Capcom

Capcom was a commodities futures firm based in London and Chicago that operated from 1984 to 1988, created by Ziauddin Akbar, the head of the treasury of the BCCI, and owned largely by BCCI's Saudi shareholders.¹² The Kerry-Brown Senate Report said that "in the entire BCCI affair, perhaps no entity is more mysterious and yet more central to BCCI's collapse and criminality than Capcom," and it moved "billions of dollars" through the futures markets "in a largely anonymous fashion."²

Founding

Akbar had been recruited from the National Bank of Oman in 1981 by Swaleh Naqvi to run BCCI's treasury from London, and by 1984 was managing more than 5.5 billion dollars with "no apparent experience in the commodities, foreign exchange or securities markets." On April 26, 1984, he registered a company, Hourcharm Ltd., at his home address in London; it was renamed Capital Commodity Dealers Ltd. on May 22, 1984, and Capcom Financial Services in July. Its capital was raised from 1 million pounds to 10 million and then to 25 million, about 37 million dollars, and it began trading on September 17, 1984; within a year customer accounts exceeded 100 million pounds. Masihur Rahman testified that "Capcom was given an official credit line" by BCCI.² In late 1984 it opened an American arm, Capcom Futures of Chicago, run by Mohammed Saghir, a former colleague of Akbar's at the National Bank of Oman; Capcom UK owned 82 percent of it, according to Wendy Gramm, the chair of the Commodity Futures Trading Commission.²

Ownership

According to a Price Waterhouse report of June 1991, Capcom's "initial shareholders were dominated by major shareholders of [BCCI]." A. R. (Abdul Raouf) Khalil, director general of the Saudi Ministry of Communications and deputy chief of Saudi intelligence, was its dominant shareholder and a director from its foundation to its end. The "Saudi Group" also included Kamal Adham, Khalil's former superior and the lead investor in the takeover of Financial General Bankshares; J.J. Uddin, a substitute for Khalil; El Sayed E. El Jawhary, an associate of both; and Robert E. Powell, an American with long ties to Adham and Khalil. Four Americans without commodities experience, Larry Romrell, Robert Magness, Kerry Fox and Powell, served as its front men; Romrell was chairman of both the London and Chicago boards.²

Losses

The losses BCCI took through Capcom are given differently by different sources. Beaty and Gwynne put the options trading losses at more than 440 million dollars.¹ The Senate report, drawing on Price Waterhouse, recorded that BCCI's position "worsened dramatically in 1985 as a result of $500 million in losses 'incurred' by BCCI in commodity trading undertaken through Capcom," which Rahman said was "equivalent to BCCI's entire capital," and put the cumulative treasury losses from 1977 to 1985 at "$600-$700 million before funding costs, or approaching $1 billion if funding costs are added."³ In July 1985 BCCI's accounts were ostensibly withdrawn from Capcom on the advice of its auditors, and Romrell observed in the annual report that "the cessation of BCCI business obviously had an impact upon our volume"; but Price Waterhouse found that BCCI's treasury paid 68 million dollars to Brenchase Ltd., a Capcom subsidiary controlled by Akbar, at the same time, and "two payments of $50 million were made to Capcom in March, 1986 out of external funds for which no liability for repayment was recorded." Asked whether Naqvi had profited from the losses, Rahman said: "since only two, three people are involved ...somebody has profited a lot."² Akbar left the treasury in 1986, after the discovery of the losses, taking "his company car and other benefits," and formed Financial Advisory Services, an introducing broker for Capcom owned by his nominee company ZASK Trading and Investments.² He later told Customs agent Robert Mazur: "We have contracted 165,000 contracts totalling $53 billion with Drexel Burnham," and "we have done over $90 billion total in 1988."²

Noriega

The Senate report called Capcom's handling of the money of General Manuel Noriega "an illustration of textbook money laundering." From 1982 to 1986 Noriega opened BCCI accounts for the "placement of secret funds of the [Panama] National Guard," which by 1986 held about 23 million dollars in Luxembourg and London. On July 26, 1986, 11.1 million dollars was moved to an account of the Banco Nacional de Panamá at the Union Bank of Switzerland in Zurich and 11.8 million dollars to one at the Deutsch-Südamerikanische Bank in Hamburg, both in the name of "Finlay International." On September 8, 1988, the money was consolidated at the Middle East Bank in London under the name "Findlays," and on September 15 to 19, on letters signed by Akbar as president of Capcom, almost all of it was paid out: 20.5 million dollars to Capcom accounts coded "GESS" and "GOOD," and 2.6 million dollars to a coded account at the Trade Development Bank in Geneva. Akbar was Capcom's managing director, chairman of Finley, and holder of a power of attorney over the GESS account, whose owning company was directed by his brother; the report concluded that Akbar "stood on both sides of the transaction." Mazur testified that Akbar described "mirror-image trading," buying contracts for one account while selling the same number from another controlled by the same person, and said it "would take forever for anyone to ever find it."²

Other Clients

Citing a Peat Marwick report, the Senate report linked Capcom to Shakarchi Trading of Zurich, the gold dealer of Mohammed Shakarchi, to which it made a payment of 150,000 dollars on the instruction of Ahmed Tawfik in February 1988; Swiss and American investigators later linked Shakarchi to the brothers Jean and Barkev Magharian, who admitted that part of the 2 billion Swiss francs they moved between 1985 and 1988 came from drug transactions. About 44 percent of Capcom's American clients were West German accounts; the most important, Ambros Holdings, a Panama-registered company with offices in Germany and Liechtenstein whose president, Richard Sax, traded under the name "Richard Wagner," accounted for half to seventy percent of Capcom Futures' commissions in September and October 1988, and went bankrupt in 1991.² The subcommittee said it had been unable to determine why Capcom was created, listing "misappropriation of BCCI assets for personal enrichment," laundering money from the Middle East, and siphoning assets out of BCCI as possibilities.²