Bank of Credit and
Commerce International Scandal (BCCI). UK Government Forced to Publish
the Sandstorm Report (posted
9 September 2011) Background
After
a five-year legal battle the UK government has finally released most of
the Sandstorm Report on 7 September 2011. According to the Bank of
England this report was the basis for the closure of BCCI in July
1991. The report was prepared by Price Waterhouse (BCCI
auditors) for the Bank of England though it was never finalized. BCCI
was the biggest banking fraud of the twentieth century. Some 1.4
million depositors lost $11bn.
Unlike many other large corporate frauds and banking scandals the UK
government did not appoint inspectors to prepare a report.
No parliamentary committee has ever been given sight of the Sandstorm
Report. UK legislators pass laws without knowledge of the facts or
opportunity to interrogate wrongdoers.
The
UK government was ordered to release the information to Prem Sikka
by the unanimous decision of three judges ( click
here for court judgment) .
This
is the first time that the UK government has been forced to release
hitherto secret information about a banking collapse. It is the first
time that it has been forced to name wrongdoers and those implicated in
the scandal. the government could not hide
behind the Data Protection Act and claim that it has to protect the
identity of the culprits
Prem Sikka had first requested the information in March 2006 and after
refusal by the UK Treasury and the Information Commissioner he pursued
the matter through the courts. Throughout the case, he represented
himself, incurred his own costs and did not have the benefit of any
legal advisers. The government used taxpayers' resources in a
futile attempt to conceal identity of many people, including convicted
criminals.
Ever since 1991, most of the Sandstorm Report has been publicly
available in the US though it has been considered to be a state secret
in the UK. This censored version was obtained by AABA and made
publicly available in UK in 1999 (click here).
With
the digitization of the US Congress Library archives the same is now
available worldwide (click
here). The missing information is shown either as a blank or a dark
rectangle.
Prem
Sikka's request was for the missing information. It primarily concealed
the names of the wrongdoers and those implicated in the scandal.
The background to the issues and the
public interest arguments for publication of the missing information
are contained in an affidavit filed with the court by Prem Sikka and is
available
here. The document shows that the UK government has erected a wall
of secrecy around the BCCI frauds.
The Report
To see the information that was concealed you need to compare the censored version
with that ordered by the court. We have already done this and
have highlighted the differences in the flies listed below. These are
shown in a red box. This has
made the files large. To make the download manageable we have divided
the files into two parts. To download it you will need Acrobat 10 or
similar. Both files are large so please allow some time for download.
Depending on the speed of your computer and internet connection it
might take 10-15 minutes.
Please
note that the report is written in code. "Sandstorm" is the code for
BCCI. There are also other entities identified by code - for example
"Fork" and "Tumbleweed" - but their identity is concealed. "Fork"
is/was an overseas bank and directly implicated in the BCCI
frauds.
In opposing the release of the missing parts of the Sandstorm Report
the UK
Treasury claimed
that its release would somehow "prejudice UK's
relationship with
with one or more other states". In other words relationship with
corrupt rulers had to take precedence over the people's right to know
and call governments to account. The government's arguments were
defeated.
The Names
Three judges criticised the UK government and said:
"We were surprised to see that the
Treasury sought to extend the protection of the data protection
principles to information about some individuals who exercised ultimate
control over the whole of BCCI’s operations and were the architects of
a group-wide programme of fraud and concealment, not to mention the
creation of a culture that led others with positions of responsibility
within the bank to follow their lead"
(paragraph 42 of the judgement ).
"the
individuals named in the Sandstorm Report were not ordinary customers,
but had become involved in the many complex and frequently incestuous
transactions that enabled the BCCI management and a number of
organisations and individuals close to it to commit or conceal fraud.
Those frauds led to severe financial hardship for many of the
“ordinary” customers and we have explained in Confidential
Schedule 2, by reference to each individual, why we consider that
there is a legitimate interest in disclosing their involvement and that
this will not cause unfairness or unwarranted intrusion into their
privacy"
The
UK government has clearly been engaged in a massive cover-up.
and used taxpayers' monies to fight the case and continue with its
cover-up. Just look at the names of the individuals and organizations -
these include well known domestic and foreign banks from home and
abroad, rulers from Middle-East, business advisers and sundry. Some of
the people have already been convicted of criminal activity but even 20
years later the UK government was protecting their
identity. Even worse, the UK government has been protecting
individuals who died long ago. For example, BCCI founder Agha Hasan
Abedi died in 1995 but his name was being concealed. Some
individuals have a colourful past and possible links with leading
US politicians and Islamist fundamentalists. Sheikh Khalid bin
Mahfouz, a billionaire Saudi banker paid $225 million to settle charges
of bank fraud in 1993 and died
in August 2009, but his name was still being shielded by the UK
Treasury.
Some
of
the names concealed by the UK government include:
Agha
Hasan Abedi. BCCI founder Sheikh
Kamal Adham, Director of both BCCI. and First American (also
head of Saudi Arabian intelligence) S.M.
