FinCEN, a division of the U.S. Department of Treasury, investigates money laundering. Special agents and analysts from various law enforcement agencies, including the Internal Revenue Service and the U.S. Customs Service, are assigned to work with the FinCEN staff. The federal review stems in part from court documents obtained through litigation by Bill White, a former real estate business associate of Bath. White contends the documents indicate that the Saudis were using Bath and their huge financial resources to influence U.S. policy. Such representation by Bath would require that he be registered as a foreign agent with the U.S. Department of Justice. In general, people required by law to be registered are those who represent a foreign entity seeking to influence governmental action or policy. An Annapolis graduate and former Navy fighter pilot, White, 46, claims that Bath and the judicial system, under the veil of national security, have blackballed him professionally and financially because he has refused to keep quiet about what he regards as a conspiracy to secretly funnel Saudi dollars to the United States. White became entangled in a series of lawsuits and countersuits with Bath, who for some six years has prevailed in the courts. White says the legal action has financially devasted him and Venturcorp Inc., the real estate development company in which he and Bath were partners. |
In sworn depositions, Bath said he represented four prominent Saudis as a trustee and that he would use his name on their investments. In return, he said, he would receive a 5 percent interest in their deals. Tax documents and personal financial records show that Bath personally had a 5 percent interest in Arbusto '79 Ltd., and Arbusto '80 Ltd., limited partnerships controlled by George W. Bush, President Bush's eldest son. Arbusto means bush in Spanish. Bath invested $ 50,000 in the limited partnerships, according to the documents. There is no available evidence to show whether the money came from Saudi interests. George W. Bush's company, Bush Exploration Co., general partner in the limited partnerships, went through several mergers, eventually evolving into Harken Energy Corp., a suburban Dallas-based company. Bush, known informally as George Jr., is a shareholder and director of Harken, which has been granted lucrative offshore drilling rights off the coast of Bahrain in the Persian Gulf. One of the top shareholders of Harken, a public company, is Saudi businessman Abdullah Taha Bakhsh. Bush said that to his knowledge, Bath's investment was from personal funds, and no Saudi money was invested in Arbusto. Bath, 55, a former U.S. Air Force pilot, declined to comment for the record. Spokesmen for FinCEN and the FBI also declined to comment. According to a 1976 trust agreement, drawn shortly after Bush was appointed director of the Central Intelligence Agency, Saudi Sheik Salem M. Binladen appointed Bath as his business representative in Houston. Binladen, along with his brothers, owns Binladen Brothers Construction, one of the largest construction companies in the Middle East. According to White, Bath told him that he had assisted the CIA in a liaison role with Saudi Arabia since 1976. Bath has previously denied having worked for the CIA. In a sworn deposition, Bath said he was the sole director of Skyway Aircraft Leasing Ltd., a company that a court document shows is owned by Khaled bin Mahfouz. Bin Mahfouz had been a major shareholder in the Bank of Credit and Commerce International, a banking empire that has been accused of money laundering and of using Mideast oil money to seek ties to political leaders in several countries. Mahfouz and his family own the National Commercial Bank of Saudi Arabia. In 1990, Bath bought the Express Auto Park garage at Hobby Airport for $ 8.4 million, which included a $ 1.4 million loan provided by Mahfouz, according to transaction documents. Bath received a 5 percent interest in the companies that own and operate Houston Gulf Airport after purchasing it on behalf of Binladen in 1977. After Binladen died in 1988, his interests in the airport were taken over by Mahfouz, according to court documents. Photo: Bill White, a real estate developer, balances a stack of depositions which he plans to turn over to federal authorities. The documents suggest a Houston businessman has been illegally representing the Saudis in the United States; Larry Reese/Chronicle |
That evidently didn't happen though. Instead, Stephens and Riady bought a bank in Hong Kong. Later Stephens would invite Riady to invest in a Little Rock, Arkansas bank called Worthen as well. In the meantime, Stephens found a new buyer for Lance's NGB stock. In December, 1977, Stephens introduced Lance to Agha Hasan Abedi (the founder of the Bank of Credit and Commerce International -BCCI). According to the U.S. Securities and Exchange Commission, they discussed the possibility that Abedi purchase the stock of Financial General Bankshares (later called First American Bankshares) held by Lance, Stephens and others and concocted a plan to take over Lance's stock of the National Bank of Georgia U.S. SEC v Lance et. al.). The SEC found out about the plan and sought a restraining order to prevent a foreign bank from taking over a U.S. bank. Years later it would be revealed that Abedi and accomplise Gaith Pharoan went right ahead anyway succeeding with the takeover in 1982 (Corporate Crime Reporter, July 22, 1991). Abedi used frontman Gaith Pharoan to act as his intermediary, taking over Lance's stake in the National Bank of Georgia for BCCI. In 1990, BCCI was convicted of money laundering for the Columbian Cocaine Cartels in Miami. In 1991, BCCI collapsed and millions of investors in 73 countries lost their life savings. (A Full Service Bank, Adams & Frantz, 1992). According to the Wall Street Journal, "BCCI represents the biggest bank robbery in history... (January 18, 1994)." And that BCCI was a "$10 billion or so" heist. (Wall Street Journal, October 28, 1994.)
