Saudi Banker, Aide Indicted in BCCI Scandal : Crime: They are charged in New York with defrauding depositors of $300 million.

The chief operating officer of the largest commercial bank in Saudi Arabia and an associate were indicted Wednesday on charges of scheming to defraud depositors of the Bank of Credit & Commerce International of $300 million from 1985 to 1991.

Manhattan Dist. Atty. Robert M. Morgenthau--who announced the charges against Sheik Khalid bin Mahfouz, a top executive of the National Commercial Bank of Saudi Arabia, and his assistant, Haroon Kahlon--stressed that his probe of BCCI still was unfolding.

“This is the biggest bank fraud in history and there is nothing to change that view,” the district attorney said.

Mahfouz was charged with investing hundreds of millions of dollars in BCCI in 1986, when it needed additional capital to sustain and expand its operations, and then secretly withdrawing the funds, defrauding depositors, regulators and auditors.

Morgenthau charged that more than $300 million was fraudulently obtained from depositors and other customers of BCCI. He said that when Mahfouz’s investment in BCCI was secretly withdrawn, the result was “a gross misstatement of the true financial picture of the bank.”

Mahfouz denied the charges Wednesday through a statement issued by his spokesman, Lawrence G. Smith. Smith called the indictment “completely unwarranted and without justification.”

The latest indictments by a grand jury in Manhattan were filed a year after BCCI was closed down by regulators worldwide. The court papers added another layer of complexity to a scandal that has caused BCCI’s customers and creditors more than $15 billion in losses.

Last year, BCCI’s founder, Agha Hasan Abedi, and the bank itself were indicted on broad charges including fraud, racketeering and money laundering.

According to the latest indictment, Mahfouz invested more than $700 million in BCCI in 1986, thus becoming a principal shareholder and director of BCCI. The same year, court papers charged, he also invested more than $140 million in the holding company that owned First American Bank, a large Washington bank. BCCI was the secret owner of First American.

The indictment charged that Mahfouz sold his BCCI shares in 1988 and his holding company shares the next year. But BCCI’s auditors and regulators were led to believe that Mahfouz continued to be a major shareholder until at least April, 1990.

The court papers alleged that at least $300 million of the payments made to Mahfouz for his BCCI and holding company shares came from BCCI’s own funds and that these payments were falsely recorded on BCCI’s books as loans.

Mahfouz is a resident of Saudi Arabia; Kahlon lives in London. Morgenthau said that discussions were underway to bring both defendants to New York to enter pleas. The defendants could face fines as high as $600 million.