiding scam transactions; management of the fund has claimed that they believed it was borrowing from one Refco subsidiary and lending to another Refco sub, and not lending to an entity that Mr. Bennett secretly controlled. On October 20, they announced plans to sue Refco.
In April 2006, papers filed by creditors of Refco seemed to show that Bennett had run a similar scam going back at least to 2000, using Bawag P.S.K. Group in the place of Liberty Corner Capital Strategy.[1]
The law requires that such financial connections between corporation and its own top officers be shown as what is known as a related party transaction in various financial statements. As a result, Refco said, "its financial statements, as of, and for the periods ended, Feb. 28, 2002, Feb. 28, 2003, Feb. 28, 2004, Feb. 28, 2005, and May 31, 2005, taken as a whole, for each of Refco Inc., Refco Group Ltd. LLC and Refco Finance Inc. should no longer be relied upon."
This announcement triggered a number of investigations, and on October 12 Bennett was arrested and charged with one count of securities fraud for using U.S. mail, interstate commerce, and securities exchanges to lie to investors. His lawyer said that Bennett planned to fight the charges. On October 19, trading of Refco's shares was halted on the New York Stock Exchange, which later delisted the company. Before the halt, Refco shares were trading for more than $28 per share, and as of October 19, they had dropped (on the pink sheets) to $0.80 per share.
Refco, Inc. filed for chapter 11 for a number of its businesses, to seek protection from its creditors on Monday, October 17, 2005. At the time, it declared assets of around $49 billion, which would have made it the fourth largest bankruptcy filing in American history. However, the company subsequently submitted a revised document, claiming it had $16.5 billion in assets and $16.8 billion in liabilities. Refco also announced a tentative agreement to sell its regulated futures and commodities business, which is not covered by the bankruptcy filing, to a group led by J.C. Flowers & Co. for about $768 million. However, other bidders soon emerged, including Interactive Brokers and Dubai Investments, the investment division of the emirate of Dubai. These offers were for a time rebuffed, as the Flowers-led group had a right to a break-up fee if Refco had sold this business to anyone else. Carlos Abadi, involved in the Dubai bid, said that the Dubai-led group offered $1 billion for all of Refco and was rejected. [2] "However, the bankruptcy judge in charge of the case deemed the break-up fee unjustified, and the Flowers group withdrew its bid. The business was instead sold to Man Financial on November 10. Man Financial kept the majority of the Refco futures businesses after selling Refco Overseas Ltd (Refco's European operation) to Marathon Asset Management who then relaunched the business as Marex Financial.
Though of much smaller size, the regulatory impact of the scandal will be larger than for probably any other corporate failure except for Enron. Refco had sold shares to the public in a public offering only two months before revealing the apparent fraud. Their auditors, Grant Thornton (lead partner Mark Ramler), and the investment banks that handled the IPO, Credit Suisse First Boston, Goldman Sachs, and Bank of America Corp., all supposedly completed due diligence on the company, and all missed the CEO's hiding $430 million in bad debts. Their largest private investor was Thomas H. Lee Partners, a highly regarded buyout fund, and the reputation of its managers has been similarly sullied.
On October 27, 2005, shareholders of Refco filed class action lawsuits against Refco, Thomas H. Lee Partners, Grant Thornton, Credit Suisse First Boston, and Goldman Sachs. On March 2, 2006, a lawyer representing Refco's unsecured creditors began steps to sue the IPO underwriters for aiding and abetting the fraud, or for breach of fiduciary duty. In April 2006, creditors sued Bawag P.S.K. Group for more than $1.3 billion.[1]
In April 2006, Christie's auction house sold Refco's prized art collection, which included photographs by Charles Ray and Andy Warhol.
On February 15, 2008, Phillip R. Bennett pleaded guilty to 20 charges of securities fraud and other criminal charges. On July 3, 2008, Bennett was sentenced to 16 years in federal prison.
The $430 million in bad debts
Though no detailed report on Bennett's transactions has yet been made public, anonymous sources cited by the Wall Street Journal and other publications have stated that the debt stemmed from losses in as many as 10 customer trading accounts, including that of Ross Capital, and the widely reported October 27, 1997, trading losses of hedge fund manager Victor Niederhoffer. Niederhoffer said on his website in response to these news articles that Refco wanted to take over the assets in his accounts and assume all the liabilities in order to meet capital requirements, and that he and Refco signed a formal agreement to that effect on Oct. 29, 1997, in the presence of two major law firms and under the close scrutiny of regulators. "There were no debts, loans, or any other financial obligations left open between us," Niederhoffer said. "Refco received considerable assets from us as part of our agreement. I don't know how much money Refco received for these assets, or how it accounted for the transaction, or whether it ended up with a profit or loss. If Refco did suffer a loss, I am confident that it was quite minimal relative to the $460 million receivable said to have been a key link in the firm’s debacle, or to the actual sums that the principals and key players of the firm took out many years later." The story in the Journal implies that Refco settled Niederhoffer's debt for positions that were worth less than he owed them, or perhaps that they accrued trading losses unwinding those positions.
Ross Capital has also been named by the Wall Street Journal's anonymous sources as one of the firms with losses that somehow led to Bennett's $430 million debt. Ross Capital is run by Wolfgang Flottl, whose father used to run Bawag P.S.K. Group, an Austrian bank that lent Bennett the money to repay Refco. In 1999, Bawag purchased 10% of Refco in a private transaction, and had an outstanding loan of 75 million euros to Refco at the time the firm collapsed. On October 5, before news of the hidden loan was made public, Phillip Bennett applied for a 350 million euro loan, to be collateralized with his shares in Refco. The loan was granted on October 10, and Bennett used it to pay off the hidden $430 million. The Refco stock that collateralized the loan is now worthless, and on November 16, Bawag joined the line of people suing Refco, demanding 350 million euros plus punitive damages in compensation for the company's failure to disclose information that would have discouraged Bawag from lending the money to Bennett. The Austrian National Bank and Financial Market Authority were investigating Bawag's involvement with Refco.
The apparent fraud was caught by Peter James, Refco's newly hired controller. Apparently, in the fiscal quarter before the story broke, Bennett failed to execute his temporary Liberty Strategies-hidden repayment of debt. This left the position on the books for James to find. It is unclear why the firm's Chief Financial Officer had not spotted the loan, but the firm's previous CFO, Robert Trosten, left Refco in October, 2004 with a $45 million payout that was not disclosed in the firm's IPO prospectus. He was under investigation by regulators who suspected he may have known something about Bennett's malfeasance. Robert C.Trosten pleaded guilty to five charges in 2008. Tone N. Grant, a Refco official, was convicted of 5 charges on April 17, 2008. He was sentenced to 10 years on August 8, 2008.
$525 million in Fake Bonds
On March 15, 2006, information leaked by the U.S. prosecutor's office revealed that Refco held offshore accounts holding as much as $525 million in fake bonds. The company held the "securities" for Bawag P.S.K., the Austrian bank with which Refco had a close relationship, discussed in part above, and for a non-U.S. hedge fund called Liquid Opportunity. Apparently, Bawag and Liquid Opportunity jointly owned six Anguilla companies, which in turn owned the fake bonds. Refco's attorneys have declined to comment.[3]
Apparently, the six Anguilla companies initially responded to Refco's bankruptcy filing as a normal customer would have, filing as creditors with a combined claim of $543 million. However, they failed to follow up with any legal filings.
This is presumably good news for other Refco customers, in that $543 million in potential claims on the firm's assets have disappeared. The likelihood that the fake bonds represent some kind of ongoing criminal activity does not bode well for the principals of Refco, BAWAG, or Liquid Opportunity.
Older Scandals
Refco has not enjoyed a clean reputation with regulators. The Commodity Futures Trading Commission and the National Futures Association took action against Refco and its units more than 100 times since the firm's founding. According to the Wall Street Journal, it was "among the most cited brokers in the business, according to data provided by the NFA."
The 1978 "cattle futures" trading scandal was played out in Refco accounts, the period during which the Hillary Rodham cattle futures controversy originated.
In 2001, the NFA ordered Refco to pay $43 million to 13 investors after their Refco broker used bogus order tickets to clear trades.
On May 16, 2005, the company disclosed that it had received a "Wells Notice," indicating it might face charges related to improper short selling at its Refco Securities unit and other matters. The company had been implicated in naked short sales on the stock of a company called Sedona Corp., disclosed that it was negotiating with the SEC and hoped to reach a settlement that would likely include an injunction against future violations and "payment of a substantial civil penalty." Refco put $5 million in reserve in anticipation of the settlement. The company has also been sued by Sedona in connection with this trading.
References
External links
Further reading
- Flaherty, Michael (October 18, 2005). "Refco to Sell Futures Unit, Files for Bankruptcy". Reuters. http://today.reuters.com/news/newsArticleSearch.aspx?storyID=203566+18-Oct-2005+RTRS&srch=refco.
- "Lure of Refco on Rocks," New York Times, October 18, 2005
- "Creditors Look For Their Share Of Refco Assets" Wall Street Journal, October 20, 2005
- "'Naked Shorting' Case Lurks in Refco's Past" Wall Street Journal, October 20, 2005
- "Thomas Lee May Delay Fund After Refco, Person Says," Bloomberg News, October 20, 2005
- "Bawag Says It Tried to Halt Refco Loans Hours After Transfer," Bloomberg News, October 20, 2005
- "Bawag Scrutiny Mounts, Putting CEO to the Test," Wall Street Journal, October 21, 2005
- "Refco's Debts Started With Several Clients," Wall Street Journal, October 21, 2005
- "Bennett's Refco Scheme Exposed by Late-Night Hunch: 'It Hit Me'", Bloomberg News, October 27, 2005
White Collar Crime Prof Blog: Refco Fraud May Go Deeper
more rings than a 100 year-old oak tree it seems. ...
lawprofessors.typepad.com/whitecollar... - Cached - Similar
http://lawprofessors.typepad.com/whitecollarcrime_blog/2006/03/refco_fraud_may.html
« Bear Stearns Settles Market Timing and Late Trading Case | Main | White Collar Sentences Are Up »
March 17, 2006
Refco Fraud May Go Deeper
Futures and commodities dealer Refco Inc. collapsed in a little over a week after it was revealed in October 2005 that its CEO, Philip Bennett, was involved in certain debt transactions carried on the company's books as loans. Bennett repaid over $400 million with funds from a loan made by Austrian bank Bawag P.S.K. (Bank fuer Arbeit und Wirtschaft), but the improper disclosure and suspicions about the company caused it to fall into bankruptcy just a week after the disclosure of problems on its balance sheet. Bennett was arrested before leaving for a European trip, and remains under home confinement while he awaits trial on securities fraud charges. A Bloomberg.com article (here) discusses a potentially greater fraud at Refco as over $500 million in bonds seem to have disappeared since the bankruptcy filing, and the registration numbers for the bonds do not correspond to existing debt securities. To make matters even more suspicious, the bonds were held through Refco's Bermuda subsidiary, and the purported owners of the bonds are Bawag -- which bailed out Bennett -- and an off-shore hedge fund, Liquid Opportunity. They owned the through six Anguilla companies that were incorporated in 2004, a year before Refco went public with its stock offering.
Does any of this sound like a budding fraud case? In the Parmalat collapse, a faked fax for an account at an off-shore bank was the trigger for that company's demise, and the use of bank secrecy havens like Anguilla certainly does not bode well for getting to the bottom of transactions, at least without a cooperating witness. Deep Throat was certainly right when he said to follow the money, the only problem being the brick walls that exist when off-shore accounts are used and transactions involve multiple layers of corporate entities. Refco had been a public company for a bit less than three months before it dove into bankruptcy, which likely means some underwriters, investment bankers, and accountants (plus a couple lawyers) will be watching these developments very closely because of their potential liability to investors under the Securities Act of 1933. (ph)
March 17, 2006 in Fraud, Investigations, Securities | Permalink
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D & B ENRON
| | |||||||||
| Type | Company Name | Address | |||||||
| Headquarters | ENRON TRANSPORTATION SERVICES COMPANY | 1400 SMITH ST, HOUSTON, TX | | ||||||
| Headquarters | ENRON NORTH AMERICA CORP | 1400 SMITH ST STE 501, HOUSTON, TX | | ||||||
| Headquarters | ENRON ENERGY SERVICES INVESTMENTS, LLC | 1221 LAMAR ST, HOUSTON, TX | | ||||||
| Headquarters | ENRON EQUITY CORP | 1400 SMITH ST, HOUSTON, TX | | ||||||
| Headquarters | ENRON GLOBAL POWER & PIPELINES L L C | 1400 SMITH ST, HOUSTON, TX | | ||||||
| ENRON CORP | 701 BRAZOS STE C104, AUSTIN, TX | | |||||||
| ENRON | 61 QUIET CV, CONCORD, NC | | |||||||
| ENRON CORP | 18318 GLENN HAVEN ESTATES DR, SPRING, TX | | |||||||
| ENRON | 4 NORTHRIDGE RD, MANSFIELD, MA | | |||||||
| ENRON CORP | 9154 UP RIVER RD, CORPUS CHRISTI, TX | | |||||||
| ENRON CORP | 2130 HIGHWAY 83, LIBERAL, KS | | |||||||
| ENRON CORP | 8 MILES SOUTH & 4 MILES EAST, PECOS, TX | | |||||||
| ENRON CORP | 1801 CALIFORNIA ST STE 3400, DENVER, CO | | |||||||
| ENRON CORP | 3025 GIBSON ST, BAKERSFIELD, CA | | |||||||
| ENRON CORP. | 1221 LAMAR ST STE 1600, HOUSTON, TX | | |||||||
| ENRON WIND LAKE BENTON LLC | 1400 SMITH ST STE 501, HOUSTON, TX | | |||||||
| ENRON/DOMINION COGEN CORP | 1400 SMITH ST, HOUSTON, TX | | |||||||
| ENRON GAS MARKETING, INC | 1400 SMITH ST STE 501, HOUSTON, TX | | |||||||
| ENRON INTERNATIONAL PHILIPPINES HOLDINGS LTD | 1400 SMITH ST, HOUSTON, TX | | |||||||
| ENRON COMMUNICATIONS INC | 10475 PARK MEADOWS DR STE 600, LITTLETON, CO | | |||||||
| ENRON GAS LIQUIDS (EUROPE), LTD | 1400 SMITH ST, HOUSTON, TX | | |||||||
| ENRON PROPERTY & SERVICES CORP | 1400 SMITH ST STE 501, HOUSTON, TX | | |||||||
| ENRON COMMUNICATIONS INC | 780 3RD AVE, NEW YORK, NY | | |||||||
| Branch | ENRON NORTH AMERICA CORP | 1101 TYVOLA RD STE 210, CHARLOTTE, NC | | ||||||
| Branch | ENRON NORTH AMERICA CORP | 790 AVENUE A, BUSHTON, KS | | ||||||
| Branch | FLORIDA GAS TRANSMISSION COMPANY, LLC | 2654 E KNIGHTS GRIFFIN RD, PLANT CITY, FL | | ||||||
| Branch | KINDER MORGAN ENERGY PARTNERS, L.P. | 4401 VANDALIA RD, DES MOINES, IA | | ||||||
| Branch | FLORIDA GAS TRANSMISSION COMPANY, LLC | 1544 N COMBEE RD, LAKELAND, FL | | ||||||
| Branch | FLORIDA GAS TRANSMISSION COMPANY, LLC | PISGAH RD, PERRY, FL | | ||||||
| Branch | FLORIDA GAS TRANSMISSION COMPANY, LLC | COUNTY ROAD 73, ROBSTOWN, TX | | ||||||
| Branch | ENRON TRANSPORTATION SERVICES COMPANY | 306 S BOARDMAN AVE, GALLUP, NM | | ||||||
| Branch | ENRON TRANSPORTATION SERVICES COMPANY | 245 N MAYLEN AVE, LECANTO, FL | | ||||||
| Branch | FLORIDA GAS TRANSMISSION COMPANY, LLC | 18169 LEE RD, FRANKLINTON, LA | | ||||||
| Branch | FLORIDA GAS TRANSMISSION COMPANY, LLC | 870 2ND ST N, SAFETY HARBOR, FL | | ||||||
| Branch | ENRON GAS LIQUIDS INC | , HOUSTON, TX | | ||||||
| Branch | ENRON NORTH AMERICA CORP | 12400 OLIVE BLVD, SAINT LOUIS, MO | | ||||||
| Branch | ENRON TRANSPORTATION SERVICES COMPANY | 248 BURROUGHSVILLE RD, MART, TX | | ||||||
| Branch | ENRON ENERGY SERVICES INC | 333 CLAY ST, HOUSTON, TX | | ||||||
| Branch | KINDER MORGAN ENERGY PARTNERS, L.P. | 1690 13TH RD, WASHINGTON, KS | | ||||||
| Branch | ENRON ENERGY MARKETING CORP | 5200 UPPER METRO PL, DUBLIN, OH | | ||||||
| Branch | ENRON NORTH AMERICA CORP. | , PASADENA, CA | | ||||||
| Branch | ENRON ENERGY SERVICES INC | 2921 BAYOU GERIMOND RD, PORT BARRE, LA | | ||||||
|
ENRON CORPORATION |
1400 SMITH ST, HOUSTON, TX | | |||||||
| ENRON CORP | 3626 CYPRESSDALE DR, SPRING, TX | | |||||||
| ENRON CORPORATION | 2814 CREEK BEND DR, FRIENDSWOOD, TX | | |||||||
| ENRON | 2855 KIFER RD, SANTA CLARA, CA | | |||||||
