Fed Looks for Ties Between Encino Bank, Multinational : Finance: Independence Bank’s chairman denies any links to the Luxembourg institution, which pleaded guilty to laundering money.
The Federal Reserve is trying to sort out what, if any, ties there are between Independence Bank in Encino and Bank of Credit and Commerce International, a shadowy multinational bank based in Luxembourg.
“We don’t know one way or the other,” said Bob Moore, a special assistant to the Board of Governors of the Federal Reserve in Washington. “We’re still checking that out.”
Independence’s chairman, Fulvio V. Dobrich, said there is no connection between his bank and BCCI, which last year pleaded guilty in federal court in Florida to laundering money in a case involving Colombian drug lords.
Dobrich said, however, that an examiner from the Federal Deposit Insurance Corp. visited Independence two weeks ago to look into the matter. Independence is the largest bank headquartered in the San Fernando Valley, with $678 million in assets.
The examiner was convinced “we don’t have any dealings with BCCI,” Dobrich said, adding that the FDIC had looked into the possibility of such ties between the banks twice before--in 1988 and 1989. A spokesman for the FDIC in San Francisco declined to comment.
Independence was bought in 1985 for an estimated $23 million by Saudi Arabian financier Gaith R. Pharaon. Pharaon previously owned a 33% stake in BCCI, according to Dobrich. But Dobrich said Pharaon sold his BCCI stake before buying Independence.
As for BCCI, its business ties around the world are complex. The bank, which operates in 68 countries, has $19.2 billion in assets.
The Federal Reserve last week ordered BCCI to divest any secret control of Washington-based First American Bank, whose chairman is former Defense Secretary Clark Clifford. First American acknowledged in a public statement made on March 1 that some investigators believe investors in First American borrowed money from BCCI to buy stock in the Washington bank. First American said that the investigators believe that when those loans went bad, BCCI ended up with some of that stock as collateral.
BCCI also agreed with the Federal Reserve to cease all banking operations in the United States.
The question of possible links between BCCI and Independence “has been thrown in the pot” in discussions between the Federal Reserve and BCCI, said W. Caffey Norman III, a Washington attorney who has represented BCCI in talks with the Federal Reserve. But Norman said he and others representing BCCI “just don’t know what the facts are.”
It’s not clear, moreover, what kind of relationship Independence could have with BCCI. Dobrich said Independence and BCCI had both loaned money to some developers for the same real-estate projects in Palm Springs and downtown Los Angeles. The developers borrowed about $2.5 million from Independence, Dobrich said, but the loans matured and were paid back last year. Dobrich declined to name the developers.
In January, 1990, BCCI pleaded guilty in federal court in Tampa, Fla., to money-laundering charges, avoiding a trial on government claims that it helped Colombian drug lords conceal the source of $32 million in proceeds from cocaine sales in the United States. A month later, BCCI was ordered to pay a $15-million fine.
Amjad Awan, assistant director of BCCI’s Latin American division, was also charged in the money-laundering case, along with several other BCCI officials. Awan said in 1988 in testimony to the U.S. Senate Foreign Relations Committee’s subcommittee on terrorism, narcotics and international communications that he performed banking services for former Panamanian dictator Manuel A. Noriega. Last July, Awan was convicted of money-laundering charges.
