Agha Hasan Abedi

Agha Hasan Abedi was a Pakistani financier who founded the BCCI in 1972, with the intention of creating the Third World's first multinational bank. He is described as a diminutive man, the son of petty bureaucrats, who handcrafted BCCI into one of the most powerful private organizations globally by the early 1980s.¹ Abedi was a visionary and a romantic, a Muslim who drifted into the secretive Sufi sect, which influenced his unique business style. He incorporated Islamic mysticism into the bank's driving force, emphasizing spiritual progress and a democratic theory of management, which eventually devolved into corruption. He was known for his ability to build relationships with ruling elites and for his philanthropic efforts in the Third World.²

BCCI's growth was fueled by petrodollars, particularly from OPEC nations, and Abedi was among the first to recognize the opportunity in these vast deposits.³ He cultivated relationships with powerful figures, including Sheikh Zayed of Abu Dhabi, who became a key supporter and later owner of BCCI.⁴ Abedi's strategy involved using nominees and a complex offshore network, primarily in the Cayman Islands, to conceal the bank's true ownership and illicit activities.⁵

He suffered a heart attack in February 1988, which ended his direct control of BCCI.⁶ The journalists Jonathan Beaty and S. C. Gwynne wrote that he spent his later years in Pakistan, living quietly in the affluent Defense Officers' Society section of Karachi, entertaining occasional visitors and maintaining his innocence regarding the bank's unraveling. Despite the allegations of fraud and the bank's collapse, Abedi remained a towering figure to many Pakistanis, revered as a courageous Third World entrepreneur.⁷

Early Life and Career

Born in 1922 in Mahmudabad, India, Abedi grew up in a culture steeped in the Moghul raj and the struggle against British conquest.⁸ His family served the rajahs of Mahmudabad as administrators and private secretaries. He began his banking career in Bombay at Habib Bank, an Islamic institution.⁹ In 1947, he migrated to Pakistan and in 1959, founded United Bank Limited, which became the third-largest bank in Pakistan under his leadership.¹⁰ United Bank was known for its innovation, customer service, and lending to small farmers and businesses.¹¹ An internal BCCI history written in 1982 by Khusro Karamat Elley stated that Abedi left Habib Bank in 1958 to gather investors for the new bank; the Kerry-Brown Senate Report dated its formation to 1959 and described it as the second largest bank in Pakistan within ten years.¹²

Relationship with Zulfikar Ali Bhutto

Abedi's bank was nationalized by the government of Zulfikar Ali Bhutto, leading to Abedi's temporary house arrest.¹³ The Banks (Nationalization) Act, 1974, which listed United Bank Limited as item ten in its schedule of fourteen banks, was deemed to have taken effect on January 1, 1974.¹⁴ According to the Senate report, Bhutto had been threatening to nationalize the banks from the time he took power, and on learning that Abedi had begun forming BCCI outside Pakistan he "not only went ahead with plans for nationalizing the United Bank, but promptly placed Abedi under house arrest." The report found that the nationalization gave BCCI its founding staff, "a group of like-minded Pakistanis to operate the bank," and gave clients such as the Saigol family and the Gokal brothers reason to bank outside Pakistan's control.¹² This event spurred him to establish BCCI with international reach. Despite the political feud, Abedi later found ways to profit from Bhutto's socialist policies, with BCCI becoming a conduit for capital flight from Pakistan.¹⁵

Strategic Alliances and Controversies

Abedi's influence grew through strategic alliances, including with General Zia ul-Haq, who became a trusted confidant.¹⁶ BCCI played a significant role in Pakistan's nuclear weapons program, brokering technology and financing.¹⁷ Abedi's network extended to high-level officials in various countries, often involving bribes, loans, and charitable contributions to gain influence. He cultivated relationships with figures like Jimmy Carter and James Callaghan, using their prestige to further BCCI's image as a philanthropic institution.¹⁸

BCCI's operations were deeply intertwined with intelligence agencies, including the Central Intelligence Agency, and were involved in arms dealing, drug trafficking, and money laundering on a global scale.¹⁹ Abedi's ability to operate with apparent immunity from law enforcement in the United States was attributed to these high-level connections and a probable cover-up by government officials.²⁰

United Bank and Political Patronage

When United Bank was formed, Abedi appointed as chairman of its board I. I. Chundrigar, a former prime minister and a close confidant of Ayub Khan, and he later hired Ayub Khan's minister of information as "publisher" of the BCCI magazine South. He took the account of the Saigol family, one of Pakistan's leading industrial groups, from Habib Bank to United Bank, where the Saigols became the principal shareholders; Price Waterhouse later found that Abedi had rescheduled millions in their loans "whenever they found it inconvenient to repay them." United Bank had a protocol department "responsible for taking care of the personal needs of VIPs," the forerunner of BCCI's protocol department in Karachi.¹² By one account Abedi flew to Abu Dhabi in 1966 with one assistant and an oriental rug and obtained Sheikh Zayed's permission for United Bank to open a branch there; by another he won Zayed over by arranging his first bustard hunting and falconry trip in Pakistan. By 1967, according to the Senate report, Abedi was running the Sheikh's financial life.¹²

