The Corruption Inside the BCCI Bank

From previous discuss, we can know that B.C.C.I is a criminal bank and did a lot of illegal activity toward their depositors. It is the largest corporate criminal enterprise ever. According to the journals by Lynne Walker on March2000, the journal stated there that the B.C.C.I criminality included: Fraud by B.C.C.I and it customers involving billions of dollars; money laundering in Europe, Africa, Asia, and the Americas B.C.C.I’s bribery of officials in most of those locations Support of terrorism Arms trafficking Sale of nuclear technologies Management of prostitution Commission and facilitation of income tax evasion Smuggling Illegal immigration Illicit purchase of banks and real estate Inside story of B.C.C.I B.C.C.I can be known as a criminal bank and even more than it. According to TIME, B.C.C.I has corporate with its secret division of the bank which known as “black network” and basically the function of this black network is as a global intelligence operation and a Mafia-like enforcement squad. Besides that, employee of black network consists of 1500 people and they have used multiplex spy equipment and techniques, along with bribery, extortion, kidnapping and even murder. B.C.C.I department of these services is to help drug dealing and money laundering for looting their treasury dictator. The black network deals in arms-trade and sends drug as well as gold.

This black network normally works with Western and Middle Eastern intelligence agencies. In order to pay for the clandestine activities, the intelligence agency has maintained a slush-fund account which is a secret fund account. It was a outgrowth of the B.C.C.I dubious and criminal associations (Jonathan, 1991). In the early 1980s this associations began running its own drugs, weapons and currency deal. B.C.C.I maintained a good relationship with international terrorists as well. Others than that, the bank also worked closely with Israel’s spy agencies as well as western intelligence groups. Most of the time, B.C.C.I operates with this Israel’s spy in arms deal. Others than arms deal, B.C.C.I also use their intelligence to bribery the public officials around the world. Due to their intelligence, law enforcement authorities cannot control their illegal action. According to former operative call Mustafa, he is the operator of the black network in the early 1980s; he said that black network came to him while he was in school in the U.S, they spoke his language and give him money. They told him to join for the organization and they also described the organization’s wealth and political power without told him what exactly the organization did. Mustafa had been went a year for training with a variety of lesson include principles of leadership as well as spycraft.

After this kind of lesson, the pleasant was gone, said Mustafa. He has been participated in the operational task for first time at London. Before that, he has been trained with firearms. While during the task, he was gave a passport and identification.

Upon the task, he and his peers was appointed to ship some unidentified goods. There is a lot of identification waiting for them to use and it was always been arranged. They need several of identification because the customs and immigration are strict. There are many operations waiting for Mustafa to carry for. Another operation took place in April 1989; which is a container ship from Colombia.

The Pakistani customs officials have been bribes by the black network for about $100,000. They use a crane for carrying the heavy container. Forklift is no use in carry those container. The crates have been loaded aboard an unmarked jet and finally departed for Czechoslovakia. People had said that this B.C.C.I not only a full-service bank but they also like to hands-on such as shipped the goods in their own ships (Jonathan, 1991). The bank dealt smuggler in arms from many countries. This bank has helped transfer North Korean Scud-B missiles to Syria. B.C.C.I acts as an intermediary to connect the Saudi Arabia, Chine and Israel. It is because they cannot transfer goods directly through government or national bank. The black network normally follows up the recruiting and persuading.

They will put money in the accounts of people that they want to seduce. They want the person to work with them. This kind of action can consider to be benign that the not hurt others. Sometimes, they will use terror tactics like kidnapping and blackmail.

They terrorize people by sending someone his brother’s hand with the rings on his hand. They usually targeted businessman and politicians. For this black network, it is the bank’s deepest secret. Someone who found talking about B.C.C.I’s activities will be killed. Others than this, those who found unreliability like the high level officer case may also suffer. He has liquidated his assets and sells his house, when the black network knew it they first killed his brother and send brigands to rape his wife. The black unit’s mission has become the pursuit of power and influence for its owns behalf (Jonathan, 1991). Their purpose was to steal depositors of billions of dollars. B.C.C.I’s corporate structure allowed the bank to operate virtually without regulation all over the world (Jonathan, 1991). This bank has many shell companies, offshore banks, branches and subsidiaries in 70 countries. The bank use unregulated Cayman Island enabled it to hide everything and quickly gained a reputation for moving money and hide it for a way. In the late of 1970s and mid- 1980s, B.C.C.I has become a magnet for doing crime such as drug money, capital-flight money as well as tax evading money and money for corrupt government officials. It was the bank that knew how to get around foreign exchange rules and falsify letters of credit in support of smuggling (Jonathan, 1991). Below are some of its activities in others country:- Panama, the bank helped Noriega loot the exchequer.

