Clifford, Partner Are Indicted in BCCI Case

NEW YORK —  Former Secretary of Defense Clark M. Clifford, a confidant of every Democratic President since World War II, and Robert A. Altman, his principal law partner, were indicted Wednesday, charged with secretly helping the scandal-plagued Bank of Credit & Commerce International gain control of Washington’s largest bank.

The coordinated state and federal indictments charged Clifford, 85, and his protege Altman, 45, with committing fraud by scheming to hide BCCI’s ownership in First American Bankshares Inc., where both men were officers.

In return, according to indictments brought by Manhattan Dist. Atty. Robert M. Morgenthau, Clifford and Altman received bribes from the leaders of BCCI “in the form of sham loans and stock deals for themselves and money denominated as fees for their law firm.”

Both men pleaded not guilty during their arraignment, where they were charged with fraud, conspiracy and receiving bribes.

If convicted, they could face fines and possible imprisonment.

In a statement, they said they “totally and categorically deny all charges.”

In indictments made public in Washington, they were accused of conspiring to defraud the Federal Reserve Board and of concealing facts during the government’s investigation of BCCI.

The three-count indictment returned in U.S. district court alleged that Clifford and Altman enriched themselves through loans and other agreements with BCCI, concealed the loan arrangements from bank regulators and breached their duty of loyalty to First American Bankshares.

Federal court papers charged the two conspired “to hamper, hinder, impede, impair and obstruct by deceit, craft, trickery and dishonest means the lawful functions of the Board of Governors of the Federal Reserve System.”

Clifford was chairman of the board of First American Bankshares and Altman was its president. Both resigned last year under pressure from the Federal Reserve Board. BCCI collapsed last year amid allegations of laundering of drug money, the financing of terrorists and arms smuggling.

The indictment in New York charged that Clifford and Altman lied to regulators by saying that the BCCI banking group would have no role in the management of First American and another BCCI entity, Credit & Commerce American Holdings.

At his arraignment in Manhattan, the tall, impeccably dressed Clifford was helped by two of his defense lawyers to walk into a 15th-floor courtroom at New York State Supreme Court. When asked how he would plead, the silver-haired attorney who plotted President Harry S. Truman’s reelection strategy and who played a major role as secretary of defense in persuading President Lyndon B. Johnson to wind down the Vietnam War, answered in a firm voice.

“I plead not guilty,” Clifford said.

Altman repeated his mentor’s words exactly.

State Supreme Court Justice John A.K. Bradley set a hearing for motions in the complex case for Aug. 5, and both Clifford and Altman were released on their own recognizance.

In the statement released after their indictments, both defendants sharply criticized prosecutors.

“The bringing of these indictments is a cruel and unjust abuse of the prosecutorial function,” Clifford and Altman said. “Instead of these charges being based on reliable and credible evidence, they are the result of mean-spirited suspicion and unfounded speculation.”

Clifford and Altman also charged that the indictments were the result of “an intense competition” that developed between Morgenthau, the U.S. Justice Department and the Fed--”each seeking public acclaim for their role in fighting BCCI corruption. . . .”

For over four decades, Clifford has been an eminence grise of the Democratic Party. The carefully spoken lawyer was a poker-playing partner of Truman and Winston Churchill. He counseled President John F. Kennedy and was sent on special diplomatic missions by President Jimmy Carter.

Clifford told the House Banking Committee last September that he had been duped by BCCI, that he had no idea it owned the controlling stock in the Washington bank he ran, that BCCI had no say whatsoever in how First American Bankshares was operated and that the millions he earned from stock in the Washington bank were completely above board.

Altman practiced corporate law and prospered under his mentor at their small Washington law firm. Until he became embroiled in the problems surrounding First American, he was best known as the husband of Lynda Carter, the actress who starred in the television series “Wonder Woman.”

At the same time as he made public the indictments, Morgenthau announced that Saudi Arabian Sheik Kamal Adham had agreed to plead guilty to violating New York state banking laws and had agreed to pay a $105-million fine. Adham is a former head of Saudi intelligence and a major investor in BCCI. Morgenthau said pointedly that the defendant had agreed to serve as a prosecution witness against Clifford and Altman.

The district attorney also announced the indictments of four BCCI officials. These separate indictments charged an international pattern of bribery. They alleged that in Pakistan, BCCI officials helped government officials to defraud the World Bank and the International Monetary Fund. The indictment charged that the BCCI bankers helped government officials in Zambia defraud the World Bank and helped the Central Bank of Senegal to defraud the International Monetary Fund.

There were similar charges of fraud in Nigeria and Colombia, and allegations of corrupt payments by BCCI group bankers in Peru, Nigeria, Argentina, Cameroon, the Ivory Coast, the Congo, Morocco, Tunisia and other nations.

“Today’s indictment spells out this massive fraud was not just a criminal fraud scheme,” Morgenthau said, “but a sophisticated and corrupt criminal enterprise, organized from the top down . . . to accumulate money and gain the power and prestige that the money provided.”

Morgenthau estimated that Clifford and Altman had made about a $10-million profit on BCCI stock they didn’t pay for and that their law firm had collected more than $16 million in legal fees from the BCCI bankers.

If found guilty on the state charges, they could face up to four years in jail. In addition, the district attorney’s office has moved in civil proceedings to attach some $40 million from both defendants.

The federal indictment alleged that Clifford and Altman, while serving as attorneys for BCCI and as officers and directors of First American Bank, “enriched themselves through secret financial arrangements with BCCI, which resulted in millions of dollars of profits to them, and then conspired to keep those arrangements from the federal regulators.”

If convicted on the federal charges, Clifford and Altman would face up to 15 years in prison and $750,000 in fines. The conspiracy count has a penalty of five years and a $250,000 fine; the two counts of concealing material facts each could bring five years and a $250,000 fine.

The Fed also announced that it has begun civil action against Clifford and Altman to determine whether they should be barred permanently from U.S. banking.

Goldman reported from New York and Houston from Washington.

Caught in the Web

Clark M. Clifford and Robert A. Altman netted millions in 1988 when they sold stock of First American’s parent company, regulators have said. Here is some background on them and the BCCI case:

INDICTED WEDNESDAY

Clark M. Clifford: Has had a distinguished career as an adviser to Democratic presidents as far back as Harry S. Truman and as a powerful lawyer in Washington. He served as defense secretary under President Lyndon B. Johnson. Clifford, 85, is former chairman of First American. He and Altman served as BCCI’s principal lawyers in the United States.

Robert A. Altman: A law partner of Clifford’s and former First American president. He now heads a Washington law firm. Altman, 45, is husband of “Wonder Woman” actress Lynda Carter.

BACKGROUND OF THE BCCI SCANDAL

International regulators have labeled BCCI a full-service bank for drug lords and dictators. It was founded in 1972 in Pakistan as an international bank serving the Third World. The bank expanded to 69 countries, with Arab oil money as capital and Pakistanis in management. Auditors say fraud began in the late 1970s to cover huge bank losses on loans; led to web of false accounts, hidden deposits, shell companies and kickbacks to hide losses on investments, secret loans, gunrunning and other improper dealings. Losses totaled several billion dollars, auditors say. The precise figure may never be known. BCCI’s worldwide operations were closed down a year ago. The bank pleaded guilty in December to charges brought by U.S. authorities and forfeited $550 million in assets. As part of a plea bargain, BCCI conceded it illegally owned First American and three other U.S. banks.

Sources: Times wire reports