| ENRON CORP INC | 3 RIVERWAY PLAZA SUITE 1975, HOUSTON, TX | | |||||||
| ENRON CORP | 3007 W 10TH, GREAT BEND, KS | | |||||||
| ENRON CORP INC | 303 MECCA ST, LAFAYETTE, LA | | |||||||
| ENRON CORP | 1050 17TH ST STE 1850, DENVER, CO | | |||||||
| ENRON CORP | 2 MI W ON HWY 665, ROBSTOWN, TX | | |||||||
| ENRON CORP INC | 3040 POST OAK BLVD #200, HOUSTON, TX | | |||||||
| ENRON CORP INC | 222 SOUTH 15TH, OMAHA, NE | | |||||||
| ENRON CORP | W WALL ST, MIDLAND, TX | | |||||||
| ENRON CORP | 750 17TH ST NW FL 4, WASHINGTON, DC | | |||||||
| ENRON CORP | 3 ALLEN CENTER, HOUSTON, TX | | |||||||
| ENRON CORP | RT 2 BOX 236, AGUA DULCE, TX | | |||||||
| ENRON CORP | 9304 UZZELL RD, MANVEL, TX | | |||||||
|
ENRON GASBANK INC FN: ENRON GB INC |
, HOUSTON, TX | | |||||||
| ENRON ONSHORE PROCUREMENT COMPANY | 1400 SMITH ST, HOUSTON, TX | | |||||||
| ENRON ENGINEERING & CONSTRUCTION COMPANY | 201 RT 3 FLORIDA GAS RD, WIGGINS, MS | | |||||||
| ENRON HYDROCARBONS MARKETING CORP | 1221 LAMAR ST STE 1600, HOUSTON, TX | | |||||||
| ENRON COMMUNICATIONS, INC | 919 CONGRESS STE 720, AUSTIN, TX | | |||||||
| ENRON BROADBAND SERVICES, INC. | 111 8TH AVE, NEW YORK, NY | | |||||||
| ENRON ENERGY RESOURCES INC | 50 JAFFREY RD STE 123, PETERBOROUGH, NH | | |||||||
| ENRON TRANSPORTATION SERVICES COMPANY | 9546 US HIGHWAY 87, PORT LAVACA, TX | | |||||||
| ENRON BROADBAND SERVICES | N8210 CTH F, IXONIA, WI | | |||||||
| Branch | ENRON CORP | 900 2ND AVE S STE 880, MINNEAPOLIS, MN | | ||||||
| Branch | ENRON CORP | 1600 SMITH ST STE 4300, HOUSTON, TX | | ||||||
| Branch | ENRON CORP | 1650 E FORK ROCK RD, KINGMAN, AZ | | ||||||
| Branch | ENRON CORP. | 1400 SMITH ST, HOUSTON, TX | | ||||||
| Branch | ENRON CORP | S HWY 77, BEATRICE, NE | | ||||||
| Branch | ENRON CORP | , DALLAS, TX | | ||||||
| Branch |
ENRON ENERGY SERVICES, INC | 2503 ROBINHOOD ST STE 200, HOUSTON, TX | | ||||||
| Branch | ENRON ENERGY SERVICES, INC | 13455 NOEL RD, DALLAS, TX | | ||||||
| Branch | ENRON ENERGY SERVICES, INC | 12647 ALCOSTA BLVD STE 400, SAN RAMON, CA | | ||||||
| Branch | ENRON ENERGY SERVICES, INC | 2005 MARKET ST STE 3110, PHILADELPHIA, PA | | ||||||
| Branch | ENRON ENERGY SERVICES, INC | 17630 CHANUTE RD, HOUSTON, TX | | ||||||
| Branch | ENRON ENERGY SERVICES, INC | 2202 STATE RD, LUMBERTON, NC | | ||||||
| Branch | ENRON ENERGY SERVICES, INC | HWY 434, ANGEL FIRE, NM | | ||||||
| Branch | ENRON ENERGY SERVICES, INC | 3100 W BROAD ST, ELIZABETHTOWN, NC | | ||||||
| Branch | ENRON ENERGY SERVICES, INC | 1085 W 3RD ST, CLEVELAND, OH | | ||||||
| Branch | ENRON ENERGY SERVICES, INC | 7505 NW TIFFANY SPRINGS PKWY, KANSAS CITY, MO | | ||||||
| Branch | ENRON ENERGY SERVICES, INC | 727 N SHEPHERD DR, HOUSTON, TX | | ||||||
| Branch | ENRON ENERGY SERVICES, INC | 451 S COUNTRY ESTATES RD, LIBERAL, KS | | ||||||
| Branch | ENRON ENERGY SERVICES, INC | STEVENS COUNTY #1 MEASUREMENT, HUGOTON, KS | | ||||||
| Branch | ENRON ENERGY SERVICES, INC | 4119 GRAND CHENIER HWY, GRAND CHENIER, LA | | ||||||
| Branch | ENRON ENERGY SERVICES, INC | HC 3, PERRYTON, TX | | ||||||
| Branch | ENRON ENERGY SERVICES, INC | 3410 LAFIERRA, RIVERSIDE, CA | | ||||||
| Branch | ENRON ENERGY SERVICES, INC | HWY 281, GEORGE WEST, TX | | ||||||
| Branch | ENRON ENERGY SERVICES, INC | 241 VAN BUREN ST STE 4A, ANOKA, MN | | ||||||
| Branch | ENRON ENERGY SERVICES, INC | 631 S COLORADO ST, LOCKHART, TX | | ||||||
| Branch | ENRON ENERGY SERVICES, INC | 13051 NW 32ND CT, OPA LOCKA, FL | | ||||||
| Branch | ENRON ENERGY SERVICES, INC | 6107 EDENBROOK DR, SUGAR LAND, TX | | ||||||
| Branch | ENRON ENERGY SERVICES, INC | DOLLARHIDE, ANDREWS, TX | | ||||||
| Branch | ENRON ENERGY SERVICES, INC | 10 HOAGLAND DR, BELLE MEAD, NJ | | ||||||
| Branch | ENRON ENERGY SERVICES, INC | E HGWY 79, CARTHAGE, TX | | ||||||
| Branch | ENRON ENERGY SERVICES, INC | E HGWY 44, FREER, TX | | ||||||
| Branch | ENRON ENERGY SERVICES, INC | 1950 N STEMMONS FWY, DALLAS, TX | | ||||||
| Branch | ENRON ENERGY SERVICES, INC | 1400 SMITH ST, HOUSTON, TX | | ||||||
D & B CHENEY; ENRON ; HILL & KNOWLTON ET AL
https://smallbusiness.dnb.com/
D & B CHENEY, RICHARD
CHENEY, RICHARD
FLORIDA CORPORATIONS DIVISION
http://www.sunbiz.org/corinam.html
| Officer/Registered Agent Name List | ||||
| Officer/RA Name | Entity Name | Entity Number | ||
|---|---|---|---|---|
| FENTON PROPERTIES, INC. | 283914 | |||
| ESTATES OF FORT LAUDERDALE PROPERTY OWNERS ASSOCIATION, INC. | 746932 | |||
| THE CYPRESSWOOD FAIRWAY PATIO HOMES HOMEOWNERS' ASSOCIATION, INC. | 755142 | |||
| MICRO DEVICES, INC. | L17799 | |||
| ESTATES OF FORT LAUDERDALE PROPERTY OWNERS ASSOCIATION, INC. | 746932 | |||
| D.J.'S AUTO SALES, INC. | 515434 | |||
| D.J.'S AUTO SALES, INC. | 515434 | |||
| HILL AND KNOWLTON, INC. | 852237 | |||
| BOTANICAL DISCOVERIES INT'L, CO. | P96000081274 | |||
| 283914 |
| Detail by Officer/Registered Agent Name | |||||
| Florida Profit Corporation | |||||
| FENTON PROPERTIES, INC. | |||||
| Filing Information | |||||
| Document Number | 283914 | ||||
| FEI/EIN Number | 591115110 | ||||
| Date Filed | 08/03/1964 | ||||
| State | FL | ||||
| Status | INACTIVE | ||||
| Last Event | VOLUNTARY DISSOLUTION | ||||
| Event Date Filed | 08/25/1986 | ||||
| Event Effective Date | NONE | ||||
| Principal Address | |||||
| P.O. BOX 245 | |||||
| Mailing Address | |||||
| P.O. BOX 245 | |||||
| Registered Agent Name & Address | |||||
| SWEAT, CLAUDE C. | |||||
| Name Changed: 10/18/1985 | |||||
| Address Changed: 10/18/1985 | |||||
| Officer/Director Detail | |||||
| Name & Address | |||||
| Title PD | |||||
| CHENEY, RICHARD | |||||
| Title SD | |||||
| PETERSON, J. HARDIN JR. | |||||
| Annual Reports | |||||
| Report Year | Filed Date | ||||
| 1984 | 02/28/1984 | ||||
| 1985 | 10/18/1985 | ||||
| 1986 | 08/25/1986 | ||||
746932
| Florida Non Profit Corporation | |||||
| ESTATES OF FORT LAUDERDALE PROPERTY OWNERS ASSOCIATION, INC. | |||||
| Filing Information | |||||
| Document Number | 746932 | ||||
| FEI/EIN Number | 591911519 | ||||
| Date Filed | 04/27/1979 | ||||
| State | FL | ||||
| Status | ACTIVE | ||||
| Last Event | AMENDMENT | ||||
| Event Date Filed | 07/29/2005 | ||||
| Event Effective Date | NONE | ||||
| Principal Address | |||||
| 2850 S.W. 54TH STREET | |||||
| Changed 03/20/1980 | |||||
| Mailing Address | |||||
| 2850 S.W. 54TH STREET | |||||
| Changed 03/20/1980 | |||||
| Registered Agent Name & Address | |||||
| CHENEY, RICHARD | |||||
| Name Changed: 02/09/2010 | |||||
| Address Changed: 02/09/2010 | |||||
| Officer/Director Detail | |||||
| Name & Address | |||||
| Title P | |||||
| CHENEY, RICHARD | |||||
| Title VP | |||||
| KLUG, RICHARD | |||||
| Title S | |||||
| SIMPSON, BEVERLY | |||||
| Title T | |||||
| MORGANTI, VICTORIA | |||||
| Title D | |||||
| ENGEL, LEO | |||||
| Title D | |||||
| BRUNO, DIANA | |||||
| Annual Reports | |||||
| Report Year | Filed Date | ||||
| 2009 | 03/05/2009 | ||||
| 2010 | 02/09/2010 | ||||
| 2010 | 05/06/2010 | ||||
755142
| Florida Non Profit Corporation | |||||
| THE CYPRESSWOOD FAIRWAY PATIO HOMES HOMEOWNERS' ASSOCIATION, INC. | |||||
| Filing Information | |||||
| Document Number | 755142 | ||||
| FEI/EIN Number | 592519231 | ||||
| Date Filed | 11/14/1980 | ||||
| State | FL | ||||
| Status | ACTIVE | ||||
| Principal Address | |||||
| 563 ST. ANDREWS RD | |||||
| Changed 02/07/2009 | |||||
| Mailing Address | |||||
| P O BOX 1111 | |||||
| Changed 01/18/1995 | |||||
| Registered Agent Name & Address | |||||
| DUKE, LOU H | |||||
| Name Changed: 02/28/2008 | |||||
| Address Changed: 02/28/2008 | |||||
| Officer/Director Detail | |||||
| Name & Address | |||||
| Title D | |||||
| BYRNES, MARY | |||||
| Title T | |||||
| DUKE, LOU H | |||||
| Title S | |||||
| HALL, DONNA | |||||
| Title P | |||||
| CHENEY, RICHARD | |||||
| Title V | |||||
| ANDERSON, CHARLES | |||||
| Title D | |||||
| ELLIS, ROY | |||||
| Annual Reports | |||||
| Report Year | Filed Date | ||||
| 2008 | 02/28/2008 | ||||
| 2009 | 02/07/2009 | ||||
| 2010 | 03/08/2010 | ||||
| | |||||
| MICRO DEVICES, INC. | |||||
| Filing Information | |||||
| Document Number | L17799 | ||||
| FEI/EIN Number | 592796034 | ||||
| Date Filed | 09/22/1989 | ||||
| State | FL | ||||
| Status | INACTIVE | ||||
| Last Event | ADMIN DISSOLUTION FOR ANNUAL REPORT | ||||
| Event Date Filed | 10/09/1992 | ||||
| Event Effective Date | NONE | ||||
| Principal Address | |||||
| 7725 N ORANGE BLOSSOM TR | |||||
| Changed 09/27/1991 | |||||
| Mailing Address | |||||
| 7725 N ORANGE BLOSSOM TR | |||||
| Changed 09/27/1991 | |||||
| Registered Agent Name & Address | |||||
| C T CORPORATION SYSTEM | |||||
| Registered Agent Resigned: 02/10/1998 | |||||
| Officer/Director Detail | |||||
| Name & Address | |||||
| Title D | |||||
| DRAIME, D.M. | |||||
| Title D | |||||
| BECHTOLD, RICHARD | |||||
| Title D | |||||
| COHEN, AVERY S.* | |||||
| Title D | |||||
| LINEHAN, EARL | |||||
| Title D | |||||
| EPSTEIN, SHELDON J. | |||||
| Title D | |||||
| CHENEY, RICHARD | |||||
| Annual Reports | |||||
| Report Year | Filed Date | ||||
| 1990 | 07/10/1990 | ||||
| 1991 | 09/27/1991 | ||||
-
( See Henco)
| Florida Non Profit Corporation | |||||||
| ESTATES OF FORT LAUDERDALE PROPERTY OWNERS ASSOCIATION, INC. | |||||||
| Filing Information | |||||||
| Document Number | 746932 | ||||||
| FEI/EIN Number | 591911519 | ||||||
| Date Filed | 04/27/1979 | ||||||
| State | FL | ||||||
| Status | ACTIVE | ||||||
| Last Event | AMENDMENT | ||||||
| Event Date Filed | 07/29/2005 | ||||||
| Event Effective Date | NONE | ||||||
| Principal Address | |||||||
| 2850 S.W. 54TH STREET | |||||||
| Changed 03/20/1980 | |||||||
| Mailing Address | |||||||
| 2850 S.W. 54TH STREET | |||||||
| Changed 03/20/1980 | |||||||
| Registered Agent Name & Address | |||||||
| CHENEY, RICHARD | |||||||
| Name Changed: 02/09/2010 | |||||||
| Address Changed: 02/09/2010 | |||||||
| Officer/Director Detail | |||||||
| Name & Address | |||||||
| Title P | |||||||
| CHENEY, RICHARD | |||||||
| Title VP | |||||||
| KLUG, RICHARD | |||||||
| Title S | |||||||
| SIMPSON, BEVERLY | |||||||
| Title T | |||||||
| MORGANTI, VICTORIA | |||||||
| Title D | |||||||
| ENGEL, LEO | |||||||
| Title D | |||||||
| BRUNO, DIANA | |||||||
| Annual Reports | |||||||
| Report Year | Filed Date | ||||||
| 2009 | 03/05/2009 | ||||||
| 2010 | 02/09/2010 | ||||||
| 2010 | 05/06/2010 | ||||||
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| Florida Profit Corporation | |||||
| D.J.'S AUTO SALES, INC. | |||||
| Filing Information | |||||
| Document Number | 515434 | ||||
| FEI/EIN Number | 000000000 | ||||
| Date Filed | 09/29/1976 | ||||
| State | FL | ||||
| Status | INACTIVE | ||||
| Last Event | INVOLUNTARILY DISSOLVED | ||||
| Event Date Filed | 12/05/1979 | ||||
| Event Effective Date | NONE | ||||
| Principal Address | |||||
| 3155 SOUTH MILITARY TRAIL | |||||
| Mailing Address | |||||
| 3155 SOUTH MILITARY TRAIL | |||||
| Registered Agent Name & Address | |||||
| CHENEY, RICHARD A. | |||||
| Officer/Director Detail | |||||
| Name & Address | |||||
| Title D | |||||
| JONES, RUTH | |||||
| Title PD | |||||
| CHENEY, RICHARD A. | |||||
| Annual Reports | |||||
| Report Year | Filed Date | ||||
| 1977 | 02/22/1977 | ||||
| 1978 | 06/08/1978 | ||||
| Foreign Profit Corporation | |||||
| HILL AND KNOWLTON, INC. | |||||
| Filing Information | |||||
| Document Number | 852237 | ||||
| FEI/EIN Number | 133016062 | ||||
| Date Filed | 03/17/1982 | ||||
| State | NY | ||||
| Status | INACTIVE | ||||
| Last Event | WITHDRAWAL | ||||
| Event Date Filed | 03/04/1988 | ||||
| Event Effective Date | NONE | ||||
| Principal Address | |||||
| % DAVIS & GILBERT | |||||
| Changed 03/04/1988 | |||||
| Mailing Address | |||||
| % DAVIS & GILBERT | |||||
| Changed 03/04/1988 | |||||
| Registered Agent Name & Address | |||||
| None | |||||
| Officer/Director Detail | |||||
| Name & Address | |||||
| Title PD | |||||
| DILENSDNNEIDER, ROBERT L | |||||
| Title VD | |||||
| EIDSON, THOMAS | |||||
| Title T | |||||
| RUOTOLO, ROBERT | |||||
| Title D | |||||
| CHENEY, RICHARD E. | |||||
| Annual Reports | |||||
| Report Year | Filed Date | ||||
| 1986 | 03/31/1986 | ||||
| 1987 | 03/12/1987 | ||||
| 1988 | 02/26/1988 | ||||
D&B
HILL AND KNOWLTON, INC.
HILL AND KNOWLTON, INC.
DELAWARE CORPORATIONS DIVISION
HILL & KNOWLTON
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HILL & KNOWLTON ( See H & K)
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Hill & Knowlton - Wikipedia, the free encyclopediaFrom Wikipedia, the free encyclopedia. Jump to: navigation, search. Hill & en.wikipedia.org/wiki/Hill_%26_Knowlton - Cached - Similar Hill & Knowlton - Wikipedia, the free encyclopediaHill & Knowlton is a global public relations company, headquartered in New ... en.wikipedia.org/wiki/Hill_%2526_Know... - Cached - Similar Hill & Knowlton - SourceWatchAug 12, 2009 ... Hill & Knowlton (H&K) is one of the oldest public relations firms in the United www.sourcewatch.org/index.php%3Ftitle... - Cached - Similar Discover - Hill & Knowlton USEffect Sales. Affect Minds. Powerful stand-out ideas that deliver impact is our www.hillandknowlton.us/ - Cached - Similar Hill & Knowlton, Inc.: Private Company Information - BusinessWeekOct 8, 2010 ... Get Hill & Knowlton, Inc. company research & investing information. Find investing.businessweek.com/research/s... - Cached - Similar Hill & Knowlton's Carbon Two-Step | Center for Media and DemocracyIn a media release, the PR firm Hill & Knowlton (H&K) boasts that the Danish www.prwatch.org/node/8680 - Cached - Similar Searches related to: HILL & KNOWLTON | |||||
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Contacts
http://www.hillandknowlton.com/contacts/practice
Consumer MarketingMaryLee Sachs Digital Communications | Corporate and Financial CommunicationsPaul Taaffe Healthcare and Pharmaceuticals |
| Julie Atherton Public Affairs
| Daniel McIntyre Technology |
| Norman Y. Mineta
| Josh Reynolds
|
Hill & Knowlton
http://en.wikipedia.org/wiki/Hill_&_Knowlton
Hill & Knowlton, Inc.
| | |
| Founded | Cleveland, Ohio, U.S. (1927 (1927)) |
|---|---|
| John W. Hill | |
| Headquarters | |
| Number of locations | 79 offices in 44 countries (2010) |
| Area served | Worldwide |
| Key people | |
| Marketing communications | |
Hill & Knowlton is a global public relations company, headquartered in New York City, United States, with 79 offices in 44 countries. Hill & Knowlton was founded in Cleveland, Ohio in 1927 by John W. Hill and is today led by Chairman & CEO, Paul Taaffe. It is owned by the WPP Group.
Contents |
History
Hill, a former reporter and financial columnist, started the firm in Cleveland in 1927; it became Hill & Knowlton when a public relations director for a defunct bank, Donald Knowlton joined shortly thereafter. Hill moved the headquarters to New York in 1934, and managed the firm until 1962.
Notable clients
Notable clients today include Amgen, Deloitte, Dolby, Haier, Hewlett-Packard, Merck, New Zealand, Nord Stream, Procter & Gamble, Qualcomm, SABIC, Statoil, Tata Communications, and Yahoo!.[1]
Controversies
Tobacco industry
In 1953, members of the tobacco industry hired the firm to help counteract then recent scientific findings that suggested cigarette smoking led to cancer. As a result “A Frank Statement” was released to nearly every major newspaper and magazine, which suggested that cigarettes had no verifiable links to cancer.[2] The tobacco industry remained a Hill & Knowlton client until 1968. Text from H&K's smoking release "A Frank Statement to Cigarette Smokers"[3]
Government of Kuwait
In 1990, H&K led over 20 other American PR firms in the "largest foreign-funded campaign ever aimed at manipulating American public opinion", according to the Center for Media and Democracy[4] H&K earned over $10.8 mm for their work, paid by "Citizens for a Free Kuwait", an astroturf organization funded almost entirely by the Kuwaiti government.[4]
One controversial maneuver was the arrangement of the testimony of “Nurse Nayirah” to the Congressional Human Rights Caucus on October 10, 1990. Nayirah falsely testified that she had witnessed Iraqi soldiers killing hundreds of premature babies at the al-Addan hospital in Kuwait City.[5]
Bank of Credit and Commerce International [see the movie The International ]
H&K represented the Bank of Credit and Commerce International (BCCI) following its drug-money laundering indictment. H&K broke no laws and may not have violated any of the standards of the PR industry[6] though its actions raised questions concerning a conflict between H&K as a public relations firm and the public interest, according to the BCCI affair report to the Committee on Foreign Relations of the United States Senate.[7]
Russia's entry into the EU
Further information: Russia in the European energy sector
The company also has pushed for Russia's inclusion in the EU as a result of their engagement with pipeline project Nord Stream, promoting Nord Stream as a vehicle for EU energy diversity. The company has flown members of the European Parliament to Siberia on a private jet for Russian oil giant Rosneft.[8]
Trade Association Membership
Hill & Knowlton Communications is a member of The International Association for Measurement and Evaluation of Communication (AMEC)
References
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^ "PR Week Global Reports". 2009/2010. http://www.prweekglobalreports.co.uk/hill_knowlton.aspx. Retrieved 23 November 2010.
