Authors: Philip Willan
Evidence to that effect entered the public domain as a result of the Bank of England/BCCI trial in London in 2005. Liquidators of the Bank of Credit and Commerce International were suing Britain’s central bank for misfeasance in public office, arguing it had been negligent in its supervision of the Luxembourg-registered financial institution. BCCI was founded in 1972 by Pakistani banker Agha Hasan Abedi and was initially capitalized by Sheik Zayed of Abu Dhabi, developing into the first multinational bank at the service of the Third World. By the time it was shut down in 1991 it had expanded into 73 countries and become a $23 billion operation, with almost a million depositors worldwide. Robert Morgenthau, the New York district attorney who played a leading role in unravelling what he called ‘the largest bank fraud in world financial history’, claimed BCCI had ‘operated as a corrupt criminal organization throughout its 19-year history’.
The liquidators claimed that the Bank of England bore at least part of the blame for that, for it had possessed information about the bank’s criminality but done little or nothing to rein it in. Though incorporated in Luxembourg and with offices in offshore havens such as the Cayman Islands, Netherlands Antilles and Hong Kong, the real centre of BCCI’s operations was in Britain. When the bank received a licence from the Bank of England in 1980 there were already more branches in the UK than in any other nation. One of its primary economics advisers was the former British prime minister James Callaghan. A United States congressional inquiry headed by Senator John
Kerry concluded that the Bank of England had participated in a cover-up of BCCI’s criminality in a last-ditch effort to save the institution from bankruptcy. It had agreed with the bank’s UK accountants, Price Waterhouse, and with the government authorities in Abu Dhabi on a plan to rescue BCCI in April 1990; Price Waterhouse had been induced to certify the BCCI accounts as ‘true and fair’, mentioning the huge losses only in a footnote. ‘As a consequence, the certification was materially misleading to anyone who relied on it ignorant of the facts then mutually known to BCCI, Abu Dhabi, Price Waterhouse and the Bank of England,’ the Kerry committee observed. The decision to seek to reorganize BCCI, rather than to advise the public of what they knew, ‘caused substantial injury to innocent depositors and customers of BCCI’.
The Bank of England’s decision may have been made in good faith and under difficult circumstances, but there are reasons to be suspicious; reasons that stem from the nature of BCCI’s criminality. American authors Jonathan Beaty and S.C. Gwynne spell that out in the introduction to their book
The Outlaw Bank
: ‘This is the story of how the wealthy and corrupt in Latin America managed to steal virtually every dollar lent to their countries by western banks, creating the debt crisis of the 1980s; how heads of state such as Ferdinand Marcos, Saddam Hussein, Manuel Noriega, and others skimmed billions from their national treasuries and hid them in Swiss and Cayman accounts forever free from snooping regulators; how Pakistan and Iraq got materials for nuclear weaponry and how Libya built poison-gas plants. BCCI is also the story of how governments manage to put together arms deals with supposedly hostile governments, as in the case of Israel’s clandestine trades with Arab states, or the United States’ supplying weapons to both Iraq and Iran in violation of its own laws.’
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Perhaps the real reason that the Bank of England didn’t want to get to grips with the BCCI problem earlier, however, was BCCI’s entanglement with western secret services. As well
as serving the financial interests of assorted Middle Eastern terrorists, despots, arms dealers, drug cartels and organized crime bosses, BCCI was also reportedly used by the secret services of Israel, Pakistan, Britain and the United States. The CIA made use of BCCI’s Pakistani branches, for example, to channel funds to the Afghan mujahedin engaged on their jihad against the Soviet Union. That operation, which began in 1979 under President Jimmy Carter, placed the bank at the heart of one of the West’s most important and ultimately successful clandestine cold war operations, good reason in itself to protect the bank from prying regulatory eyes. The bank reportedly funnelled millions of dollars to Iraq for arms purchases between 1985 and 1989 when Saddam Hussein was being backed by the United States as a secular Arab bulwark against fundamentalist Iran. Some of the BCCI money was channelled through the Atlanta branch of Italy’s Banca Nazionale del Lavoro, which ultimately contributed a massive $4 billion to the Iraqi war effort.
