The Bcci Scandal -- One Man's Dream: Trusted Aides Tell Abedi's Story

KARACHI, Pakistan - In a small, red-roofed cottage in the heart of this financial mecca where three decades ago he conceived a $20 billion banking empire, Agha Hasan Abedi has watched from a wheelchair as his life's vision crumbles amid charges of unprecedented, worldwide bank fraud.

He has said little about it, his brain damaged from heart attacks, his speech slurred from a stroke and his vocal cords badly damaged from surgery.

In fact, the man who once vowed to build the largest bank on the planet in less than a quarter of a century has not read a single word about the collapse of his empire, a network of bank branches that includes 1.3 million depositors in 70 countries.

The man who built, bought, bargained and brokered the Bank of Credit and Commerce International - a name now more synonymous with vice than with vision - can no longer read even a simple balance sheet.

He spends his days in front of a television. He remembers only the old days, he tells his rare visitors in speech so slurred it is incomprehensible to a stranger. As for the rest, his aides will explain everything.

It seems international investigators layer new allegations on BCCI each day. Abedi's inner circle of handpicked lieutenants decided they had heard enough.

Seated in the office where Abedi laid the foundations for the BCCI empire in the early 1970s, they said it was time to tell his side of the story.

There have been allegations in the foreign press of BCCI links with gun runners, drug dealers, CIA operatives and nuclear-weapons-component smugglers. Abedi's aides denied the claims. The former senior bank executives told a story that was as replete with conspiracies and international intrigues as the allegations emerging in the BCCI scandal.

Theirs was a version far different, far more specific than the popular view held throughout this increasingly anti-American Muslim nation.

Here, Abedi is revered as a Third World saint who has bailed out nations, bankrolled scores of charities, saved hundreds of lives, employed thousands of middle-class Pakistanis and put Pakistan on the map of international finance - only to be undone by what several Pakistani commentators have called a Western Jewish conspiracy to destroy Pakistan and the Muslim world.

But the story told by Khalil Zobairi, one of Abedi's first managerial hires at BCCI, and by Muzaffar Ali Bukhari, who was with BCCI more than a decade, had little to do with the outside financial world.

Instead, they said, it was a conspiracy from within that destroyed the Third World's biggest banking empire. They also blamed the management style Abedi used to build his institution from a tiny bank with no branches and just $2.5 million in capital into an international network with $20 billion in assets.

"In my opinion, the main reason for the fall of BCCI was because of the extraordinary trust of Mr. Abedi in lieutenants - senior lieutenants who were around him but were highly incompetent and corrupt," said Zobairi, who along with others in Abedi's inner circle are now waiting for government approval to start another bank in Pakistan.

The basic plot, as told by Abedi's inner circle: BCCI's dynamism and health held out only as long as Abedi's did. But, after two heart attacks, a stroke and a heart transplant left Abedi an invalid in his Karachi home in 1988, his top managers shielded him from deepening losses and wrongdoing until his retirement last year.

But just beneath that scripted veneer, even Abedi's inner circle conceded that ultimately he created an institution tailor-made for corruption and abuse.

It was an empire with little or no central control or accountability. Regional managers encouraged to tiptoe on the outer edges of the law in their quest to grow fast. They occasionally crossed the lines of legality.

It was an institution in which Abedi instructed everyone to live beyond their means to build their own stature and confidence. He was obsessed with building personal, almost godfatherly relationships, ranging from the lowest-paid bank teller to the richest, most powerful leaders of institutions and nations worldwide.

Interviews with businessmen, political leaders, lawyers, journalists and other prominent Pakistanis, none of whom have direct ties to BCCI's founder and some of whom rank among his few local detractors, confirmed much of the inner circle's account.

For BCCI, the end came June 6. The Bank of England, armed with an audit report from Price Waterhouse that uncovered billions of dollars in bad loans and potential fraud, ordered the entire BCCI network closed.

But for Abedi's inner circle, and those who have met the Pakistani tycoon both before and after his debilitating illness, the bank's ultimate fate was sealed on the day when Abedi was stricken with his first heart attack.

To understand the fall of BCCI, most observers here say one must first understand the rise of Abedi and his self-styled banking empire. Born in 1922 in the north Indian city of Lucknow, he had a soft-spoken, homespun nobility that sprang from his roots.

