BCCI Official in Venture With Keating : Banking: The ex-owner of Lincoln Savings reportedly formed an offshore firm with a director of scandal-plagued Bank of Credit & Commerce International in 1986.
Former Lincoln Savings & Loan owner Charles H. Keating Jr., moving into the international investment arena in 1986, helped to form an offshore currency trading firm with a key director of the scandal-ridden Bank of Credit & Commerce International.
The director, Alfred Hartmann, also was chairman of a small BCCI-owned bank in Geneva that has been linked to drug-money laundering and was chairman of a Zurich-based institution involved in providing $3 billion in loans to fund Saddam Hussein’s nuclear, chemical and ballistic missile programs in Iraq.
The National Mortgage News, a trade publication, reports in its Monday edition that, according to federal sources, the relationship that Keating formed with the Swiss businessman may help to explain million of dollars in losses that Irvine-based Lincoln’s parent company, American Continental Corp., claimed from speculating in foreign currency trading.
The possibility of a link also revives calls to freeze Keating’s personal assets abroad. Lawyers for small investors who lost more than $250 million in the April, 1989, collapse of Keating’s empire had sought such a freeze nearly two years ago. But Keating said then that he had no personal bank accounts, cash or investments abroad.
“It was clear to us back then that he was involved in significant movement of money offshore,” Ronald Rus of Orange, a lawyer for the investors, said Friday. “We wanted to determine what his offshore activity was.”
Congressional investigators have been examining possible ties between Keating and BCCI through Hartmann. There is no indication, however, that Keating was aware of Hartmann’s affiliation with Luxembourg-based BCCI, and Keating recently said he never dealt with the worldwide institution.
Stephen C. Neal, who is defending Keating in a criminal securities fraud trial in Los Angeles Superior Court, said he did not know of any connection between his client and BCCI.
“Everyone is trying to find sinister connections when none exist,” Neal said. “The fact that Hartmann had a BCCI affiliation at the same time he was on Trendinvest (the offshore trading company) is totally irrelevant.”
BCCI, part of the Abu Dhabi-controlled banking empire, has been accused of a multinational fraud and of financing terrorists and drug cartels. It is the target of numerous criminal and civil actions and investigations.
In 1986, American Continental set up a subsidiary called Dungiven Investments Ltd., whose only purpose was to invest $17.52 million in a Bahamas trading company called Trendinvest Ltd. On Nov. 10, 1987, Dungiven sold the stock back to Trendinvest for a profit of only $1,504.
Trendinvest, which traded foreign currencies, listed both Keating and Hartmann as directors, the National Mortgage News found in reviewing public records that were filed in a House Banking Committee hearing two years ago on Lincoln’s April, 1989, collapse. The thrift’s failure is the biggest to date, costing taxpayers $2.6 billion.
Hartmann is emerging as a major figure at BCCI. He was chairman of BCCI-owned Banque de Commerce et de Placements in Geneva until it was sold in July, and he quit recently as its president. The first U.S. indictment of BCCI officials on drug-money laundering charges in Tampa in 1988 stated that some of the drug proceeds were transferred into accounts at BCP. A federal investigator has described BCP as “a major link” in the BCCI chain, according to the Financial Times of London.
Hartmann also was chairman of a Zurich-based subsidiary of Banco Nazionale del Lavoro, an Italian-owned bank that routinely handled overnight transactions between BCCI and the central bank of Iraq, according to the National Mortgage News. The FBI raided the Italian bank’s Atlanta branch in July after learning that it had made more than $3 billion in illegal loans to Hussein’s government.
Hartmann also is chairman of the Swiss Society of Chemical Industries and has been a vice chairman of F. Hoffman-La Roche & Co., the giant Swiss drug and chemical company.
Times staff writer Doug Frantz in Washington contributed to this story.