The most criminal institution-B.C.C.I permits the leader to open secret offshore accounts in order to transfer those national funds into those accounts and then make to fund to become them. The accounts under the names of:- Panamanian National Guard Panamanian Defense Forces Panamanian Treasury In Iraq which during 1980s, B.C.C.I became one of the main channel for that Saddam Hussien skimmed from national oil revenue.

According to investigator Jules Kroll, B.C.C.I helped the autocrat to hide that money all over the world. Image of Saddam Hussien In Guatemala, government officials said to the TIME they suspect that some of the money gone to pay bribes to smooth their crime. According to Watcher, B.C.C.I normally takes some actions to carry out its fraud. The actions for them to use were:- B.C.C.I employs the someone who be in power as nominees for B.C.C.I. B.C.C.I in fact guaranteed them to be held harmless for any actual losses (Watcher, 2010). B.C.C.I using bank secrecy havens like Cayman Islands to avoid regulation by any single regulator of B.C.C.I. This kind of “havens” can permit them to transfer their assets and liabilities from bank to bank. B.C.C.I pays bribes and rebate to the agents of other banking and financial institutions to avoid problems. The more this bank channel for such money, the more funds gathering became their chief goal. From those accounts, B.C.C.I had lends a huge amount to please the government or to buy secret control of companies (Jonathan, 1991). The U.S. regulators discovered that the loans had enabled B.C.C.I to buy secret control in the three American banks which are:- First American Bankshares in Washington National Bank of Georgia Independence Bank of Encino, Calif The National Bank of Georgia and Independence Bank of Encimo, Calif were bought by Abedi’s front man was estimated $500 million in B.C.C.I loan. Those loans were never to be repaid.

What the Abedi get in return was the ownership of the three banks mentioned in above, since he held their shares as hostage for the non-repayable loans. B.C.C.I’s deposit also disappeared through black network. Basically, they use the money to pay bribes as well as conduct its weapon and currency deal. According to a former officer, this bank had bought virtual control of custom officials in port as well as terminals around the world (Jonathan, 1991). John Kerry is the first to craft for the B.C.C.I’s illegal operations. He has been hindered by Justice Department from investigate the B.C.C.I. According to him, the Justice Department refused to give him any documents and has blocked a sedimentary by a key witness. But the Justice Department has denied any reluctance to investigate. Image of John Kerry In one of the most mysterious events is that the B.C.C.I bank records from Panama City relating to Noriega had disappeared. While this event occurred, it is under guard by the Drug Enforcement Administration (DEA). They said they had no idea about the disappeared of the documents. The Justice Department also ignored the offer from Lloyd.

Lloyd’s of London, which is enmeshed in a racketeering lawsuit against B.C.C.I, has fruitlessly made offers to provide evidence of B.C.C.I crime such as bribery and kickbacks (Jonathan, 1991). Lloyd’s accuses B.C.C.I of taking part in smuggling operations and falsifying shipping document. B.C.C.I Most Criminal Activities: Money Laundering From the time of B.C.C.I’s indictment on drug money laundering charge in Tampa, Florida in October, 1988. The operation most involving the B.C.C.I was a Custom job name C-Chase. According to Kerry and Brown, agents who work for this had migrates millions of dollars in U.S currency, representing the proceeds of cocaine sales. Robert Mazur, Customs agent in Tampa. He had chooses B.C.C.I as the target of the Custom money laundering. He stated that B.C.C.I bank executives volunteered methods to smooth and improve his techniques for crime-money laundering. Besides, B.C.C.I also offered to introduce Mazur to other potential customer which is rich for money laundering services. Lawyer for the B.C.C.I and the bank itself contended that the Tampa case represented an accident which is just involved in a small number of bank officers (Kerry and Brown, 1992). When the B.C.C.I pled guilty to money laundering, there was only a few of its employing had admit that they engaged in the activity. According to the Kerry and Brown, B.C.C.I seems attracted to traffickers. At first, these traffickers find international bank that are good in wire transfers, have branches in others part of the world and permit quick retrieval of funds. From the Kerry and Brown, we can found they also like to seek the bank where their law may afford large quantity in secrecy to depositors. Others than that, they also like the bank which permits nominee accounts as well as not provide for close monitoring of cross border transactions of currency movements. Beside the way that mentioned above, B.C.C.I will use some techniques to do their money laundering activity.

