Progress Report: Follow the Money

[Guest guest]

> Wed, 25 Aug 2004 09:19:53 -0700

> Progress Report: Follow the Money

> " American Progress Action Fund "

> <progress

>

 

 

Center for American Progress - Progress Report #160;

 

by David Sirota, Christy Harvey, Judd Legum and

Jonathan Baskin

August 25, 2004

 

Even though were on vacation, we wanted to alert you

to a new article by the Progress Reports David Sirota

and Jonathan Baskin, to appear in the September issue

of the Washington Monthly. By looking at a signature

event during his career in Congress, the article

debunks Bush administration claims that Democratic

candidate John Kerry has done nothing to thwart

terrorism. It traces the senator#8217;s tireless

investigation of the Bank of Credit and Commerce

International (BCCI), which at the time was#160;one of

the world#8217;s foremost terrorist-financing

institutions. Because of an investigation spearheaded

by Kerry, in the face of opposition from vested

interests in both political parties, the bank was

brought down in the summer of 1991, marking the end of

a major threat to U.S. security. In later years, it

has been discovered the bank served, among

others,#160;Osama bin Laden and was, in the words of

one senior U.S. investigator, " the mother and father

of terrorist financing operations. " The article is

attached - see the Washington Monthly's Web

site#160;for other great content.

Follow the MoneyHow John Kerry busted the terrorists'

favorite bank

by David Sirota and Jonathan Baskin

 

Two decades ago, the Bank of Credit and Commerce

International (BCCI) was a highly respected financial

titan. In 1987, when its subsidiary helped finance a

deal involving Texas oilman George W. Bush, the bank

appeared to be a reputable institution, with

attractive branch offices, a traveler's check

business, and a solid reputation for financing

international trade. It had high-powered allies in

Washington and boasted relationships with respected

figures around the world.

 

All that changed in early 1988, when John Kerry, then

a young senator from Massachusetts, decided to probe

the finances of Latin American drug cartels. Over the

next three years, Kerry fought against intense

opposition from vested interests at home and abroad,

from senior members of his own party; and from the

Reagan and Bush administrations, none of whom were

eager to see him succeed.

 

By the end, Kerry had helped dismantle a massive

criminal enterprise and exposed the infrastructure of

BCCI and its affiliated institutions, a web that law

enforcement officials today acknowledge would become a

model for international terrorist financing. As

Kerry's investigation revealed in the late 1980s and

early 1990s, BCCI was interested in more than just

enriching its clients--it had a fundamentally

anti-Western mission. Among the stated goals of its

Pakistani founder were to " fight the evil influence of

the West, " and finance Muslim terrorist organizations.

In retrospect, Kerry's investigation had uncovered an

institution at the fulcrum of America's first great

post-Cold War security challenge.

 

More than a decade later, Kerry is his party's nominee

for president, and terrorist financing is anything but

a back-burner issue. The Bush campaign has settled on

a new strategy for attacking Kerry: Portray him as a

do-nothing senator who's weak on fighting terrorism.

" After 19 years in the Senate, he's had thousands of

votes, but few signature achievements, " President Bush

charged recently at a campaign rally in Pittsburgh;

spin that's been echoed by Bush's surrogates,

conservative pundits, and mainstream reporters alike,

and by a steady barrage of campaign ads suggesting

that the one thing Kerry did do in Congress was prove

he knew nothing about terrorism. Ridiculing the

senator for not mentioning al Qaeda in his 1997 book

on terrorism, one ad asks: " How can John Kerry win a

war [on terror] if he doesn't know the enemy? "

 

If that line of attack has been effective, it's partly

because Kerry does not have a record like the

chamber's dealmakers such as Sens. Joe Lieberman

(D-Conn.) or Orrin Hatch (R-Utah). Though Kerry has

been a key backer of bills on housing reform,

immigration, and the environment, there are indeed few

pieces of landmark legislation that owe their passage

to Kerry.

