Morgenthau's Mission

Robert Morgenthau puffs on a long Dunhill Montecruz, one of the two cigars he will allow himself today "to quiet my nerves." The Manhattan district attorney, who just turned 73, has issued a bundle of indictments in the case of now defunct Bank of Credit and Commerce International. In fact, his sweeping charges of international corruption are certain to spark government scandals in a dozen countries. Not a bad birthday present.

The centerpiece of the indictments: fraud charges against Clark Clifford, the Washington legend who has been closely tied to every Democratic politician for more than 50 years, as well as his law partner Robert Altman. But as Clifford defended himself before reporters last week, the spotlight was shining brightly on Morgenthau, too. A third-generation career public servant who, like many prosecutors, craves publicity as well as justice, Morgenthau has become a lawman with a mission. He has pushed ahead of federal and international investigators and has often forced their hand. While Morgenthau's motives aren't always clear, this much is: if the prosecutor has his druthers, more indictments in the BCCI scandal are on the way.

Last week's charges, meanwhile, aim high and far. Clifford and Altman stand accused of having accepted more than $40 million in commercial bribes to help the money-laundering bank secretly gain control of the institution that later became First American Bankshares. (The Justice Department weighed in the same day with a less detailed indictment that only charged the two men with fraud.) Clifford and Altman pleaded not guilty to all charges. At a press conference last week, they said they had been duped by the rogue bank: "Rather than being a participant, we proved to be a victim of BCCI," Clifford said.

But there were more bombshells. Morgenthau charged that BCCI founder Agha Hasan Abedi, chief operating officer Swaleh Naqvi and other officials ran a corrupt enterprise "that bribed central bankers, government officials and others worldwide to gain power and money." According to the indictment bribes went to bank regulators in Argentina, Nigeria and eight other nations; BCCI also schemed with officials to defraud the World Bank and other institutions. Most intriguing, the D.A. unveiled a potentially valuable witness: Sheik Kamal Adham, Saudi intelligence chief and a big BCCI shareholder, who pleaded guilty to misdemeanor bank-fraud charges and agreed to pay a $105 million fine.

Morgenthau and his deputies have turned the BCCI case into nothing less than a crusade with Morgenthau as a kind of special prosecutor to the entire world. The Justice Department filed the first cases against BCCI in the late 1980s, but Morgenthau has led the pack since then. "So many big shots in these countries were involved with BCCI that they're now too embarrassed--or implicated--to risk prosecuting the criminals," says a Senate investigator. Within the United States, Morgenthau's is the real pedal-to-the-metal investigation--an astonishing fact, considering that he's basically a city cop. That has other local prosecutors cheering. Says one New York City assistant D.A., "This is the sort of international scandal that the Feds are supposed to be uniquely qualified to deal with. Local prosecutors are supposed to be uniquely qualified to prosecute guys who drive stolen cars across the bridge to New Jersey." So why would Morgenthau stretch his resources to take on such a far-flung case--beyond the obvious publicity value? He says the answer has to do with our trust in government: Morgenthau's office takes on some 33,000 drug cases each year. "How can you prosecute the 19-year-old drug dealer," he says, "and then say that the big money is too hard to reach?. . . You have to cut off that money trail."

By comparison, the Feds seemed sluggish. The New York grand jury finished its work on July 22, and Morgenthau told Justice that an indictment was forthcoming. Justice rushed an indictment through, completing the documents at 4:30 a.m. on the day of the announcement; the federal grand jury approved the indictment just two hours before the press conference. The State Department, too, has been a balky partner. Four months ago the Federal Reserve subpoenaed Saudi financier Sheik Khalil, who has not been charged. The U.S. Embassy in Jidda said that it was unable to find him, though the millionaire's house covers a square block there. (The Justice Department refuses to comment.) "It's quite clear to me that the embassy made no effort at all to search for Khalil," says Morgenthau. Sometimes it seems that nobody in the government wants to hear about BCCI. After the D.A. said he uncovered officials at the World Bank and the International Monetary Fund who had taken payments from BCCI, he offered to make the names available to regulators. Says Morgenthau, "We have never had a reply."

As the case unfolds, allegations of deeper American involvement raise troubling questions. Intelligence sources now say that Mohammed Hammoud, an alleged BCCI front man, was taped saying over the telephone, " If anybody knew how dirty the Americans are in this BCCI business, they'd be surprised-they're dirtier than the Pakistanis." He then said he was about to tell someone about the American role. Eight hours later, he was found dead.

Where is the case likely to go next? Further indictments could focus on the drug trade, or even payoffs to American officials. "Where you go depends on what breaks you get," Morgenthau says. A year ago, when he announced his first BCCI indictments, Morgenthau said his investigation was only "25 percent through." Last week he said the probe had reached the halfway point. There is much more to come. "We've only scratched the surface," says John Moscow, a key Morgenthau deputy who has directed the BCCI probe. Morgenthau says that his office received documents from the Cayman Islands subsidiary of BCCI only last month. That part of the empire allegedly created many of the phony investments and fictitious assets that cooked BCCI's books. The documents should yield a rich new crop of scandal.

Potential pitfalls could lie ahead for Morgenthau. If the Feds move quickly with their case, U.S. law will preempt a similar trial by New York officials--and a federal judge has already set an Oct. 26 court date. New York has not yet scheduled a trial. Whoever wins the race to the courthouse will find winning is anything but certain: the facts are slippery, and it's hard to persuade juries to follow arcane paper trails. Attorneys for Clifford and Altman say that the case is built on circumstantial evidence that will not withstand a close look by a jury. But whatever direction the BCCI inquiry takes from here, it's almost certain that this politically sensitive case would never have come so far so quickly were it not for the dogged D.A. from Manhattan.

Alleging widespread fraud, the Bank of England, the U.S. Federal Reserve and regulators in several other countries shut down BCCI operations around the world.

Robert Morgenthau unveils a sweeping indictment against BCCI and two of its top executives. The Fed charges that BCCI used front men to secretly acquire First American.

Former defense secretary and Democratic Party insider Clark Clifford and his protege Robert Altman step down as chairman and president of First American Bankshares.

BCCI pleads guilty to state and federal racketeering charges and agrees to pony up $550 million, the largest single criminal payout in American history.

Sheik Kamal Adham, a key BCCI investor and the former head of Saudi intelligence, pleads guilty to violating New York banking laws and pays a $105 million fine.

The Manhattan D.A. and U.S. prosecutors charge Clifford and Altman with fraudulently helping BCCI gain secret control of Washington-based First American.