Kemal Shoaib

Kemal Shoaib was a Pakistani banker and officer of the Bank of Credit and Commerce International (BCCI) who chaired the Independence Bank of Encino in California after BCCI secretly acquired it in October 1985 through Ghaith R. Pharaon.¹²

Family and Education

Shoaib was born in Jaunpur, India, in 1936, to Iffat Ara and Muhammad Shoaib, a civil servant who later became Finance Minister of Pakistan and an adviser to the World Bank. He was the fifth of six children; his eldest sister, Nafis Sadik, later headed the United Nations Population Fund. The family moved from Delhi to Karachi at Partition. He studied chemical engineering at Imperial College London and the Catholic University in Washington, went on to the Massachusetts Institute of Technology, and later took a master's degree in Islamic history at the School of Oriental and African Studies in London. His first job, in Lahore, was designing a chemicals factory for Wyeth.³

In September 1965 he married, in Rawalpindi, the daughter of Syed Hashim Raza, the first administrator of Karachi and later Governor of East Pakistan. President Ayub Khan and the whole cabinet attended the wedding, at which news arrived that war with India had begun.³

BCCI

A memorandum of July 25, 1983, from the BCCI employee Aijaz Afridi to BCCI's second in command, Swaleh Naqvi, with copies to Shoaib and K. K. Elley, set out BCCI's plan for the New York bank of First American; it described the bank as operating independently of the other First American banks while drawing on them as sources of funds and for "their entire international business," so that First American New York would "become their Central Treasury."¹⁴

According to the Federal Reserve, Shoaib had been general manager of BCCI's United Kingdom Group in London and head of its Group Planning Division. In 1983 and 1984, after Abedi expressed interest in acquiring a medium-sized California bank, BCCI officials including Shoaib investigated at least three possible targets, and in November 1984 BCCI employees recommended Independence. The Federal Reserve found that Shoaib, "who had been instrumental in the acquisition of Independence, was appointed its chairman immediately following the acquisition," that he "had solicited the position as chairman of Independence from Abedi, rather than from Pharaon," and that he "was not interviewed by Pharaon prior to becoming chairman." Regulators knew a former BCCI officer would chair the bank but were not told that BCCI had made the decision.² The Senate report describes Abedi's appointment of Shoaib, "a high-level BCCI official," as chief operating officer, and records that BCCI abandoned an earlier plan to place Roy Carlson, president of the National Bank of Georgia, on the board as well.¹

The Federal Reserve found that while chairman he "continued to act on behalf of BCCI, reported to senior BCCI officials concerning Independence, and continued to receive benefits, including a subsidized home mortgage loan and accrual of pension benefits, from BCCI," benefits conditioned on his remaining at Independence. In March 1986 he wrote to Naqvi listing "points that need to be discussed" about the bank's budget, capital, strategy and planning, and urged that new managers and a treasury officer come from BCCI. In June 1986 he sent Naqvi the resume of a proposed director for approval before forwarding it to Pharaon, and in July 1987 the resume of a candidate for executive vice president, who then met Abedi and Naqvi. In November 1987, when the bank needed capital, he attached his letter asking Pharaon for 7.5 million dollars to a note asking Naqvi to "forward [the letter] to Dr. Pharaon after you have examined and agreed." He was paid as chairman from October 1985 to January 15, 1989.²

The Federal Deposit Insurance Corporation knew that Pharaon had selected a former BCCI officer to chair the bank. Its enforcement chief, John W. Stone, testified that "Mr. Shoaib had embarked on a program of investing in joint ventures involving acquisition, development and construction of real estate projects, primarily in southern California. In 1988, FDIC examiners discovered improper account of these projects which resulted in the understatement of total assets and liabilities, and the overstatement of the bank's capital." The FDIC required further capital from Pharaon and the resignation of Shoaib, who left the bank in January 1989.⁵

Enforcement

On July 12, 1991, the Federal Reserve issued a notice of intent to bar Pharaon, Abedi, Naqvi and Shoaib permanently from banking.² On July 29, 1991, it assessed a 200 million dollar fine against BCCI, 37 million dollars against Pharaon and 20 million dollars against Shoaib.⁵

Later Life

Shoaib and his family lived in London while he worked for BCCI and in Los Angeles while he chaired Independence Bank. In 1990 they returned to Karachi, where he was chairman of International Industries, International Steels and Century Paper. He represented Pakistan at bridge, captained its bridge team, and had been national table tennis champion as a young man. He died in 2020.³