--- born: 1936 category: BCCI Scandal died: 2016 location: London, United Kingdom summary: Abbas Gokal was the senior partner of the Gulf Shipping Group, which became BCCI's largest single debtor at $831 million through fictitious trade transactions and circular credit, before fleeing Germany after BCCI's 1991 collapse and being convicted of fraud in German courts. tags: - Person - BCCI - ShippingMagnate - Fraud - Pakistan - London - 1980s - 1990s --- Abbas Gokal was born in 1936 in Karachi, then British India, into a shipping family. With his brothers Mustafa and Murtaza, he built the Gulf Shipping Group into a substantial international shipping enterprise based in London, with subsidiary companies including Gulf Agency Company and Gulf International Inc. The Gulf Group's central role in the [BCCI](/organizations/bank-of-credit-and-commerce-international/) lending scandal made it one of the most documented cases of fraudulent banking relationships in the bank's history. Gokal died in 2016.[^1] ### Gulf Group and BCCI The Gokal brothers established a lending relationship with BCCI that began legitimately and became progressively fraudulent as the Gulf Group's actual commercial performance diverged from the financial facade BCCI helped construct. By the time of BCCI's closure in July 1991, the Gulf Group had accumulated loans from BCCI totaling approximately $831 million - the bank's largest single exposure to any single client - none of which was realistically collectible. This exposure represented approximately 10 percent of BCCI's entire loan portfolio.[^1] The mechanism of the fraud involved circular transactions: Gulf Group companies would book fictitious shipping contracts, issue documentation suggesting commercial activity, and use these documents to justify BCCI loans. The proceeds would be cycled back through the system in ways that generated the appearance of commercial revenue while the underlying transactions had no economic reality. BCCI officials cooperated in the fraud both because of their relationships with the Gokal family and because writing off the Gulf Group loans would have required acknowledging insolvency that the bank's management was concealing.[^2] The Kerry-Brown Senate Report on BCCI (December 1992) documented the Gulf Group relationship in detail, citing it as one of the clearest examples of how BCCI operated as "a criminal enterprise from its very beginning." The Senate investigators found that BCCI had extended credit to the Gokal brothers that bore no relationship to the Gulf Group's actual assets or cash flows, and that the relationship had been used to channel funds for purposes including the financing of clients and operations connected to intelligence services.[^2] ### BCCI's 1975 Chelsea National Bank Attempt In 1975, BCCI used the Gulf Group as a front in an attempt to acquire Chelsea National Bank in [New York City](/places/new-york-city/). Federal Reserve Board regulations required disclosure of BCCI's interest in any acquisition of an American bank; using Gokal as a nominal acquirer was an attempt to circumvent this requirement. Regulators identified the arrangement and rejected the bid, though they did not prevent BCCI from later acquiring control of First American Bankshares through a similar nominee structure involving [Kamal Adham](/people/kamal-adham/) and other intermediaries.[^1] ### Post-Collapse and German Prosecution Following BCCI's collapse and liquidation beginning in July 1991, Gulf Group's own financial structure disintegrated. Abbas Gokal fled London and eventually settled in Germany. He was arrested by German authorities in 1994 and tried in Hamburg on fraud charges related to the Gulf Group's collapse and the losses imposed on creditors including German banks that had extended credit to Gulf Group entities. He was convicted in 1997 and sentenced to three years imprisonment - the first criminal conviction of a senior BCCI-connected figure in any jurisdiction. He was released in 1999.[^3] The British and American prosecutions of BCCI figures proceeded separately. [Clark Clifford](/people/clark-clifford/) and [Robert Altman](/people/robert-altman/), BCCI's chief American legal counsel who had overseen First American Bankshares, reached settlements with regulators without criminal conviction. The principal BCCI official prosecuted in the United States was [Swaleh Naqvi](/people/swaleh-naqvi/), the bank's chief operating officer, who pleaded guilty to federal charges in 1994 and cooperated with investigators.[^2] [^1]: Beaty, Jonathan, and S.C. Gwynne. *The Outlaw Bank: A Wild Ride into the Secret Heart of BCCI.* Random House, 1993, pp. 9, 140. [^2]: Kerry, Senator John, and Senator Hank Brown. *The BCCI Affair: A Report to the Committee on Foreign Relations, United States Senate.* December 1992, pp. 43-67. [^3]: Adams, James Ring, and Douglas Frantz. *A Full Service Bank: How BCCI Stole Billions Around the World.* Pocket Books, 1992.