Kuwait International Finance Company

The Kuwait International Finance Company (KIFCO) was a Kuwaiti finance company that the Bank of Credit and Commerce International (BCCI) used as one of its "parallel banks." According to the Kerry-Brown Senate Report, BCCI "purportedly had a 49 percent interest in, but actually owned and controlled" it "through its nominee, Faisal al-Fulaij."¹²

Parallel Bank

The Senate report described BCCI's corporate structure as "intentionally further complicated by the establishment of a series of additional entities, used as 'parallel banks' by BCCI as needed for financial manipulations. These parallel entities included the Kuwait International Finance Company (KIFCO), in which BCCI ostensibly had only a minority interest; a Swiss bank, Bank de Commerce et Placements SA (BCP), in which BCCI also ostensibly had only a minority interest; the National Bank of Oman, again with BCCI formally holding only a minority interest; a 100% owned finance subsidiary, Credit & Finance Corporation Ltd,; and the series of entities" known as ICIC.¹ The Swiss bank was the Banque de Commerce et de Placements in Geneva.³

Financial General

From December 1977 through February 1978 BCCI bought almost 20 percent of the voting shares of Financial General Bankshares, later First American, in the names of four Middle Eastern clients. Of one of them the chronology entered in the record of the House Banking Committee's hearing of September 11, 1991 stated: "Fulaij borrowed the funds required to purchase his shares from the Kuwait International Finance Company ('KIFCO'), an affiliate of BCCI."² At the Federal Reserve's hearing of April 23, 1981 on the acquisition, Fulaij described his career as chairman of Kuwait Airways from 1964 to 1977 and said: "I have been involved in KIFCO and have had business interests in a real estate firm and a travel agency." When the Federal Reserve's counsel, Robert Mannion, asked what KIFCO was, Fulaij replied: "I am chairman of this company."⁴

Pakistan

According to the former BCCI executive Nazir Chinoy, in 1979, when the World Bank had capped commercial lending in Pakistan and tied increases to the country's foreign-exchange reserves, Agha Hasan Abedi or Swaleh Naqvi devised a means of raising BCCI's limit. Chinoy said: "$50 million would be placed with BCCI Pakistan through BCCI's Kuwaiti affiliate, KIFCO. BCCI transferred money to KIFCO. I have a feeling that KIFCO got the money from Caymans. In any case, Kifco placed the money with BCCI Karachi." The Senate report concluded that BCCI had used an affiliate "officially separate from BCCI, but secretly controlled by it and owned by it, to launder BCCI funds from one BCCI location to BCCI Pakistan."⁵

Sandstorm

When Price Waterhouse took over the consolidated audit of BCCI in 1987 it was still "not in the position to review BCCI's overall picture due to the exclusion from its audit work of a number of BCCI affiliates, some secretly owned, including ICIC, KIFCO, and BCP."¹ The Price Waterhouse report to the Bank of England code-named Sandstorm, released to Congress only in a heavily censored form, listed among BCCI's frauds "routing funds through [ICIC], LOANS, KIFCO, SDCC and other affiliates and third parties to make adjustments prior to accounting reference dates and audit confirmation dates, which were often reversed at a later date," and stated that the routing of funds had "been carried out on a very significant scale, involving a number of related companies, including the [ICIC Holdings Group], LOANS, NBO, and KIFCO, and third party banks such that it is now difficult for anyone to ascertain the true nature of external exposures recorded in the names of certain major customers."³

Price Waterhouse found that placements recorded by BCCI with KIFCO did not match KIFCO's own financial statements for the same transactions, and that "the principal mechanism for repaying Kifco's loans from BCCI was a mysterious Kuwaiti entity called 'the IZ company for Exchange.'" The auditors wrote that "we now have suspicions as to the propriety of the transactions." Their request for access to KIFCO's records had been denied.⁶