Bank of Commerce and Credit International

Bank of Commerce and Credit International (BCCI), international bank, founded in 1972. By 1990 BCCI had offices in 69 countries, $15 billion in deposits, and $20 billion in assets. In July 1991 evidence of widespread systematic fraud at BCCI led regulators in seven countries to seize the bank’s assets. The bank’s operations in the remaining 62 countries were gradually shut down. A subsequent investigation resulted in a New York criminal indictment of the institution and four of its units, as well as the arrest of about 20 BCCI officials in the emirate of Abu Dhabi, United Arab Emirates, for alleged fraud.

BCCI was founded by Pakistani banker Agha Hasan Abedi, who remained its chairman until 1989. From March 1990 it was under the control of Sheikh Zayed bin Sultan al-Nahyan, the ruler of Abu Dhabi.

In July 1990 in Tampa, Florida, five former BCCI officials were convicted of laundering $32 million in cocaine profits for Colombia’s Medellín drug cartel. Despite these convictions and later evidence of BCCI’s fraudulent conduct, regulatory control was difficult. The bank had no central office under the jurisdiction of an individual government; its two central offices were located in Luxembourg and the Cayman Islands, both tax havens with secretive banking rules.

In October 1994 a U.S. federal court sentenced Swaleh Naqvi, former chief executive of BCCI, to an 8-year prison term for his role in defrauding investors. This was in addition to a 14-year sentence he had already been given in Abu Dhabi. In addition, Naqvi was ordered to pay more than $250 million to U.S. investors.

The government of Abu Dhabi, which held a 77 percent share in the collapsed bank, reached an agreement with the bank’s liquidators in March 1994. The government agreed to reduce its claims against BCCI and contribute $1.8 billion to creditors, a move approved by the High Court in London in December 1994.