BCCI charge denied

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The Independent Online
(First Edition)

MANAMA (Reuter) - A Saudi Arabian bank official yesterday rejected his indictment in the scandal-hit Bank of Credit and Commerce International, saying the charges were untrue.

Sheikh Khalid bin Mahfouz of National Commercial Bank was charged in New York on Wednesday with defrauding dollars 300m from depositors and customers in the BCCI banking scandal by the Manhattan district attorney.

'The indictment . . . is completely unwarranted and without justification,' a spokesman for Sheikh Mahfouz said yesterday.

'Mr bin Mahfouz rejects in the strongest terms possible any suggestion of involvement in any wrongdoing. He was not part of the group that created and controlled BCCI,' the spokesman said.

He said the sheikh had suffered huge losses and had co-operated fully with all investigators.

NBC, owned by the Mahfouz family, is the largest commercial bank in Saudi Arabia and operates a branch in New York.

Sheikh Mahfouz was charged by a New York grand jury with pumping hundreds of millions of dollars into the bank in 1986 and then secretly withdrawing it and misleading regulators. He sold his BCCI shares in 1988 and his First American stake in 1989. The indictment charged that at least dollars 300m of the payments came from BCCI, but the money was falsely recorded as loans.

The spokesman said Sheikh Mahfouz had not been given the opportunity to address any concerns the district attorney's office might have had.

'This is a profound abuse of local prosecutorial powers for two further reasons. First, all of the challenged acts were lawful, and second, none of those acts took place in New York.'