National Bank of Georgia

National Bank of Georgia was a financial institution that became entangled in the BCCI scandal.¹

Acquisition by BCCI

Ghaith R. Pharaon finalized his acquisition of National Bank of Georgia from Bert Lance in January 1978, with the help of Agha Hasan Abedi.¹ Abedi paid off Lance's $3.5 million bank loan on the same day.¹

BCCI illegally acquired the National Bank of Georgia, using Pharaon as a front man.¹ The bank's assets quadrupled from $400 million to $1.6 billion under Roy P. M. Carlson's leadership, who was appointed head of the bank by Abedi and Pharaon.² The National Bank of Georgia functioned primarily as a clearinghouse for BCCI funds in the United States, a destination for BCCI letters of credit, and a provider of loans and services to BCCI's international clientele.²

By 1987, the bank's share of the Atlanta retail market had dropped to 5 percent, and it began to suffer significant loan losses, requiring new capital infusions.² First American Bank purchased the National Bank of Georgia from Ghaith Pharaon in 1987; Beaty and Gwynne put the price at $227 million, and the Federal Reserve charges quoted in the Kerry-Brown report at $220 million.¹³

Legal Issues

The National Bank of Georgia was one of the three prominent U.S. banking institutions that the Federal Reserve Board fined BCCI $200 million for illegally acquiring control.¹ It was also part of the indictment against BCCI and Abedi in November 1991.⁴

Pharaon's Holding Companies

Bert Lance completed the sale of his stock to Pharaon on January 4, 1978, the same day he repaid a Chicago loan; Lance testified that he never met Pharaon until the night of the closing.⁵ In 1976 Mochtar Riady of the Lippo Group had looked into buying Lance's share of the bank, a deal that fell through.⁶ The Kerry-Brown Senate Report found that BCCI owned 50 percent of the bank from its ostensible sale to Pharaon, who held those shares as its nominee. His shares passed through a chain of holding companies: GRP, Inc. (1981), renamed NBG Financial Corporation; Interedec (Georgia) N.V. of Curacao and Interedec (Georgia) of Nassau (1983); and Pharaon Holdings Limited of Nassau, which acquired his 50 percent without notice to the Federal Reserve. On January 1, 1985, he pledged all the shares of NBG Financial to BCCI in a secret "Memorandum of Deposit" that gave BCCI "or its nominees" the right to vote them.³

Roy P. M. Carlson, a former Bank of America officer who had worked with Abedi, became the bank's president and made repeated BCCI-related trips abroad; Tariq Jamil, a former BCCI employee, worked at the bank until its sale and then returned to BCCI, and the bank financed the travel of Abedi and Swaleh Naqvi to the United States from as early as August 1982.³

Sale to First American

According to BCCI's New York manager Abdur Sakhia, the decision to merge the bank with First American was taken at a meeting in Miami in November 1985 attended by Abedi, Naqvi, Clark Clifford, Robert Altman, Carlson and Jamil; Carlson told the Senate subcommittee's staff that he, Clifford and Altman met at the Grand Bay Hotel in Miami in February 1986 to discuss the price, a meeting Altman denied. In February 1986 Keefe, Bruyette & Woods valued the bank at 130 to 144 million dollars; First American's treasurer, A. Vincent Scoffone, put its value at 152 million on the median price of recent bank sales, suggesting a premium for its Atlanta location, and on May 8, 1986, Altman wrote to Naqvi hoping for a price of 160 to 175 million dollars. According to the Senate report, a week later in London Altman and a BCCI officer, Batastini, agreed on 205 million dollars, 80 million of it for an option; in the words of the Federal Reserve's charges, "in December 1986, BCCI caused CCAH to agree to purchase the shares of NBG [Financial] from Pharaon for $220 million." First American paid 80 million dollars at the end of December 1986, and the purchase closed on August 19, 1987.³⁷ The Federal Reserve later charged that Altman had structured the transaction to conceal BCCI's role.⁸