 

But legislation is only one facet of a senator's

record. As the BCCI investigation shows, Kerry

developed a very different record of

accomplishment--one often as vital, if not more so,

than passage of bills. Kerry's probe didn't create any

popular new governmental programs, reform the tax

code, or eliminate bureaucratic waste and fraud.

Instead, he shrewdly used the Senate's oversight

powers to address the threat of terrorism well before

it was in vogue, and dismantled a key terrorist

weapon. In the process, observers saw a senator with

tremendous fortitude, and a willingness to put the

public good ahead of his own career. Those qualities

might be hard to communicate to voters via one-line

sound bites, but they would surely aid Kerry as

president in his attempts to battle the threat of

terrorism.

 

From drug lords to lobbyists

 

Despite having helmed the initial probe which led to

the Iran-Contra investigation, Kerry was left off the

elite Iran-Contra committee in 1987. As a consolation

prize, the Democratic leadership in Congress made

Kerry the chairman of the Subcommittee on Terrorism,

Narcotics, and International Operations and told him

to dig into the Contra-drug connection. Kerry turned

to BCCI early in the second year of the probe when his

investigators learned that Panamanian strongman Manuel

Noriega was laundering drug profits through the bank

on behalf of the Medellin cartel.

 

By March 1988, Kerry's subcommittee had obtained

permission from the Foreign Relations Committee to

seek subpoenas for both BCCI and individuals at the

bank involved in handling Noriega's assets, as well as

those handling the accounts of others in Panama and

Colombia. Very quickly, though, Kerry faced a

roadblock. Citing concerns that the senator's requests

would interfere with an ongoing sting operation in

Tampa, the Justice Department delayed the subpoenas

until#160;the end of the year,#160;at which point the

subcommittee's mandate was running out.

 

BCCI, meanwhile, had its own connections. Prominent

figures with ties to the bank included former

president Jimmy Carter's budget director, Bert Lance,

and a bevy of powerful Washington lobbyists with close

ties to President George H.W. Bush, a web of influence

that may have helped the bank evade previous

investigations. In 1985 and 1986, for instance, the

Reagan administration launched no investigation even

after the CIA had sent reports to the Treasury,

Commerce, and State Departments bluntly describing the

bank's role in drug-money laundering and other illegal

activities.

 

In the spring of 1989, Kerry hit another obstacle.

Foreign Relations Committee chairman Claiborne Pell

(D-R.I.), under pressure from both parties, formally

asked Kerry to end his probe. Worried the information

he had collected would languish, Kerry quickly

dispatched investigator Jack Blum to present the

information his committee had found about BCCI's

money-laundering operations to the Justice Department.

But according to Blum, the Justice Department failed

to follow up.

 

The young senator from Massachusetts, thus, faced a

difficult choice. Kerry could play ball with the

establishment and back away from BCCI, or he could

stay focused on the public interest and gamble his

political reputation by pushing forward.

 

BCCI and the bluebloods

 

Kerry opted in 1989 to take the same information that

had been coldly received at the Justice Department and

bring it to New York District Attorney Robert

Morgenthau, who agreed to begin a criminal

investigation of BCCI, based on Kerry's leads. Kerry

also continued to keep up the public pressure. In

1990, when the Bush administration gave the bank a

minor slap on the wrist for its money laundering

practices, Kerry went on national television to slam

the decision. " We send drug people to jail for the

rest of their life, " he said, " and these guys who are

bankers in the corporate world seem to just walk away,

and it's business as usual#8230;When banks engage

knowingly in the laundering of money, they should be

shut down. It's that simple, it really is. "

 

He would soon have a chance to turn his declarations

into action. In early 1991, the Justice Department

concluded its Tampa probe with a plea deal allowing

BCCI officials to stay out of court. At the same time,

news reports indicated that Washington elder statesman

Clark Clifford might be indicted for defrauding bank

regulators and helping BCCI maintain a shell in the

United States.