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^ Richard W. Pollay, "Propaganda, Puffing and the Public Interest", Public Relations Review, Volume XVI, Number 3, Fall 1990.
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^ a b Stauber, John; Rampton, Sheldon (1995). "How PR Sold the War in the Persian Gulf". Toxic Sludge Is Good For You: Lies, Damn Lies and the Public Relations Industry. Common Courage Press. ISBN 1567510604. http://www.prwatch.org/books/tsigfy10.html.
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^ "Deception on Capitol Hill" (New York ed.). New York Times. January 15, 1992. http://www.nytimes.com/1992/01/15/opinion/deception-on-capitol-hill.html.
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^ http://www.prsa.org/AboutPRSA/Ethics/ProfessionalStandardsAdvisories/
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^ Russia hones new image among EU elite. Euobserver 09.02.2009
Further reading
-
Miller, Karen S. (1999). The Voice of Business: Hill & Knowlton and Postwar Public Relations. The University of North Carolina Press. ISBN 0807824399. http://books.google.com/books?id=XD3PkYdP9O8C&dq=The+Voice+of+Business:+Hill+%26+Knowlton+and+Postwar+Public+Relations&hl=sv&source=gbs_navlinks_s.
External links
Retrieved from "http://en.wikipedia.org/wiki/Hill_%26_Knowlton"
BCCI affair report to the Committee on Foreign Relations of the United States Senate
The BCCI Affair
The BCCI Affair. A Report to the Committee on Foreign Relations United States
Senate by. Senator John Kerry and Senator Hank Brown December 1992 ...
www.fas.org/irp/congress/1992_rpt/bcci/ - Cached - Similar
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Open Resource [pdf] - The BCCI Affair
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Jul 15, 2007 ... Throughout 1946 tension between the United States and the Soviet Union grew. ...
The BCCI Affair, A Report to the Committee on Foreign Relations, 102d Congress
2d Session Senate, December 1992. ...
http://www.fas.org/irp/congress/1992_rpt/index.html
FAS Note: This December 1992 document is the penultimate draft of the Senate Foreign Relations Committee report on the BCCI Affair. After it was released by the Committee, Sen. Hank Brown, reportedly acting at the behest of Henry Kissinger, pressed for the deletion of a few passages, particularly in Chapter 20 on "BCCI and Kissinger Associates." As a result, the final hardcopy version of the report, as published by the Government Printing Office, differs slightly from the Committee's softcopy version presented below.--Steven Aftergood
The BCCI Affair
A Report to the Committee on Foreign Relations
United States Senate
by
Senator John Kerry and Senator Hank Brown
December 1992
102d Congress 2d Session Senate Print 102-140
-
EXECUTIVE SUMMARY
-
Introduction and Summary of Investigation
-
The Origin and Early Years of BCCI
-
BCCI's Criminality
-
BCCI's Relationship with Foreign Governments, Central Banks, and International Organizations
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BCCI in the United States - Initial Entry and FGB and NBG Takeovers
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BCCI in the United States - Part Two: Acquisition, Consolidation, and Consequences
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BCCI and Law Enforcement - The Justice Deparment and the US Customs Service
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BCCI and Law Enforcement - District Attorney of New York
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BCCI and Its Accountants
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BCCI, The CIA and Foreign Intelligence
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The Regulators
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Clark Clifford and Robert Altman
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Abu Dhabi: BCCI's Founding and Majority Stockholders
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Mohammed Hammoud: BCCI's Flexible Frontman
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BCCI And Georgia Politicians
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BCCI's Lawyers and Lobbyists
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Hill and Knowlton and BCCI's PR Campaign
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Ed Rogers and Kamal Adham
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BCCI and Kissinger Associates
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Capcom: A Case Study of Money Laundering
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Legislative and Policy Recommendations
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Appendix - Matters For Further Investigation, Witnesses and Writs
1992 Congressional Reports
Legislation
Other Reports
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The BCCI Affair A Report to the Committee on Foreign Relations United States Senate by Senator John Kerry and Senator Hank Brown December 1992 102d Congress 2d Session Senate Print 102-140
-
Tehran, Baghdad & Damascus: The New Axis Pact - TASK FORCE ON TERRORISM & UNCONVENTIONAL WARFARE, HOUSE REPUBLICAN RESEARCH COMMITTEE, U.S. HOUSE OF REPRESENTATIVES, August 10, 1992
.18 Hill and Knowlton and BCCI's PR Campaign [ see red highlighted above]
HILL AND KNOWLTON AND BCCI'S PR CAMPAIGN
Introduction
Two days following its indictment in Tampa in October, 1988 as a result of the Operation C-Chase sting, BCCI did what many businesses in trouble do under such circumstances -- it hired a public relations firm to help it reduce the bad publicity surrounding the indictment. The firm selected by BCCI was, consistent with BCCI's usual strategy, unusually well-connected politically: Hill and Knowlton, home to Republican Robert Gray and Democrat Frank Mankiewicz, and generally considered the most politically prominent public relations firm in Washington.(1) During the following two years, Hill and Knowlton provided various services to BCCI and to its secretly-held affiliate, First American.(2)
On August 1, 1991, former Customs Service Commissioner William von Raab, in testimony before the Subcommittee, criticized the public relations firm, implicating its activities as a factor in BCCI's success in staying open following its indictment, and suggesting that the January, 1990 plea agreement between BCCI and the U.S. Attorney in Tampa was "a tribute to the influence team that was marching up and down the Eastern seaboard helping BCCI keep its neck off the block."(3)
In response to the Von Raab testimony, Hill and Knowlton's Vice Chairman, Frank Mankiewicz, immediately issued the following statement on the PR Newswire, which is set forth in full:
Mr. Von Raab's testimony as to Hill and Knowlton is incredibly irresponsible and totally false. Neither I, nor Robert Gray, nor anyone else from Hill and Knowlton ever contacted, on behalf of BCCI, anyone in the Department of Justice or anywhere else in the Executive Branch, or for that matter, on Capitol Hill.(4)
The import of Hill and Knowlton's release was that whatever it did for BCCI, its work had not involved lobbying.
But Mankiewicz's strong statements concerning what Hill and Knowlton did not do for BCCI failed to explain exactly what Hill and Knowlton did do.
In fact, Hill and Knowlton had represented BCCI at a critical time in its history, following the Tampa drug-money laundering indictment.(5) Moreover, according to statements made by former Hill and Knowlton partners to the press, Hill and Knowlton partners did know BCCI was "sleazy," and at least one partner did leave the firm in part as a result of disagreements over the BCCI account.(6)
Moreover, Hill and Knowlton did have contact with Capitol Hill on behalf of First American, Clark Clifford and Robert Altman, on BCCI related matters, in the period when BCCI still secretly-held First American, and after BCCI's ownership of First American was a matter of public record and established fact.(7)
Finally, Hill and Knowlton did have contact with at least one Congressional staffer, Michael Pillsbury, on behalf of BCCI itself, in January, 1990. At that time, Senate staffer Pillsbury wrote Karna Small at Hill and Knowlton, soliciting information from Hill and Knowlton concerning what it was doing for BCCI, and offering to be of assistance to BCCI in its public relations efforts.
Small's involvement provides further evidence of the fact that Hill and Knowlton assigned politically-connected staff to the BCCI account. Small's previous work had included being assistant press secretary to James Brady under President Reagan, press spokesperson for National Security Advisor Robert McFarlane, and an assistant to the National Security Counsel during the period in which McFarlane and Admiral John Poindexter were in charge of the NSC.(8)
The record before the Subcommittee suggests that the contact between Small at Hill and Knowlton and Capitol Hill was initiated by Pillsbury, rather than Small or Hill and Knowlton. Hence, Mankiewicz's statement was technically correct, if incomplete, on this point.(9)
Hill and Knowlton's activities on behalf of BCCI, First American, Clifford and Altman resulted in Hill and Knowlton making statements that in the end proved to be materially misleading, and attacking individuals who were making accurate, but damaging statements about their clients. While there is no evidence that any Hill and Knowlton partner knew that the information it was disseminating was false, BCCI's use of Hill and Knowlton raises questions about the role of public relations firms in our political system.
When a public relations firm disseminates information, does it have any independent responsibility to the public to make sure that the information disseminated is accurate?
Are there other issues of public policy at stake when a public relations firm that is politically well-connected, on behalf of a client who has been indicted for illegal acts, disseminates materials attacking and discrediting people who are making accurate statements? Is corrective industry or legislative action warranted?
Findings
** Hill and Knowlton partners knew of BCCI's reputation as a "sleazy" bank at the time it accepted the account in October, 1988. Some of this information came from then Commissioner of Customs William von Raab, in response to questions from a friend who was a partner at Hill and Knowlton.
** Hill and Knowlton made contacts with Capitol Hill on behalf of First American, and BCCI's lawyers, Clark Clifford and Robert Altman, on issues pertaining to BCCI. Materials prepared in part by Hill and Knowlton and provided to Capitol Hill were provided to federal bank regulators in the spring of 1990 in an effort to discourage those regulators from crediting allegations in the media that BCCI secretly owned First American.
** In 1988 and 1989, Hill and Knowlton assisted BCCI with an aggressive public relations campaign designed to demonstrate that BCCI was not a criminal enterprise, and to put the best face possible on the Tampa drug money laundering indictments. In so doing, it disseminated materials discrediting persons and publications whose statements were later proved accurate about BCCI's criminality.
** Important information provided by Hill and Knowlton to Capitol Hill and provided by First American to regulators concerning the relationship between BCCI and First American in April, 1990 proved to be incorrect. The misleading material represented the position of BCCI, First American, Clifford and Altman concerning the relationship, and was contrary to facts known by BCCI, Clifford and Altman. There is no evidence that Hill and Knowlton partners knew the information to be inaccurate, or reason to believe that their clients' account was correct.
Retention and Initial Services to BCCI of Hill and Knowlton
On October 10, 1988, BCCI was indicted in Tampa on drug money laundering, sparking an immediate need by BCCI to respond by every means possible. As Abdur Sakhia, one of BCCI's senior officers in the United States, recommended Hill and Knowlton.
I started the Hill and Knowlton connection. The day we were indicted we were inundated by everyone. I said we have to tell our side of the story. I am not capable of telling it. You need to have a PR firm to handle this. To me, BCCI's problems here were like Johnson and Johnson's Tylenol crisis, or the indictment of Drexel for insider trading.(10)
Hill and Knowlton had been purchased by a London advertising and public relations conglomerate, the WPP group and now had offices in London. A British BCCI director, John Hilbery, who lived in London, had contacts there, and BCCI's main offices in London hired the firm, at a rate of $50,000 per month.
At the outset of the retention of Hill and Knowlton by BCCI, some Hill and Knowlton partners in Washington expressed concern about the account.
As former Commissioner Von Raab testified:
I was in my office when a friend of mine from Hill & Knowlton came to me and he said, Willie, he said, BCCI wants to hire Hill & Knowlton and they want me to work on it.
And he said, what should I do? And I said, don't work on it, it is a sleazy operation. Well, the result was, Bob Gray and Frank Mankiewicz worked on it. My friend left Hill & Knowlton.(11)
Before the month of October was over, Hill and Knowlton had deployed a team of six of its public relations professionals in New York, Tampa, and Washington, D.C., as well as 16 additional Hill and Knowlton staff in ten other countries. The firm's initial work included such standard public relations tasks as handling BCCI's press strategy, developing various BCCI officials as press spokesmen, creating a public relations history of BCCI and a public relations position paper to be used to rebut the Florida indictments, and developing a recommended advertising campaign for BCCI in major newspapers around the world.(12)
Hill and Knowlton documents found by the Subcommittee at BCCI's document repository in Florida describe this work in some detail.
A document evidently generated by Hill and Knowlton in London in October, 1988, entitled, "BCCI Worldwide Action Program," carried recommendations for generating positive press for BCCI through interviews between BCCI officials trained by Hill and Knowlton on what to say with influential journalists such as Lou Dobbs at CNN, Louis Rukeyser at PBS, and James Stewart of the Wall Street Journal.
A second Hill and Knowlton document dated October 27, 1988, described as "Background on the Tampa Indictments And BCC Position on Compliance," described the approach to be taken by BCCI officers in these interviews:
Management of BCCI was surprised and shocked to learn in news reports that the bank and nine of its employees had been indicted in Tampa, Florida on charges of laundering drug money. The bank had no warning that it or any of its people were under investigation, nor is its management aware that any employee anywhere had violated long-standing bank policies to do business in a manner fully consistent with the laws and regulations of every jurisdiction in which it operates.
The specific facts of the charges are not known to BCCI at this time; the bank has, however, reaffirmed its commitment to legal integrity and pledged to cooperate with all legal authorities in the resolution of these troubling developments. BCC has taken the further step of launching an extensive internal review under the direction of a special committee of outside directors to review the allegations.(13)
Senior BCCI officials to whom the document was being distributed knew at the time that many of these statements were inaccurate. Even mid-level BCCI officials knew that some of these statements were inaccurate. For example, according to BCCI officers such as Amjad Awan and Akbar Bilgrami, both convicted of money laundering, BCCI had never, even on paper, created a package of "long-standing bank policies" against committing any kind of criminal act, let again directed against laundering money.(14)
Creating an anti money-laundering policy after the fact was one of the urgent tasks management was about to engage in as part of BCCI's damage control operation. BCCI official Akbar Bilgrami was in this period told to write a memorandum concerning a meeting which he had not attended in which BCCI had supposedly reiterated its policies against money laundering with BCCI's banking staff in Miami. According to Bilgrami, he declined the request to write the memorandum for two reasons. First, its substance was misleading. Second, he felt ridiculous trying to write an account of an event at which he was not even present.(15) Bilgrami made clear his understanding that the notion that BCCI had an anti-money laundering policy in place prior to his indictment was absurd.(16)
The backgrounder on BCCI prepared by Hill and Knowlton at the time for use with the press stressed BCCI's total institutional commitment to conservative and ethical practices:
BCC draws upon Eastern traditions of trust, confidentiality, hospitality and cordiality in business dealings. The bank has an unusually egalitarian management structure with many functional, as opposed to ceremonial, titles for managers . . .It stresses conservativism, prudence and liquidity in its deposit taking and lending activities. . . Although it has never publicized the fact, BCC is a major participating in recognized charitable and philanthropic programs around the world . . . The BCC Group as a matter of corporate policy adheres strictly to the rules and regulations of all countries in which it does business . . . Financial transactions of the bank are subject to four levels of review by regional auditors, by central auditors, external auditors (Price Waterhouse is the bank's outside audit firm) and by the auditors of various state banking authorities.(17)
The truth, of course, was at the time the words were written, BCCI's top officials had engaged in massive fraud for over a decade and was billions of dollars in the hole, and had survived, to date, through phony bookkeeping designed to hide practices that were neither conservative nor prudent. The material created by Hill and Knowlton was thus unrelated to the facts, and merely an articulated form of what BCCI wanted the world to believe.
On October 21, 1988, Hill and Knowlton released a press statement on BCCI's behalf stating that "BCCI has never knowingly violated the laws of any country," and "would not countenance any such violation or activity." At that time, BCCI had been cited for regulatory violations in numerous countries around the world, despite its practice -- well-known within BCCI -- of bribing public officials around the world in an effort to limit the number of citations for such violations.(18)
In November and December, 1988, Hill and Knowlton coordinated briefings of BCCI employees on how to handle themselves as press representatives, including "media training" classes, and a seminar by BCCI's lawyers to BCCI employees to discuss the implications of the Tampa indictments for the bank and for unindicted bank officials.
On December 8, 1988, Hill and Knowlton registered with the Justice Department as a foreign agent for BCCI in preparation for engaging in lobbying efforts on behalf of BCCI in Washington.
In December, 1988, the Subcommittee deposed a former BCCI official, Aziz Rehman, who testified under oath that BCCI had engaged in wrongdoing beyond the actions for which BCCI was indicted in Tampa. According to Rehman these included maintaining a "Nassau" branch of BCCI in Miami at a time that the bank did not have an office in Nassau, and which it was using to assist clients in tax evasion. According to Rehman, customers were able to make deposits in the Nassau branch in Miami which earned interest "outside" the United States, were not reported by BCCI to the IRS, and thus permitting the customer to evade paying
taxes. Rehman's statements were later supported by two other BCCI officers, Akbar Bilgrami and Amjad Awan, in statements to the Subcommittee, as well as by BCCI records stored in Miami.
In a press release from Hill and Knowlton in New York, BCCI defended itself by attacking Rehman and calling his charges, which were accurate, wild lies. The December 22, 1988 press release, issued on Hill and Knowlton New York letterhead, with two Hill and Knowlton account executives listed as press contacts stated:
The allegations made about the Bank of Credit and Commerce International S.A. by Mr. Aziz Rehman before hearings of the U.S. Senate Subcommittee on Terrorism, Narcotics and International Communications [sic] in October, 1988 [sic] have absolutely no basis in fact.
Mr. Rehman was fired from BCCI in 1984. Whether this influenced his sworn Senate testimony in any way we do not know. At no time has BCCI operated any "fictitious" branches in the Bahamas or elsewhere. Nor has the Bank chartered aircraft to transport cash illegally.
Mr. Rehman's statements are fantastic and erroneous interpretations of routine and legitimate banking transactions.(19)
The activities described by Rehman were neither routine nor legitimate; his statements neither fantastic nor erroneous. Rehman's statements were even possibly verifiable at the time they were made. Numerous BCCI employees in Miami knew that Rehman was telling the truth, and that BCCI had maintained its Nassau books in Miami at a desk labelled "Nassau" opposite a desk that handled Miami's transactions. As BCCI officials interviewed by the Subcommittee acknowledged, the Nassau account of BCCI was for years nothing more than a separate set of books kept in BCCI's Miami office and labelled "Nassau."(20)
As these officials later told the Subcommittee in confirming Rehman's account, the Nassau branch of BCCI in Miami was used by BCCI clients for the purpose of shielding assets from U.S. taxation. The Nassau branch was established in Miami at a time when BCCI had no operation in Nassau -- even a post office box. Officers at the "Nassau" branch of BCCI sat across the table at BCCI's office in Miami from the "Miami" branch of BCCI in Miami, so that customers of BCCI could "shift" funds from the on-shore branch of BCCI to the off-shore branch. Moreover, since BCCI, as a foreign bank outside of the Federal Deposit Insurance Corporation (FDIC) system, could not accept deposits from U.S. citizens in the United States, its "Nassau" branch was used to allow U.S. citizens to make deposits "offshore."(21)
There is no indication in BCCI records that any independent fact-checking was done by the firm. Apart from blind acceptance of whatever BCCI told them, Hill and Knowlton also had no reason to believe that Rehman's statements were either true or false. The public relations firm did nothing more, and nothing less, then peddle BCCI's position without regard to the damage to the reputation of the person its client hired it to disparage.
Attacking The Press
In May, 1990, Regardie's Magazine published a cover story concerning the relationship between BCCI and First American by financial journalist Larry Gurwin. The story was entitled, "Who Really Owns First American Bank?" It provided detailed information concerning that issue, suggesting that one very possible answer was BCCI. The article also contained a comprehensive and detailed history of BCCI's takeover of Financial General Bankshares, BCCI's previous run-ins with regulators and law enforcement, the role played in First American and in BCCI by Clark Clifford and Robert Altman, and questions concerning BCCI's shareholders. The Gurwin article in Regardie's made available in public significant material concerning these issues not previously known. As a consequence, it has been justifiably credited by many as substantially advancing knowledge of BCCI's activities in the United States, and helping prompt the investigative work that led to the unravelling of BCCI's ownership of First American.
When the Regardie's article appeared, on behalf of "First American," Hill and Knowlton created a "Fact Sheet" on the article which consisted of an attack on the story, the magazine itself, and the reporter who wrote it. The "Fact Sheet" was not released generally to the press, but to specific persons who might have a special interest in whether the article was true -- people like the chairman of the Subcommittee, Senator Kerry, and the Comptroller of the Currency, Robert L. Clarke, each of whom received a seven page fact sheet rebutting the allegations in Regardies in late April, 1990. The "Fact Sheet" was provided to Senator Kerry by Mankiewicz, in his capacity as Vice Chairman of Hill and Knowlton.