According to Kerry and Brown, the techniques had been use by B.C.C.I were:- Use of certificate of deposits held at foreign branches to offset cash deposits made in the U.S Use technique that designed by drug traffickers known as “counter-balancing loan proceeds” to credit to foreign corporate bank accounts Use false names and code Counter-surveillance techniques against law enforcement B.C.C.I, the CIA and Foreign Intelligence According to the Watcher, the relationships between B.C.C.I, CIA and the members of the United States as well as foreign Intelligence Communities are very complicated. Furthermore, the key person who might determine the relationship is no longer available. Three of them were death. Those people were:- CIA former director-William Casey Image of William Joseph Casey B.C.C.I customer and Iranian arms deal- Ben Benerjee and Cyrus Hashemi. Former B.C.C.I chairman- Agha Hasan Abedi had death in Karachi 1995 due to heart attack. Finally, some of the person who partly know the truth have denied that they having memory about the events. Image of Agha Hasan Abedi However, the Subcommittee had received the documentary report which stated some additional materials.

For instances:- B.C.C.I documents Testimony from B.C.C.I officials and insiders External and circumstantial historic information According to Watcher, the external and circumstantial historic information is describing contacts among the B.C.C.I and the intelligence communities. Contacts among B.C.C.I were:- Former United State intelligence officials and former head of the CIA Former as well as current foreign intelligence officials (Watcher, 2009) People who involve in covert operations on behalf of the U.S government which include Iran/Contra affair. In addition to that, Subcommittee also received accusation of meeting between William Casey and the founded of B.C.C.I- Agha Hasan Abedi. The Subcommittee Investigation and the CIA According to Watcher, at March, 1991 cleared staff learned from Subcommittee that CIA had prepared a report about B.C.C.I criminality, therefore the staff contact to the CIA’s communicate office to request a copy of the particular document- report of B.C.C.I criminality.

However, the staff had been told that the document never exists but William Von Raab ensures the document exists. Again, the staff contact CIA for second time but the result get from CIA is same as first time. After that, cleared staff had requested a formal briefing from CIA about the knowledge of B.C.C.I activities; however, the CIA just provided some general information to the staff. The briefer appeared to be ignored other more important about B.C.C.I. On May 14, 1991, Senator Kerry again request for the document prepared by the CIA, but no response to his request for two month, during that time is the closure of B.C.C.I globally on July, 1991. Finally, until July, 1991, CIA director Webster only replied to Kerry request. He had admitted the existence of the two documents about B.C.C.I and state the two documents is extremely sensitive and refuse to being held by. According to the Kerry, the information inside consists of:- One about startling information concern of the B.C.C.I had secretly owned First American Bank in Washington. A distribution list attached to the information indicated that CIA had communicated to the Treasury Department. After he had viewed those documents, he asked Judge Webster to declassify the incident of B.C.C.I owned the First American Bank. The incident after that had been declassified but not include others information. During the August, Senate Select Committee on Intelligence began its inspect of the CIA’s relationship with B.C.C.I. they also requested the document which is concern for the B.C.C.I (Watcher, 2009). The CIA itself began its own internal review and discovered that reports on B.C.C.I by the CIA during end of August. Any further request from others to declassify the remaining B.C.C.I’s info, CIA continues to reject.

Besides, CIA also does not want to permit staff to review this material. However, Acting Director Richard Kerr agreed to testify (Watcher, 2009). On October, 1991, Richard Kerr testified it- CIA-B.C.C.I relationship in open session. After the closed session, Kerry pressed again for the document and finally it was promise between Subcommittee and the CIA to send the memoranda to the Senate Intelligence Committee to permit review. Official records, According to Watcher, Federal Reserve asks CIA whether got derogatory info about Middle Eastern shareholders to buy Financial General Bankshares (FGB) -later became First American Bankshares, through Commerce and Credit American Holdings (CCAH). Unfortunately, CIA had no such info on the shareholders. According to the CIA records, they first developed information concern B.C.C.I. after learning in the early 1980’s B.C.C.I, they found that this institution involve in money laundering activities. After that, when target about laundering drug money; CIA discover this bank involve in driving certain financial market, in arms trafficking, as well as in supporting international terrorism. Kerr admit that CIA used B.C.C.I for certain operations and undertaken the knowledge of any person at B.C.C.I. He had also acknowledged the CIA had made widely use of First American for various of purposes (Watcher, 2009). According to Watcher, he said that Kerr mentioned that is a few things that CIA did not do. CIA had not been involved in:- B.C.C.I black network of thugs and assassins Knowledge of any use of B.C.C.I for the same of arms to Iran Diversion of funds for the Nicaraguan Contras Violate any laws Relationship with the head of B.C.C.I-Agha Hasan Abedi Place Abedi on a watch list Unofficial B.C.C.I-CIA links The unofficial story of B.C.C.I’s link to U.S. intelligence is extremely complicated. It is because the inability of investigators to find out that whether private persons belong with U.S. intelligence were plight actions or apparently under the sanction of a U.S. government agency, policy or operation (Watcher, 2009). In the 1970’s and 1980’s, according to Watcher, there have been cases of people with relate to U.S. intelligence involve in operations on their own benefits as well as for their own sake. However, it had no relate to any approved by U.S. government interest such as Edwin Wilson’s illegal arms sales. There have been others case like retired General Richard Secord’s arms sales to Iran as well as to the contras in the Iran/Contra affair.