On February 7, 1992, New York Post reporter, Mike McAlary reported that Jackson Stephens "brokered the 1970s deals in which BCCI officials secretly acquired control of two American banks... The banks -First American Bankshares and the National Bank of Georgia were used as a financial clearinghouse by a collection of [the] world's most dastardly crooks, drug dealers, dictators and spies....and yet Stephens' ties to principals in the scandal continue to this day....Lance and Stephens are reported to have made a fortune as a result of their involvement with BCCI."
Robert M. Morgenthau, District Attorney, County af New York, stated on July 29, 1991 that "BCCI was operated as a corrupt, criminal organization, throughaut its entire nineteen-year history. It systematically falsified its records. It knowingly allowed itself to be sued to launder illegal income of drug sellers and other criminals and it paid bribes and kickbacks to other public officials (Evil Money, Encounters Along the Money Trail, Rachel Ehrenfeld, 1992)."
In October, 1992, the Senate Foreign Relations released an 800-page report on the BCCI collapse. They argued that BCCI activities represented an "international financial crime on a massive and global scale," and that the bank "systematically bribed world leaders and political figures throughout the world."
In his own defense, Stephens wrote in the Wall Street Journal that "neither I nor anyone at Stephens played any role in bringing BCCI to America nor did we play any role in persuading them to buy shares in Financial General. BCCI representatives were introduced to me as representing a third party client. We opened a brokerage account on behalf of these individuals. We were paid normal brokerage fees for our services. Our contact was brief and ordinary course (Wall Street Journal, November 18, 1992)."
In response to the concerns over Jackson Stephens' involvement in BCCI, the Ohio Attorney General noted in his 1993 report on WTI's ownership: "Stephens' name has been linked to securities violations that allegedly occurred when the Bank of Commerce and Credit International (BCCI), a foreign bank dominated by Pakistani financier Agha Hasan Abedi, acquired stock and control over the Washington-based First American Bank. This is an error by the Ohio Attorney General. The bank, as noted, was actually called Financial General Bankshares.] Because Stephens no longer owns a part interest in WTI, his alleged involvement in the BCCI affair is not relevant to the reliability of the current owner" (page 37, footnote 4). But the Attorney General's investigation didn't look into the financing of Von Roll's incinera¢or by the Union Bank of Switzerland (UBS), which was connected to BCCI through joint ownership of Luxembourg based Banque de Credit et de Placement (Reuters, July 8, 1991; Financial Times, July 9, 1991).
Writing about Von Roll's current owner, the United Bank of Switzerland, and its relationship with BCCI, James Ring Adams notes, "You can spin threads from that web for as long as you like (American Spectator, October, 1992)." Spin threads, indeed! Documents filed in Florida by the Government of Panama indicate that General Manuel Noriega used BCCI during the 1980's to funnel money to UBS that he had apparently stolen from the Panamanian military (The Independent, U.K., August 14, 1991). By 1987, Noriega had become a thorn in the side of the U.S. administration and anyone (except Jessie Jackson) who could help get rid of Noriega was apparently just fine.
Once again, there was Jack Stephens. Gabriel Lev' is a Panamanian entrepreneur, and formerly Panama's ambassador to Washington, had Jackson Stephens as his banker. Joel McCleary was an American political consultant who had been the youngest treasurer of the Democratic National Party. McCleary was a protege of Hamilton Jordon, and a deputy assistant for political affairs to Jimmy Carter. McCleary went to Panama in 1983, when Jordan's friend Gabriel Lewis sought help in running the ruling party's presidential campaign. In the mid-1980s both Lewis and McCleary fell out of favor with Noriega, and both wanted Noriega ousted. When Lewis, in Panama, felt that his life was under threat by Noriega he called his "banker, Jackson T. Stephens, in Little Rock, Arkansas, who was desperate to get his friend and client to safety...Stephens phoned his former classmate at the Naval Academy, chairman of the Joint Chiefs of Staff, Admiral William Crowe. Stephens asked Crowe to help get Lewis out of the jam. Crowe phoned the Southern Command, and within minutes General Woerner sent over a black-paneled truck with some plainclothes bodyguards to protect Lewis and help him escape Panama...(Divorcing the Dictator: America's bungled affair with Noriega, Frederick Kempe, 1990)."