The Hill and Knowlton "Fact Sheet" began with the following assessment of the Regardie's article:
The May 1990 issue of Regardie's magazine carries a cover story on First American Bankshares which is full of inaccuracies and outright falsehoods, utilizing a sensationalist approach to yesterday's news. It has been published with the clear intent of denigrating and injuring the company, its officers, and directors, and its shareholders. With glaring bias and distortion, Regardie's fails to report fairly the story of First American. . .(22)
According to the Hill and Knowlton release, the Regardie's article consisted of a:
rehash of stale allegations and charges . . . rejected by the Federal Reserve and other regulators . . . seeks to prove First American may somehow be controlled by the Bank of Credit and Commerce International (BCCI).(23)
Hill and Knowlton then made the following representations of fact concerning the relationship between BCCI and First American, which proved to be untrue:
** BCCI's management is not involved in any respect in the policy or affairs of First American, a point that is easily checked.
** BCCI has never owned any stock in First American.
** First American is not controlled by BCCI in any sense and all dealings between the two institutions (which have actually been quite limited) have been proper and on an arms-length basis.(24)
Again, Hill and Knowlton had no particular knowledge of the true state of affairs. It acted merely as a conduit for the position of its clients. That position, however, was misleading and false.
Hill and Knowlton then made the following representations of fact concerning the use of First American by General Manuel Noriega:
First American has never had any banking relationship of any kind with Manuel Noriega, nor has it ever knowingly handled any funds of Manuel Noriega . . . Nor is there any indication in First American's bank documents [that] any deposit contained funds belonging to Manuel Noriega.(25)
In fact, dozens of documents at First American's offices in Washington showed, quite clearly, the handling of Noriega assets by First American through the bank account maintained by BCCI at First American in Washington. Thus, Hill and Knowlton's client, First American, or its officers, were again providing untrue information to the PR firm on this point, which the firm in turn was disseminating on First American's behalf.
The "Fact Sheet" distributed by Hill and Knowlton made similarly erroneous statements concerning the relationship between Clifford and Altman and BCCI.(26)
Once again, there is no evidence to demonstrate that Hill and Knowlton had conducted any independent investigation of the facts that they were distributing.
To the contrary, their presentation was identical with the position that was being taken then and to this day, by BCCI, Clifford and Altman concerning these issues. Untrue statements by BCCI, Clifford and Altman concerning these issues are among the central matters on which each has been indicted by law enforcement and cited by regulators.
Once again, Hill and Knowlton acted merely as a conduit for the version of events being promoted by their clients. Once again, the materials it disseminated contained numerous statements that proved to be false. Once again, its attacks -- this time on investigative reporter Larry Gurwin and on Regardie's magazine by Hill and Knowlton in its capacity as public relations firm for First American, Clifford and Altman -- served to discredit people who were telling the truth.
In May, 1991, Hill and Knowlton disseminated another memorandum pertaining to First American and BCCI. This memorandum was written in response to a May 5, 1991 article in the Washington Post concerning Clifford and Altman's purchase of stock in First American through secret lending from BCCI.
A cover page to the Memorandum written by Frank Mankiewicz stated the following:
I would like to stress a few points:
- The fundamental contention of the Washington Post story of May 5, indeed its lead sentence - is untrue, and worse, never supported in the article. The Post says regulators were told "that BCCI would have no financial relationship with First American and its senior management." No such statement was ever made. In fact, First American was free to have financial dealings with BCCI on an arms-length basis - as it did with many banks - and audits have confirmed that no impropriety occurred. As to financial dealings with senior management, I have no idea what representation or discussion the Post is talking about.
- These investments were not secretive ownership; rather, the Directors had full knowledge of both the purchases, and approved them. They were also encouraged by shareholders, and the ownership was timely reported to regulators, as required.
- The loan from BCCI was made with the advice of New York counsel . . . none, then or now, believes the loan contravened any commitment to the Federal Reserve . . .(27)
Mankiewicz then enclosed a memorandum, on Hill and Knowlton stationery, which further stated that "there was no reason at the time of these transactions for any one to consider the role played by BCCI [in lending funds to Clifford and Altman] to be remarkable or inappropriate."(28)
The positions taken, identical to those taken by Clifford and Altman, were at best, gross simplifications and distortions of the truth, as the public record at the time, available to Hill and Knowlton, demonstrated. Specific representations had indeed been made to the Office of the Comptroller of the Currency that BCCI would not be involved in any aspect of financing First American's ownership either at the time of the FGB takeover, or later. These representations were part of the record on which the Federal Reserve agreed to permit the takeover of First American by the group linked with BCCI. While Clifford and Altman's ownership of BCCI stock had been disclosed to and approved by First American directors, their loans from BCCI had not. While Clifford and Altman's ownership of BCCI stock had been disclosed to regulators, their loans from BCCI had not. Clifford and Altman's personal attorneys may not have believed the loans contravened any commitment to the Federal Reserve. But that has not been the position of the regulators themselves. Indeed, the Federal Reserve has formally charged Clifford and Altman with conflict of interest, breach of fiduciary duty, and other violations of their statutory responsibilities in connection with these very transactions. In fact, the Federal Reserve has viewed these transactions to be sufficiently improper to justify banning Clifford and Altman from banking for life.(29)
Again, there is no evidence to demonstrate that Hill and Knowlton had conducted any independent investigation of the facts that they were distributing. The firm acted as a conduit for a position, which contained numerous statements that proved to be misleading at best.
Should Hill and Knowlton Have Known Better?
According to press accounts, some Hill and Knowlton executives from the beginning raised ethical questions concerning the firm's representation of BCCI and refused to work on the account -- suggesting that sufficient information had always been available to Hill and Knowlton to reject the account on the ground that BCCI had in fact engaged in sleazy practices, and that if Hill and Knowlton accepted BCCI's account, it might end up tarnished.(30)
According to an August 17, 1991 account in the National Journal, in October, 1988, Lawrence J. Brady, an ex-senior vice president in Hill and Knowlton's Washington office and two other Hill and Knowlton executives had told Mankiewicz in a conversation involving all four officials that BCCI was, to use Brady's word, a "sleazy" bank, after Brady discussed the possible representation with Von Raab. The National Journal article quoted another former Hill and Knowlton official as saying "the smell test was used, and [BCCI] did not seem to pass the muster."(31)
Regardless of such concerns, Hill and Knowlton kept the account for 18 months, and represented BCCI's secretly-held U.S. subsidiary, First American, another 15 months beyond that, until Clifford and Altman's resignation in August 1991.
What is the responsibility, if any, of a public relations firm to ensure that it does not assist clients in misleading the public, the Congress, or the Executive Branch, through the dissemination of false information?
The baseline standard is one defined by the Code of Professional Standards of the Public Relations Society of America, which states that "a member shall adhere to the highest standards of accuracy and truth" and "shall not knowingly disseminate false or misleading information."
In the case of Hill and Knowlton, BCCI, and First American, there is no evidence that Hill and Knowlton executives actually knew that the specific information they were disseminating was false. But there were obvious warning signs present from the beginning that served as cautions to some Hill and Knowlton partners, who did not want the firm to keep the account because of these warnings. These warnings initially consisted of a lengthy number of press accounts detailing BCCI's past bad behavior; the various filings made with regulators by various parties in connection with the FGB litigation; the Operation C-Chase drug money laundering indictment in Tampa itself. In December, 1988, they also included the Aziz Rehman deposition before the Subcommittee; the information provided Hill and Knowlton executives who refused to work on the account by Customs Commissioner Von Raab and others. By 1990, they included serious allegations being raised by the press in 1990.
Conclusion
Hill and Knowlton's representation of BCCI was not an unusual event. Institutions charged with wrongdoing hire public relations help all the time to ensure that their side of the story is told.
The result in the case of BCCI was that Hill and Knowlton ended up providing information to the Congress and to the press and public that was not merely misleading or distorted, but actually false. Hill and Knowlton assisted in discrediting people who were providing accurate information about the underlying situation, including a former BCCI officer, an investigative journalist and his publisher. Given Hill and Knowlton's close ties to both political parties, and its influence in Washington, this was especially unfortunate. Hill and Knowlton did not violate any laws. It may not have violated any of the standards of the public relations industry. But its actions raise questions concerning an apparent conflict in this case between the role played by Hill and Knowlton as BCCI's public relations firm, and the public interest.
As former Commissioner Von Raab testified concerning this issue:
So, it should not happen . . . [but] it happens all the time. It should not happen and maybe the BCCI case will be the example that will cause someone to change this influence peddling culture, to try to ask some reasonable questions of the integrity of the people that they are going to be representing.(32)
The public relations industry needs to consider whether additional internal standards may be appropriate to discourage the kind of representation provided BCCI by Hill and Knowlton. Such standards, could, at a minimum, require firms to conduct due diligence before agreeing to represent a client on any matter, backed up by the possibility of some form of sanction for gross violations of the standard.
SENATOR BROWN'S VIEW:
Clearly, Hill and Knowlton's representation of BCCI during the Chairman's investigaiton increased the pressure to cease the Subcommittee's efforts to make public the bank's nefarious methods. As the report itself concedes, no laws were violated. No ethical standards were breached. Neither my office nor my staff were approached or lobbied by Hill and Knowlton on this subject, nor felt that Hill and Knowlton went beyond their ethical mandate as they presented BCCI's "side of the story" to the public. The experience of Senator Kerry and his staff was quite different. Our comments in this section are especially critical of Hill and Knowlton, and should be evaluated in light of these facts.
1. See lengthy descriptions of Hill and Knowlton's political contacts in The Power House, Robert Keith Gray and the Selling of Access and Influence in Washington, Susan B. Trento, St. Martin's Press, 1992. The book also contains interviews with former Hill and Knowlton executives concerning the discussions within Hill and Knowlton about the BCCI account.
2. Subcommittee documents on Hill and Knowlton stationery obtained from BCCI New York and BCCI Miami; letters and memoranda from Frank Mankiewicz to Senator Kerry on behalf of First American; See Hill and Knowlton's "BCCI Worldwide Action Program" memorandum, October, 1988.
3. S. Hrg. 102-350 PT. 1 p. 51.
4. Hill and Knowlton press release to PR Newswire, August 1, 1991, "To National and Business Editors."
5. Documents on Hill and Knowlton stationery concerning representation of BCCI, October-December, 1988; BCCI internal memoranda concerning Hill and Knowlton, October, 1988-January, 1990; BCCI lawyers notes produced by Raymond Banoun to Subcommittee on September 3, 1992 concerning Hill and Knowlton; correspondence, Michael Pillsbury to Hill and Knowlton, January, 1990.
6. See chapter on BCCI in The Power House, Trento, id.
7. See letter and memorandum from Frank Mankiewicz to Senator John Kerry, May 6, 1991.
8. Numerous press accounts chronicle Small's career. See e.g. UPI, October 15, 1985, Washington Post, November 5, 1985, and some 165 other citations in Nexis database prior to 1991.
9. Letter, Michael Pillsbury, on Senate stationery, to Karna Small, Hill and Knowlton, January 11, 1990, regarding Hill and Knowlton's media strategy for BCCI.
10. Staff interview, Abdur Sakhia, October 7, 1991.
11. Id. p. 52.
12. Neither Frank Mankiewicz nor Robert Gray were among the team of Hill and Knowlton professionals hired by BCCI in this period, nor do any documents in the possession of the Subcommittee show them to have worked on BCCI matters at all. Mankiewicz, however, along with others at Hill and Knowlton, did provide assistance to First American on the charges that it was secretly owned by BCCI, after the handling of the Hill and Knowlton retention by BCCI in the U.S. was switched from BCCI-London to Clifford and Altman in the spring of 1989.
13. Draft Appendix A to White Paper, October 27, 1988, Hill and Knowlton.
14. Staff interviews, July, 1992, Amjad Awan and Akbar Bilgrami. BCCI Miami documents provide ample evidence for the proposition that money laundering at BCCI was systematic, as do the various indictments of BCCI by federal and local U.S. law enforcement. See indictment, U.S. v. Awan, BCCI et al, Middle District of Florida, 1988, 88-330-Cr.-T-13(B), "BCCI . . . would and did formulate and implement a corporate strategy for increasing BCCI's deposits by encouraging placements of funds from whatever sources, specifically including "flight capital," "black market capital," and the proceeds of drug sales, in conscious disregard of the currency regulations, tax laws and anti-drug laws of the United States and of other nations. Paragraph 7.
15. Staff interview, Bilgrami, July 20-29, 1992.
16. Bilgrami, staff interviews, July 20-28, 1992.
17. October 26, 1988, Hill and Knowlton, "Background: The Bank of Credit and Commerce."
18. Among the foreign countries which had cited BCCI for various infractions prior to Hill and Knowlton's representation of BCCI were France, Kenya, Nigeria, and Sudan, as reported in press accounts available to Hill and Knowlton on the Lexis database. See Reuters, November 11, 1987. As BCCI officer Abdur Sakhia testified before the Subcommittee, "BCCI officers were indicted and jailed in other countries, like Sudan, Kenya, India, and in each case there was a terror in the bank that, you know, this has happened, that has happened. And somehow then some deal would be struck. People would be freed, BCCI would start doing business all over again." S. Hrg. 102-350 Pt. 2.
19. News Release, Hill and Knowlton, For: Bank of Credit and Commerce International, December 22, 1988.
20. Staff interviews, Amjad Awan and Akbar Bilgrami, July, 1992.
21. Staff interviews, Akbar Bilgrami, July 20-28, 1992; see also staff interviews with Nazir Chinoy, March 9, 1992.
22. "FACT SHEET," Re: Regardie's Article, provided to Senator John Kerry on April 30, 1990 by Hill and Knowlton.
23. Id.
24. Id.
25. Id.
26. Id.
27. Memorandum, From Frank Mankiewicz, Hill and Knowlton, May 6, 1991.
28. Id.
29. Board of Governors of the Federal Reserve, Summary of Charges, In the matter of Clifford, July 29, 1992.
30. A lengthy treatment of this question is contained in The Power House by Susan Trento, id. The book describes meetings about BCCI by Hill and Knowlton executives who wanted the firm to reject the account as a consequence of its poor reputation, but were rebuffed by firm management.
31. National Journal, August 17, 1991, "BCCI Passed PR Firm's Smell Test."
32. S. Hrg. 102-350 Pt. 1 p. 52.
20. BCCI AND KISSINGER ASSOCIATES ( see red highlighted above)
Introduction
Beginning in the fall of 1986, and continuing through early 1989, BCCI initiated a series of contacts with perhaps the most politically prominent international and business consulting firm in the United States -- Kissinger Associates.
At the time, Kissinger Associates had five partners: former Secretary of State Henry Kissinger, former Assistant and current National Security Advisor Brent Scowcroft, former Under Secretary and current Acting Secretary of State Lawrence Eagleburger, international economist Alan Stoga, and investment bank T. Jefferson Cunningham III.
Ultimately both Stoga and a retired Brazilian Ambassador working as a consultant to Kissinger Associates, Sergio Correa da Costa, seriously explored finding ways to link BCCI's global network of banks with the services being offered by Kissinger Associates. Discussions between representatives of BCCI and representatives of Kissinger Associates took place over an 18 month period concerning the possibility of merging the capabilities of BCCI and Kissinger Associates on various, mostly unspecified, projects. Following BCCI's indictment, discussions continued as to whether Kissinger Associates could help BCCI respond to the ramifications of that indictment. These discussions ended in early 1989 at Henry Kissinger's personal insistence.
During the discussions, Stoga provided advice to BCCI on a possible public relations campaign. At their conclusion, Kissinger Associates referred BCCI to one its own directors, former Assistant Secretary of State William Rogers, and his firm, Arnold & Porter, who already represented Kissinger Associates on its own legal work. Rogers and Arnold & Porter in turn agreed to provide BCCI with legal services arising out of its indictment, although few services were provided as a consequence of the opposition of Clark Clifford and Robert Altman to the firm's involvement.
Although discussions concerning a broader relationship were cut short by the indictment, the BCCI-Kissinger Associates correspondence reveals much about BCCI's approach to seeking political influence in the United States. The correspondence also highlights BCCI's focus on doing business with, and ability, given its $23 billion in reported assets and 73 countries of operation, to attract interest from, some of the most politically well-connected people in the United States.
Genesis of Interest in BCCI-Kissinger Relationship
And Position Of Kissinger Associates Concerning BCCI
In late July, 1991, the Subcommittee received documents from BCCI's liquidators describing BCCI's use of a retired Brazilian Ambassador, Sergio da Costa, as a front-man for its purchase of a bank in Brazil while da Costa was also working -- according to the BCCI documents -- as a partner in Kissinger Associates.
In September, 1991, staff was advised by press that there were a number of documents at BCCI's document depositories concerning its relationship with Kissinger Associates. Staff were provided some of these documents by reporters, and found others in subsequent reviews of BCCI documents at its former offices in New York. These documents, on both Kissinger Associates and BCCI stationery, discussed in general terms the services Kissinger Associates might perform for BCCI, and were dated both before and after BCCI's indictment on drug money laundering charges in Tampa. Accordingly, they raised the question of whether Kissinger Associates had ever been retained by BCCI.
In November, 1991, the Committee on Foreign Relations authorized a subpoena for all documents to Kissinger Associates and related entities, for all documents pertaining to BCCI, and for its client lists.
In response, Kissinger Associates promised to cooperate with the Subcommittee investigation and to provide all documents pertaining to BCCI, under an agreement that the subpoena not be served. Kissinger Associates refused, however, to provide the client list, arguing that the list was beyond the parameters of the investigation into BCCI by the Subcommittee, and advising the Subcommittee that if it pursued the list, Kissinger Associates would litigate the matter, if necessary, through an extensive appellate process to the Supreme Court.
In providing several dozen documents material to the Subcommittee investigation on January 30, 1992, Kissinger Associates, represented by its attorney, former Presidential counsel Lloyd Cutler, made the following representations:
At the outset, it should be made clear that Kissinger Associates, Kent Associates, and China Joint Ventures (collectively referred to hereinafter as "Kissinger Associates") have never represented or provided any services for BCCI, ICIC, or any BCCI shareholder. Neither BCCI or ICIC nor any person known to be a BCCI shareholder has ever been a client of Kissinger Associates.
The only substantive contact between Kissinger Associates and BCCI occurred in late 1988-early 1989, when [BCCI officer] Abol Helmy met several times with Alan Stoga of Kissinger Associates to discuss a possible consulting arrangement for BCCI . . . In December, 1988, Mr. Stoga advised Mr. Helmy that Kissinger Associates was not interested in a consulting relationship with BCCI. At Mr. Helmy's request, Mr. Stoga met with Mr. Helmy again in January, 1989, at which time in response to a further inquiry from Mr. Helmy he again advised Mr. Helmy that Kissinger Associates did not want to proceed with a relationship. In February 1989, in response to Mr. Helmy's request for a recommendation for Washington-based legal counsel, Mr. Stoga recommended Arnold & Porter. Mr. Stoga has had a number of other meetings with Mr. Helmy since February, 1989, but these meetings have been of a purely social nature.(1)
While this account of the relationship is not untrue, it does fail to characterize the full extent of the contacts between BCCI and Kissinger Associates and the series of meetings and contacts between representatives of the two organizations. In fact, both Stoga, as a partner of Kissinger Associates, as well as its consultant, da Costa, worked over an extended period to bring the two organizations together, and such a relationship could well have developed but for BCCI's drug money laundering indictment. The following account, while not necessarily complete, is intended to provide a fuller picture of the contacts between BCCI and Kissinger Associates, of BCCI's goals and intentions in soliciting the relationship with Kissinger Associates, and of the assistance, albeit limited, provided to BCCI by Kissinger Associates in BCCI's time of trouble.