The Bank of England had heard about the BCCI’s unorthodox activities from at least November 1986, when the governor received an anonymous letter stating: ‘The BCCI is involved in helping people avoid tax, illegal transfers of money, Hawala transfers, off the record deposits, conduit for drug and crime money and also as banker to intelligence agencies for most major agencies of the world.’ That same year MI6 – which, as the trial made clear, has close ties to the Bank of England – was informed by the CIA that BCCI was being used by the Abu Nidal Organization (ANO), a Palestinian group dedicated to the destruction of Israel. The CIA had received the information from a senior ANO defector. According to Appendix 8 of Lord Justice Bingham’s ‘Inquiry into the Supervision of the Bank of Credit and Commerce International’ – marked Top Secret Umbra but declassified for the Bank of England trial – an ANO account was first opened at the Park Lane branch of the BCCI in London on 31 March
1981 by Samir Najmeddin, an alleged arms dealer and ANO operative. A healthy $30 million deposit was made into the account the following day. By 1989 the Secret Intelligence Service (SIS, or MI6) had been introduced to BCCI president Swaleh Naqvi by the former head of Saudi intelligence, Sheik Kamal Adham, according to the Bingham report. It seems highly unlikely, however, that the two organizations – SIS and BCCI – were not already intimate by then.
The BCCI liquidators’ case against the Bank of England collapsed in November 2005 after a hearing lasting 256 days. The liquidators abandoned their claim after the chancellor of the high court, Sir Andrew Morritt, ruled that it was no longer in the best interests of the creditors to continue. Proceedings at the Old Bailey, largely ignored by the press, had been somewhat surreal, as participants danced around the unspoken heart of the matter: the role of MI6 in the affair. Had the Bank of England failed to rein in the BCCI because the bank was involved in crucial intelligence operations mounted by Britain and its allies? There was no clear, overt evidence to that effect, and everyone involved was too polite to mention the hypothesis directly.
A document linking the IOR to this ambiguous world emerged during the course of the trial. A cryptic note on a London-registered company called Manlon Trading Ltd, drawn up by a Mr Barnes of the Bank of England, reads: ‘A check through our system throws up a variety of references for Aziz and Patel but none that could reasonably be linked to this deal. Instituto per le Operata Religione [sic] pops up in a 1985 reference attached. The whole thing seems rather odd and should, I think, be looked at more closely.’ Further details on the link are available in a note from an A.R.W. Davies, manager of the Bank’s Realizations Department, and dated 11 October 1988. ‘Also, and again rather strange, there are a number of credits originating from what appear to be church organizations abroad. Paul cited two; Habitat for Humanity, a US based
organization who paid in US$10k and an Italian religious group, calling themselves Istituto per le Operata Religione [sic], based in Vatican City. They paid in three credits amounting to US$130k over a six week period.’ The note pointed out that the liquidator of Manlon had found evidence that the company had accounts with the Bombay and Luxembourg offices of BCCI in May 1987 and that a director of the company had lied to the liquidator about the company’s affairs.
According to documents deposited at Companies House, Manlon’s principal – and somewhat vague – activity was to ‘act as confirming agents in the sale of goods of all kinds’. It appears to have been active in West Africa, with promissory notes drawn on the Central Bank of Nigeria featuring large in its last, 1987, accounts. The Davies note observes: ‘From my discussions with Ray Hocking and Paul Sarling, it is quite clear that they consider the activities of the company, as evidenced by its TDB [Trade Development Bank] bank account, to be so unusual as to be disturbing. The Liquidator has therefore to consider whether or not to involve the Serious Fraud Office (SFO).’ The Trade Development Bank was a scandal-plagued financial institution founded by the controversial Lebanese-born banker Edmond Safra and sold by him to American Express in 1983. Why was money from the IOR arriving in the account of such an anomalous enterprise as Manlon? Significant sums had reached Manlon from the IOR, and there had also been payments from the Banco Ambrosiano and the Banca Nazionale del Lavoro, a source familiar with the liquidation said. ‘Very secretive people were involved.’ Among the surprising recipients of Manlon’s funds was an association of Catholic priests in Chicago, Archbishop Marcinkus’s home town, the source said.
