Setback for BCCI campaign

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The Independent Online
NEW YORK - Efforts by liquidators of the Bank of Credit and Commerce International to recover money allegedly stolen with the help of the Saudi financier Sheikh Khalid bin Mahfouz have suffered yet another serious setback as a result of a settlement of charges in the United States, writes Larry Black.

The US Federal Reserve Bank and the New York District Attorney, Robert Morgenthau, agreed last Thursday to drop all charges against the sheikh, the former chief executive of the National Commerce Bank of Saudi Arabia, in exchange for payment of dollars 225m (pounds 155m), some dollars 188m of which will be set aside to compensate depositors and creditors. But the agreement makes it clear that the settlement cannot be used as evidence of the sheikh's guilt or liability in other cases against him. It even restates his assertions of innocence.

The sheikh, who is being sued for dollars 10.5bn by BCCI's liquidators, was charged last year with having received dollars 300m from the bank as payment for providing its owners with capital they needed to hide illegal loans from the eyes of regulators. But Sheikh Khalid's American lawyer, Gary Naftalis, said in an interview yesterday that the complete dismissal of the US fraud and racketeering charges was 'a significant, positive benefit for our defence in the cases pending in Europe'.

The settlement terms 'remove yet another public relations weapon from the hands of the liquidators, who have tried unfairly to muddy the waters with suggests my client was an 'indicted felon' or a 'racketeer',' Mr Naftalis said. 'We'll now be able to come to England to fight on the merits of the case.'

The dollars 188m will be placed in a fund to compensate those who can demonstrate that they suffered loss as a result of the collapse of BCCI in 1991, Mr Naftalis said. Some of the money will also be used to finance continuing investigations by Mr Morgenthau's office into the affair.

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