According to Watcher again, it is hard to distinguish from Wilson’s case, but for sure the fact is that the sales had actual secret permits and support from officials within the government. In the mid-1980’s, sources indicate that B.C.C.I provides services not only to the CIA, moreover to intelligence agencies of some others countries. The latter to the Governor of the Bank of England stated as the following:- the B.C.C.I engage in helping people avoid tax Illegal transfers of money Hawala transfers- informal transfers system Off the record deposits Pipeline for drug and crime money Banker to intelligence agencies for most major agencies of the world. Kamal Adham: B.C.C.I’s Godfather of Middle East Intelligence Image of Kamal Adham Bob Woodward said press accounts refer to Kamal Adham as the “godfather of Middle East Intelligence” stressed the closeness of his relate to CIA. He is the brother-in-law of King Faisal of Saudi Arabia. He was the head of Saudi Intelligence and mainly on internal security as well as relations with external intelligence agencies. When Sadat- Nasser’s Vice President is having financial problems, Adham had responsibility for making payment to Sadat on behalf of the CIA. He was playing a major role in B.C.C.I. For instances:- He was the CIA’s principal communicators for the entire Middle East for 19 years. He also the lead-front man for B.C.C.I in its takeover of First American bank. He was an important nominee shareholder in B.C.C.I. He remains one of key players in the B.C.C.I affair. According to Watcher, on July 1992, he had accomplished an agreement which is plea with the District Attorney of New York saying that he had been the front man of B.C.C.I in the U.S. In addition to that, he will provide full co-operation with the U.S law enforcement in B.C.C.I’s case. According to Watcher, the relationship between CIA and Saudi intelligence service was good when Kamal Adham had been its head. Adham’s historic relationship with United State intelligence was usually close.

During Adham still a liaison of CIA, Raymond H. Close- CIA’s station chief for Saudi Arabia had choose to work for Adham after leaving the CIA. While Adham working with the Close, he has became the leader investor for Commerce and Credit American Holdings (CCAH) group taking over First American, officially on his own benefits, Watcher describe it. In fact, he acts as a nominee for B.C.C.I. At the mid-April of 1981, he personally appeared to the Federal Reserve to tell his personal background and wealth and of course he inform to them of his desire to be an investor. Indeed, he did not tell Federal Reserve about his background in Saudi Arabian intelligence, close ties to CIA and acted as liaison between the U.S and Anwar Sadat in helping negotiate the agreement which called Camp David Accords. Image of celebrating the signing of the Camp David Accords. Start from left is Menachem begin, Jimmy Carter and Anwar El Sadat. In this Camp David Accords, Adham was encouraged other political figures not to reject Sadat for agreeing to peace with Israel. Although this attempt may have some objection in term of public statements by Gulf rulers but there are many Gulf rulers still provide support to Sadat due to they want to have a defendant from United State to defend their family in case there is a instabilities. It is because United State is Israel’s superpower sponsor. According to Watcher, Adham was at same time in business with a retired CIA station chief for the U.S. in negotiation for Camp David Accords and make the shareholder in the takeover of the largest bank on behalf of B.C.C.I. This had caused people in the U.S. and Saudi government to doubt whether he was truly retired. For the question about this, Adham said to the U.S. investigator they were unrelated. B.C.C.I purchase First American was not an exchange for Camp David Accords. He also said that his role in Camp David Accords and simultaneous takeover of Financial General were coincidence. Clark Clifford who was a highly influential American lawyer also believes what the Adham had said. Image of Clark Clifford Abdul Raouf Khalil Same as Kamal Adham, he was the B.C.C.I shareholder as well as front man from its creation. He also is a main nominee in B.C.C.I’s underground takeover of First American (watcher, 2009). He also met with Federal Reserve and told them he feels to be a passive investor. Federal Reserve assumed him as a private Arab business because he did not tell them about his background like act as liaison to the U.S. and a keyman in Saudi Arabian intelligence. He told the Federal Reserve that he holds interests in real estate, mechanical and electrical maintenance projects as well as commodities.