The Vatican had a new opportunity to play geopolitics with the election of a Polish pope in 1978. Karol Wojtyla wasted no
time in beginning his mission, travelling to his native Poland to inspire his compatriots with the desire for freedom in June 1979, eight months after his election to the throne of St Peter. His rapport with the huge crowds that turned out to greet him helped lay the groundwork for the Solidarity movement, the beginning of non-violent opposition to the communist regime. As archbishop of Krakow he had already helped to sow the seeds of the democratic revolt. The Solidarity movement blossomed the following year with the creation of an independent trade union: anathema for a communist system ostensibly governed by and for the people. On 14 August workers at a Gdansk shipyard walked off the job. The strike that began over workers’ rights and pay became a battle for the soul of the nation and ultimately for the possibility of freedom behind the Iron Curtain, throwing up the moustachioed electrician and union organizer Lech Walesa as one of its unlikely heroes. Pope John Paul’s unwavering moral support and his restraining influence – which prevented a radicalization of the conflict and the consequent risk of a Soviet military invasion – played an enormous role in the movement’s success. ‘Certainly the pope felt communism was as bad as nazism as a system,’ the American reporter Wilton Wynn, who covered the visit, told me. ‘When John Paul went to Poland in 1979 I saw the reawakening of Polish nationalism. It was mind-boggling. He could have had a revolution if he wiggled his little finger.’
There were other, more practical forms of support, however. The CIA reportedly sent Solidarity a total of $50 million between 1982 and 1989 and further funds and material support were supplied through the efforts of Polish churches in the United States and through the American AFLCIO trade union.
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It was only natural that the Vatican should be involved. Among those at the forefront of the Vatican’s effort was the Polish Jesuit Father Kazimierz Przydatek, who ran a Polish pilgrims’ centre near the Vatican and arranged audiences with the pope for his visitors. ‘Przydatek helped the
Polish people a lot,’ a fellow Polish priest, Father Hieronim Fokcinski, told the American author Jonathan Kwitny. ‘Father Przydatek would receive money. He was chaplain at an exclusive hospital here and knew many important people. He took part in many meetings organized by his friends to raise money for Poland.’
Francesco Pazienza has claimed to have been personally involved in the funding of Solidarity on behalf of the IOR, as we have seen. Kwitny, who was not convinced that the CIA made any significant contribution, says one of Przydatek’s financial backers was Flavio Carboni and that the Polish priest also knew Pazienza. ‘Przydatek literally ran from the room in mid-interview when I asked him about Pazienza and Carboni, and wouldn’t answer further questions when I followed him, asking about them,’ Kwitny wrote. His biography of Pope John Paul,
Man of the Century
, also contains evidence of Roberto Calvi’s direct involvement in the Polish fund-raising. The Polish socialite Wanda Gawronska told Kwitny she met the banker at a dinner party, presented to him as someone involved in raising money for Poland. ‘She says Calvi apologised for not having his checkbook with him, then pulled one hundred million lire out of his pocket – worth about a hundred thousand dollars at the time – and handed it to her. She says she was stunned: she had never dreamed that anyone walked around with so much cash, and now she feared having to carry it home,’ Kwitny wrote.
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If anyone was a natural for an important role in the clandestine anti-communist activities of the Roman Catholic church it was Paul Marcinkus: an American of Eastern European origins who controlled the purse strings of the church. A gifted athlete standing six foot three inches tall, Marcinkus’s ecclesiastical career was based on his considerable organizational skills and a robust physique that made him an effective
informal bodyguard for the pope on his international travels. Organizing papal trips abroad would bring him into contact with the secret services of many countries – and gain him the nickname ‘the Gorilla’.
Marcinkus first appeared to British author John Cornwell as a looming figure in a Vatican doorway. ‘A big man dressed all in black had come to scrutinise me,’ Cornwell wrote. ‘He was leaning easily against the door jam lighting a curled Petersham pipe of enormous capacity. As he sucked at the stem he gazed at me with very still, hooded eyes, a steady, bemused, cold-looking expression. His head was strangely huge, and steep at the sides – like a beehive – and he held a lighted match delicately above his pipe with massive, not too clean hands, blemished with dark warts around the thumbs.’
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Paul Casimir Marcinkus was born on 15 January 1922 in the tough ethnic Chicago suburb of Cicero, the fourth son of a Lithuanian-born window-cleaner. The town had a population of 70,000, the best known of whom was the gangster Al Capone. In the Grant Works quarter, where the Marcinkus family lived, the residents were drawn from Poland, Ireland, Lithuania and Czechoslovakia and the biggest employer was the Western Electric Company. ‘Later on Cicero became famous, not so much for Al Capone but for the race riots which they had. It’s true these ethnic groups were very jealous of their property. They slaved like dogs to get it in their hands and they weren’t going to let somebody come in and take over their stuff,’ Marcinkus said in a partially unpublished 1988 interview with a European journalist, given to me on condition of anonymity. The morality of property rights, how money was earned and what good causes it was to be used for, would be an important part of Marcinkus’s personal story.