Searching to besmirch excellence
TIME and NEWSWEEK recently carried damaging articles about BCCI and its founder, Agha Hassan Abedi, identical enough to conclude that they emanated from the same source, were one-sided and so tainted by obvious vested interest that they lacked the normal objectivity of these two very fine weekly international publications. BCCI or Abedi not being newsworthy in the weeks immediately preceding, the coincidence of sudden motivation to besmirch the reputation of a semi-invalid and his banking creation needs some attention.
Agha Hassan Abedi founded United Bank Limited (UBL) in 1959 at the instance of the Saigols, one of the 21 major business families then running Pakistan’s industry and commerce, who were peeved at being discriminated against in respect of credits by Habib Bank Limited and Muslim Commercial Bank Ltd, owned respectively by their rival business groups, the Habibs and Adamjees. Abedi had joined Habib Bank 12 years earlier as a Senior Selective Service Officer. As UBL’s first GM and its Director at the age of 37, Abedi soon became its President and later its Chairman concurrently. The Saigols thus unwittingly provided the first chink in the armour of the elite club of the predator business families (who did not brook any trespassing into their economic preserve) by letting the professional senior management of UBL dictate policy and also run the bank on a day to day basis. Blessed with a magnetic personality, outstanding leadership qualities and a dynamic business acumen that revolutionized the concept of credit approval and disbursement thereof, Abedi made UBL into a giant rivalling HBL. By 1971 UBL had 912 domestic and 24 international branches, with assets exceeding US$ 1 billion.
In the meantime Zulfikar Ali Bhutto had politically harnessed the public resentment against the avarice and greed of a handful of robber barons, translating the aspirations of the masses for “Roti, Kapra Aur Makan” into an electoral victory for his PPP in then West Pakistan. Seeking to curb the powers of the rich-elite in future electoral manipulation, Bhutto launched an economically disastrous nationalisation campaign, capped by the takeover of banks. The ills of nationalisation notwithstanding, bank branches were opened for socio-economic (in addition to that of commercial) reasons for the benefit of the masses.
Retiring prematurely at 49, Agha Hassan Abedi worked his credibility in banking and financial circles to create the Bank of Credit and Commerce International (BCCI), giving truth to the words of John Kenneth Galbraith, “Banking is a career from which no man really recovers!” Supported by a clutch of Saudi and Emirates Princes and businessmen, Bank of America NT and SA (striving to penetrate the Middle East market) coming in as a major shareholder along with Shaikh Zayed Bin Nayhan, the Ruler of Abu Dhabi (who deposited huge personal and State Funds through Abu Dhabi Investment Company — ADIC), BCCI was probably the first bank to grow without the shadow of a Central Bank or with the support of some nation as a home base, having no parallel in modern banking history. The Stateless status laid the foundations of its future global corporation status.
Genius and timing then combined with Providence, nothing could have been more crucial than the oil crisis of 1973, the new bank rising on the crest of the wave of oil money. Combining the Western concepts of business with the oriental penchant for loyalty and inter-relationships, Agha Hassan Abedi, through inspiring individual leadership, rapidly transformed BCCI into a global colossus. Employees envisaged their individual destinies as being synonymous with BCCI (and by extension with Agha Hassan Abedi). To grow into a world-wide financial institution of 11,000 employees with over US$ 16 billion in assets spread over 70 countries in 18 years from a minuscule and meagre amount of US$ 2.5 million takes some doing — and some leader. To deny men of vision their earned glory in the sun is a universal pastime, one must look closely at all their achievements before tarring and feathering them.
Pakistanis are intermittently world champions in hockey, in squash Jahangir and Jansher rule supreme. Our pilots (PAF and PIA) are second to none but the discipline in which we really excel is in banking. Pakistan’s professional expertise in international banking is greatly respected, case in point the number of senior Pakistani executives in international finance institutions, the brilliant No.2 in the World Bank, Moeen Qureshi, didn’t rise to that post because of his blue eyes. With the advent of electronics, coupled with expansion of operations in the Third World, international commercial financial institutions underwent radical change, they also had to draw on executive manpower from the targeted regions itself, the personnel from Asia excelling in certain banking disciplines. Unfortunately BCCI employees were not always selected for the technical skills that along with experience is a necessity in modern banking. Some of them were brought in for influence-peddling rather than professional competence. Agha Hassan Abedi was the banking equivalent of the purported “Islamic” nuclear bomb in international banking, attempting to translate his domestic banking expertise into the enlarged arena of the world with state of the art “personalised services” to rich Middle Eastern clients, treated initially with suspicion and derision by the gnomes of international finance. Today private banking’s “personalised services” is offered by all the large banks all over the World.