Other than that, he also involve in some business ventures with American and British manufactures. He do it is for the installation of electronic which include computer equipment in Saudi Arabia (Watcher, 2009). According to Watcher, Price Waterhouse audit said Khalil had no written communications with B.C.C.I from 1985 on. By the late of 1980’s, B.C.C.I had used Khalil name as a nominee in transaction in Latin American, Caribbean and Europe while he still contact with CIA until well after B.C.C.I’s closure. Former CIA Director Richard Helms and B.C.C.I Front Man Mohammed Irvani Except Adham and Khalil, Mohammed Rahim Motaghi Irvani also acted as B.C.C.I’s chief front man in the earlier but before Adham acted as the lead for shareholder in the purchase of First American. He is the former B.C.C.I’s front man and he wishes to takeover the First American but not success. He held 5 percent shareholder of CCAH. He was at the time the principal partner in Helms’ international consulting firm-Safeer as well as the chief financier of that firm (Watcher, 2009). Irvani had received Helms advice on how to protect from any liability and thus, there is a financial link between Helms and Irvani. According to Watcher, Irvani founded the Melli Industrial Group in Iran in 1949 where by it is manufacture footwear and leather goods also developed close relationship to Shah of Iran’s government. During the time of the takeover of Financial General Bank in 1978, Melli Industrial Group owned many operating companies which amounted 23. Moreover, it also merging with others foreign firm.

Irvani held interest in the Iran Arab Bank. According to Watcher, there is a friendship between Irvani and Helms in that period at Iran. After he was backed to U.S., he has been indicated for telling a lie before a Congressional committee concern CIA activity in Chile. He pleads no contest to the charge. Thus he was seeking for Clark Clifford for help. In order to help him, Clifford visited the top Justice Department to argue for that statement. He also emphasize such charge could destroy the U.S. intelligence communities. Unfortunately, it is no way out. It was definitely at this time that Irvani provided a vital lifetime to Helms through financing the Safeer Company (Watcher, 2009). According to Safeer Company corporate records, 80 percent of Safeer was owned by Irvani.

Furthermore, much of the business of this Safeer was deal by Roy Carlson. He is the Irvani’s former chief U.S assistant. Carlson who was became the Vice President of Safeer and had close relate to B.C.C.I. Watcher mentioned that, Carlson served as a Naval officer in the Pacific. He had been joined the U.S. foreign service as well as was detailed to South Africa. He spent 20 year at there before moving to the Bank of America (BOA). Finally, he became the head of the bank’s operation. During that time, he had close contact to Abedi and advised him on the formation of B.C.C.I. Lastly, Abedi introduced him to Irvani. Thus Irvani employed him to be the head(manager) of the Melli group. After the revolution if Iranian, Carlson went to work with Richard Helms in Safeer. After Ghaith Pharoan purchase the National Bank of Georgia from Bert Lance, then, Abedi had selected Carlson to be the head of that bank. According to Watcher, Irvani had agreed to be the front man of B.C.C.I, that time Helms had promised to protect Irvani. He had protected him against all the possible liability.

They will use his name as a shareholder by Abedi, B.C.C.I include Clifford law firm. Over a decade, Irvani, Calrson and Helms continue to interact among each other in B.C.C.I. Helms had introduced Irvani to various people which many are ambassador. Besides, he also introduce Irvani’s son-Ali to others ambassador like Ambassador Paul Nitze. Others than Paul Nitze, he also introduced Ali to former CIA station chief-Raymond Close. Throughout the decade, B.C.C.I financed Irvani investment in U.K. and U.S. which amounted $38 million on buying the New York office building. Other than that, millions of dollars at a time had been given to Irvani family.

