Bank Pleads Guilty to Handling Drug Profits : Noriega: A Luxemborg institution linked to Panama’s ousted strongman forfeits $15 million in assets to the U.S.

An international bank that handled accounts for ousted Panamanian strongman Manuel A. Noriega pleaded guilty Tuesday to laundering millions of dollars of cocaine profits and agreed to forfeit more than $15 million in assets to the United States.

The Justice Department hailed the 11th-hour agreement by the Luxembourg-based Bank of Credit and Commerce International as “the largest cash forfeiture ever” and said the bank has pledged to cooperate with federal investigations of money laundering worldwide.

But the settlement was denounced by Sen. John F. Kerry (D-Mass.) as “a sad commentary on a country that is supposed to be taking money laundering extremely seriously.” Kerry heads a Senate Foreign Relations subcommittee that found evidence that the bank had helped Noriega shelter $10 million after his indictment in Florida on drug charges.

“When banks engage knowingly in the laundering of money, they should be shut down,” Kerry said in an interview.

U.S. Dist. Judge W. Terrell Hodges, in Tampa, Fla., accepted guilty pleas from two divisions of the bank but did not formally impose sentence. After the plea, the trial of six former officers of the bank and two Colombians began on charges of helping launder $32 million in cocaine proceeds.

Avoids Issue

Atty. Gen. Dick Thornburgh’s chief spokesman, David Runkel, sidestepped a question on whether the guilty plea and the bank’s cooperation would strengthen the government’s drug-trafficking, money-laundering and racketeering case in Miami against Noriega.

“Gen. Noriega has been known to use this bank in the past,” Runkel said. “Whether there is any connection to the Miami case, I don’t know.”

If convicted on all charges, the bank would have faced up to $40 million in fines. Under the agreement, the bank faces substantial penalties if it fails to cooperate, and it must implement strict guidelines to block money laundering.

Links to Noriega are expected to be detailed during the trial by Stephen Michael Kalish, a convicted marijuana dealer who is serving a 15-year prison sentence. Kalish already has testified in other proceedings that he gave Noriega an attache case stuffed with $300,000 in bills to arrange banking connections on his behalf.

Before pleading guilty, lawyers for the bank had threatened to expose Noriega’s links with U.S. intelligence agencies if he were brought into the case.

Since its founding in 1973 by Pakistani bankers and Arab investors, the privately held bank has grown to about 400 offices worldwide and $20 billion in assets.

The indictment charged that the bank’s offices were part of an international network that laundered millions of dollars for Colombian and other drug traffickers.

Investigators from Kerry’s subcommittee on terrorism and narcotics began probing the bank as part of a lengthy inquiry in 1987 and 1988 into cocaine trafficking and money laundering in Central America and the Caribbean.

The investigators accumulated evidence of strong ties between Noriega and the bank, including a secret, $25-million account maintained by the general there. But Jack A. Blum, chief counsel of the Senate subcommittee, said the full extent of the Noriega connection was never discovered because the inquiry was delayed at the request of the Justice Department.

“It was clear this bank had been the bank to which Noriega had referred drug traffickers,” Blum said.

Noriega was chief of intelligence for the Panamanian military when he opened the account, and he had sole authority over it, according to testimony before the Senate panel.

He used the account to pay cash to Panamanian politicians and to finance extensive travel and lavish spending in the United States and Europe by himself and his family, according to the testimony.

Amjad Awan, a former executive of the bank and a defendant in the Tampa trial, told Senate investigators that he was Noriega’s personal banker from 1982 until early 1988. Noriega ordered the account closed after he was indicted on drug charges in the United States.

Handwritten Drafts

Awan, a 42-year-old Pakistani national, said Noriega opened the account with a deposit of several hundred thousand dollars in cash and that later deposits of cash and checks pushed the balance as high as $25 million.

Awan claimed that he did not know the origin of the funds. He said he often dispensed cash from the account to Panamanian politicians who came to the bank with handwritten notes from Noriega authorizing the withdrawals.

After he left Panama in 1984 for Miami and later Washington, Awan said he still acted as Noriega’s banker and flew frequently to Panama and New York for meetings with the general.

One federal charge accused the bank of helping launder several million dollars for Kalish, starting with a $2-million deposit by Kalish at the bank’s Panama City branch in 1983. Prosecutors say the transaction was handled by Awan.

When asked by Blum about the deposit during his sworn statement, Awan said he had no recollection of it.