Georgia Law Change Seen as BCCI’s Key to U.S. : Scandal: Probes into bank fraud elicit complaints of ‘guilt by association.’

From Associated Press

A seemingly obscure piece of legislation and the international interests of Jimmy Carter, Bert Lance and Andrew Young helped to draw Georgia into the Bank of Credit and Commerce International scandal.

A federal grand jury in Atlanta reportedly is examining a 1987 General Assembly bill that allowed a BCCI-controlled company to buy a major Georgia bank. The scandal over BCCI has focused attention on charitable donations to the Atlanta-based Carter Center.

Amid complaints of “guilt by association,” many prominent Georgians say they have had only arm’s-length relationships with BCCI. They say they were unaware, until recent news reports, of any wrongdoing on the part of the Luxembourg-based bank now linked to money-laundering, arms sales and other unlawful acts.


“Anybody who knows me . . . knows that I would not deal with anybody with a criminal purpose,” said Lance, a federal budget director of the Carter Administration.

BCCI’s operations were shut down by regulators in the United States and seven other countries July 5. The bank has been indicted by a state grand jury in New York on charges of bribery and fraud.

Federal officials have said the 1977 purchase of Lance’s National Bank of Georgia by Saudi businessman Ghaith Pharaon helped BCCI penetrate the U.S. market.

An investigative report issued last week by the Federal Reserve Bank said that Pharaon, a key BCCI stockholder who has had a range of interests in Georgia, acted as a front for BCCI in that deal. It said half of his investment in the Georgia bank was actually controlled by BCCI.

Pharaon sold the Georgia bank in 1987 to First American Bankshares Inc., a Washington-based holding company that authorities say was secretly controlled by BCCI.

Investigators have been looking into a bill that easily passed the Legislature that year. It cleared the way for National Bank of Georgia to be sold by expanding the Southeast region in which Georgia banks are permitted to do business.

Robert Moler, a former state banking official, said he was interviewed by a New York district attorney’s investigator who seemed interested in the possibility that huge sums of money were spent lobbying for the bill.

But Moler and legislators recalled that the bill, proposed by the National Bank of Georgia, was unopposed by other state banks, so no hard sell was necessary to get it passed.

Though not named in connection with the BCCI investigation, former President Carter’s ties to the bank also have received attention. Carter received $8 million from BCCI founder Agha Hasan Abedi for charitable programs operated out of his Atlanta-based Carter Center.

Carter Center spokeswoman Carrie Harmon said the donations, made from 1987 to 1990, grew largely out of the Pakistani Abedi’s interest in Carter’s efforts to eradicate guinea worm disease, a paralyzing affliction affecting millions of people in the Third World.

Young, a former U.S. ambassador to the United Nations who was mayor of Atlanta from 1982 to 1990, also had a longtime relationship with Abedi. Under a $50,000 retainer agreement, Young, through his consulting company, introduced Abedi to Third World leaders.