Behind the collapse of a behemoth

Kim Sengupta on an intricate conspiracy that reads more like a thriller than a real-life scandal

The BCCI scandal was the result of a massive failure of the system. But if one man could be said to have played a key role in the spectacular collapse, it was Abbas Gokal.

The flamboyant shipping magnate was one of the most important customers in the short and tempestuous history of the Bank of Credit and Commerce International. So much so the bank lent him and his Gulf shipping group $1.2bn.

The money was lost and BCCI's liquidators, Touche Ross, are sueing Gokal and his two brothers, Mustapha and Murtaza. But it is Abbas who ended up in the dock of the Old Bailey in London charged with conspiring to defraud the bank's creditors and depositors, and now faces a substantial jail sentence following the seven-month trial.

How he came to be there is itself a tale of intrigue. Following the $20bn disintegration of the bank, the various investigations into what had gone wrong started on both sides of the Atlantic. It soon became clear Gokal was a prime suspect in the intricate conspiracy.

But he was back at his base in Pakistan, from where he could not be extradited. Contact was made with him by the US authorities. After lengthy negotiations he agreed to leave his safe haven of Karachi to travel to America to be interviewed by John Moscow, the assistant district attorney of New York. He was said to have information about corrupt US politicians and officials, and wanted to strike a favourable plea-bargaining deal.

Mr Moscow wrote to Gokal's American lawyers, " I have spoken with the prosecuting authorities in the United Kingdom. They tell me that they have no current plans to arrest Mr Gokal when he meets with us." He was also at pains to point out that he had kept details of the meetings from the Serious Fraud Office in London.

On 18 July l994 Gokal left for the US. Unknown to him the SFO had discovered his travel plans. It began extradition proceedings. During a stopover in Frankfurt he was hauled off the aircraft by the Federal German police at the request of the SFO and extradited to Britain.

Mr Moscow was said to be furious with the SFO, and denied any suggestion of collusion. Insiders at his office said they were promised details by Gokal about people in power and their dealings with third world countries, drugs and arms dealing.

In London, Gokal was charged with six counts of fraud and false accounting. His alleged fellow conspirators included his brothers Mustapha and Murtaza, Agha Hasan Abedi, the founder of BCCI, and Swaleh Naqvi, the bank's number two.

At the Old Bailey trial which began in September l996 the prosecution claimed Gokal, aged 60, and once a powerful player in world shipping, was instrumental in fraudulently obtaining loans for his ailing empire which was suffering from cash flow problems.

Mr Anthony Hacking, QC, prosecuting told the jury Gokal personally paid out $2m in bribes to BCCI officials to secure the cash line - loans no other banks would touch. When in l991 the Bank of England belatedly closed down BCCI, his business empire "inevitably collapsed".

Mr Hacking said: "It was discovered that Gokal had borrowed $1.2bn. He had not really got any security at all. It was an extraordinary situation. It was a major factor leading to the collapse of the BCCI bank." Gokal had created a "huge financial structure" to hide the truth of his fraudulent activities from the world.

The court heard there were a huge number of documents which had been signed by Gokal that "showed his knowledge and participation in the fraud". The funds made illegally available to Gokal were distributed through his companies. And, Mr Hacking added: "The Crown say that Mr Gokal used vast sums of money he defrauded to sustain his lavish lifestyle around the world to provide personal benefit and gain for himself and his close family."

At the BCCI headquarters at Leadenhall Street, in the City, there was a "special duties department". Mr Hacking said: "Its sole job was to administer fraudulent activities. False documents were created on a vast scale. There were secret meetings between Gokal and BCCI officials in which the fraud was planned. The SFO have recovered notes of these meetings.

"Millions of dollars were flowing back and forth between Gokal's companies and BCCI. There were a large number of companies through which funds flowed. He misused ordinary employees like secretaries and clerks and duped them into signing false documents to deceive on a massive scale."

Gokals' brother-in-law, and former senior aide Abdul Chagla, described the problems faced by the Gulf Group and crucial meetings with BCCI officials. Chagla said: " Most outsiders thought the Gokal brothers ran all the companies in the [Gulf] Group. But that was just conjecture. Abbas Gokal ran the business in every respect. He was the only one who took major decisions He had total control of the Gulf Group companies.

"In the l980s the Gulf Group was having financial problems due to a downturn in the shipping business and by the failure of the group's non-shipping activities. There were already cash flow problems, but by l984 things reached crisis point as various banks sought the repayment of loans."

Chagla told of meetings between Gokal and Agha Hasan Abedi to discuss " increasing loans to pay off overdrafts". They both allegedly agreed documentation of such deals would be non-factual. At a second meeting Abedi allegedly commented: "There would be great trouble if our board or auditors got wind of the money you owe."

