Pakistani Bank Is Charged with Money Laundering (Great Events: 1900-2001)
Article abstract: After major international investigations of mismanagement and illegal transactions, the Luxembourg-based Bank of Credit and Commerce International was forced to stop its operations.
Banking in an International Economy
The Bank of Credit and Commerce International (BCCI) was established in 1972 by Agha Hassan Abedi, a financier from the kingdom of Mahmudabad (which was made part of the new country of Pakistan in 1948). Abedi had founded his first bank in 1959, with old friends from Pakistan as his financial advisers. These friends were not professional bankers.
Like many other South Asian business executives of his generation, Abedi relied on borrowers’ honesty and integrity, not their credit record or collateral, when he made decisions about lending money. After founding BCCI, Abedi managed his rapidly growing network of international finance in a similar way. He placed confidence in handshakes and promises rather than the kinds of financial analyses used by American and European bankers.
Under Abedi’s leadership BCCI grew quickly; millions of Pakistanis deposited their savings in the bank, along with oil-rich Middle Eastern countries. BCCI became one of the largest banks in the world, with offices in seventy-two countries. By 1988, however, bad loans and Abedi’s declining health were problems for the bank. New, highly trained managers recognized that BCCI needed new...
(The entire section is 1112 words.)
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