Somewhere along the line, Agha Hassan Abedi decided that the Stateless Bank must have a home. The USA was seen as a land of opportunity through the same eyes that millions have seen in the many decades and centuries preceding him, a land of freedom and of hope, a land without the restraints of prejudice. USA is a land of endless entrepreneurial opportunities, supported by dynamic banking practices that gives tremendous financial support to ideas and does not discriminate (as a State policy) because of race, religion, etc. BCCI thus became an aspirant Corporate immigrant, for economic (and psychological) reasons. The First American Bank, with branches in Washington DC, Virginia, Maryland, etc presented a niche of available opportunity. The same investors who controlled BCCI bought out the First American Bank and thus ran afoul of the system, constituting a misdemeanour. Corporate moves in the US cannot be made without an Attorney and an Accountant, in BCCI’s case Clark Clifford and Robert Altman, respected law partners, provided the necessary legal cover. It was their duty to point out potential legal problems to (1) the shareholders (2) US authorities. Using of “front men” is not a crime, but suggesting that people of the calibre of Clifford and Altman were dupes is ludicrous to say the least.
Definite evidence suggests that drug-money laundering (that no one can support morally) did take place. Awan, Bilgrami and Associates were convicted on this count while BCCI has been fined in the US, after accepting its guilt. When any organisation expands pell mell, the Chief Executive is pulled in opposite directions, the need to maintain momentum conflicts with the ability of management capacity to keep up. The temptation to expand often dwarfs the need to consolidate, with usually tragic consequences. The upper echelons of BCCI were packed with senior managers from the South Asian sub-continent with proven ability in that region but with uneven ability and experience in the international banking arena. The independence given to subordinates was misused either for personal gain or childish displays of the trappings of power, incapability now became endemic, losing millions on the bank’s account. Agha Hassan Abedi’s philosophical concept of linkage between moral and material floundered at the altar of individual personal greed and/or incompetence and/or for a combination of both. To put it bluntly, Agha Sahib trusted blindly, some of his employees looted the till blindly. As bankers to major nationalised corporations in Third World countries, young and inexperienced executives became cronies of Third World leaders as their private bankers. Access to power acting as an aphrodisiac, inexperience and immaturity makes for a fatal combination. The money invested privately constituted illegal kickbacks, morality thus failed at the altar of corporate convenience. The responsibility of instilling and maintaining corporate morality (as well as sanity) at the higher levels of management devolves upon the leader of an institution. While Agha Hassan Abedi cannot ever be thought of as corrupt, there is no doubt that some of his minions did willingly and knowingly indulge in corrupt practices.
All banks can certainly be used as a conduit for money laundering, whether they are in the private sector or nationalised. Given that the same checks and balances do not exist in the Pakistan banking system as in the US, what about the money being laundered in 40 US banks as ascertained by the US Drug Enforcement Agency (DEA)? What about “Private Banking” offered by the Pakistani branches of US and other western banks to selected and key Pakistani citizens? Pakistani auditors and inspectors may look the other way, why not invite US inspectors and auditors to carry out a detailed audit over the last decade of the banks of US origin in this country?
The question revolves around whether it was BCCI Corporate philosophy to indulge knowingly in corrupt practices or individual initiative to enlarge the profit base because of incessant demands for performance in a competitive corporate environment? Why is the whole senior management team still intact after Abedi’s retirement if it was BCCI Corporate philosophy to use all means fair or foul for corporate success? Agha Hassan Abedi remains mentally alert, the media attack seems to have been orchestrated to pre-empt future banking plans. In the absence of concrete substantiated evidence, the vendetta must be taken to be inspired. In the meantime Agha Hassan Abedi is fighting back in the only way he knows how, by creating another bank.
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