Akbar, BCCI Grand Cayman, helped Swaleh Naqvi Ziauddin
Akbar, BCCI Treasury official, M
Azmatullah, BCCI accounts officer for major customer accounts,
helped Swaleh Naqvi Zafar
Iqbal, BCCI chief executive, Head of Treasury and General Manager
of Grand Cayman to 1986. Imran
Imam, accounts officer for an entiry identified as WXYZ
and Dr. Pharaon. H.M.
Kazmi, BCCI officer Abdul
Raouf Khalil, a shareholder in both BCCI. and First American Swaleh
Naqvi, BCCI executive and deputy to Abedi Ajmand
Naqvi, accounts officer for an entiry identified as Tumbleweed,
helped Swaleh Naqvi N
Habib-Ullah, helped Swaleh Naqvi J.
Khan, Accounts officer for Adham and Jawhary, left the bank before
1991, received $0.3 million; helped Swaleh Naqvi D.
Rizvi, BCCI executive responsible for relationship with the Virano
Group - left BCCI in 1990, helped Swaleh Naqvi H
Sheikh, accounts officer of Gulf Group util 1988; paid $1.7 mllion
by
Swaleh Naqvi A.
Abbas, General Manager of Baharian until 1990 helped Swaleh Naqvi Bashir
Tahir, General Manager BCC Emirates Qazar
Raza, Joint Executive for Asia/Middle East, formerley General
Manager for NBO A
Chaudhary, General Manager Europe B.
Chowdry, General Manager, UK Region MM
Haque, Executive for UK Region S.
Doha, Manager IBU UK Region (later with Al Rahi in London) T
Jamil, General Manager Hong Kong S.
Siddiki, Central Executive H.
Motta, Legal Department, UK Region Jawahry
Abu
Dhabi Investment Authority (ADIA)
Al-Rahji Bankng and Investment Corporation Robert
Altman, US lawyer, acquitted of UAA charges but settled a civil
lawsuit
with US Feds
Arab Livestock Company ALSCO) Attock
Oil BCP Bear
Steans Burford CAPCOM,
brokers used by BCCI Treasury Brenchase
Limited, a subsiairy of Capcom,
a company subsequenlty controlled by Z
Akbar. Capital
Commodity Dealers (Capcom) Clark
Clifford, US lawyer and Presidential adviser
Dubai Islamic Bank The
Gulf Group Gulf
Investment Real Estate Co.
ATB (a UK bank) Credit
Suisse Dubai
Crescent FIIL French
American Gokal
Brothers Habib
Bank Government
of Cameroon Independence
Bank Inc Maram
Trading Co. National
Bank of Georgia National
Commercial Bank of Saudi arabia (NCB) Qatar
Islamic Bank
Razat
Associates Inc. Refco Royal
Bank of Scotland, Singapore Saudi
Arabian Fertiliser Company (SAFCO) Saudi
Cairo Bank Saudi
National Commercial Bank (SNCB) Security
Pacific State
Bank of India (SBI) The
Virani Group Rudolf
Wolff
Crescent Shorafa
Stock
The
Offshore, or Secrecy Jurisdictions Links
The
words "Grand Cayman" were purged throughout the document (for example,
see para 1.25, 4.3, 7.13). The name of a Turks and Caicos company
(para 7.17), North American Finance and Investment, was also withheld.
The name of Arab Livestock Company (ALSCO) and its location in Bahrain
(for example, see para 7.24) and Saudi National Commerce Bank operating
from Bahrain (para 6.27, 8.7, 8.12) was also withheld. The word
"Bahrain" was withheld in para 1.25. The name of Royal Bank of
Scotland, Singapore (para 3.5) was withheld.
Some Issues
The
UK government did not withdraw ambassadors. The UK government did
not seek extradition of the culprits, shut down foreign embassies,
demand trade sanctions or regime change. It just covered up the names
of wrongdoers and kept parliament and the people in the dark. How can
anyone trust the Bank of England or the Treasury to tell the truth
about the current banking crash?
The
release of the information has considerable relevance to the
current banking crisis. The UK government can now be forced to publish
reports. They can be forced to publish the names of the wrongdoers.
The
UK government secrecy meant that many financial institutions were
unable to make appropriate assessments of risk. Under the UK (and many
other countries) law, financial institutions are required to apply the
"Know Your Customer" (or KYC) tests. Since the UK government shielded
the names of many wrongdoers it did not enable the institutions to
assess the risks. It would be recalled that BCCI indulged in money
laundering. Many of the parties associated with BCCI are still active
in the
business world today.
The
Sandstorm Report prepared by BCCI auditors Price Waterhouse documents a
catalogue of fraud which had been taking place over a long period of
time. Yet auditors continued to give a clean bill of health to BCCI.
All audit reports were unqualified.
BCCI
had all the
paraphernalia
associated with contemporary corporate governance: audit committees,
non-executive directors, mission statements, internal auditors,
external
auditors, vision statements and corporate social responsibility
statements. Yet
no one spoke up. There was no independent investigation into the
governance of
BCCI. The investigation and lessons may have generated a debate about
better
banking regulation and governance, but that was not to be. We only
speculate on
how the current banking crisis might have been checked if the UK
government was
not so keen on cover-up.