Background: BCCI and Ambassador Sergio da Costa
In the fall of 1986, Sergio da Costa, the most senior member of the Brazilian diplomatic corps and a close associate of then Brazilian president Jose Sarney, decided to retire at the age of 67 after four decades of serving Brazil as its Ambassador to such significant postings as England, Canada, the United Nations, and the United States. Da Costa was anxious to enter the private sector, and ultimately accepted offers from three organizations. Da Costa would move to Paris and set up an office there as a consultant to an international law firm, Coudert Brothers. He would simultaneously also work for BCCI, on a monthly retainer. And he would become a consultant to Kissinger Associates, for a third monthly retainer.
At the time, BCCI already knew Ambassador da Costa well. Months earlier, he had provided BCCI with advice on selecting possible front-men for BCCI's intended acquisition of a bank in Brazil. Under Brazilian law, foreign banks were not permitted to own a majority interest in any Brazilian bank. Accordingly, BCCI had decided to buy a Brazilian bank, purchase a minority interest in the bank openly, and hold additional shares to guarantee BCCI's control of the bank through cooperating Brazilian nominees, in what was essentially a conspiracy to circumvent Brazilian banking laws.
Da Costa was extremely politically well-connected in Brazil. He had been brought to BCCI by BCCI shareholder and front-man Ghaith Pharaon, who in late April, 1986 had met with Da Costa in Miami to seek Da Costa's help in responding to the problems posed for BCCI in circumventing the Brazilian bank laws. A telex from Miami branch manager Abdur Sakhia to BCCI-London on May 6, 1986 described the meeting having ended positively for BCCI:
Ambassador Da Costa has promised Dr. Pharaon to assist the Bank in any way he can and he also had asked Mr. Ferreira [a prominent Brazilian businessman close to President Sarney] to use his association with the President of the Republic to assist BCC.(2)
By September of 1986, da Costa had agreed to himself become a front-man for BCCI in Brazil. In return, BCCI agreed to pay him $150,000 a year, with no further responsibilities beyond being a front-man and using his influence to help BCCI with Brazilian authorities in Brasilia, the capital city.
Under the terms of the arrangement, da Costa agreed to be a director and shareholder, secretly acting as BCCI's nominee, of the bank BCCI was purchasing in Brazil, in a transaction structured by BCCI officer Abol Helmy, who later himself had a series of contacts with Kissinger Associates.
Helmy drafted a memorandum, "Strictly Private and Confidential," regarding "Brazil," on September 2, 1986, under which da Costa and a second prominent Brazilian would each own 50 percent of a Brazilian company that would buy 12,622,500 voting ordinary shares in BCCI Brazil, pledge those shares to BCCI, give BCCI the right to vote its shares, and give BCCI the right to buy those shares. Da Costa would agree to serve on the three man board of directors as BCCI's front-man, to guarantee BCCI control of the bank. He would 'pay' $1,233,580 for his 'share' of BCCI Brazil's stock, and BCCI would reimburse him that amount in New York. The internal BCCI memorandum drafted by Helmy makes explicit the fact that these arrangements were designed to deceive Brazilian authorities:
It must be emphasized that the Brazilian economy and bureaucracy are highly sophisticated. As such any payments made by Brazilians must have the appropriate ORIGINATION OF FUNDS. That is, the Brazilian 'investors' must have the necessary net worth for Brazilian taxation authorities' purposes to support any investments made. . .
Messrs. Da Costa and Leoni to ensure that the transaction is fully acceptable to the Central Bank and to ensure that there are no adverse public consequences will be purchasing their shares in cash. . .
Both Ambassador Da Costa and Mr. Leoni are reluctant to take loans from any bank to finance the transaction for Central Bank and public image purposes . . . I have negotiated, subject to BCC management approval, an interest free loan to the individuals concerned . . . to enable them to complete the transaction.(3) (emphasis in original)
The memorandum demonstrated that BCCI would provide da Costa with $2,467,160 for the purchase of his stock in BCCI Brazil, every penny the stock would cost. In a staff interview, Helmy acknowledged that da Costa was not at risk and that the transaction was a standard nominee arrangement by which BCCI circumvented local laws and that this approached had been used a numerous of times previously by BCCI. Helmy also said it was BCCI's understanding that da Costa would take care of arrangements with Brazil's central bank and other Brazilian officials to make sure that they acquiesced in the transaction as structured.(4) Thus, in essence, Helmy at BCCI and da Costa, while still Brazil's Ambassador to the United States, had with other BCCI officials and other prominent Brazilians, created a plan by which they would together make possible BCCI's purchase of a bank in Brazil to circumvent Brazilian law.
BCCI officials were ecstatic at da Costa's participation in their plan for Brazil, and his agreement to be a Senior Advisor to BCCI. On October 28, 1986, while da Costa was still Brazil's Ambassador to the United States, the head of BCCI's Miami office, S. M. Shafi, sent him a congratulatory telex at the Embassy:
congratulations from myself and my colleagues on your joing [sic] our Brazilian project. We welcome you to the fold BCC family. I am very certain your experience, qualifications and contacts not only in Brazil but also internationally will go a long way in turning our subsidiary in Brazil into one of the most successful units of BCCI.(5)
Da Costa signed a three-year consultancy agreement with BCCI on November 3, 1986, under which he committed to acting as "Director of [BCCI's] investment bank in Brazil," and a front-man for BCCI there.(6) Da Costa then followed through in participating in the plan developed by Helmy under which BCCI would secretly purchase a majority interest in BCCI Brazil through nominees. He received his 'loans,' from BCCI, and purchased his 'stock' in the Brazilian bank. BCCI duly reported its loans to him on its books in Panama, characterized as "International Loans," as if they were normal loans that BCCI anticipated would be repaid. By April 30, 1988, da Costa's 'loans,' from BCCI amounted to $1,563,723.85. In fact, da Costa did not pay interest or principal on the loans, which were shams to mask BCCI's ownership of the 'da Costa' shares of the bank.
Among themselves, BCCI officials were also pleased about another aspect of being connected to da Costa. As he entered his agreement with BCCI to circumvent Brazilian banking laws, he had told them that he was also joining Kissinger Associates. A BCCI telex that circulated in New York and London in early December, 1986 described da Costa's principal work to now be as a partner in Kissinger Associates, with BCCI understanding the Coudert Brothers work, by comparison, as merely a consultancy.
Da Costa and Kissinger Associates
In September, 1986, while da Costa was negotiating the terms of his consultancy with BCCI, he also reached out to determine if he could reach a similar relationship with Henry Kissinger. In early September, he sent Kissinger a copy of a biography he had written, "Every Inch a King," concerning Brazilian emperor Dom Pedro I.
In November, 1986, da Costa and Kissinger concluded their discussions concerning the services da Costa would provide Kissinger Associates. Letters between da Costa and Kissinger, dated November 3, 1986, set forth the terms of their agreement, under which da Costa would be paid $40,000 a year as a consultant to Kissinger Associates, plus a 10 percent to 20 percent fee for putting together transactions for Kissinger Associates. The letters show that Kissinger sought an agreement from da Costa that he would work only for Kissinger Associates and for Coudert Brothers, and that da Costa told Kissinger in return that he would also be working for BCCI, as he and Kissinger had previously discussed. As da Costa wrote Kissinger:
From our brief conversation, I gathered that you had in mind, basically, the Brazilian "market", i.e. you would expect me to channel through Kissinger Associates whatever Brazil-related project is secured by me. . . What concerns me is the case of companies that have already indicated their firm intention of retaining my services as consultant under a permanent retainer agreement soon after November 1st . . . There is particularly the case of B.C.C.I., mentioned to you when we first discussed our association. They not only wish to retain me as a permanent consultant, but insist that I become member of the Board and shareholder of their Brazilian operation, obviously seeking to benefit from my standing in the country. . . In short, since we are both acting in good faith and are reasonable men, I cannot even visualize a possibility of discomfort in our business relationship. I am convinced that a simple reflection in a side letter like this would be far better than any attempt at spelling out a paragraph on the exact meaning of "exclusivity."(7)
Kissinger accepted da Costa's simultaneous involvement in acting as a consultant to Kissinger Associates and BCCI, and da Costa signed up for a two-year commitment.
On December 8, 1986, da Costa received the first of a series of payments of $12,500 a month from BCCI Grand Caymans to his account at BCCI's agency in New York for his consultancy to BCCI. In the same period, he received the first of a series of payments from Kissinger Associates of $10,000 a quarter.
Beginning in early 1987, da Costa began to act as a business agent for Kissinger Associates in Brazil on projects involving purchases of companies, plants, or assets in Brazil by foreign companies. During 1987, he made several trips to Brazil on behalf of Kissinger Associates, and attended in the summer of 1987 what he described in a letter to Kissinger Associates as "that amusing luncheon with the BNL crowd," referring to a meeting with people involved in the Banco Nationale del Lavaro, an Italian bank from whom Kissinger was a consultant, and which has recently been under investigation by the House Committee on Banking, Finance and Urban Affairs for its role in the illegal arming of Iraq using U.S. commodity credits.(8)
Da Costa, Kissinger and Ghaith Pharaon
On September 20, 1987, da Costa wrote Kissinger to invite him to a party hosted by BCCI front-man Ghaith Pharaon, suggesting that Kissinger might want to obtain Pharaon as a client for Kissinger Associates:
I was asked to convey an invitation of Dr. Gaith Pharaon to a dinner at his plantation at Richmond Hill, Georgia, Saturday October 31st.
Although with residences in Paris and in Saudi Arabia, his real "home" seems to be the River Oaks Plantation, which once belonged to Henry Ford. His main local asset was the National Bank of Georgia, which he recently agreed to sell to First American Bankshare Inc of Washington DC for some $230 million. I believe that the latter bank is owned by the main shareholders of BCCI, of which Pharaon was or still is a shareholder . . .
As [Pharaon] admires you intensely and has a wide range of business interests in the US, I have thought of him for some time as a potential client. Hence my acquiescence to forward the invitation.(9)
In October, 1987, while da Costa was seeking to put together an acquisition of a plant in Brazil involving the New York firm of Kohlberg Kravis Roberts & Co., ("KKR") on behalf of Kissinger Associates, he wrote Lawrence Eagleburger and Alan Stoga, again referencing his invitation to Kissinger to attend the Pharaon dinner with da Costa.(10) However, Kissinger declined the invitation.
Da Costa Introduces BCCI to Kissinger Associates
On May 28, 1987, da Costa decided to introduce BCCI acquisitions officer Abol Helmy, who had crafted BCCI's purchase of the bank in Brazil, and da Costa's participation as a BCCI front man, to Kissinger Associates partner Alan Stoga. A chronology provided the Subcommittee by Kissinger Associates' attorneys, and apparently prepared by Stoga in November, 1991, describes the meeting as follows:
Da Costa introduces Abol Helmy to Stoga without any specific purpose. Helmy is described as responsible for BCCI's acquisitions in Latin America.(11)
According to the Stoga chronology, on June 10, 1987, Stoga met Helmy again to discuss the possibility of a relationship between Kissinger Associates and BCCI. According to the Stoga chronology, no specifics of the relationship were discussed.(12)
On August 26, 1987, Pakistan's former Ambassador to the United States, Sultan M. Khan, who now worked at BCCI's representative office in Washington, D.C., wrote Kissinger, on BCCI stationery, to invite Kissinger to attend a dinner he and BCCI were hosting, honoring the leader of the Chinese delegation to the annual International Monetary Fund dinner. Although Khan had worked closely with Kissinger when he was U.S. Secretary of State and Khan was Pakistan's foreign minister, Kissinger declined the invitation.(13)
The Stoga chronology shows no further meetings between Stoga and Helmy until September, 1988. However, Helmy told Subcommittee staff that he had a series of meetings in this period with Stoga regarding possible links between BCCI and Kissinger Associates. Moreover, a November 2, 1988 letter on Kissinger Associates letterhead from Stoga to da Costa states, "I have been in regular contact with Abol Helmy for more than two years and, during that time, we have discussed the possibility of a consulting relationship [by Kissinger Associates for BCCI] several times."(14)
Helmy and Stoga's Attempts to Develop
Business Between Kissinger Associates and BCCI
Helmy viewed his meetings with Stoga as a means to engage in business development for BCCI, and believed that Stoga also believed that it could be to both of their benefits within their respective organizations to provide one another with business.(15)
This process moved forward slowly, and it was not until October 7, 1988 that Stoga sent Helmy and BCCI written material from Kissinger Associates describing the nature of their business and the possible benefits to both organizations of a relationship. As Stoga wrote Helmy:
I enjoyed lunch yesterday and, even more, your suggestion that BCCI might be interested in developing a relationship with Kissinger Associates.
As you suggested, I am enclosing a brief explanation of our firm and biographical sketches of our principals. I am not sure the former really does us justice, but I am reluctant to be more specific, at least on paper, about the kinds of consulting projects we undertake for clients. . .
I agree that a next step should be for me to meet your [BCCI's] management in London or in New York.(16)
The materials enclosed by Helmy, and retrieved later by Subcommittee staff at BCCI's offices in New York, consisted of a six paragraph summary of Kissinger Associates approach to its business, and a two page biographical summary of its partners' credentials. According to the summary:
Kissinger Associates' purpose is to utilize the diverse backgrounds, experiences, contacts, and relationships of its senior personnel to assist client companies in sorting through and coming to terms with the increasingly complicated international environment. . . The firm does not provide detailed written materials to clients, in large part to assure the confidentiality and the frankness of communications.(17) (emphasis in original)
Less than one week later, BCCI was indicted in Tampa, prompting an immediate memorandum from Helmy to Swaleh Naqvi, then BCCI's chief:
Further to our recent conversation in London, I met with Mr. Alan Stoga who is one of the 3 partners of Kissinger Associates, Inc. Subsequently, the developments in the United States took place. Judging by the high level of adverse publicity that is being generated by the media, it is imperative that a firm response be made.
I received a call today from Mr. Stoga who informed me that Dr. Kissinger recommends that a public relations offensive be made by us and in that context has suggested using Burson-Marstellar, a highly reputable public relations firm that successfully dealt with 1st Chicago crises last year. Kissinger Associates, Inc. have indicated that they shall be happy to use their personal contacts with the firm and make the necessary recommendations. I shall, of course, not proceed in any way without explicit instructions from you.(18)
The next day, Helmy sent another memorandum to Naqvi, enclosing the materials he had received from Stoga concerning Kissinger Associates and advising Naqvi that he would meet with Stoga on October 14. Helmy and Naqvi then discussed the overture to Kissinger Associates by telephone, evidently to discuss the qualms that Kissinger Associates might have to working with BCCI now that it had been indicted. Following Helmy and Stoga's next meeting, Helmy reported back to BCCI London as follows:
I just met with Mr. Alan Stoga, Dr. Kissinger's partner, and discussed the relevant matters as per our phone conversation of yesterday.
I emphasized to Mr. Stoga that our conversations in getting our two respective organizations together have been going on for over a year and hence, have not been generated as result of the present circumstances.
I feel that a relationship could be established in the near future depending on how fast the present publicity ends.
I shall keep you duly informed of my next meeting with Dr. Kissinger himself which should be sometime next week.(19)
The correspondence makes clear Helmy's desire to secure this important relationship for BCCI as a means of helping BCCI reduce its current problems in the United States, and as a means for Helmy himself to increase his power within the BCCI organization.
While Helmy pursued the relationship from his office at BCCI New York, da Costa in the meantime also tried to push a relationship forward. Kissinger Associates had decided to end his consultancy in September as a consequence of his not having developed enough business in Brazil to justify his $40,000 a year stipend, and sent da Costa a letter to that effect which he evidently did not receive. In the meantime, Helmy had contacted da Costa to seek da Costa's assistance in reassuring Kissinger Associates that BCCI was truly an ethical institution.
On October 25, 1988, da Costa wrote Eagleburger and Stoga to remind them that the discussions to link the two organizations went back many months and were not prompted by the indictments:
On two or three different occasions last year and early this year, I suggested to BCCI to seek the assistance of K.A. [Kissinger Associates] to obtain their assessments worldwide and particularly regarding the Untied States. The suggestion was well received and matter virtually cleared six months ago. However, the situation created by the serious heart condition which stroke [sic] BCCI's president and founding father delayed the implementation until September 29th when I was asked to a meeting in London.
During the meeting, a few questions were put to me as to the type of work that KA did normally for their clients and the Deputy Chairman [Naqvi] indicated that instructions would be promptly sent to Mr. Abol Helmy in new York to approach KA and negotiate a contract.
That was Thursday September 29th. Thirteen days later, October 12th., the blow of the accusation for money-laundering, of which the bank expects to be entirely cleared, having offered the fullest cooperation with the investigators.
Mr. Abol Helmy has already contacted Alan Stoga last week and asked me to refer to the early conversations held at the bank about my recommendation, not to appear that he is seeking support in a moment of distress. . .
Perhaps you could start talking to Mr. Helmy in the clear understanding that a contract would be signed only after you had the opportunity to ascertain - to your satisfaction - that the procedures adopted by the bank to defend itself from the allegations are adequate enough.(20)
In response, Stoga wrote da Costa November 2, 1988. The letter from Stoga to da Costa was not to advise him that Kissinger Associates was sufficiently concerned about BCCI's drug money laundering indictments to preclude a relationship. The letter instead politely advised da Costa that as far as Stoga was concerned, the prospective relationship was Stoga's, not da Costa's, and that da Costa was not welcome to participate in further discussions between BCCI and Kissinger Associates. As Stoga wrote da Costa:
Thank you for your fax regarding BCC. After your kind introduction, I have been in regular contact with Abol Helmy for more than two years and, during that time, we have discussed the possibility of a consulting relationship several times. Abol raised this issue again in September saying that he was urging Mr. Naqvi to consider hiring us. Helmy did not mention your involvement during any of these discussions and said he, too, was surprised by your fax.
I am not sure how we will proceed with respect to BCC, but I will remain directly in contact with Abol.(21)
Da Costa acknowledged Stoga's position and had no further involvement with Kissinger Associates until December, when he wrote to remind the firm that he had not received his quarterly stipend, and was told that his consultancy was at an end, other than on a case-by-case basis should da Costa generate transactions for Kissinger Associates. Da Costa replied with a fax transmission to Kissinger, thanking him for being welcomed to Kissinger Associates "at that precise moment when I was leaving a life-long protected life to explore on my own the other side of the fence," and promising to do his best to generate more business in Brazil on a case-by-case basis in the future.(22)
Kissinger Associates Says No to BCCI, Provides Legal Referral
Kissinger Associates determined to take its time in considering the risks and benefits of any relationship with BCCI, with Kissinger himself apparently taking the view throughout that the relationship was not worth having, while Stoga sought to continue to explore it.
The chronology provided the Subcommittee by Kissinger Associates states that Stoga telephoned Helmy in December to advise him that Kissinger Associates would not be interested in any relationship with BCCI, but that Helmy requested another meeting with Stoga "after holidays to discuss."(23)
BCCI files tell a different story. According to a December 19, 1988 memorandum from Helmy to Naqvi, he continued to be in communication with Stoga about the proposed relationship, and continued to anticipate that they would work something out despite the drug money laundering indictment:
I am in communication with Mr. Alan Stoga, Partner of Kissinger Associates, Inc. Their response was they are interested in principal but would like to wait a bit longer. I will be meeting Mr. Stoga in the first week of January, 1989 and will be discussing the issue further. It would be of interest for you to know that Mr. Scowcroft is now the National Security Advisor Designate in the Bush Administration and another Partner of Kissinger Associates is being tapped for Assistant Secretary of State in the Bush Administration. I shall keep you informed of my next meeting. You may agree that this association with Kissinger Associates, Inc. needs time to be cultivated. I am working in that direction.(24)
Evidence of what Helmy was referring to is a proposal which Kissinger Associates found in its files from Helmy to Stoga, dated January 9, 1989.
The proposal refers to a California bank known by Stoga to be available for a price of $76 million, a price which he estimated was less than 10 times the bank's expected earnings. The bank was for sale, and if Kissinger Associates could find a buyer, there was an opportunity for everyone to make money. Helmy provided Stoga with a 17 page outline for the proposal transaction, and asked him to consider it.
The proposal revealed that the bank involved was the Independence Bank of Encino, held by BCCI shareholder and front-man Ghaith Pharaon.