"In September 1987 Lewis wanted to bring McCleary back into Panamanian affairs, this time with a brief to destroy his former employer.... Lewis had decided he could get rid of Noriega only with the military's help. McCleary had the contacts and knowledge he needed to pull it off. Again, Lewis's American banker, Jack Stephens, for whom McCleary had done work in the past, helped bring the two together..." They worked out of Washington DC. "By spring of 1988, American foreign policy makers all agreed Noriega had to go..." George Bush (and Elliot Abrams) wanted Noriega ousted. Noriega was strong and he was buying intelligence from CIA agents while he was on Bush's CIA payroll. In August 1988 Noriega said, "I've got Bush by the balls." According to Kempe, "the threat [was] that Noriega might reveal much of what he knew: he had many of the administration's secrets (Overthrowing the Dictator by Frederick Kempe)." He was finally ousted from power in 1989 when the U.S. invaded Panama. He was convicted of narcotics trafficking in 1992 and is serving a 40 year sentence in prison near Miami.
Friends in High Places: Stephens and George Bush
As described above, Jackson Stephens was close to Jimmy Carter and several people in his cabinet and coterie of political cronies. But Jack Stephens is also well known for playing both sides of the fence. In 1991, Jackson Stephens contributed $100,000 to the Republican Party for Bush's presidential campaign, and Stephens Inc. "kicked in another $100,000." Stephens wife was the Arkansas co-chairman of the Bush for President campaign. (Wall Street Journal, December 6, 1991.) He and his wife were hosts to the Inaugural party for President Bush in 1989. (New York Times, Ma, 8, 1992.) In addition, Stephens brokered the deal that allowed the Union Bank of Switzerland (as mentioned above, a BCCI-connected bank, that also financed and ultimately owns the WTI incinerator project) to rescue a Harken Energy project that George Bush Jr. (son of President Bush) was involved with in 1987. When Harken needed help, Stephens was there. A meeting in Little Rock was set up "between Harken officials and Jackson Stephens that produced an unusual rescue plan. Mr. Jack obtained a $25 million cash infusion for Harken from Union Bank of Switzerland, which rarely invested in small American companies (The American Spectator, October, 1992)."
Friends in High Places:Stephens and Bill Clinton
Jackson Stephens was a major donor to Bill Clinton's campaigns for Governor and raised at least $100,000 for Bill Clinton's first Presidential campaign (Seattle Times, November 6, 1993) while extending $2 million to the campaign through Stephens and Riady's Worthen bank (The American Spectator, October, 1992). He has been the major financier of Bill Clnton's political career. According to Peter Truell and Larry gurwin, "No group raised more money for the Clinton Presidential campaign" than the Stephens Group. "A study released in July found that employees of Stephens Inc. gave more money to Clinton than employees of all but two other firms in the entire country (False Profits. The Inside Story of BCCI, the World's Most Corrupt Financial Empire, by Peter Truell and Larry Gurwin, 1992)." Rachel Ehrenfeld argues that "Bill Clinton had full knowledge of Stephen's involvement with BCCI when he accepted hundreds of thousands of dollars from the Stephens family for his campaign (Evil Money)."
This is where things get complex. Jackson Stephens, as noted above has been partners with an Indonesian Tycoon, Mochtar Riady*. His son, James Riady was a co-president of Worthen Bank (Federal News Service, July 17' 1997). In 1994, Stephens' family interests owned approximately 55% of Worthen bank's outstanding stocks (Worthen proxy, March 29, 1994). Worthern provided the Clinton campaign with a $2 million dollar financing deal that basically saved the Democratic National Party from a cash shortage in the early 1992 Presidential campaign (The Spectator, October 1992). The Riadys own a company called The Lippo Group*.
According to William Safire, Lippo's ties to Jack Stephens enabled them to receive sensitive trade secrets from out of the Clinton Administration through Lippo employee, John Huang*, who also worked in the U.S. Department of Commerce as a Clinton employee. The kicker was that Huang would go across the street from his Commerce office to use a Stephens Inc. business office as a "drop" to receive and send documents and make off the record phone calls. "At informative Thompson committee hearings last week, we learned that Huang, Lippo's man at Clinton Commerce, received a call on the average of twice a week from a secretary at the Stephens drop who was instructed not to leave her boss's name. Huang would then cross the street to pick up and send express packages and use the Stephens phone. We know that Huang spoke to former Lippo associates at least 237 times in his 14 months at his sensitive trade post. 'That number troubles me' said Senator Joseph Lieberman.