Lucknow, which remains a part of India, was a center for high Islamic culture before the British divided the Indian subcontinent to create the new Islamic state of Pakistan in 1947.

Abedi's first job was in a Lucknow bank as a teller counting money for well-heeled customers. When the subcontinent was partitioned along religious lines several years later, Abedi joined the millions of Indian Muslims to migrate that year to Karachi, which was then a sleepy backwater port of just 350,000.

Soon afterward, Abedi started his first bank. He called it the United Bank Ltd., and within just two decades, he built it into Pakistan's largest. He recruited the best, most loyal managers he could find. And using enticements from the sordid to the sublime, he laid the groundwork for his future empire by opening Pakistan's doors to the soon-to-be-rich Middle East markets.

Karachi's corporate magnates now recall with nostalgia how Abedi used the city's first five-star hotel as a base to entertain his new Arab clients in the 1960s during Karachi's heady years as a bustling sin city.

It was in those early years with United Bank that Abedi's top managers would supply harems and escorts for his new Arab customers to take on hunting trips in the Pakistani desert.

"This was the real beginning of Abedi's empire," one prominent Karachi businessman said. "As fundamentalist Muslims, the sheiks told Abedi that Islamic law prohibited them from earning interest on their accounts. So he paid out the interest in favors. And really, it wasn't so different than the old court of Avadh, where courtiers and concubines abounded."

But as early as 1972, Abedi was well aware of Prime Minister Zulfikar Ali Bhutto's plan to nationalize Pakistan's banks as a symbol of his new socialism. So the young entrepreneur approached one of his many newly rich Arab friends, the emir of Abu Dhabi, as well as financiers from the Bank of America, which was then seeking a foothold in the Middle East.

Abedi quickly raised $2.5 million in starting capital. With it, he incorporated BCCI that year in Luxembourg, then a notorious tax haven. Abedi stayed on with United until the nationalization order came and, in January 1974, he left to devote himself full-time to building his new empire.

His vision, and his motto, were simple. "Mr. Abedi's dream was that we should become the biggest bank of the world in 25 years," recalled Bukhari, who left BCCI as South Asian manager last year when it was clear that Abedi had lost virtually all control over the bank.

Jetting around the world in the bank's private, customized Boeing 727, Abedi ingratiated himself with the world's rich, its powerful and its famous. He used philanthropy, building friendships with leaders such as former President Carter by donating to their favorite charities, while simultaneously creating massive tax write-offs for his bank's growing profits.

From top to bottom, even within BCCI's management structure, Abedi built friendships with individuals from lowly tellers to governors of central banks.

Bukhari explained that BCCI gained footholds in many Third World nations where foreign banks were illegal by first helping them repay international debts in exchange for minority BCCI interest in their national banking system. Such activities earned Abedi and his bank unprecedented laurels as shining lights for the Third World - an institution daring to go where no Western financial corporation would tread.

But as BCCI mushroomed in size, Abedi began to lose control of the many regional offices that functioned with increasing autonomy and impunity.

The first hint that such a philosophy was going wrong came in 1985, the year Bukhari and the other executives interviewed here were told that BCCI had posted a loss of $300 million. When Bukhari and others asked what caused the loss, he said that they were officially told it was from "cutting corners."

The problems in several of BCCI's many autonomous regions began to mount.

Then, in February 1988, under increasing personal pressure, Abedi was stricken with his first and second heart attacks in rapid succession. He had a heart transplant in March, but aides said that his condition deteriorated further after the indictment later that year of several BCCI employees in Florida, where the bank was charged, and pleaded guilty to, drug-money-laundering charges.

It was after Abedi fell ill that Zobairi, Bukhari and other members of Abedi's inner circle allege that his management team sold BCCI and Abedi's vision to the ruler of Abu Dhabi, Sheik Zayed ibn Sultan al Nuhayan.

Zobairi said Abedi finally was eased out of BCCI last year and Sheik Zayed bought most of the bank's shares on the recommendation of its current management.

As Abedi sits in his wheelchair day after day on the modest, quarter-acre Karachi compound he acquired decades ago, his inner circle insists that the 69-year-old visionary reaped few personal profits from his empire. Aides estimate his assets at $5 million.

In the words of one prominent Karachi attorney who knows Abedi: "It never was money that Abedi was after. It was power - not in the crude sense, but access to people, influence. He very much enjoyed it. That was his poison."