There is no record that Helmy advised Stoga or Kissinger Associates of what he also knew about Independence Bank -- that the bank was secretly owned by BCCI, in arrangements similar to the nominee arrangements Helmy had personally crafted for da Costa in Brazil. Helmy himself may not have known Independence Bank's other secret -- that at the time, it was already in the deep financial trouble that three years later lead to a $150 million bailout of Independence Bank, with funds lent by the U.S. Treasury, of the Bank Insurance Fund.
At about this time, in January, 1989, according to the Stoga chronology, Stoga again met with Helmy to repeat that Kissinger Associates would not proceed with a relationship with BCCI. The Stoga chronology states that Helmy said he understood that the time was not right and he hoped if circumstances changed, the firm would reconsider.
The Stoga chronology is again contradicted by BCCI files. A memorandum written January 11, 1989 from Helmy to Naqvi, found in BCCI's Kissinger Associate files in New York, presents an entirely different picture of the relationship at this stage:
I had a lunch meeting with the gentleman in January 5, 1989 and a follow up telephone conversation on January 10, 1989. It was established that it is in our interest for both parties to continue with the conversations. As such, the door for an eventual relationship remains open.
They were far more knowledgeable of the details of our situation during this meeting and made certain "unofficial" general recommendations which I shall convey to you at our next meeting. I am meeting my contacts senior partner by the end of January with a view of discussing our overall worldwide activities.(25)
In staff interviews, Helmy later confirmed that the memorandum referred to Stoga and to the "senior partner" to an intended meeting with Kissinger.
There are four possible explanations of the difference between Helmy's understanding and the Kissinger Associates chronology.
First, Helmy could have been wilfully misleading his superiors at BCCI about the relationship, although it is hard to understand why he would do this, persistently, for months, unless he had in fact received some encouragement from Stoga. Moreover, Stoga had in fact continued to meet month after month with Helmy.
Second, Helmy could have misunderstood what Stoga was telling him. Again, this would fail to explain why Stoga continued meeting with him to discuss these matters.
Third, Stoga could himself have been trying to keep the door open, despite instructions from Kissinger to the contrary. There is some evidence for this from the various memoranda, including Stoga's later representations as to what happened. It would be plausible that Stoga as the most junior member of the partnership would at the time have had a greater need than Kissinger himself to take advantage of BCCI's 73 nation financial network and reported $23 billion in assets to generate new business,
Finally, Kissinger Associates as an organization might at the time have been seeking to keep its options open concerning a possible relationship with BCCI, and rewritten history once BCCI had become notorious. The documents provided do not either preclude such a possibility, or prove it.
It is impossible to make a definitive judgment on this issue because of the remarkable absence of any contemporaneous documents concerning Kissinger Associates' rejection of the relationship with BCCI, at least among the documents provided the Subcommittee by Kissinger Associates. While Kissinger Associates did provide the Subcommittee with Stoga's November, 1991 reconstruction of what took place, for better or worse, the only contemporaneous documents available to the Subcommittee concerning this issue were those created by Helmy while he was at BCCI.
However, there is no evidence from any source that Helmy ever met with Kissinger, as Helmy had implied he would do in two of his memoranda to Naqvi. Moreover, there is no evidence that Stoga took any action to follow up on Helmy's business suggestions.
It is not contested, however, that Kissinger Associates did make "certain 'unofficial' general recommendations" to BCCI, just as Helmy's January 11, 1989 memorandum stated.
The Stoga chronology shows that Stoga did stay in contact with Helmy through January, 1989. The chronology states that Helmy asked to meet with Stoga, and did so on January 25, 1989, when Helmy told Stoga that he was now in charge of the Tampa legal case, and would appreciate Stoga recommending new lawyers for BCCI in Washington.
As Helmy later explained, he, among others at BCCI, felt that Clark Clifford and Robert Altman had their own agenda and own problems, and were not ideally situated to manage the overall handling of the Tampa case. He had received authority to try to go around Clifford and Altman, and was using the best contacts he had to develop an alternative.(26)
According to the Stoga chronology, Stoga reported the request for assistance to Kissinger, and after consulting with Kissinger, told Helmy he could recommend William Rogers and a team of lawyers at Arnold and Porter, which Kissinger Associates had long used to handle legal matters pertaining to the firm and its principals. According to the Stoga chronology, this was "without reference to HAK," that is, Henry Kissinger. At the time, Rogers was also on the Board of Directors of Kissinger Associates.(27)
Referral to William Rogers and Arnold and Porter
BCCI's records in New York first alerted the Subcommittee to the possibility that BCCI had been represented by Arnold & Porter and former Assistant Secretary of State William D. Rogers. An undated document maintained in the Kissinger Associates file at BCCI listed as BCCI's team of representatives:
FIRM: ARNOLD & PORTER
1. Mr. William D. Rogers
(Formerly Assistant Secretary of State)
2. Mr. Jerry Hawke
(Formerly General Counsel Federal Reserve Board)
3. Mr. Irv Nathan
(Formerly Deputy Attorney General of the US)
FIRM: Kissinger Associates
1. Dr. Henry Kissinger
2. General Scowcroft
(Presently: National Security Counsel Chief)
3. Mr Eagleburger
(Presently: Assistant Secretary of State (Designate)
4. Mr. Alan Stoga(28)
The listing of the present and former government titles of the "team" BCCI was seeking to assemble gives a clue as to BCCI's intentions. Consistent with BCCI's historic approach to responding to its problems, it was seeking to retain people as close to the heart of the U.S. government as it could find to fix its problems, and in its view, this appropriately included people who worked for the Justice Department, State Department, and Federal Reserve.
In fact, while Kissinger Associates did not perform any services for BCCI apart from its referral of Arnold & Porter, Arnold & Porter did agree to represent BCCI, although that representation never developed into any substantial activity on the part of the firm. According to BCCI officers Abol Helmy and Abdur Sakhia, the principal reason the representation did not ultimately take hold was that Clifford and Altman did not want BCCI to develop any independent representation in Washington, and squelched the Arnold & Porter representation. As Sakhia recollected, in the period after BCCI's indictment:
We had a longish meeting about Kissinger representing us. I came in late in the meeting, and the upshot of it was they referred him to William Rogers. Then Rogers met with Naqvi and Abedi, but Clifford did not want Rogers involved.(29)
As Rogers described the representation:
Our relationship with BCCI consisted of about 10 meetings and telephone calls with BCCI people, one meeting with Messrs. Clifford and Altman and related office work. The purpose of the discussions was to explore legal services that Arnold & Porter might render BCCI. We geared up to provide services with background reading and the like. But we did not communicate on behalf of BCCI with any public official in connection with any BCCI matter, either orally or in writing. We made no appearances on behalf of BCCI in any judicial proceedings or in any administrative matter. We did not lobby on behalf of BCCI. And we did not communicate with any Senator, Representative or Hill staff.(30)
In all, four Arnold & Porter partners worked on BCCI matters between June 12, 1989, the date Arnold & Porter agreed to "provide legal advice from time to time to BCCI and its affiliates as and when requested to do so by BCCI," and January, 1990, including the three referred to in the BCCI memorandum concerning Arnold & Porter and Kissinger Associates. The firm did about $16,000 in legal work for BCCI in all, a fraction compared with the $20 million BCCI paid the various attorneys whose services were managed on BCCI's behalf by Clifford and Altman.(31)
Further Contacts Between Stoga and Helmy
During the spring of 1989, Abol Helmy, frustrated in his attempts to wrest control of BCCI's legal strategy in the U.S. from Clifford and Altman, and BCCI's unwillingness to take advantage of the Arnold & Porter representation he had arranged, decided to leave BCCI and form his own company, Equicap.
During this period, Helmy had several meetings with Stoga which the Kissinger Associates chronology characterized as "social." Helmy also provided Stoga with copies of detailed proposals he was working on for a Brazilian investment fund, which appears to be a suggestion to Stoga that Stoga help him solicit possible investors for the fund.
Response to Press and Congressional Inquiries
In November 1991, after BCCI's global closure, Kissinger Associates began to receive queries from the press concerning its contacts with BCCI. In response to those queries, Kissinger asked Stoga to reconstruct his contacts with BCCI. Stoga reviewed the documents concerning BCCI contained at Kissinger Associates files that were later provided the Subcommittee, and prepared a memorandum to Kissinger on November 11, 1991 that described the contacts as follows:
The most titillating passage in Helmy's memos claim I passed along a recommendation from you about a public relations offensive involving Burson Marstellar which we would help facilitate. Another memo implies that he met you. And another says that we had been discussing a client relationship for over a year.
To the best of my collection, I did not talk to Helmy about Burson (which had not been a client for almost two years at that point), in particular, or about public relations in general. The only "advice" I do recall giving is telling him in an aside that, based on what I read in the papers, BCCI would be lucky to survive as a bank in the U.S. unless there was a thorough house cleaning. And, of course, when Helmy in February, 1989, asked for the name of a good lawyer, we referred him to Bill [Rogers].
With regard to meeting you, as you know, there is no reference on your calendars, you have no recollection, and da Costa says it did not happen. Additionally, I asked Helmy (with whom I developed a social relationship after he left BCCI) and he says he did not meet with you.
Finally, I remember that Helmy said when he approached us in September, 1988 that after meeting me a year earlier he had begun thinking about proposing a relationship. He was concerned that we would think his 1988 overture was a product of the indictment, but insisted that it was not. At the same time da Costa -- whose contract had not been renewed -- sent us a memo which said he had been having conversations with BCCI about a relationship with us for some time. If so, he did not tell us about them until the moment it looked like a contract might be in the offing. Then da Costa tried to prove he would deserve a fee.(32)
Stoga offers no explanation in the memorandum to Kissinger as to how Helmy could have set forth the supposed recommendation to BCCI of Burson Marstellar from Stoga and Kissinger himself if Stoga had said nothing concerning the firm. But it seems less than likely that Helmy would as a matter of sheer coincidence fabricate the supposed recommendation by Stoga and Kissinger of a firm who had indeed been a client. An alternative theory might be simply that Stoga did make the recommendation, represented it as Kissinger's, and failed to recollect it three years later. A third possibility is that Stoga chose not to remember the recommendation, or whether it actually came from Kissinger himself, given its "titillating" quality.
Helmy was by his own account distraught to find out that his overtures to Stoga and Kissinger Associates were about to become public. As he later told Subcommittee staff, he had sought to nurture his relationship with Stoga before while he was at BCCI and since he had left, considered him a personal friend, and feared the exposure would damage a relationship of some personal importance to Helmy. Helmy understood that exposure of the BCCI-Kissinger Associates letters could potentially injure Stoga's standing with Kissinger himself, and wished to help Stoga out of a situation which Helmy felt Helmy had created. Accordingly, after talking with Stoga, Helmy drafted a letter, dated November 13, 1991, to describe his current view of what had taken place.
In the letter, Helmy wrote Stoga as follows:
Obviously both you and I are distressed by the recent articles in The Boston Globe and the New York Times which discuss my 1988 recommendation to BCC that I retain the services of Kissinger Associates after BCCI was indicted in Tampa, Florida.
I am, of course, surprised that a recommendation that BCCI retain the services of an organization enjoying the fine reputation held by Kissinger Associates warrants publicity, but I suppose that in the current milieu this kind of thing makes the news too. . .
On the merits, while we were discussing the possibility of BCCI's retention of Kissinger Associates, the fact is that you never told me or led me to believe that Dr. Kissinger himself actually made any recommendation. Only my enthusiasm to encourage Mr. Naqvi and BCC inadvertently resulted in my memorandum suggesting otherwise. Also, as you told The New York Times, and to the best of my knowledge, Kissinger Associates was never actually retained by BCCI in any kind of professional, advisory, or any other relationship. . .
Since no good deed goes unpunished, my efforts to assist BCCI in gaining the valuable services of Kissinger Associates, seem, now, to have caused both Kissinger Associates and myself a degree of harm for which I apologize to you and your organization.(33)
Thus, Helmy sought to make clear that Henry Kissinger himself had never to Helmy's knowledge been involved in his attempts to link the two organizations. His letter did not refer to the one thing that definitely happened during the course of his discussions with Stoga -- the initially successful referral of BCCI to William D. Rogers and Arnold & Porter.
Conclusion
The solicitation by BCCI of a relationship with Kissinger Associates was largely based on personal contacts. It began with overtures by Ambassador da Costa, a man Kissinger knew was simultaneously a consultant to Kissinger Associates and to BCCI. The solicitation then developed through the burgeoning personal relationship between BCCI officer Helmy and Kissinger Associates partner Stoga.
Although Henry Kissinger was never himself especially interested in this potential client, BCCI become aggressively interested in Kissinger Associates because of its political connections, at a time when BCCI was struggling for survival.
Following the Tampa indictments, Kissinger himself recognized the potential risk to the reputation of his firm should it perform services for BCCI, and by December or January instructed Stoga to advise BCCI that no relationship was possible. Unable to respond to Helmy's overtures directly, Stoga, with Kissinger's participation, eventually agreed to pass BCCI on to William Rogers at Arnold & Porter as a means of helping Helmy and BCCI, while protecting Kissinger Associates.
The result was that through the Kissinger Associates connection, BCCI retained lawyers who had previously represented the Justice Department, State Department, and Federal Reserve, agencies of some relevance to BCCI's predicament. That relationship failed to develop not because of any lack of willingness by Arnold & Porter or Helmy at BCCI, but as the direct result of Clifford and Altman's need to maintain control over BCCI's affairs in the United States.
This story highlights once again BCCI's consistent strategy of responding to problems through reaching out to prominent political figures and retired government officials in hopes that it could use political influence to solve its problems. The failure of this strategy was a reflection of BCCI's own naivete about how to do business in the United States, the care which Kissinger himself took to protect his own reputation in dealing with clients, and Clifford and Altman's role of primacy in BCCI's U.S. affairs. BCCI's ability to get its foot in the door at such politically well-connected institutions, does, however, raise questions about the general vulnerability of such politically well-connected firms to providing services that advance the secret agendas of other clients who may be less notorious than, but equally noxious as, BCCI.
1. Letter, Lloyd N. Cutler to Senator Kerry, January 30, 1992.
2. Memorandum/telex, Sakhia to Siddiki, May 6, 1986, Senate document.
3. BCCI internal memorandum, Helmy to Ameer Saddiki, September 2, 1986, Senate document 000653.
4. Staff interview, Abol Helmy, January 12, 1992.
5. Telex, Shafi to da Costa, October 28, 1986, BCCI Senate Document 000645.
6. BCCI Luxembourg Letter of Appointment, Ameer H. Siddiki to Ambassador Correa da Costa, October 28, 1986, Senate document.
7. Letter, November 3, 1987, da Costa to Kissinger.
8. Letter, Sergio Correa da Costa to Chris Vicks, Kissinger Associates, August 13, 1987.
9. Letter, Da Costa to Kissinger, September 20, 1987.
10. Da Costa Memorandum to L. Eagleburger and A. Stoga Re: Kohlberg Kravis Robert & Co -- KKR; October 6, 1987.
11. BCCI Chronology, January 30, 1992, provided to Subcommittee by attorneys for Kissinger Associates.
12. Id.
13. Letter, Khan to Kissinger, August 26, 1987.
14. Letter, Stoga to da Costa, November 2, 1988.
15. Helmy staff interview, January 12, 1992.
16. Letter, Stoga to Helmy, October 7, 1988.
17. Attachment, KISSINGER ASSOCIATES, INC., to Stoga letter to Helmy, October 7, 1988.
18. Letter, BCCI New York, from Abol Fazl Helmy to Swaleh Naqvi, October 12, 1988.
19. Memorandum, BCCI New York, Helmy to Naqvi, October 14, 1988.
20. Memorandum, Sergio Correa da Costa, to Kissinger Associates, October 25, 1988, Ref. BCCI as client of KA, Attention: Mr. L. Eagleburger, Mr. Alan Stoga.
21. Letter, Stoga to da Costa, November 2, 1988.
22. Letters, Cunningham to da Costa, December 12, 1988; da Costa to Kissinger, December 13, 1988.
23. BCCI Chronology, provided to Subcommittee by Kissinger Associates.
24. Letter, BCCI New York, Helmy to Naqvi, December 19, 1991.
25. Memorandum, BCCI New York, Helmy to Naqvi, January 11, 1989.
26. Helmy staff interview, January 12, 1992.
27. BCCI Chronology provided by Kissinger Associates to Subcommittee.
28. BCCI Document in Kissinger Associates file, BCCI New York.
29. Staff interview, Abdur Sakhia, October, 1991.
30. Letter, Rogers to Winer, March 3, 1992.
31. Id and attachments.
32. Stoga to Kissinger, November 11, 1991, RE: BCCI.
33. Letter, Abol F. Helmy to Alan Stoga, November 13, 1991.
THE BCCI AFFAIR
EXECUTIVE SUMMARY
1. BCCI CONSTITUTED INTERNATIONAL FINANCIAL CRIME ON A MASSIVE AND GLOBAL SCALE.
BCCI's unique criminal structure -- an elaborate corporate spider-web with BCCI's founder, Agha Hasan Abedi and his assistant, Swaleh Naqvi, in the middle -- was an essential component of its spectacular growth, and a guarantee of its eventual collapse. The structure was conceived by Abedi and managed by Naqvi for the specific purpose of evading regulation or control by governments. It functioned to frustrate the full understanding of BCCI's operations by anyone.
Unlike any ordinary bank, BCCI was from its earliest days made up of multiplying layers of entities, related to one another through an impenetrable series of holding companies, affiliates, subsidiaries, banks-within-banks, insider dealings and nominee relationships. By fracturing corporate structure, record keeping, regulatory review, and audits, the complex BCCI family of entities created by Abedi was able to evade ordinary legal restrictions on the movement of capital and goods as a matter of daily practice and routine. In creating BCCI as a vehicle fundamentally free of government control, Abedi developed in BCCI an ideal mechanism for facilitating illicit activity by others, including such activity by officials of many of the governments whose laws BCCI was breaking.
BCCI's criminality included fraud by BCCI and BCCI customers involving billions of dollars; money laundering in Europe, Africa, Asia, and the Americas; BCCI's bribery of officials in most of those locations; support of terrorism, arms trafficking, and the sale of nuclear technologies; management of prostitution; the commission and facilitation of income tax evasion, smuggling, and illegal immigration; illicit purchases of banks and real estate; and a panoply of financial crimes limited only by the imagination of its officers and customers.
Among BCCI's principal mechanisms for committing crimes were its use of shell corporations and bank confidentiality and secrecy havens; layering of its corporate structure; its use of front-men and nominees, guarantees and buy-back arrangements; back-to-back financial documentation among BCCI controlled entities, kick-backs and bribes, the intimidation of witnesses, and the retention of well-placed insiders to discourage governmental action.
2. BCCI SYSTEMATICALLY BRIBED WORLD LEADERS AND POLITICAL FIGURES THROUGHOUT THE WORLD.
BCCI's systematically relied on relationships with, and as necessary, payments to, prominent political figures in most of the 73 countries in which BCCI operated. BCCI records and testimony from former BCCI officials together document BCCI's systematic securing of Central Bank deposits of Third World countries; its provision of favors to political figures; and its reliance on those figures to provide BCCI itself with favors in times of need.
These relationships were systematically turned to BCCI's use to generate cash needed to prop up its books. BCCI would obtain an important figure's agreement to give BCCI deposits from a country's Central Bank, exclusive handling of a country's use of U.S. commodity credits, preferential treatment on the processing of money coming in and out of the country where monetary controls were in place, the right to own a bank, secretly if necessary, in countries where foreign banks were not legal, or other questionable means of securing assets or profits. In return, BCCI would pay bribes to the figure, or otherwise give him other things he wanted in a simple quid-pro-quo.
The result was that BCCI had relationships that ranged from the questionable, to the improper, to the fully corrupt with officials from countries all over the world, including Argentina, Bangladesh, Botswana, Brazil, Cameroon, China, Colombia, the Congo, Ghana, Guatemala, the Ivory Coast, India, Jamaica, Kuwait, Lebanon, Mauritius, Morocco, Nigeria, Pakistan, Panama, Peru, Saudi Arabia, Senegal, Sri Lanka, Sudan, Suriname, Tunisia, the United Arab Emirates, the United States, Zambia, and Zimbabwe.