 

Kerry pounced, demanding (and winning) authorization

from the Foreign Relations Committee to open a broad

investigation into the bank in May 1991. Almost

immediately, the senator faced a new round of pressure

to relent. Jacqueline Kennedy Onassis and Democratic

doyenne Pamela Harriman personally called Kerry to

object, as did his fellow senators. " What are you

doing to my friend Clark Clifford?, " staffers recalled

them asking, according to The Washington Post. BCCI

itself hired an army of lawyers, PR specialists, and

lobbyists, including former members of Congress, to

thwart the investigation.

 

But Kerry refused to back off, and his hearings began

to expose the ways in which international terrorism

was financed. As Kerry's subcommittee discovered, BCCI

catered to many of the most notorious tyrants and

thugs of the late 20th century, including Iraqi

dictator Saddam Hussein, the heads of the Medellin

cocaine cartel, and Abu Nidal, the notorious

Palestinian terrorist. According to the CIA, it also

did business with those who went on to lead al Qaeda.

 

And BCCI went beyond merely offering financial

assistance to dictators and terrorists: According to

Time, the operation itself was an elaborate fraud,

replete with a " global intelligence operation and a

Mafia-like enforcement squad. "

 

By July 1991, Kerry's work paid off. That month,

British and U.S. regulators finally responded to the

evidence provided by Kerry, Morgenthau, and a

concurrent investigation by the Federal Reserve. BCCI

was shut down in seven countries, restricted in dozens

more, and served indictments for grand larceny,

bribery, and money laundering. The actions effectively

put it out of business what Morgenthau called, " one of

the biggest criminal enterprises in world history. "

 

Bin Laden's bankers

 

Kerry's record in the BCCI affair, of course,

contrasts sharply with Bush's. The current president's

career as an oilman was always marked by the kind of

insider cronyism that Kerry resisted. Even more

startling, as a director of Texas-based Harken Energy,

Bush himself did business with BCCI-connected

institutions almost at the same time Kerry was

fighting the bank. As The Wall Street Journal reported

in 1991, there was a " mosaic of BCCI connections

surrounding [Harken] since George W. Bush came on

board. " In 1987, Bush secured a critical $25

million-loan from a bank the Kerry Commission would

later reveal to be a BCCI joint venture. Certainly,

Bush did not suspect BCCI had such questionable

connections at the time. But still, the president's

history suggests his attacks on Kerry's

national-security credentials come from a position of

little authority.

 

As the presidential campaign enters its final stretch,

Kerry's BCCI experience is important for two reasons.

First, it reveals Kerry's foresight in fighting

terrorism that is critical for any president in this

age of asymmetrical threats. As The Washington Post

noted, " years before money laundering became a

centerpiece of antiterrorist efforts...Kerry crusaded

for controls on global money laundering in the name of

national security. "

 

Make no mistake about it, BCCI would have been a

player. A decade after Kerry helped shut the bank

down, the CIA discovered Osama bin Laden was among

those with accounts at the bank. A French intelligence

report obtained by The Washington Post in 2002

identified dozens of companies and individuals who

were involved with BCCI and were found to be dealing

with bin Laden after the bank collapsed, and that the

financial network operated by bin Laden today " is

similar to the network put in place in the 1980s by

BCCI. " As one senior U.S. investigator said in 2002,

" BCCI was the mother and father of terrorist financing

operations. "

 

Second, the BCCI affair showed Kerry to be a

politician driven by a sense of mission, rather than

expediency--even when it meant ruffling feathers.

Perhaps Sen. Hank Brown, the ranking Republican on

Kerry's subcommittee, put it best. " John Kerry was

willing to spearhead this difficult investigation, "

Brown said. " Because many important members of his own

party were involved in this scandal, it was a

distasteful subject for other committee and

subcommittee chairmen to investigate. They did not.

John Kerry did. "

#160;