In July 1978 the government of Zia ul-Haq issued a White Paper on the March 1977 elections which stated that "the other large source of funds" for Bhutto's Pakistan People's Party "was the money brought in by Agha Hasan Abdi [sic]," amounting to "two or three crores of rupees," and described Abedi's "travels . . . loaded as he used to be with bagfuls of money."¹²

Zia and the BCCI Foundation

The Senate report found that after Bhutto's overthrow Abedi "swiftly changed allegiances" to Zia, who "did the most for BCCI." Nazir Chinoy, BCCI's branch chief in Pakistan from 1978 to 1982, told Senate staff that Abedi called on Zia at night on every visit, meeting him for two to three hours after official dinners, and that "Abedi used Zia and Zia used Abedi also for the gulf countries." BCCI's branch in the United Arab Emirates paid Zia 40 million Pakistani rupees in May 1985; the report's text gives the date as May 26 and its footnote cites a check dated May 25. In 1979, according to Chinoy, Abedi and Swaleh Naqvi had 50 million dollars placed with BCCI Karachi through the Kuwaiti affiliate KIFCO so that Pakistan could report higher dollar reserves to the World Bank.²¹

The Pakistani BCCI Foundation, created to shelter BCCI's Pakistani profits from tax, received tax-free status in 1981 while Ghulam Ishaq Khan was minister of finance; Ishaq Khan chaired it through the 1980s, had close ties to Abedi, and became president of Pakistan after Zia's death in August 1988. The report stated that BCCI provided 10 million dollars in grants in the late 1980s to a science and technology institute named for Ishaq Khan and directed by A.Q. Khan, and that the foundation made a 3 million dollar "investment" in Attock Cement, a company "ostensibly owned by BCCI front-man Ghaith Pharaon, but in fact a front for BCCI itself." BCCI also held interests through nominees in Attock Oil, which the report called "BCCI's oil company."²¹²²

The Senate report also stated that BCCI Canada financed Pakistan's attempt to procure nuclear materials in the United States, "as documented in the Parvez case." That claim rests solely on the testimony of Alan Kreczko, a State Department deputy legal adviser (S. Hrg. 102-350, pt. 3, p. 599); the Third Circuit's opinion in the prosecution of Arshad Pervez, who sought maraging steel and beryllium for Pakistan and whose convictions for conspiracy and attempting to export beryllium it vacated in 1989, makes no mention of BCCI or of any bank.²³²⁴

Rahman's Account

Masihur Rahman, BCCI's chief financial officer, who worked with Abedi for nearly two decades, told Senator John Kerry's subcommittee that Abedi had explained the bank's purpose to him at its founding: "Up to that stage in the early 1970's there were mostly national banks and savings banks. The few banks which are international are indeed the colonial banks from Britain, France, Germany, and lately from America." Rahman described the early quarters in Abu Dhabi as "mess-type flats," the command structure as "Mr. Abedi at the very top, there was Mr. Naqvi who was like a chief operating officer, who converted... Mr. Abedi's ideas and things into practical shapes. And then there was a big gap," and the bank's compartmentalization as "Chinese walls" that were "getting very, very watertight." Of Abedi himself he said: "I remember looking into his eyes and seeing God and the Devil balanced equally in them."²⁵

Illness

The accounts of Abedi's collapse differ in form and date. Beaty and Gwynne dated it to a heart attack in February 1988; the Kerry-Brown Senate Report described "Abedi's stroke in early 1989, which led to Carter arranging an emergency heart transplant for him," and said it "had a substantial impact on BCCI's ability to survive the drug money laundering indictments in Tampa." Associated Press obituaries in 1995 reported two heart attacks that led him to step back from the bank in 1988, a heart transplant the same year, and a stroke that caused brain damage.^6252627

Prosecutions and Death

Abedi was indicted in New York County by Robert Morgenthau on July 29, 1991. Pakistan refused extradition requests from the United Arab Emirates and the United States. An Abu Dhabi court that tried BCCI's former executives from October 1993 to April 1994 convicted him in absentia in June 1994, while he was reported to be "bedridden in his home" in Pakistan; United Press International reported his sentence as six years and the American Banker as eight. The court ordered the convicted executives to pay more than 9.13 billion dollars to the Abu Dhabi government and the bank's former majority shareholders.²⁶²⁸²⁹ Abedi died of heart failure at the Aga Khan Hospital in Karachi on August 5, 1995, aged 74, five days after he was admitted with chest pains; his wife was with him.²⁶²⁷