Abu Dhabi

Abu Dhabi is the capital of the United Arab Emirates (UAE) and the most populous emirate in the UAE federation, located on the Persian Gulf coast. Abu Dhabi's vast oil wealth, accumulated after significant oil discoveries in 1958, made Sheikh Zayed bin Sultan Al-Nahayan and the Abu Dhabi ruling family among the wealthiest in the world. This wealth, combined with the emirate's sovereign status and opaque regulatory environment, made Abu Dhabi's ruling family the ultimate financial backer and nominal owner of the Bank of Credit and Commerce International - the most significant factor in BCCI's ability to operate under regulatory cover for as long as it did.¹

BCCI and Sheikh Zayed

BCCI was founded by Pakistani banker Agha Hasan Abedi in 1972 with Abu Dhabi financial backing as a key component of its capital base from the outset. Sheikh Zayed bin Sultan Al-Nahayan and Abu Dhabi government entities became increasingly significant shareholders through the 1970s and 1980s as BCCI's nominal assets expanded and its actual fraud deepened. Abu Dhabi entities ultimately held approximately 77 percent of BCCI's nominal shares at the time of its collapse in 1991.

Abu Dhabi's Ghanim Faris al-Mazrui, head of the Private Department of Sheikh Zayed's court and a longtime BCCI director, was among the Abu Dhabi officials most directly connected to the bank's management. Abu Dhabi's investment provided BCCI with a veneer of sovereign backing that complicated regulatory action; no Western regulator wanted to confront a gulf oil state directly over its bank.²

In spring 1990, the Bank of England agreed to a plan under which Abu Dhabi's Sheikh Zayed would take over BCCI formally and move its headquarters to Abu Dhabi, ostensibly to reorganize the bank and address its problems. This plan was coordinated with the Bank of England and effectively delayed BCCI's closure while concealing its problems from depositors. When BCCI was finally closed in July 1991, Abu Dhabi negotiated a settlement with liquidators and regulators over its liability as the bank's principal shareholder.¹

Arms and Intelligence Context

Abu Dhabi and the UAE more broadly served as financial transit points for arms deals and intelligence-related financial flows during the Cold War and Iran-Contra era. The UAE's position outside Western regulatory frameworks but inside the dollar clearing system made it useful for transactions that required distance from American or European oversight. UAE-based banks and entities appear in the financial networks associated with Iranian arms procurement, Pakistani nuclear financing (the A.Q. Khan network), and post-Cold War arms flows.²

The Kerry-Brown Findings and Settlement

The Kerry-Brown Senate Report found that Abu Dhabi "was present at BCCI's creation as one of two providers of BCCI's capital," and that it was the bank's largest depositor, its largest borrower, and for most of its existence its largest shareholder. By July 5, 1991, the government, the ruling family and their investment company owned 77 percent of BCCI, and because the remainder was held by nominees and ICIC, the report concluded that "Abu Dhabi was in fact BCCI's sole owner." The Abu Dhabi Investment Authority had held 10 percent from 1980. The report rejected Abu Dhabi's account of itself as a passive victim and found that its officials had engaged "in a cover-up of fraudulent activity involving BCCI, which continues, in substantial part, to this day," holding "at least eighteen" BCCI officers incommunicado and breaking repeated commitments to supply witnesses and documents.³

On June 14, 1994, Judge Shehab Abdul-Rehman of the Abu Dhabi Court of the First Instance sentenced twelve former BCCI executives to a total of 56 years and awarded 9.13 billion dollars in damages: 6.56 billion to the Private Department of the UAE president, 1.347 billion to the Abu Dhabi Investment Authority and 1.223 billion to the Finance Department; one defendant, Iqbal Ahmed Rizvi, was acquitted. A later dispatch of the same agency described thirteen executives sentenced to 61 years.⁴⁵ Abu Dhabi's shareholders agreed in November 1994 to a 1.8 billion dollar compensation package for creditors, which a Luxembourg court approved on January 31, 1995; the first payment was cleared in December 1995 and May 1996, and in May 1996 Abu Dhabi bought back BCCI's 40 percent stake in Union National Bank, formerly the Bank of Credit and Commerce Emirates, for 27.4 million dollars. The liquidators later put Abu Dhabi's total contribution at 2.2 billion dollars, and the liquidation of BCCI's UAE branches was completed in June 2013.⁵⁶⁷