Gulf Group

The Gulf Group was the shipping and trading business of the Gokal brothers, Abbas, Mustafa and Murtaza, with operations in London and Geneva and subsidiaries including Gulf Agency Company and Gulf International Inc. It was the largest single borrower from the Bank of Credit and Commerce International (BCCI), whose loans to it were never repaid.¹² The Kerry-Brown Senate Report described the Gokal family's "shipping empire" as one that "could be characterized as much BCCI affiliate as BCCI customer."³

Lending

According to the journalists Jonathan Beaty and S.C. Gwynne, the brothers used BCCI money to build their shipping business, in their heyday chartering more ships in a year than China and India combined, and their borrowings topped out at 831 million dollars in 1990.² BCCI's auditors, Price Waterhouse, reported the exposure at each examination. In 1987 they found it had reached 318 million dollars, "23 percent of BCCI's capital base," rising every year, with repayment performance "below expectations," security likely unenforceable, and financial information "inadequate." Three years later they found that on many of the Gokal loans the information was "not merely 'inadequate' but non-existent," and that "cash allocations to [some Gokal] accounts appear to be arbitrary and, as a result of this and the lack of formal repayment schedules, it is difficult to assess the underlying performance of each account." A later report put the brothers' debts at more than 400 million dollars, noted violations of Indian and Pakistani exchange controls, and recorded statements by BCCI's management that the auditors "should look to the relationship of trust between the Gokals and BCCI's top officials rather than to any documents" in judging whether the loans could be recovered. Price Waterhouse did not require the loans to be classified or provided against, so long as BCCI promised to correct them.⁴ At the trial of Abbas Gokal in 1997, prosecutors put the fraudulent loans over the life of the relationship at 1.2 billion dollars (794 million pounds).⁵

Nominee Role

In 1975 BCCI used the Gokal family as nominees in an attempt to acquire the Chelsea National Bank in New York City, which regulators blocked; when Ghaith Pharaon later bid for Financial General Bankshares, the Comptroller of the Currency, John Heimann, asked his staff to determine "whether Pharaon, like Gokal before him, was a front for BCCI."¹³ The Senate report's appendix listed the connections between "the Gokal group and the Gokal family" and the financial empire of Charles Keating among matters for further investigation.⁶

Prosecution

The Serious Fraud Office opened its inquiry into BCCI's loans to the Gulf Group in September 1992, using records from the London liquidators, Touche Ross, and from Grand Cayman, Abu Dhabi and two New York banks, Security Pacific and the French American Bank, which were alleged to have been used to disguise the fraud. The brothers, then based in Geneva with an associate, Shahveer Byramji, left for Pakistan before Swiss police raided the group's offices. Abbas Gokal was arrested at Frankfurt in July 1994, and warrants were also issued for Mustafa and Murtaza. At his trial at the Old Bailey, prosecution accountants described a "document factory" at BCCI's London headquarters, and on May 8, 1997, he was sentenced to fourteen years for conspiracy to account falsely and conspiracy to defraud.⁵⁷⁸