3. BCCI DEVELOPED A STRATEGY TO INFILTRATE THE U.S. BANKING SYSTEM, WHICH IT SUCCESSFULLY IMPLEMENTED, DESPITE REGULATORY BARRIERS THAT WERE DESIGNED TO KEEP IT OUT.
In 1977, BCCI developed a plan to infiltrate the U.S. market through secretly purchasing U.S. banks while opening branch offices of BCCI throughout the U.S., and eventually merging the institutions. BCCI had significant difficulties implementing this strategy due to regulatory barriers in the United States designed to insure accountability. Despite these barriers, which delayed BCCI's entry, BCCI was ultimately successful in acquiring four banks, operating in seven states and the District of Colombia, with no jurisdiction successfully preventing BCCI from infiltrating it.
The techniques used by BCCI in the United States had been previously perfected by BCCI, and were used in BCCI's acquisitions of banks in a number of Third World countries and in Europe. These included purchasing banks through nominees, and arranging to have its activities shielded by prestigious lawyers, accountants, and public relations firms on the one hand, and politically-well connected agents on the other. These techniques were essential to BCCI's success in the United States, because without them, BCCI would have been stopped by regulators from gaining an interest in any U.S. bank. As it was, regulatory suspicion towards BCCI required the bank to deceive regulators in collusion with nominees including the heads of state of several foreign emirates, key political and intelligence figures from the Middle East, and entities controlled by the most important bank and banker in the Middle East.
Equally important to BCCI's successful secret acquisitions of U.S. banks in the face of regulatory suspicion was its aggressive use of a series of prominent Americans, beginning with Bert Lance, and continuing with former Defense Secretary Clark Clifford, former U.S. Senator Stuart Symington, well-connected former federal bank regulators, and former and current local, state and federal legislators. Wittingly or not, these individuals provided essential assistance to BCCI through lending their names and their reputations to BCCI at critical moments. Thus, it was not merely BCCI's deceptions that permitted it to infiltrate the United States and its banking system. Also essential were BCCI's use of political influence peddling and the revolving door in Washington.
4. THE JUSTICE DEPARTMENT MISHANDLED ITS INVESTIGATION AND PROSECUTION OF BCCI, AND ITS RELATIONSHIPS WITH OTHER GOVERNMENT AGENCIES CONCERNING BCCI.
Federal prosecutors in Tampa handling the 1988 drug money laundering indictment of BCCI failed to recognize the importance of information they received concerning BCCI's other crimes, including its apparent secret ownership of First American. As a result, they failed adequately to investigate these allegations themselves, or to refer this portion of the case to the FBI and other agencies at the Justice Department who could have properly investigated the additional information.
The Justice Department, along with the U.S. Customs Service and Treasury Departments, failed to provide adequate support and assistance to investigators and prosecutors working on the case against BCCI in 1988 and 1989, contributing to conditions that ultimately caused the chief undercover agent who handled the sting against BCCI to quit Customs entirely.
The January 1990 plea agreement between BCCI and the U.S. Attorney in Tampa kept BCCI alive, and had the effect of discouraging BCCI's officials from telling the U.S. what they knew about BCCI's larger criminality, including its ownership of First American and other U.S. banks.
The Justice Department essentially stopped investigating BCCI following the plea agreement, until press accounts, Federal Reserve action, and the New York District Attorney's investigation in New York forced them into action in mid-1991.
Justice Department personnel in Washington lobbied state regulators to keep BCCI open after the January 1990 plea agreement, following lobbying of them by former Justice Department personnel now representing BCCI.
Relations between main Justice in Washington and the U.S. Attorney for Miami, Dexter Lehtinen, broke down on BCCI-related prosecutions, and key actions on BCCI-related cases in Miami were, as a result, delayed for months during 1991.
Justice Department personnel in Washington, Miami, and Tampa actively obstructed and impeded Congressional attempts to investigate BCCI in 1990, and this practice continued to some extent until William P. Barr became Attorney General in late October, 1991.
Justice Department personnel in Washington, Miami and Tampa obstructed and impeded attempts by New York District Attorney Robert Morgenthau to obtain critical information concerning BCCI in 1989, 1990, and 1991, and in one case, a federal prosecutor lied to Morgenthau's office concerning the existence of such material. Important failures of cooperation continued to take place until William P. Barr became Attorney General in late October, 1991.
Cooperation by the Justice Department with the Federal Reserve was very limited until after BCCI's global closure on July 5, 1991.
Some public statements by the Justice Department concerning its handling of matters pertaining to BCCI were more cleverly crafted than true.
5. NEW YORK DISTRICT ATTORNEY MORGENTHAU NOT ONLY BROKE THE CASE ON BCCI, BUT INDIRECTLY BROUGHT ABOUT BCCI'S GLOBAL CLOSURE.
Acting on information provided him by the Subcommittee, New York District Attorney Robert Morgenthau began an investigation in 1989 of BCCI which materially contributed to the chain of events that resulted in BCCI's closure.
Questions asked by the District Attorney intensified the review of BCCI's activities by its auditors, Price Waterhouse, in England, and gave life to a moribund Federal Reserve investigation of BCCI's secret ownership of First American.
The District Attorney's criminal investigation was critical to stopping an intended reorganization of BCCI worked out through an agreement among the Bank of England, the government of Abu Dhabi, BCCI's auditors, Price Waterhouse, and BCCI itself, in which the nature and extent of BCCI's criminality would be suppressed, while Abu Dhabi would commit its financial resources to keep the bank going during a restructuring. By the late spring of 1991, the key obstacle to a successful restructuring of BCCI bankrolled up Abu Dhabi was the possibility that the District Attorney of New York would indict. Such an indictment would have inevitably caused a swift and thoroughly justified an international run on BCCI by depositors all over the world. Instead, it was a substantial factor in the decision of the Bank of England to take the information it had received from Price Waterhouse and rely on it to close BCCI.
6. BCCI'S ACCOUNTANTS FAILED TO PROTECT BCCI'S INNOCENT DEPOSITORS AND CREDITORS FROM THE CONSEQUENCES OF POOR PRACTICES AT THE BANK OF WHICH THE AUDITORS WERE AWARE FOR YEARS.
BCCI's decision to divide its operations between two auditors, neither of whom had the right to audit all BCCI operations, was a significant mechanism by which BCCI was able to hide its frauds during its early years. For more than a decade, neither of BCCI's auditors objected to this practice.
BCCI provided loans and financial benefits to some of its auditors, whose acceptance of these benefits creates an appearance of impropriety, based on the possibility that such benefits could in theory affect the independent judgment of the auditors involved. These benefits included loans to two Price Waterhouse partnerships in the Caribbean. In addition, there are serious questions concerning the acceptance of payments and possibly housing from BCCI or its affiliates by Price Waterhouse partners in the Grand Caymans, and possible acceptance of sexual favors provided by BCCI officials to certain persons affiliated with the firm.
Regardless of BCCI's attempts to hide its frauds from its outside auditors, there were numerous warning bells visible to the auditors from the early years of the bank's activities, and BCCI's auditors could have and should have done more to respond to them.
By the end of 1987, given Price Waterhouse (UK)'s knowledge about the inadequacies of BCCI's records, it had ample reason to recognize that there could be no adequate basis for certifying that it had examined BCCI's books and records and that its picture of those records were indeed a "true and fair view" of BCCI's financial state of affairs.
The certifications by BCCI's auditors that its picture of BCCI's books were "true and fair" from December 31, 1987 forward, had the consequence of assisting BCCI in misleading depositors, regulators, investigators, and other financial institutions as to BCCI's true financial condition.
Prior to 1990, Price Waterhouse (UK) knew of gross irregularities in BCCI's handling of loans to CCAH/First American and was told of violations of U.S. banking laws by BCCI and its borrowers in connection with CCAH/First American, and failed to advise the partners of its U.S. affiliate or any U.S. regulator.
There is no evidence that Price Waterhouse (UK) has to this day notified Price Waterhouse (US) of the extent of the problems it found at BCCI, or of BCCI's secret ownership of CCAH/First American. Given the lack of information provided Price Waterhouse (US) by its United Kingdom affiliate, the U.S. firm performed its auditing of BCCI's U.S. branches in a manner that was professional and diligent, albeit unilluminating concerning BCCI's true activities in the United States.
Price Waterhouse's certification of BCCI's books and records in April, 1990 was explicitly conditioned by Price Waterhouse (UK) on the proposition that Abu Dhabi would bail BCCI out of its financial losses, and that the Bank of England, Abu Dhabi and BCCI would work with the auditors to restructure the bank and avoid its collapse. Price Waterhouse would not have made the certification but for the assurances it received from the Bank of England that its continued certification of BCCI's books was appropriate, and indeed, necessary for the bank's survival.
The April 1990 agreement among Price Waterhouse (UK), Abu Dhabi, BCCI, and the Bank of England described above, resulted in Price Waterhouse (UK) certifying the financial picture presented in its audit of BCCI as "true and fair," with a single footnote material to the huge losses still to be dealt with, failed adequately to describe their serious nature. As a consequence, the certification was materially misleading to anyone who relied on it ignorant of the facts then mutually known to BCCI, Abu Dhabi, Price Waterhouse and the Bank of England.
The decision by Abu Dhabi, Price Waterhouse (UK), BCCI and the Bank of England to reorganize BCCI over the duration of 1990 and 1991, rather than to advise the public of what they knew, caused substantial injury to innocent depositors and customers of BCCI who continued to do business with an institution which each of the above parties knew had engaged in fraud.
From at least April, 1990 through November, 1990, the Government of Abu Dhabi had knowledge of BCCI's criminality and frauds which it apparently withheld from BCCI's outside auditors, contributing to the delay in the ultimate closure of the bank, and causing further injury to the bank's innocent depositors and customers.
7. THE CIA DEVELOPED IMPORTANT INFORMATION ON BCCI, AND INADVERTENTLY FAILED TO PROVIDE IT TO THOSE WHO COULD USE IT.
THE CIA AND FORMER CIA OFFICIALS HAD A FAR WIDER RANGE OF CONTACTS AND LINKS TO BCCI AND BCCI SHAREHOLDERS, OFFICERS, AND CUSTOMERS, THAN HAS BEEN ACKNOWLEDGED BY THE CIA.
By early 1985, the CIA knew more about BCCI's goals and intentions concerning the U.S. banking system than anyone else in government, and provided that information to the U.S. Treasury and the Office of the Comptroller of the Currency, neither of whom had the responsibility for regulating the First American Bank that BCCI had taken over. The CIA failed to provide the critical information it had gathered to the correct users of the information -- the Federal Reserve and the Justice Department.
After the CIA knew that BCCI was as an institution a fundamentally corrupt criminal enterprise, it continued to use both BCCI and First American, BCCI's secretly held U.S. subsidiary, for CIA operations.
While the reporting concerning BCCI by the CIA was in some respects impressive -- especially in its assembling of the essentials of BCCI's criminality, its secret purchase of First American by 1985, and its extensive involvement in money laundering -- there were also remarkable gaps in the CIA's reported knowledge about BCCI.
Former CIA officials, including former CIA director Richard Helms and the late William Casey; former and current foreign intelligence officials, including Kamal Adham and Abdul Raouf Khalil; and principal foreign agents of the U.S., such as Adnan Khashoggi and Manucher Ghorbanifar, float in and out of BCCI at critical times in its history, and participate simultaneously in the making of key episodes in U.S. foreign policy, ranging from the Camp David peace talks to the arming of Iran as part of the Iran/Contra affair. Yet the CIA has continued to maintain that it has no information regarding any involvement of these people, raising questions about the quality of intelligence the CIA is receiving generally, or its candor with the Subcommittee. The CIA's professions of total ignorance about their respective roles in BCCI are out of character with the Agency's early knowledge of many critical aspects of the bank's operations, structure, personnel, and history.
The errors made by the CIA in connection with its handling of BCCI were complicated by its handling of this Congressional investigation. Initial information that was provided by the CIA was untrue; later information that was provided was incomplete; and the Agency resisted providing a "full" account about its knowledge of BCCI until almost a year after the initial requests for the information. These experiences suggest caution in concluding that the information provided to date is full and complete. The relationships among former CIA personnel and BCCI front men and nominees, including Kamal Adham, Abdul Khalil, and Mohammed Irvani, requires further investigation.
8. THE FLAWED DECISIONS MADE BY REGULATORS IN THE US WHICH ALLOWED BCCI TO SECRETLY ACQUIRE US BANKS WERE CAUSED IN PART BY GAPS IN THE REGULATORY PROCESS AND IN PART BY BCCI'S USE OF WELL-CONNECTED LAWYERS TO HELP THEM THROUGH THE PROCESS.
When the Federal Reserve approved the take over of Financial General Bankshares by CCAH in 1981, it had substantial circumstantial evidence before it to suggest that BCCI was behind the bank's purchase. The Federal Reserve chose not to act on that evidence because of the specific representations that were made to it by CCAH's shareholders and lawyers, that BCCI was neither financing nor directing the take over. These representations were untrue and the Federal Reserve would not have approved the CCAH application but for the false statements made to it.
In approving the CCAH application, the Federal Reserve relied upon representations from the Central Intelligence Agency, State Department, and other U.S. agencies that they had no objections to or concerns about the Middle Eastern shareholders who were purporting to purchase shares in the bank. The Federal Reserve also relied upon the reputation for integrity of BCCI's lawyers, especially that of former Secretary of Defense Clark Clifford and former Federal Reserve counsel Baldwin Tuttle. Assurances provided the Federal Reserve by the CIA and State Department, and by both attorneys, had a material impact on the Federal Reserve's willingness to approve the CCAH application despite its concerns about BCCI's possible involvement.
In 1981, the Office of the Comptroller of the Currency had additional information, from reports concerning BCCI's role in the Bank of America and the National Bank of Georgia, concerning BCCI's possible use of nominee arrangements and alter egos to purchase banks on its behalf in the United States, which it failed to pass on to the Federal Reserve. This failure was inadvertent, not intentional.
In approving the CCAH application, the Federal Reserve permitted BCCI and its attorneys to carve out a seeming loophole in the commitment that BCCI not be involved in financing or controlling CCAH's activities. This loophole permitted BCCI to act as an investment advisor and information conduit to CCAH's shareholders. The Federal Reserve's decision to accept this arrangement allowed BCCI and its attorneys and agents to use these permitted activities as a cover for the true nature of BCCI's ownership of CCAH and the First American Banks.
After approving the CCAH application in 1981, the Federal Reserve received few indicators about BCCI's possible improper involvement in CCAH/First American. However, at several critical junctures, especially the purchase by First American of the National Bank of Georgia from Ghaith Pharaon in 1986, there were obvious warnings signs that could have been investigated and which were not, until late 1990.
As a foreign bank whose branches were chartered by state banking authorities, BCCI largely escaped the Federal Reserve's scrutiny regarding its criminal activities in the United States unrelated to its interest in CCAH/First American. This gap in regulatory oversight has since been closed by the passage of the Foreign Bank Supervision Enhancement Act of 1991.
The U.S. Treasury Department failed to provide the Federal Reserve with information it received concerning BCCI's ownership of First American in 1985 and 1986 from the CIA. However, IRS agents did provide important information to the Federal Reserve on this issue in early 1989, which the Federal Reserve failed adequately to investigate at the time.
The FDIC approved Ghaith Pharaon's purchase of the Independence Bank in 1985 knowing him to be a shareholder of BCCI and knowing that he was placing a senior BCCI officer in charge of the bank, and failed to confer with the Federal Reserve or the OCC regarding their previous experiences with Pharaon and BCCI.
Once the Federal Reserve commenced a formal investigation of BCCI and First American on January 3, 1991, its investigation of BCCI and First American was aggressive and diligent. Its decisions to force BCCI out of the United States and to divest itself of First American were prompt. The charges it brought against the parties involved with BCCI in violating federal banking standards were fully justified by the record. Its investigations have over the past year contributed substantially to public understanding to date of what took place.
Even after the Federal Reserve understood the nature and scope of BCCI's frauds, it did not seek to have BCCI closed globally. This position was in some measure the consequence of the Federal Reserve's need to secure the cooperation of BCCI's majority shareholders, the government and royal family of Abu Dhabi, in providing some $190 million to prop up First American Bank and prevent an embarrassing collapse. However, Federal Reserve investigators did actively work in the spring of 1991 to have BCCI's top management removed.
In investigating BCCI, the Federal Reserve's efforts were hampered by examples of lack of cooperation by foreign governments, including most significantly the Serious Fraud Office in the United Kingdom and, since the closure of BCCI on July 5, 1991, the government of Abu Dhabi.
U.S. regulatory handling of the U.S. banks secretly owned by BCCI was hampered by lack of coordination among the regulators, which included the Federal Reserve, the FDIC, and the OCC, highlighting the need for further integration of these separate banking regulatory agencies on supervision and enforcement.
9. THE BANK OF ENGLAND'S REGULATION OF BCCI WAS WHOLLY INADEQUATE TO PROTECT BCCI'S DEPOSITORS AND CREDITORS, AND THE BANK OF ENGLAND WITHHELD INFORMATION ABOUT BCCI'S FRAUDS FROM PUBLIC KNOWLEDGE FOR FIFTEEN MONTHS BEFORE CLOSING THE BANK.
The Bank of England had deep concerns about BCCI from the late 1970s on, and undertook several steps to slow BCCI's expansion in the United Kingdom.
In 1988 and 1989, the Bank of England learned of BCCI's involvement in the financing of terrorism and in drug money laundering, and undertook additional, but limited supervision of BCCI in response to receiving this information.
In the spring of 1990, Price Waterhouse advised the Bank of England that there were substantial loan losses at BCCI, numerous poor banking practices, and evidence of fraud, which together had created a massive hole in BCCI's books. The Bank of England's response to the information was not to close BCCI down, but to find ways to prop up BCCI and prevent its collapse. This meant, among other things, keeping secret the very serious nature of BCCI's problems from its creditors and one million depositors.
In April, 1990, the Bank of England reached an agreement with BCCI, Abu Dhabi, and Price Waterhouse to keep BCCI from collapsing. Under the agreement, Abu Dhabi agreed to guarantee BCCI's losses and Price Waterhouse agreed to certify BCCI's books. As a consequence, innocent depositors and creditors who did business with BCCI following that date were deceived into believing that BCCI's financial problems were not as serious as each of these parties already knew them to be.
From April, 1990, the Bank of England relied on British bank secrecy and confidentiality laws to reduce the risk of BCCI's collapse if word of its improprieties leaked out. As a consequence, innocent depositors and creditors who did business with BCCI following that date were denied vital information, in the possession of the regulators, auditors, officers, and shareholders of BCCI, that could have protected them against their losses.
In order to prevent risk to its restructuring plan for BCCI and a possible run on BCCI, the Bank of England withheld important information from the Federal Reserve in the spring of 1990 about the size and scope of BCCI's lending on CCAH/First American shares, despite the Federal Reserve's requests for such information. This action by the Bank of England delayed the opening of a full investigation by the Federal Reserve for approximately eight months.
Despite its knowledge of some of BCCI's past frauds, and its own understanding that consolidation into a single entity is essential for regulating a bank, in late 1990 and early 1991 the Bank of England tentatively agreed with BCCI and its Abu Dhabi owners to permit BCCI to restructure as three "separate" institutions, based in London, Abu Dhabi and Hong Kong. This tentative decision demonstrated extraordinarily poor judgment on the part of the Bank of England. This decision was reversed abruptly when the Bank of England suddenly decided to close BCCI instead in late June, 1991.
The decision by the Bank of England in April 1990 to permit BCCI to move its headquarters, officers, and records out of British jurisdiction to Abu Dhabi has had profound negative consequences for investigations of BCCI around the world. As a result of this decision, essential records and witnesses regarding what took place were removed from the control of the British government, and placed under the control of the government of Abu Dhabi, which has to date withheld them from criminal investigators in the U.S. and U.K. This decision constituted a costly, and likely irretrievable, error on the part of the Bank of England.
