BCCI’s Arms Transactions for Arab Terrorist Revealed

LONDON —  The Bank of Credit & Commerce International handled millions of dollars in illegal arms transactions for Palestinian terrorist Abu Nidal in an effort to persuade its wealthy Mideast backers that the bank was staunchly pro-Arab, according to a former high-ranking bank official.

British weapons secretly destined for the terrorist’s arsenal--some of them for resale to Iraq and elsewhere--were financed through BCCI offices here and shipped under export documents that bank officials knew to be phony, records and interviews disclosed.

“During the Iran-Iraq War, the bank wanted to show to the Arab world that we supported Iraq, and we did that through support of Abu Nidal for several years,” said Ghassan Qassem, a 17-year BCCI officer who served as Abu Nidal’s personal banker and became a spy inside the bank for Western intelligence agencies.

The bank was a vehicle for transmitting money to Abu Nidal from wealthy Arabs who supported his work as a matter of political conviction and from individuals and governments that contributed funds as a form of protection against terrorist attacks aimed at them.

The banker’s disclosures provide an important new piece in the BCCI puzzle, helping complete the picture of a bank motivated by the twin forces of politics and profit. His view from the inside supports the perception that BCCI was, in part, an instrument of Arab foreign policy.

Qassem, who managed the Sloane Street branch here, said BCCI’s strategies not only aided Arab interests but fostered lucrative business for the bank.

In fact, there is increasing evidence that BCCI profited from associations with a number of individuals and groups engaged in terror and arms trading. Bank audit reports provided to the Bank of England, for example, link 42 BCCI accounts in various British branches to arms merchants and terrorists. And evidence recently obtained by a U.S. congressional committee shows that BCCI financed the export of terrorism to South America, facilitating millions of dollars in transactions between Abu Nidal and leftist guerrillas in Peru.

BCCI was shut down in July by bank regulators around the world after its auditors uncovered evidence of widespread fraud and losses of $5 billion or more. The bank remains under scrutiny by criminal investigators here and in five American cities as well as by banking authorities.

In interviews arranged under strict security at a London hotel, Qassem provided new details of BCCI’s relationship with Abu Nidal, whose attacks are blamed for more than 300 deaths and 650 injuries. The soft-spoken banker also disclosed new information about BCCI’s long-shrouded ties to U.S. and European spy agencies.

But it is Qassem’s explanation of the bank’s motives that adds new perspective to BCCI’s links to the Arab sheiks who bankrolled the bank.

Many of the wealthy Arabs behind BCCI are longtime supporters of Palestinian terrorists. Sheik Zayed ibn Sultan al Nuhayan, the ruler of Abu Dhabi and the bank’s current majority owner, was an early patron of the Palestine Liberation Organization.

Other moderate Arab states where BCCI operated are said by Western authorities to have paid millions of dollars into Abu Nidal’s BCCI account to buy protection from terrorist violence against their diplomats and prominent citizens.

A French secret service report says that certain Mideast countries bought peace by making regular payments to Abu Nidal and his organization, an accusation made earlier in U.S. reports. A former CIA chief of counterterrorism, Vincent Cannistraro, said that countries such as Saudi Arabia, Kuwait and the United Arab Emirates “feel very vulnerable. Their citizens cannot be protected around the world. So, they pay for protection.”

Qassem said Arab countries made regular monthly or annual payments to Abu Nidal.

“Sometimes the money was paid in cash, delivered in suitcases,” he said. “Or it was deposited to (Abu Nidal’s) bank accounts in Jordan, Switzerland, America. But the bulk of the money came through the BCCI account here.”

Abu Nidal had many other sources of income, Qassem said, including commissions from arms transactions. Aided by access to BCCI records, Western counterterrorism agents also learned that Abu Nidal traded profitably in construction services and various other legitimate businesses.

Shortly after Qassem began spying for Britain’s MI-5 intelligence organization, the United States and Britain pressured Poland to close an Abu Nidal front company operating in Warsaw. The company, SAS Trade and Investment, had sold arms and other goods to the Mideast and was a key part of the highly organized ring’s profit-making operations.

Qassem described his dealings with Abu Nidal and intelligence agents over the course of two interviews here. They were arranged through an intermediary at public locations because Qassem said he fears for his life.

He has altered his physical appearance since first disclosing his role as a banker-spy on the BBC-TV program “Panorama” in July. For a time, he subsequently refused to talk to journalists and, he said, spent most of his time on the run under the protection of a private security service.

“The risk is very wide,” said the man who, with his family of four children, has been forced to move from his London home to a more secure and undisclosed location.

Nothing about the man who walked into Qassem’s branch office a decade ago provided any warning that the banker was about to plunge into a world of terrorism and espionage.

The customer appeared to be a typical middle-aged businessman, balding and nattily dressed, when he first strolled into the posh lobby of BCCI’s branch on Sloane Street in 1981. The customer, traveling on an Iraqi passport in the name of Shakar Farhan, said he sold computers and photocopiers in Kuwait.

A year earlier, an account had been opened on his behalf at the branch with an initial deposit of $50 million. The deposit was transferred to BCCI from a Midland Bank branch near Marble Arch. Qassem had hand-carried the transfer papers.

Wealthy Arab businessmen and members of royal families were regular customers of the BCCI branch in the fashionable Knightsbridge shopping district. The bank occupied an office of marble and tinted glass on a block with such shops as Hermes, Giorgio Armani and Cartier.

