BCCI Is One Financial Scandal Menem Hopes to Avoid : Argentina: A money-laundering controversy already surrounds the president. Now questions are being raised about his ties to financier Ghaith Pharaon.


President Carlos Menem already had plenty of trouble with a money-laundering scandal that was coming too close for comfort. He undoubtedly would have preferred that Argentina had never heard of the Bank of Credit & Commerce International.

But BCCI was here, and it has left a trail of question marks about its dealings in this country, where corruption--suspected and real--is always grist for the rumor mills.

The Argentine press, of course, is hot on the trail. So far, it has published no proof of any link between the worldwide BCCI scandal and the one troubling Menem. But some tantalizing tidbits of information have raised suspicions that the bank's shady operations may have scandalous ramifications in Argentina.

BCCI branches have been shut recently in more than 30 countries. The Arab-owned bank has been charged with money laundering, fraud, bribery, arms trafficking and other offenses. So far, no charges have been filed in Argentina, but the Central Bank has canceled the operating license of the local BCCI branch, and a federal judge has seized its documentation.

Arab tycoon Ghaith R. Pharaon, who once held 15% of BCCI's stock, has multimillion-dollar business interests in Argentina that include a 3,700-acre plantation and a new Hyatt hotel. Clarin, a leading Buenos Aires newspaper, reported that Pharaon visited Argentina as early as 1981 and received a resident's visa here in 1988, when former President Raul Alfonsin was in office.

"As a result of bureaucratic paperwork, Pharaon was provided with all of the documents that Argentine citizens have a right to, including a passport," Clarin said.

According to some other reports, Pharaon used an Argentine passport for identification in some of his business deals. Federal police deny he had an Argentine passport.

He applied for Argentine citizenship but withdrew the application after an Argentine journalist charged in a book that Pharaon had used BCCI to launder drug money. Pharaon denied the accusation and sued the journalist for libel.

In September, 1988, Pharaon's newly formed Hotel Corp. of Argentina bought a piece of prime real estate in central Buenos Aires with plans to build a hotel, the Park Hyatt. An old mansion on the site, preserved as an architectural monument, was torn down despite protests from neighboring property owners.

The city council approved special zoning for the hotel. Newspapers have noted that the zoning, buried in a package of more than 200 other measures, was passed without discussion.

But Councilman Facundo Suarez, a member of Alfonsin's political party who was mayor at the time, said in an interview that there was nothing unusual or irregular about the package and that the hotel measure had been fully discussed in public hearings of the planning commission, which recommended the zoning. He acknowledged that he met once for 15 minutes or so with Pharaon but said the meeting was purely protocol.

In 1989, when bureaucratic procedures stalled the project, Pharaon met with Menem and the obstacles were removed. Construction is now nearly completed.

Justice Minister Leon Arslanian said Thursday that he was ordering an investigation of any possible connections between Pharaon's Hyatt project and drug money laundering. "We are investigating the possible relations between Pharaon, BCCI and some contractors that are building the Hyatt hotel," Arslanian told Clarin.

Maria Servini de Cubria, a federal judge who seized the local BCCI branch's documentation July 30, is the same judge who opened a case implicating people close to Menem in the laundering of international drug money. Charges have been filed against Amira Yoma, sister of Menem's estranged wife and his appointments secretary until recently; Ibrahim Al Ibrahim, Yoma's former husband and a former customs inspector, and Mario Caserta, a Menem political ally.

The Argentine newsmagazine Somos said this month that Yoma and Ibrahim are among Pharaon's Argentine friends. Like Menem's family, Yoma and Ibrahim are of Syrian origin.

Judge Servini de Cubria, who removed herself from the case this month, has been charged with abuse of authority for allegedly reporting in secret to Menem and Yoma's lawyer. Menem has admitted meeting with the judge but said they did not talk about the case, now dubbed "Yomagate" by the Argentine press.

Federal Judge Miguel Pons, who opened the proceedings against Servini de Cubria, ordered Menem to submit written testimony.

The continuing Argentine sagas of "Yomagate" and BCCI may produce more information to embarrass Menem. The more intertwined the stories become, the greater their international impact will be.

But there is no sign that Menem's administration is in real danger of succumbing to the scandal.

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