News
A model of a Neanderthal man on display at the National Museum of Prehistory in Dordogne, France
science
News
Richard Dawkins dedicated his book 'The Greatest Show on Earth' to Josh Timonen
newsThat's Richard Dawkins on babies with Down Syndrome
Arts and Entertainment
Eye of the beholder? 'Concrete lasagne' Preston bus station
architectureWhich monstrosities should be nominated for the Dead Prize?
Extras
indybest
PROMOTED VIDEO
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Arts and Entertainment
music
Sport
football
Life and Style
This month marks the 20th anniversary of the first online sale
techDespite a host of other online auction sites and fierce competition from Amazon, eBay is still the most popular e-commerce site in the UK
News
i100
Arts and Entertainment
tv
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

AIFMD Business Analyst / Consultant - Investment Management

£450 - £600 per day: Harrington Starr: AIFMD Business Analyst / Consultant - I...

Business Analyst Solvency II SME (Pillar 1, 2 & 3) Insurance

£450 - £600 per day: Harrington Starr: Business Analyst Solvency II SME (Pilla...

Manager - SAS - Data Warehouse - Banking

£350 - £365 per day: Orgtel: Manager, SAS, Data Warehouse, Banking, Bristol - ...

SQL DBA/Developer

£500 per day: Harrington Starr: SQL DBA/Developer
 SQL, C#, VBA, Linux, SQL Se...

Day In a Page

Middle East crisis: We know all too much about the cruelty of Isis – but all too little about who they are

We know all too much about the cruelty of Isis – but all too little about who they are

Now Obama has seen the next US reporter to be threatened with beheading, will he blink, asks Robert Fisk
Neanderthals lived alongside humans for centuries, latest study shows

Final resting place of our Neanderthal neighbours revealed

Bones dated to 40,000 years ago show species may have died out in Belgium species co-existed
Scottish independence: The new Scots who hold fate of the UK in their hands

The new Scots who hold fate of the UK in their hands

Scotland’s immigrants are as passionate about the future of their adopted nation as anyone else
Britain's ugliest buildings: Which monstrosities should be nominated for the Dead Prize?

Blight club: Britain's ugliest buildings

Following the architect Cameron Sinclair's introduction of the Dead Prize, an award for ugly buildings, John Rentoul reflects on some of the biggest blots on the UK landscape
eBay's enduring appeal: Online auction site is still the UK's most popular e-commerce retailer

eBay's enduring appeal

The online auction site is still the UK's most popular e-commerce site
Culture Minister Ed Vaizey: ‘lack of ethnic minority and black faces on TV is weird’

'Lack of ethnic minority and black faces on TV is weird'

Culture Minister Ed Vaizey calls for immediate action to address the problem
Josephine Dickinson: 'A cochlear implant helped me to discover a new world of sound'

Josephine Dickinson: 'How I discovered a new world of sound'

After going deaf as a child, musician and poet Josephine Dickinson made do with a hearing aid for five decades. Then she had a cochlear implant - and everything changed
Greggs Google fail: Was the bakery's response to its logo mishap a stroke of marketing genius?

Greggs gives lesson in crisis management

After a mishap with their logo, high street staple Greggs went viral this week. But, as Simon Usborne discovers, their social media response was anything but half baked
Matthew McConaughey has been singing the praises of bumbags (shame he doesn't know how to wear one)

Matthew McConaughey sings the praises of bumbags

Shame he doesn't know how to wear one. Harriet Walker explains the dos and don'ts of fanny packs
7 best quadcopters and drones

Flying fun: 7 best quadcopters and drones

From state of the art devices with stabilised cameras to mini gadgets that can soar around the home, we take some flying objects for a spin
Joey Barton: ‘I’ve been guilty of getting a bit irate’

Joey Barton: ‘I’ve been guilty of getting a bit irate’

The midfielder returned to the Premier League after two years last weekend. The controversial character had much to discuss after his first game back
Andy Murray: I quit while I’m ahead too often

Andy Murray: I quit while I’m ahead too often

British No 1 knows his consistency as well as his fitness needs working on as he prepares for the US Open after a ‘very, very up and down’ year
Ferguson: In the heartlands of America, a descent into madness

A descent into madness in America's heartlands

David Usborne arrived in Ferguson, Missouri to be greeted by a scene more redolent of Gaza and Afghanistan
BBC’s filming of raid at Sir Cliff’s home ‘may be result of corruption’

BBC faces corruption allegation over its Sir Cliff police raid coverage

Reporter’s relationship with police under scrutiny as DG is summoned by MPs to explain extensive live broadcast of swoop on singer’s home
Lauded therapist Harley Mille still in limbo as battle to stay in Britain drags on

Lauded therapist still in limbo as battle to stay in Britain drags on

Australian Harley Miller is as frustrated by court delays as she is with the idiosyncrasies of immigration law