They also indicated that the Irvanis had received massive loans from National Bank Georgia (Watcher, 2009). Closure of B.C.C.I How Fraud and International Corporate Structure Delayed the Recognition of Insolvency Since the bank was founded in 1972, its financial statements were falsified. According to Herring, the escape had showed how effectively the complex international corporate structure it devised shielded it from scrutiny by external accountants and supervisor. At first, B.C.C.I adopted dual banking structure. The non bank holding company in Luxembourg (B.C.C.I Holdings SA) was under the protection of secrecy laws. It also owned two separate banks that were licensed and supervised in two separate jurisdictions which are B.C.C.I SA in Luxembourg and B.C.C.I Overseas in the Cayman Islands. As mention above, this two owned a very strict secrecy laws. Neither this two was the operational of B.C.C.I. Most of the decisions were made by Abedi. The dual banking structure makes the supervisory authority difficult to monitor the B.C.C.I’s activities. The intelligence of B.C.C.I had hired separate auditing firm for each bank. Luxembourg has the responsibility for exercising consolidated supervision over B.C.C.I given by Basel Concordat but it is no way out due to B.C.C.I had no banking business in Luxembourg. It is because B.C.C.I had conducted their banking business in others branches at others countries.

Furthermore, Luxembourg had lacked of resources to monitor B.C.C.I worldwide operations. Although B.C.C.I largest branch network in England, but the Bank of England reject to accept the burden of supervising B.C.C.I. Well, the closure of the B.C.C.I due to three different pressures:- Luxembourg gave notice to B.C.C.I that it must leave Luxembourg within 12 months.

After this, B.C.C.I had want to subsidies from Abu Dhabi, Cayman Islands and United Kingdom but none of this three host country was willing to take over responsibility for consolidated supervision of B.C.C.I. New York District Attorney’s office, Congress and the Fed investigate concern to charges of money laundering, drug trafficking, wire fraud and the concealment of B.C.C.I control over First American, Independence Bank and the National Bank of Georgia (Herring, n.d). Due to the charges, B.C.C.I would impossible continue to operate. A draft of a report was delivered to the Bank of England on June, 1991. Reports describe that B.C.C.I’s fraud which include:-[sources below taken from Herring, n.d] Falsification of accounting records External vehicles used to route fund transfer and “park” transaction The use of nominee and hold-harmless arrangements The creation of 70 companies to facilitate and disguise lending to the Gulf Group Collusion with third party bank to make loans to B.C.C.I customers Collusion with customer and give false confirmations to the auditors of fictitious Other than the above, there are some others else but cannot be exposed. How Fraud and the International Corporate Structure of B.C.C.I Complicated Resolution The closure of the bank was reached a little impact on financial market. It is because the authorities implemented the intervention and most of the market participants had cut lines to B.C.C.I. The Basel Committee’s review of the insolvency liquidation of B.C.C.I indentified four major conflicts in the national insolvency regimes (Herring, n.d). According to Herring, the regimes had complicated the liquidation of B.C.C.I’s assets and reduced the amount that could distribute to creditors. The four conflicts were:- Different country may have different insolvency regimes for banks and branches. The United State follows a separate-entity doctrine whereas Luxembourg and United Kingdom follows a single-entity doctrine. Separate-entity doctrine- agency or branch of a foreign bank is treated as if were a separately incorporated legal entity for purposes of liquidation (Herring, n.d). Single-entity doctrine- bank and all of its foreign branches are treated as offices of a sing corporate entity (Herring, n.d.). These two approaches have differing implication on market discipline and it may undermine incentives for creditors. Different countries have different liquidation procedures. In U.S., the general insolvency law does not apply to bank while in U.K. the same liquidation laws apply to banks as to other commercial entities. In Luxembourg, the court will depend on the case. For this conflict, it can reduce the amount available to distribute to all creditors. Right of set-off differs across bankruptcy regimes (Herring, n.d). According to Herring, U.S. exercised right of set-off with regard to claims denominated in the same currency with regard to the same branch. For U.K, the claims may not be dominated in the same currency and on the same branch.

For Luxembourg, the right of set-off exercised only before a liquidation order when the claims are fixed in amount. Another wildcard in the international bankruptcy deck that can trump normal insolvency procedures. B.C.C.I was prosecuted under Racketeer Influenced and Corrupt Organizations Act (RICO). The RICO prosecution might have intensified the worldwide scramble for assets but the U.S. Attorney General negotiated an unusual plea agreement, which forged an alliance with the court appointed liquidators (Herring, n.d). According to Herring, the alliance was opposed by competing liquidators branches elsewhere of the world. Others creditors will hope to secure preferential access to B.C.C.I’s assets in the U.S. RICO had used about 8 years to resolve the massive fraud. RICO had also charges against the sovereigns of Abu Dhabi as well as 6 individuals.

Cite this page