United Arab Emirates

The United Arab Emirates (UAE) is a federation of seven emirates on the Persian Gulf: Abu Dhabi, Dubai, Sharjah, Umm al-Quwain, Fujairah, Ajman and Ras al-Khaimah. It was formally established on December 2, 1971, under the leadership of Sheikh Zayed bin Sultan Al Nahyan, ruler of Abu Dhabi, who became its president. Abu Dhabi's government and ruling family were among the founding providers of capital to the Bank of Credit and Commerce International (BCCI) and, when the bank was closed in July 1991, its majority owners.¹²³

The Trucial States

The Portuguese reached the Gulf in 1498 and were driven from Julfar, Dibba, Sohar and Muscat between 1633 and 1650; the Dutch entered Gulf trade after the Portuguese lost Hormuz in 1622. After defeating the Qawasim in 1820, the British signed a series of agreements with the sheikhs of the individual emirates from 1820 to 1853, under which the sheikhs undertook to keep the peace at sea and not to build large ships or fortify the coast. In 1892 the Exclusive Agreements bound the Trucial States not to dispose of any territory except to the United Kingdom and not to enter into relations with any foreign government without British consent, in return for British defense.²

Pearling provided income through the 19th and early 20th centuries, until the depression of the late 1920s and early 1930s and the Japanese cultured pearl destroyed the industry. Oil company teams began geological surveys in the early 1930s, and in 1962 the first cargo of crude oil was exported from Abu Dhabi. Zayed became ruler of Abu Dhabi on August 6, 1966, and increased Abu Dhabi's contributions to the Trucial States Development Fund, of which it became the largest donor. Rashid bin Saeed Al Maktoum, de facto ruler of Dubai since 1939, turned to shipping, and Dubai began exporting oil in 1969.¹²

Federation

In early 1968 Britain announced that it would withdraw from the Gulf by the end of 1971. Zayed and Rashid met on February 18, 1968, at Al Samha, and called for a federation that would include the seven Trucial States as well as Qatar and Bahrain; the rulers of the nine states held a constitutional conference in Dubai from February 25 to 27, 1968, agreeing eleven points as the basis for a "Federation of the Arab Emirates." On July 18, 1971, the rulers of six of the Trucial States, all but Ras al-Khaimah, decided to form a union and declared "the United Arab Emirates as an independent sovereign state being a part of the Arab World." The federation was formally established on December 2, 1971, and Ras al-Khaimah joined it the following year.¹²

BCCI

The Senate report of John Kerry and Hank Brown stated that "Abu Dhabi was present at BCCI's creation as one of two providers of BCCI's capital. It was BCCI's largest depositor, and its largest borrower, and for most of BCCI's existence, its largest shareholder." BCCI's early growth was fastest "in the United Arab Emirates, the Sultanate of Oman, Yemen, and Bahrain." A 1977 record of BCCI's shareholders listed "Majid Al-Futaim of Dubai in the United Arab Emirates at just 4 percent" as its largest Arab owner.³⁴ In 1990, after auditors and regulators in Britain found fraud at the bank, the Abu Dhabi ruling family and government agreed "to formally buy the bank, assert control, guarantee its losses, replace BCCI's head with the head of its own BCCI affiliate, the Bank of Credit and Commerce Emirates (BCCE), move BCCI's operations and records from London to Abu Dhabi." When BCCI was closed on July 5, 1991, the government of Abu Dhabi, its ruling family and their investment company owned 77 percent of the bank, and "since the remaining 23 percent was actually held by nominees and by BCCI's alter-ego ICIC, Abu Dhabi was in fact BCCI's sole owner."³

After the closure, "it was in Abu Dhabi that most of BCCI's top officials remained, where they remain under the control of the Abu Dhabi government, under conditions said to be luxurious, which the Abu Dhabi government refuses to discuss," the report stated, adding that they had "remained incommunicado, and out of the reach of foreign investigators." Abu Dhabi presented itself as the bank's largest victim, having lost "some $6 billion in all," and maintained that it had never known that most of BCCI's shareholders were nominees, "including the heads of state of several of the smaller sheikhdoms of the United Arab Emirates of which Sheikh Zayed is president," or that Kamal Adham and A. R. Khalil, "two successive heads of Saudi intelligence," were also nominees. Its witness before the Senate subcommittee, Ahmed Al Sayegh, testified: "We didn't know anything about the bank [BCCI] because of our passive role in the past."³

The report also recorded that the Washington law firm Patton, Boggs & Blow had "served as headquarters for a billion-dollar enterprise called Real Estate Operations, Inc., owned by Sheikh Zayed's Abu Dhabi government," as described in The Wall Street Journal of May 20, 1992. A pro forma invoice of November 1985 for 1,250 TOW missiles bound for Iran, backed by BCCI letters of credit, was "channeled through the Arabian Gate General Trading Co. of Dubai, United Arab Emirates."³⁵