10. CLARK CLIFFORD AND ROBERT ALTMAN PARTICIPATED IN IMPROPRIETIES WITH BCCI IN THE UNITED STATES.
Regardless of whether Clifford and Altman were deceived by BCCI in some respects, both men participated in some BCCI's deceptions in the United States.
Beginning in late 1977, Clifford and Altman assisted BCCI in purchasing a U.S. bank, Financial General Bankshares, with the participation of nominees, and understood BCCI's central involvement in directing and controlling the transaction.
In the years that followed, they made business decisions regarding acquisitions for First American that were motivated by BCCI's goals, rather than by the business needs of First American itself; and represented as their own to regulators decisions that had been made by Abedi and BCCI on fundamental matters concerning First American, including the purchase by First American of the National Bank of Georgia and First American's decision to purchase branches in New York City.
Clifford and Altman concealed their own financing of shares of First American by BCCI from First American's other directors and from U.S. regulators, withheld critical information that they possessed from regulators in an effort to keep the truth about BCCI's ownership of First American secret, and deceived regulators and the Congress concerning their own knowledge of and personal involvement in BCCI's illegalities in the United States.
11. ABU DHABI'S INVOLVEMENT IN BCCI'S AFFAIRS WAS FAR MORE CENTRAL THAN IT HAS ACKNOWLEDGED, INVOLVING IN SOME CASES NOMINEE RELATIONS AND NO-RISK TRANSACTIONS THAT ABU DHABI IS TODAY COVERING-UP THROUGH HIDING WITNESSES AND DOCUMENTS FROM U.S. INVESTIGATORS.
Members of Abu Dhabi's ruling family appear to have contributed no more than $500,000 to BCCI's capitalization prior to April 1990, despite being the record owner of almost one-quarter of the bank's total shares. An unknown but substantial percentage of the shares acquired by Abu Dhabi overall in BCCI appear to have been acquired on a risk-free basis -- either with guaranteed rates of return, buy-back arrangements, or both.
The interest held in BCCI by the Abu Dhabi ruling family, like the interests held by the rulers of the three other gulf sheikdoms in the United Arab Emirates who owned shares of BCCI, materially aided and abetted Abedi and BCCI in projecting the illusion that BCCI was backed by, and capitalized by, Abu Dhabi's wealth. Investments made in BCCI by the Abu Dhabi Investment Authority appear to have been genuine, although possibly guaranteed by BCCI with buy-back or other no-risk arrangements.
Shares in Financial General Bankshares held by members of the Abu Dhabi royal family in late 1977 and early 1978 appear to have been nominee arrangements, adopted by Abu Dhabi as a convenience to BCCI and Abedi, under arrangements in which Abu Dhabi was to be without risk, and BCCI was to guarantee the purchase through a commitment to buy-back the stock at an agreed upon price.
Abu Dhabi's representative to BCCI's board of directors, Ghanim al Mazrui, received unorthodox financial benefits from BCCI in no-risk stock deals which may have compromised his ability to exercise independent judgment concerning BCCI's actions; confirmed at least one fraudulent transaction involving Abu Dhabi; and engaged in other improprieties pertaining to BCCI; but remains today in place at the apex of Abu Dhabi's committee designated to respond to BCCI's collapse.
In April, 1990, Abu Dhabi was told in detail about BCCI's fraud by top BCCI officials, and failed to advise BCCI's external auditors of what it had learned. Between April, 1990 and November, 1990, Abu Dhabi and BCCI together kept some information concerning BCCI's frauds hidden from the auditors.
From April, 1990 through July 5, 1991, Abu Dhabi tried to save BCCI through a massive restructuring. As part of the restructuring process, Abu Dhabi agreed to take responsibility for BCCI's losses, Price Waterhouse agreed to certify BCCI's books for another year, and Abu Dhabi, Price Waterhouse, the Bank of England, and BCCI agreed to keep all information concerning BCCI's frauds and other problems secret from BCCI's one million depositors, as well as from U.S. regulators and law enforcement, to prevent a run on the bank.
After the Federal Reserve was advised by the New York District Attorney of possible nominee arrangements involving BCCI and First American, Abu Dhabi, in an apparent effort to gain the Federal Reserve's acquiescence in BCCI's proposed restructuring, provided limited cooperation to the Federal Reserve, including access to selected documents. The cooperation did not extend to permitting the Federal Reserve open access to all BCCI documents, or substantive communication with key BCCI officials held in Abu Dhabi, such as BCCI's former president, Swaleh Naqvi. That access ended with the closure of BCCI July 5, 1991.
From November, 1990 through the present, Abu Dhabi has failed to provide documents and witnesses to U.S. law enforcement authorities and to the Congress, despite repeated commitments to do so. Instead, it has actively prevented U.S. investigators from having access to vital information necessary to investigate BCCI's global wrongdoing.
The proposed agreement between Abu Dhabi and BCCI's liquidators to settle their claims against one another contains provisions which could have the consequence of permitting Abu Dhabi to cover up any wrongdoing it may have had in connection with BCCI.
There is some evidence that the Sheikh Zayed may have had a political agenda in agreeing to the involvement of members of the Abu Dhabi royal family and its investment authority in purchasing shares of Financial General Bankshares, then of CCAH/First American. This evidence is offset, in part, by testimony that Abu Dhabi share purchases in the U.S. bank were done at Abedi's request and did not represent an actual investment by Abu Dhabi until much later.
12. BCCI MADE EXTENSIVE USE OF THE REVOLVING DOOR AND POLITICAL INFLUENCE PEDDLING IN THE UNITED STATES TO ACCOMPLISH ITS GOALS.
BCCI's political connections in Washington had a material impact on its ability to accomplish its goals in the United States. In hiring lawyers, lobbyists and public relations firms in the United States to help it deal with its problems vis a vis the government, BCCI pursued a strategy that it had practiced successfully around the world: the hiring of former government officials.
BCCI's and its shareholders' cadre of professional help in Washington D.C. included, at various times, a former Secretary of Defense (Clark Clifford), former Senators and Congressmen (John Culver, Mike Barnes), former federal prosecutors (Larry Wechsler, Raymond Banoun, and Larry Barcella, a former State Department Official (William Rogers), a former White House aide (Ed Rogers), a current Presidential campaign deputy director (James Lake), and former Federal Reserve Attorneys (Baldwin Tuttle, Jerry Hawke, and Michael Bradfield). In addition, BCCI solicited the help of Henry Kissinger, who chose not to do business with BCCI but made a referral of BCCI to his own lawyers.
At several key points in BCCI's activities in the U.S., the political influence and personal contacts of those it hired had an impact in helping BCCI accomplish its goals, including in connection with the 1981 CCAH acquisition of FGB and the handling and aftermath of BCCI's plea agreement in Tampa in 1990.
The political connections of BCCI's U.S. lawyers and lobbyists were critical to impeding Congressional and law enforcement investigations from 1988 through 1991, through a variety of techniques that included impugning the motives and integrity of investigators and journalists, withholding subpoenaed documents, and lobbying on capital hill to protect BCCI's reputation and discourage efforts to close the bank down in the United States.
13. BCCI'S PUBLIC RELATIONS FIRM SMEARED PEOPLE WHO WERE TELLING THE TRUTH AS PART OF ITS WORK FOR BCCI.
When Hill and Knowlton accepted BCCI's account in October, 1988, its partners knew of BCCI's reputation as a "sleazy" bank, but took the account anyway. In 1988 and 1989, Hill and Knowlton assisted BCCI with an aggressive public relations campaign designed to demonstrate that BCCI was not a criminal enterprise, and to put the best face possible on the Tampa drug money laundering indictments. In so doing, it disseminated materials unjustifiably and unfairly discrediting persons and publications who were telling the truth about BCCI's criminality.
Important information provided by Hill and Knowlton to Capitol Hill and provided by First American to regulators concerning the relationship between BCCI and First American in April, 1990 was false. The misleading material represented the position of BCCI, First American, Clifford and Altman concerning the relationship, and was contrary to the truth known by BCCI, Clifford and Altman.
Hill and Knowlton's representation of BCCI was within the norms and standards of the public relations industry, but raises larger questions as to the relationship of those norms and standards to the public interest.
14. BCCI ACTIVELY SOLICITED THE FRIENDSHIPS OF MAJOR U.S. POLITICAL FIGURES, AND MADE PAYMENTS TO THESE POLITICAL FIGURES, WHICH IN SOME CASES MAY HAVE BEEN IMPROPER.
Beginning with Bert Lance in 1977, whose debts BCCI paid off with a $3.5 million loan, BCCI, BCCI nominees, and top officials of BCCI systematically developed friendships and relationships with important U.S political figures. While those which are publicly known include former president Jimmy Carter, Jesse Jackson, and Andrew Young, the Subcommittee has received information suggesting that BCCI's network extended to other U.S. political figures. The payments made by BCCI to Andrew Young while he was a public official were at best unusual, and by all appearances, improper.
15. BCCI'S COMMODITIES AFFILIATE, CAPCOM, ENGAGED IN BILLIONS OF DOLLARS OF LARGELY ANONYMOUS TRADING IN THE US WHICH INCLUDED A VERY SUBSTANTIAL LEVEL OF MONEY LAUNDERING, WHILE CAPCOM SIMULTANEOUSLY DEVELOPED SIGNIFICANT TIES TO IMPORTANT U.S. TELECOMMUNICATIONS INDUSTRY EXECUTIVES AND FOREIGN INTELLIGENCE FIGURES.
BCCI's commodities affiliate, Capcom, based in Chicago, London and Cairo, was principally staffed by former BCCI bankers, capitalized by BCCI and BCCI customers, and owned by BCCI, BCCI shareholders, and front-men. Capcom employed many of the same practices as BCCI, especially the use of nominees and front companies to disguise ownership and the movement of money. Four U.S. citizens -- none of whom had any experience or expertise in the commodities markets -- played important and varied roles as Capcom front men in the United States.
While investigation information concerning Capcom is incomplete, its activities appear to have included misappropriation of BCCI assets; the laundering of billions of dollars from the Middle East to the US and other parts of the world; and the siphoning of assets from BCCI to create a safe haven for them outside of the official BCCI empire.
Capcom's majority shareholders, Kamal Adham and A.R. Khalil, were both former senior Saudi government officials and successively acted as Saudi Arabia's principal liaisons to the Central Intelligence Agency during the 1970's and 1980's.
Its U.S. front men included Robert Magness, the CEO of the largest U.S. cable telecommunications company, TCI; a vice-President of TCI, Larry Romrell; and two other Americans, Kerry Fox and Robert Powell, with long-standing business interests in the Middle East. Magness, Romrell and Fox received loans from BCCI for real estate ventures in the U.S., and Magness and Romrell discussed numerous business ventures between BCCI and TCI, some of which involved the possible purchase of U.S. telecommunications stock and substantial lending by BCCI.
Commodities regulators with the responsibility for investigating Capcom showed little interest in conducting a thorough investigation of its activities, and in 1989 allowed Capcom to avoid such an investigation through agreeing to cease doing business in the United States.
The Subcommittee could not determine whether BCCI, Capcom, or their shareholders or agents actually acquired equity interests in the U.S. cable industry and believes further investigation of matters pertaining to Capcom is essential.
16. INVESTIGATIONS OF BCCI TO DATE REMAIN INCOMPLETE, AND MANY LEADS CANNOT BE FOLLOWED UP, AS THE RESULT OF DOCUMENTS BEING WITHHELD FROM US INVESTIGATORS BY THE BRITISH GOVERNMENT, AND DOCUMENTS AND WITNESSES BEING WITHHELD FROM US INVESTIGATORS BY THE GOVERNMENT OF ABU DHABI.
Many of the specific criminal transactions engaged in by BCCI's customers remain hidden from investigation as the result of bank secrecy laws in many jurisdictions, British national security laws, and the holding of key witnesses and documents by the Government of Abu Dhabi. Documents pertaining to BCCI's use to finance terrorism, to assist the builders of a Pakistani nuclear bomb, to finance Iranian arms deals, and related matters have been sealed in the United Kingdom by British intelligence and remain unavailable to U.S. investigators. Many other basic matters pertaining to BCCI's criminality, including any list that may exist of BCCI's political payoffs and bribes, remain sequestered in Abu Dhabi and unavailable to U.S. investigators.
Many investigative leads remain to be explored, but cannot be answered with devoting substantial additional sources that to date no agency of government has been in a position to provide.
Unanswered questions include, but are not limited to, the relationship between BCCI and the Banco Nazionale del Lavoro; the alleged relationship between the late CIA director William Casey and BCCI; the extent of BCCI's involvement in Pakistan's nuclear program; BCCI's manipulation of commodities and securities markets in Europe and Canada; BCCI's activities in India, including its relationship with the business empire of the Hinduja family; BCCI's relationships with convicted Iraqi arms dealer Sarkis Sarkenalian, Syrian drug trafficker, terrorist, and arms trafficker Monzer Al-Kassar, and other major arms dealers; the use of BCCI by central figures in the alleged "October Surprise," BCCI's activities with the Central Bank of Syria and with the Foreign Trade Mission of the Soviet Union in London; its involvement with foreign intelligence agencies; the financial dealingst of BCCI directors with Charles Keating and several Keating affiliates and front-companies, including the possibility that BCCI related entities may have laundered funds for Keating to move them outside the United States; BCCI's financing of commodities and other business dealings of international criminal financier Marc Rich; the nature, extent and meaning of the ownership of other major U.S. financial institutions by Middle Eastern political figures; the nature, extent, and meaning of real estate and financial investments in the United States by major shareholders of BCCI; the sale of BCCI affiliate Banque de Commerce et Placement in Geneva, to the Cukorova Group of Turkey, which owned an entity involved in the BNL Iraqi arms sales, among others.
The withholding of documents and witnesses from U.S. investigators by the Government of Abu Dhabi threatens vital U.S. foreign policy, anti-narcotics and money laundering, and law enforcement interests, and should not be tolerated.
SUMMARY OF LEGISLATIVE RECOMMENDATIONS
1. THE SUBCOMMITTEE RECOMMENDS THAT THE UNITED STATES DEVELOP A MORE AGGRESSIVE AND COORDINATED APPROACH TO INTERNATIONAL FINANCIAL CRIME, AND TO MOVE FURTHER AGAINST FOREIGN PRIVACY AND CONFIDENTIAL LAWS THAT PROTECT CRIMINALS.
2. THE SUBCOMMITTEE RECOMMENDS THAT THE JUSTICE DEPARTMENT RECONSIDER THE POLICIES AND PRACTICES THAT LED TO ITS INEFFECTIVENESS IN INVESTIGATING AND PROSECUTING BCCI, AND IMPAIRED ITS ABILITY TO COOPERATE WITH OTHER INVESTIGATIONS OF BCCI BEING CONDUCTED BY THE FEDERAL RESERVE, NEW YORK DISTRICT ATTORNEY, AND THE SENATE.
3. THE SUBCOMMITTEE RECOMMENDS THAT THE CENTRAL INTELLIGENCE AGENCY AND STATE DEPARTMENT UPGRADE THE TRACKING OF FOREIGN FINANCIAL INSTITUTIONS AND ACTIVITIES, AND THE DISSEMINATION OF INFORMATION CONCERNING SUCH INSTITUTIONS.
4. THE SUBCOMMITTEE RECOMMENDS THAT THE CONGRESS CONSIDER WHETHER ADDITIONAL OVERSIGHT MECHANISMS ARE NECESSARY TO ENSURE THE CIA'S ACCOUNTABILITY ON THE PROVISION OF INFORMATION.
5. THE SUBCOMMITTEE RECOMMENDS THAT FEDERAL AGENCIES IMPOSE NEW REQUIREMENTS ON FOREIGN AUDITORS TO PROTECT U.S. INTERESTS IN ANY CASE IN WHICH ANY SUCH AGENCY IS RELYING ON AN AUDIT CERTIFIED BY A FOREIGN AUDITOR. AT MINIMUM, THIS SHOULD REQUIRE FOREIGN AUDITORS WHOSE CERTIFICATIONS ARE USED BY INSTITUTIONS DOING BUSINESS IN THE U.S. AGREE TO SUBMIT THEMSELVES TO U.S. LAWS.
6. THE SUBCOMMITTEE RECOMMENDS THAT THE PRESIDENT AND THE SECRETARY OF STATE ADVISE THE GOVERNMENT OF ABU DHABI THAT ITS WITHHOLDING OF DOCUMENTS AND WITNESSES PERTAINING TO BCCI FROM U.S. FEDERAL LAW ENFORCEMENT INVESTIGATORS, THE FEDERAL RESERVE, THE NEW YORK DISTRICT ATTORNEY AND THE CONGRESS THREATENS VITAL U.S. INTERESTS AND WILL NOT BE TOLERATED.
7. FURTHER ATTENTION NEEDS TO BE GIVEN TO THE PROBLEM OF THE REVOLVING DOOR IN WASHINGTON, AND THE IMPACT ON THE REGULATORY PROCESS AND ON LAW ENFORCEMENT OF POLITICAL INFLUENCE IN WASHINGTON. THE SUBCOMMITTEE RECOMMENDS THE CONSIDERATION OF LEGISLATING A FEDERAL STATUTORY CODE OF CONDUCT FOR ATTORNEYS WHO PRACTICE BEFORE FEDERAL AGENCIES.
8. THE SELF-REGULATION OF THE U.S COMMODITIES MARKETS BY THE COMMODITIES FUTURES TRADING COMMISSION, THE CHICAGO BOARD OF TRADE, AND THE CHICAGO MERCANTILE EXCHANGE IS INADEQUATE TO PROTECT THOSE MARKETS AGAINST MONEY LAUNDERING INVOLVING TRADES
FROM ABROAD. THE SUBCOMMITTEE RECOMMENDS THAT THE EXCHANGES MAKE MONEY LAUNDERING ILLEGAL, AND DEMAND THAT THIS REQUIREMENT BE ACCEPTED BY FOREIGN COMMODITIES EXCHANGES WITH WHOM THEY DO BUSINESS, AS A CONDITION OF ACCESS TO US EXCHANGES.
9. THE SUBCOMMITTEE RECOMMENDS THAT FURTHER STEPS BE TAKEN TO INSURE ADEQUATE ACCOUNTABILITY OF FOREIGN FINANCIAL INSTITUTIONS DOING BUSINESS IN THE UNITED STATES, INCLUDING REQUIRING FOREIGN BANKS FORM SEPARATELY CAPITALIZED HOLDING COMPANIES IN THE UNITED STATES AS A CONDITION OF LICENSE AND THE CONSIDERATION BY THE FEDERAL RESERVE OF ESTABLISHMENT A MINIMUM STANDARD FOR CONSOLIDATED REGULATION THAT EXCLUDES BANK REGULATORY HAVENS.
10. THE SUBCOMMITTEE RECOMMENDS THAT FOREIGN INVESTORS WHO PURCHASE SUBSTANTIAL SHARES OF U.S. BUSINESSES BE REQUIRED TO APPEAR PERSONALLY IN THE UNITED STATES AS INSURANCE THAT THE FOREIGN INVESTOR IS NOT ACTING AS A NOMINEE FOR SOMEONE ELSE.
11. TURF WARS CONTINUE TO SEVERELY DAMAGE THE ABILITY OF LAW-ENFORCEMENT AGENCIES IN THE UNITED STATES TO DO THEIR JOB. THE SUBCOMMITTEE RECOMMENDS THE ESTABLISHMENT OF A COMMITTEE OF LAW ENFORCEMENT OFFICIALS WHOSE JOB IT IS TO CONDUCT OVERSIGHT OF, PREVENT, AND RESPOND TO FAILURES OF COOPERATION IN LAW ENFORCEMENT.
12. THE SUBCOMMITTEE RECOMMENDS THAT A STATUTORY MECHANISM FOR THE RECEIPT BY CONGRESS OF FOREIGN FINANCIAL INFORMATION BE ESTABLISHED.
Connecting Cheney to Enron to Hill & Knowlton to BCCI et al to CRIS to Houston Texas
