Abbas Gokal

Abbas Gokal (born 1936) was a Pakistani shipping magnate and, with his brothers Mustafa and Murtaza, the principal of the Gulf Group, a Geneva-registered shipping and trading concern that was the largest single borrower from the Bank of Credit and Commerce International (BCCI). He was arrested at Frankfurt in July 1994, extradited to Britain, and convicted at the Old Bailey in April 1997 of conspiracy to account falsely and conspiracy to defraud; on May 8, 1997, he was sentenced to fourteen years, then the heaviest sentence obtained by the Serious Fraud Office.¹²³

Gulf Group and BCCI

Born in 1936 into a shipping family, Abbas Gokal built the Gulf Group with his brothers into an international shipping enterprise with subsidiaries including Gulf Agency Company and Gulf International Inc.¹ The Gokal family's relationship with BCCI began at the bank's founding, and the Kerry-Brown Senate Report described it as a "shipping empire [that] could be characterized as much BCCI affiliate as BCCI customer."⁴

The Gulf Group's lending relationship with BCCI became progressively fraudulent. Gulf companies booked fictitious shipping and trade transactions, and the documentation was used to justify fresh BCCI loans whose proceeds were cycled back to service old ones, generating the appearance of commercial revenue. BCCI officials cooperated because writing the loans off would have exposed the bank's insolvency.⁴ The size of the exposure grew with each examination. In 1987 Price Waterhouse put the Gulf Group's borrowings at 318 million dollars, 23 percent of BCCI's capital base, and reported that repayment was "below expectations," that the security was "likely unenforceable," and that the financial information was "inadequate." Three years later the auditors found that for many Gokal loans the information was "not merely 'inadequate' but non-existent," and that "cash allocations to [some Gokal] accounts appear to be arbitrary"; a later report put the brothers' debts at more than 400 million dollars and recorded that BCCI's management told the auditors to rely on "the relationship of trust between the Gokals and BCCI's top officials rather than to any documents."⁵ By the bank's closure in July 1991 the Gulf Group owed about 831 million dollars, roughly 10 percent of BCCI's loan portfolio, and at Gokal's trial prosecutors put the fraudulent loans over the life of the relationship at 1.2 billion dollars (794 million pounds).¹³

The appendix of the Kerry-Brown report lists the "Gokal group and the Gokal family" among unresolved connections to the financial empire of Charles Keating, a matter the subcommittee recommended for further investigation and never resolved.⁶

Chelsea National Bank

In 1975 BCCI used the Gokal family as nominee purchasers in an attempt to acquire the Chelsea National Bank in New York City, which would have given the bank an undisclosed American subsidiary. Regulators identified the arrangement and the bid failed.¹⁷ When Ghaith Pharaon later appeared as a purchaser of Financial General Bankshares, the Comptroller of the Currency, John Heimann, directed his enforcement staff to determine "whether Pharaon, like Gokal before him, was a front for BCCI."⁷ BCCI acquired control of First American Bankshares through a similar nominee structure involving Kamal Adham and other Gulf investors.¹

Flight and Arrest

The Serious Fraud Office opened its inquiry into BCCI's loans to the Gulf Group in September 1992, examining "a conspiracy between members of senior management" at the bank. Its investigators drew on records from BCCI's London liquidators, Touche Ross, and from Grand Cayman, Abu Dhabi (the files of Swaleh Naqvi), and two New York banks, Security Pacific and the French American Bank, which were alleged to have been used to disguise the fraud. Gokal, then based in Geneva with his brothers and an associate, Shahveer Byramji, left for Pakistan, which had no extradition treaty with Britain, before Swiss police raided the Gulf Group's offices.²

On July 14, 1994, police learned that Gokal planned to fly covertly to New York. On July 18 his flight was intercepted at a refuelling stop in Frankfurt, where Detective Sergeant Doug Reeman found him "sitting in first class with his wife" and arrested him. He was held in a German prison pending extradition.² In November 1994 his lawyer, Ian Burton, said he was "no longer objecting to returning to this country"; arrest warrants had also been issued for Mustafa and Murtaza Gokal.⁸

Trial and Sentence

After extradition Gokal was remanded to Brixton prison, and in February 1995 he was charged with conspiracy to account falsely and conspiracy to defraud. His trial, postponed twice from September 1995, opened in September 1996 and ran for 122 days at the Old Bailey; 19 court days were lost to illness, two jurors were discharged, and the remaining ten returned unanimous verdicts of guilty on both counts after four days of deliberation in April 1997. The trial cost about 10 million pounds. Agha Hasan Abedi and Naqvi were named as absent co-conspirators; the prosecution's accountants described a "document factory" at BCCI's London headquarters used to falsify records.²³

On May 8, 1997, Mr Justice Buxton sentenced him to fourteen years, calling him "intelligent, sophisticated and unscrupulous" and saying he had "created a serious threat to the integrity of the whole international banking system." "You have been convicted on two separate counts of dishonesty of the most serious and far-reaching kind," the judge told him, and private investors "plainly would not have parted with their money had the truth not been concealed from them." He was also ordered to pay nearly 5 million dollars from his personal assets. A Serious Fraud Office lawyer said the fraud had "brought despair to hundreds of thousands of ordinary people."³

Other Prosecutions

The Old Bailey conviction was one of several national prosecutions arising from BCCI's collapse. An Abu Dhabi court convicted twelve former BCCI executives in June 1994, among them Abedi in absentia; Naqvi, extradited from Abu Dhabi to the United States in May 1994, pleaded guilty in Washington that July and was sentenced by Judge Joyce Hens Green in October 1994 to eleven years and ordered to pay 255 million dollars.⁹¹⁰ In New York, Robert Altman was acquitted on August 14, 1993, of charges brought by the New York County District Attorney, and on November 30, 1993, the charges against his partner Clark Clifford, who had been too ill to stand trial with him, were dismissed.¹¹¹²