Noriega ‘Shell Game’ at BCCI Documented : Scandal: Investigators say he transferred government funds overseas to finance his lavish lifestyle.

Nine years ago, when Manuel A. Noriega was a colonel in charge of Panama’s national guard and its military intelligence, he opened a secret account for guard funds in the Panama City branch of the Bank of Credit & Commerce International.

Over the next four years, according to federal court documents, Noriega channeled $3.2 million in Panamanian government funds into the account, while directing that large parts of it be transferred to a BCCI branch office in London.

The unusual maneuver had a purpose. Investigators who have followed the converging trails of BCCI and Noriega--who subsequently became Panama’s dictator--have discovered that most of the money was never used for the benefit of the national guard.

Instead, Noriega played a “shell game” that enabled him to use such overseas accounts to pay travel expenses for himself and his family, buy a condo in Paris and finance a high lifestyle on an official salary of less than $50,000 a year, the documents show.

The evidence of Noriega’s alleged financial misdeeds may represent only a small part of BCCI’s shadowy role in aiding in the corruption of government officials and leading businessmen in Latin America. As investigators around the world try to trace the tentacles of BCCI’s far-flung empire, there are signs that it extended its criminal influence throughout the region to Colombia, Peru, Guatemala, Argentina and perhaps other countries.

Most of BCCI’s international operations were shut down July 5 by authorities in the United States, England and other countries. The collapse of the institution, founded by Pakistani investors and headquartered in Luxembourg, represents the biggest banking scandal in history, American prosecutors say.

Investigators say that it may be years before the full extent of BCCI’s criminality becomes clear. But some regulators already estimate that losses may run as high as $15 billion from the labyrinthine web of bad loans, suspect payments and outright fraud spun by BCCI.

Although Noriega’s dealings account for only a small part of those losses, authorities say that they appear to reflect a favored strategy of BCCI officials. While the secretive bank had branches in nearly 70 countries, it based its heaviest operations in places where it was least likely to attract scrutiny, such as Panama, Luxembourg and the Cayman Islands. “It was located everywhere but regulated nowhere,” said one U.S. investigator.

In the months before Noriega’s indictment in February, 1988, on U.S. drug-conspiracy charges, the Panamanian strongman used $223,281 from one BCCI account in London to pay Visa card charges in the names of his wife, Felicidad, and daughters Thays, Sandra and Lorena. The bills had been rung up at Miami-based retailers including Saks Fifth Avenue, Jordan Marsh and Toys R Us, court records show.

The extent of Noriega’s links to BCCI--his accounts there once totaled $23 million--are being documented in two civil lawsuits in federal court in Miami, as the former dictator prepares to go on trial next month on criminal charges of international drug trafficking.

The Panamanian government contends that Noriega used the accounts at BCCI and other banks to steal $6.5 billion from his fellow countrymen over the last decade. His larcenous acts included the private sale of military aircraft, government-owned lumber and official immigration documents and the theft of money from the national guard, the Panama Defense Forces and a government agricultural fund, the government has charged.

Meanwhile, BCCI was soliciting business from other suspect characters in the region. For example, officers of the bank aggressively reached out to obtain business from Colombian drug traffickers. Daniel Gonzalez, former deputy manager of BCCI/Panama, said his superiors in London instructed him to pursue wealthy clients in the drug trade.

Gonzalez has said Noriega helped attract this illicit business because he routinely deposited at BCCI bribe money that he received from Colombia’s Medellin cocaine cartel for permitting its members to operate in Panama.

In a recent book about his experiences, Gonzalez said major depositors besides Noriega included Medellin cartel leaders Pablo Escobar and Jorge Luis Ochoa. But dozens of other associates arrived with bags, suitcases and even large vans filled with currency, he said, forcing BCCI’s staff to work late into the night counting multimillion-dollar deposits.

“The cash transactions that were carried out were so great that we had barely recovered from one avalanche of notes when the next one was waiting to be counted,” Gonzalez wrote.

Supervising this activity was Amjad Awan, the Pakistani-born manager of BCCI/Panama who had been handpicked by Agha Hasan Abedi, a fellow countryman and the founder of BCCI. Awan assumed his position in Panama--and that of personal banker to Noriega--at the relatively young age of 34.

Recently sentenced to 12 years in prison for his role in laundering cocaine profits, Awan told Senate investigators last year that on Noriega’s orders the bank also would pay out cash from the dictator’s accounts to favored individuals from time to time.

“I used to get a note signed by Gen. Noriega, brought by the person himself who had to receive the funds,” Awan testified. Noriega would alert him by phone that a payee was about to arrive at the bank, he said.

Awan also said several hundred thousand dollars were laundered for Noriega through First American Bank of Washington, which was secretly owned by BCCI. Officials of First American, headed by Washington lawyer Clark M. Clifford, said fund transfers may have occurred through a code-named account that they did not associate with Noriega.

Clifford and Robert A. Altman, president of First American, have contended that BCCI achieved ownership of their bank without their knowledge or approval.

As the BCCI scandal has spread, a parliamentary investigation in Peru has turned up allegations that former President Alan Garcia illicitly funneled millions of dollars in cash through BCCI’s Panama branch into private accounts in Europe. Garcia has told reporters in Lima that such charges are “a scandalous witch hunt” and that he had nothing to do with BCCI.

But members of the Peruvian investigating committee told a U.S. Senate Foreign Relations subcommittee that BCCI officials from Panama mysteriously persuaded Peruvian officials to put at least $250 million in government reserves into numbered bank accounts in BCCI’s Panama branch. They testified that they suspect some officials of Peru’s Central Bank and perhaps Garcia may have received payoffs in return for arranging the deposits.

Manhattan Dist. Atty. Robert M. Morgenthau said in an indictment last month that BCCI paid up to $3 million in bribes to two senior officials of the Peruvian Central Bank to obtain the deposits and other banking relationships.

In Guatemala, another alleged payoff scheme has come under scrutiny. Attention has focused on Munther Ismael Bilbeisi, a Jordanian expatriate who allegedly sold $35 million worth of smuggled coffee to American companies with help from BCCI executives.

Sources familiar with the matter say that a Miami grand jury, which indicted Bilbeisi on Friday on tax evasion charges, has obtained evidence that BCCI furnished the dealer with letters of credit and falsified documents as part of the coffee-smuggling scheme. In return, Bilbeisi allegedly kicked back cash to the bankers and laundered his profits through BCCI.

Also allegedly acting as an arms broker, Bilbeisi sold Jordanian helicopters to Guatemala at inflated prices, kicking back some of the proceeds to high-ranking Guatemalan military officers and to the brother of former President Vinicio Cerezo Arevalo, according to a lawsuit filed in Miami by Lloyd’s of London, which at one time insured Bilbeisi.

The civil racketeering suit filed by Lloyd’s accuses BCCI and Bilbeisi of coffee smuggling, arms dealing, money laundering, customs violations and the payment of bribes and kickbacks. Guatemala has brought criminal charges against Bilbeisi and is seeking to extradite him from Jordan.

The same Senate Foreign Relations subcommittee has turned up evidence that BCCI sought to line up a third-country buyer for 22 French-made Mirage jets owned by the Argentine air force.