FBI Probing Marina Investor’s BCCI Links : Finance: County officials say the agency seeks information about a Saudi billionaire’s holdings in the publicly owned land.
The FBI has begun investigating the business activities of Saudi Arabian billionaire Abdul Aziz al Ibrahim and his links with the scandal-ridden Bank of Credit & Commerce International.
Los Angeles County officials who administer Marina del Rey confirmed Wednesday that they have been interviewed by an FBI agent seeking information about the “specter of BCCI,” including Ibrahim’s investment in the marina.
Ibrahim, a brother-in-law of Saudi King Fahd, has extensive real estate holdings in the United States, Europe and the Middle East.
Family spokesmen have acknowledged that Ibrahim had extensive business dealings with the now-shuttered bank, but insisted that Ibrahim was among the victims of the bank’s fraudulent practices. British auditors have reported that in 1989, the Ibrahim family had about $132 million in loans from BCCI.
Ted Reed, director of the county Department of Beaches and Harbors, said he spent several hours in late August being questioned by an FBI agent.
“BCCI was the main thrust of it,” Reed said. “We walked through how the (Saudi) group came to be involved in the marina.”
Ibrahim heads a Saudi investment group that in August, 1989, secretly bought a major stake in three hotels, two apartment complexes, offices, shops, restaurants, and 1,100 boat slips at the county-owned marina. In an effort to conceal the investors’ identity, the deal was structured through a dozen shell corporations in Luxembourg, the Cayman Islands and California.
The FBI has requested all available documents about the Saudis’ investment, county officials said.
Phil Armstrong, a spokesman for Ibrahim in Washington, said he knew “the FBI has initiated a broad, sweeping inquiry into the BCCI situation.”
“Since the Ibrahim family has been reported by the press as a depositor in the bank, we presume it’s a part of that inquiry,” Armstrong said. No one in Ibrahim’s organization has been contacted by federal investigators, he said.
The extent of the federal inquiry is unknown. FBI Special Agent Karen Gardner in Los Angeles would neither confirm nor deny the investigation’s existence.
But in a recent memo to the county Board of Supervisors, Reed said, “Evidently, the FBI is in the early stages looking into Mr. Ibrahim’s business activities.”
Reed said he thinks the FBI is trying to learn if there was a connection between BCCI and the marina investment. “I told them that we did not know the source of the funds that were invested,” he said.
The marina investment was the latest addition to the Ibrahim family’s portfolio of U.S. real estate, which includes Ritz-Carlton hotels in New York, Washington and Houston, a Ritz-Carlton project under construction in Aspen, Colo., a hotel-office complex near Chicago’s O’Hare International Airport and undeveloped land in Bel-Air.
Ibrahim also has dabbled in Hollywood, playing a leading role in financing the unreleased movie “Brenda Starr,” featuring Brooke Shields.
The Times reported in July that auditors in London from the Price Waterhouse accounting firm had expressed concern last year about “an absence of critical information” on the Ibrahims’ loans with BCCI.
The auditors noted that the loans were advanced against $152 million in deposits at the bank, although there was no formal lien on the deposits.
“We do not understand the rationale for maintaining both loans and deposits of the levels concerned,” the auditors wrote.
County officials did not learn the identity of the investors when the Saudis purchased a 49.9% stake in the marina holdings of developer Abraham M. Lurie in 1989. Instead, they accepted assurances from the Saudis’ Chicago attorney that the investors were wealthy foreign businessmen who “wish to remain anonymous.”
The Times later identified Ibrahim as the lead investor.
The FBI investigation is yet another sign that the effort by the Saudi group to expand its marina holdings could be in trouble.
The marina is publicly owned and businesses there operate on long-term leases with the county. The leases can be bought and sold like conventional real estate, but all such transfers must be approved by county supervisors.
In July, after The Times disclosed Ibrahim’s ties to BCCI, the supervisors launched their own investigation of the Ibrahim group’s business dealings. That inquiry is proceeding.
The county has demanded information concerning the investors’ relationship with BCCI, including financial information on all companies involved in the marina deal and the original source of funds for the investment.
This week, Supervisor Kenneth Hahn, who supported the Saudis’ initial investment at the marina in 1989, said he will oppose the group’s efforts to expand its holdings there.
The Saudis have been locked in a bitter legal battle with Lurie for control of the marina properties. They have had persistent differences almost from the outset.
In July, facing imminent foreclosure for failure to pay overdue bank loans, the marina partnership of Lurie and the Saudis filed for federal bankruptcy protection.
Lurie has been having financial trouble of his own and appears to be unable to buy out his Saudi partners. A more likely resolution of the dispute would be for the Ibrahim group to buy out Lurie.
But Hahn said that even if the Saudis defeat Lurie in court, he will vote to disallow the transfer of the leases to the Saudis. If the supervisors do not approve the transfer, it is likely that the Ibrahim group will be forced to sell the leases.
Hahn said through an aide that his decision was not based on Ibrahim’s BCCI connections, but was a response to Saudi Arabia’s long-standing support for an Arab boycott of companies that do business with Israel.
Hahn’s declaration that he would oppose the Saudis was prompted by a letter he received from Louis Rogers, his appointee to the county’s Small Craft Harbor Commission, an advisory board that oversees the marina.
In the letter, Rogers urged Hahn to come down “foursquare on the side of morality and decency” by rejecting the Saudis’ efforts to take over Lurie’s properties.
Hahn’s chief deputy, Mas Fukai, said this week that the veteran supervisor agrees 100% with the sentiments expressed by Rogers.
Ironically, the Saudi government in July proposed ending the economic boycott if Israel agreed to stop building settlements in territories it occupies.
The decision by Hahn and Rogers to oppose the Saudis marks a dramatic reversal for both men. Both voted to approve the 1989 transaction.
Despite the controversy, the Ibrahims are still interested in taking over Lurie’s marina properties, family spokesman Armstrong said.
The argument about the Saudi boycott of Israel is “completely irrelevant,” he said. “We’re independent business people . . . not associated with any official government agency in Saudi Arabia,” he said.