Clark Clifford

Clark McAdams Clifford was born December 25, 1906, in Fort Scott, Kansas. He earned a B.A. from Washington University in St. Louis in 1927 and an LL.B. from Washington University School of Law in 1928, after which he practiced law in St. Louis through World War II. He served in the Navy during the war, rising to captain, and arrived at the White House in 1946 as naval aide to President Harry S. Truman. He died October 10, 1997, in Bethesda, Maryland, at age 90.¹

Truman Administration

Clifford served as Special Counsel to President Harry S. Truman from 1946 to 1950, becoming one of the most influential aides in the Truman White House. In September 1946, he co-authored (with George Elsey) a classified report on Soviet foreign policy -- the "Clifford-Elsey Report" -- assessing that the Soviet Union intended to expand its influence through military force and subversion and recommending a policy of strategic containment. The document anticipated the Truman Doctrine.

Clifford was a principal drafter of the National Security Act of 1947, which established the Central Intelligence Agency, the National Security Council, the Joint Chiefs of Staff, and unified the military services under a new Department of Defense. He remained Truman's closest domestic political advisor through the 1948 election, playing a central role in the campaign strategy that produced Truman's upset victory.¹

In 1950, Clifford left government and founded the Washington law firm Clifford & Miller (later Clifford & Warnke) with his partner Paul Warnke. Over the following three decades the firm became one of the most influential in Washington, with clients including Firestone Tire and Rubber, Time Incorporated, General Electric, and numerous major financial institutions.²

Later Government Service

Clifford served as an informal advisor to President John F. Kennedy following the Bay of Pigs failure in April 1961. President Lyndon B. Johnson appointed him Secretary of Defense in January 1968, replacing Robert McNamara. In what became his most consequential decision in public life, Clifford convened a private reassessment of Vietnam strategy and concluded the war was unwinnable at any politically acceptable cost. His recommendations shaped Johnson's March 1968 decision to seek negotiations and decline to seek re-election. Clifford later served President Jimmy Carter as a diplomatic troubleshooter, negotiating the Panama Canal Treaties and serving as special envoy to Cyprus, Greece, Turkey, and India.¹

BCCI and First American Bank

In 1977, Bert Lance -- former director of the Office of Management and Budget under Carter -- introduced Clifford to Agha Hasan Abedi, the Pakistani founder of BCCI. Abedi sought American legal representation for a planned acquisition of Financial General Bankshares, a Washington, D.C.-based bank holding company.

In 1978, BCCI orchestrated a hostile bid for Financial General Bankshares using a group of Middle Eastern investors as nominal purchasers. The Securities and Exchange Commission filed suit against the participants, alleging undisclosed concert of action. Clifford and his partner Robert Altman -- the son of a friend, then in his early thirties -- served as counsel to the investor group. Clifford personally assured banking regulators that BCCI would play no ownership or management role in Financial General; he represented the purchase as a straightforward investment by independent Arab shareholders. Regulators approved the sale in 1981 based on these representations.²

The bank was subsequently renamed First American Bankshares, Inc. Clifford became chairman of the board; Altman became president. Both men received substantial legal fees for their continued representation of BCCI's interests. In 1986, the Central Intelligence Agency issued an internal report stating that BCCI had in fact owned First American since 1982 -- a report that was not acted on.²

In February 1988, Clifford and Altman sold a large portion of their First American stock to Mohammed Hammoud, a BCCI front man, for substantial profits.³

Indictment and Resolution

In 1989, Senate investigator Jack Blum brought evidence of BCCI's operations to Manhattan District Attorney Robert Morgenthau, initiating the sequence of investigations that led to BCCI's collapse. When BCCI was seized by regulators worldwide in July 1991, the Federal Reserve Board ordered BCCI to divest its illegally acquired shares in First American.

In July 1992, a New York state grand jury convened by Morgenthau indicted Clifford and Altman on charges of bribery, fraud, and receiving benefits from BCCI in exchange for allowing BCCI to secretly own and control First American while representing to regulators that it did not. The Federal Reserve Board simultaneously brought civil charges.

Clifford, then 85 and suffering from serious heart disease, asserted that he had been deceived by Abedi and the other BCCI principals and had no knowledge of BCCI's actual ownership of First American. New York courts severed his case from Altman's on health grounds; Clifford was never tried. Altman was acquitted by a Manhattan jury in September 1993. In 1992, BCCI's liquidators had pleaded guilty and agreed to forfeit $550 million to settle criminal charges; the BCCI settlement fund ultimately recovered approximately $880 million, including the $225 million settlement by Khalid bin Mahfouz in December 1993.⁴

Clifford died October 10, 1997, before any final legal resolution of the charges against him. He maintained his innocence to the end.