As manager of BCCI’s most prestigious branch in London, the Syrian-born Qassem was accustomed to working for the super-rich. The position also gave him stature within BCCI and, consequently, easy access to top executives from the bank’s headquarters.

In the early 1980s, BCCI was the world’s fastest growing bank. Founded by Pakistanis and financed by Arabs, it offered a unique blend of secrecy and a far-flung branch network that appealed to a vast array of clients--including terrorists, drug cartels, dictators and spies. Not only did Syrian agents move money through BCCI, so did CIA and British intelligence operatives.

Qassem first met Shakar Farhan when he picked him up at London’s Gatwick Airport and escorted the visitor to his London hotel. Normally, such personal services are provided by employees of lesser rank, but the branch manager was acting at the request of a major bank client: the government of Iraq.

Farhan was in London to sign papers completing the sale of Portuguese arms to Iraq. The deal was financed by BCCI, Qassem said.

Much of Farhan’s bank business was more routine: requests for access to the bank’s telex machine, help with English translations and assistance on shopping trips to find Havana cigars on Jermyn Street, a bicycle and custom-tailored suits on Oxford Street.

But not many clients, even at this discreet bank, sent and received coded telexes--or sought financing for armored Mercedes-Benzes equipped with concealed rocket and grenade launchers.

The bank had arranged the purchase and the “James Bond” retrofitting of six Mercedes sedans. The deal collapsed when Farhan rejected the cars. The on-board rocket launchers were too obvious, even from a considerable distance, Qassem said.

There also was a shipment of riot guns and ammunition intended for Syria and financed with a BCCI letter of credit. When British authorities refused to approve a license to export the sensitive equipment to Syria in 1985, an African diplomat was paid to sign export documents claiming to be the buyer.

Did the bank know it was financing an illegal arms deal? “Yes,” Qassem said.

According to a spokesman for weapons-maker Royal Ordnance, owned by the British government at the time, the company “waved goodby at the docks” after signing over the shipment of riot weapons. “We thought it was sailing to Sierra Leone,” said Andrew Jeacock, the spokesman.

Instead, he said, subsequent evidence shows that the arms were diverted via Amsterdam to East Germany, where, the London Sunday Times reported last summer, state police and Abu Nidal divided the shipment.

Qassem said he thought that the customer he knew as Farhan was an agent for Iraq and later Syria. Eventually, the banker said he came to realize that “everything was not as it seemed.”

It happened in 1987. He saw a copy of the French news magazine L’Express and discovered a picture of his customer, Farhan. “I read some words that frightened me,” Qassem recalled. The picture in L’Express was of Abu Nidal, nom de guerre of the Palestinian terrorist Sabri Banna.

“I took it to my senior manager at the bank’s headquarters and said, ‘Look at this,’ ” said Qassem. “He said to forget it. To destroy the magazine.”

The eagerness of top bank officials to keep secret BCCI’s dealings with Abu Nidal is consistent with what an American undercover agent discovered not long after the magazine incident. Posing as a money launderer, the agent tried to inform a London BCCI manager that the source of his bank deposits was cocaine sales. The banker grew visibly agitated and blurted, “I don’t want to know. I don’t want to know.”

Soon after being rebuffed by his superior, Qassem arranged through a friend to meet with agents from MI-5, one of the British intelligence agencies. He says now that it was his intention to do something to protect the bank. He became a spy.

The meeting took place at a London hotel not far from his Sloane Street office. Qassem said he agreed to provide the agents with information and copies of records regarding the Abu Nidal account and other accounts at BCCI. He declined in the interview to discuss the other accounts.

Access to those bank records helped British authorities tie Syria to an attempted terrorist bombing in 1986. The BCCI account of Yasser Haider, described as a senior Syrian military intelligence officer in the London embassy, was used for payments to Abu Nidal agents involved in an attempt to use a pregnant woman to smuggle a bomb aboard an Israeli El Al jetliner here.

During more than two years, the banker said, he attended numerous clandestine sessions with British agents and their colleagues from the CIA. It was his impression, he said, that information he was providing was being shared with other Western intelligence agencies.

While neither MI-5 nor the CIA will comment on such a relationship, the American agency has acknowledged that it obtained intelligence data through BCCI.

Qassem says his intention was to do “something good for the bank,” which he feared could be harmed by dealing with terrorists. He even persuaded an MI-5 official to explain his service to Swaleh Naqvi, the bank’s acting president, in December, 1989. Instead of praising his employee for assisting authorities, Naqvi was angered by the spying and arranged for Qassem to be transferred overseas. Qassem said that when he rejected the transfer, he was fired.

The full extent of BCCI’s relationship with Abu Nidal still is not known.

“They clearly were not a mainstream bank, but we have no evidence that BCCI itself actively furthered terrorism,” said a top American counterterrorism official.

However, according to unpublished reports by a task force on terrorism run for Republican congressmen, BCCI was a conduit for $4 million paid to Abu Nidal for his organization’s work in teaching urban terrorist tactics to Peru’s Maoist Shining Path guerrillas in 1988.

While Abu Nidal operatives were linked to the attempted bombing of the U.S. Embassy in Lima in 1988, the relationship with the Shining Path appears to conform to the impression among Western analysts that Abu Nidal has become a terrorist for hire.

“Behind the soldier there is the businessman,” explained a former Abu Nidal deputy in one of the task force reports.

And it was at BCCI where Abu Nidal the soldier became Abu Nidal the businessman.