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.BCCI sannual auditing system was also designed to be non-transparent, withcomplexity built in to avoid the detection of illegal accounting practices.PriceWaterhouse were the in-house, contract accountants for BCCI Overseas,while Ernst & Young audited BCCI and BCCI Holdings in Britain.Neithercompany, apparently, oversaw or audited BCCI s numerous satellite compa-nies.BCCI also made extensive efforts to operate as much as possible innation-states offering total bank secrecy.However, it became increasingly difficult for management and auditorsto account for unexplained losses of hundreds of millions of dollars.A42 Corporate and White-collar CrimeThis SAGE ebook is copyright and is supplied by NetLibrary.Unauthorised distribution forbidden.02-Minkes-3706:03-Minkes-Ch-02 5/29/2008 10:52 AM Page 43PriceWaterhouse audit in 1990 resulted in one of BCCI s founders, SheikZayed bin Sultan al Nahayan (emir of Abu Dhabi in the United ArabEmirates), making good on one loss, of hundreds of millions of dollars, inexchange for an increase in his (corporate) shareholdings to 77 per cent.Thistransaction resulted in the transfer of much of BCCI s record-keeping opera-tion to Abu Dhabi.However, international suspicion continued to grow.InMarch 1991, the Bank of England commissioned PriceWaterhouse to carry outan inquiry, which ultimately resulted in the Sandstorm report showing thatBCCI had engaged in  widespread fraud and manipulation.In addition to aplethora of lawsuits filed by BCCI creditors, criminal charges were filed in UKand US courts.In 1993, Syed Ziauddin Ali Akbar, the head of BCCI s treasury division inLondon until 1986, was the first to face BCCI-related charges in Britain.Akbarpleaded guilty to false accounting practices involving $765 million.Authoritiesestimated that Akbar had personally gained or misused $61 million.Akbar wassentenced to six years in prison, a  light sentence resulting from a plea bargainfor his guilty plea (New York Times, 29 Sept.1993).Another high profile trialinvolved Abbas Gokal, the head of Gulf Group who secretly receivedhundreds of millions of dollars in unsecured loans from BCCI.Arrested inGermany and extradited to Britain in 1994, Gokal was sentenced to 14 yearsimprisonment in 1997.After a lengthy appeal process, the High Court upheldGokal s sentence in 2001.Gokal was released from prison in May 2004, andhe remains in violation of a confiscation order for £2.94 million issued byBritain s Serious Fraud Office, monies intended for the numerous victims ofthe BCCI fraud.In the United States, investigations of BCCI began in 1988 when the bankwas implicated in Panamanian dictator General Noriega s drug-trafficking andmoney laundering activities.US investigations eventually revealed BCCI sconnections with the Central Intelligence Agency and various members of theAmerican political elite  Henry Kissinger and associates were specificallyimplicated.Indictments on multiple fraud and larceny charges were drawnup in 1991 against Swaleh Naqvi, the former BCCI chief operating officer.However, it was 1994 before a complicated accord was struck between the USand Abu Dhabi allowing Naqvi s extradition to the USA.In exchange forNaqvi, the USA agreed to remove Sheikh Zayed and Abu Dhabi from a $1.5billion civil racketeering lawsuit filed by the trustee of First AmericanBankshares.This was a Washington-based bank that was illegally owned byBCCI.When proceedings commenced, Naqvi admitted responsibility for $255million in losses in the United States, and pled guilty to charges of fraud, rack-eteering and conspiracy.He was ordered to pay restitution and sentenced toeight years in prison.As stated in Kerry and Brown s report to Congress,  Thescope and variety of BCCI s criminality, and the issues raised by that criminal-ity, are immense, and beyond the scope of any single investigation or report(1992).Attempting to capture the repercussions, the victims and causes of all43Corporate Economic CrimesThis SAGE ebook is copyright and is supplied by NetLibrary.Unauthorised distribution forbidden.02-Minkes-3706:03-Minkes-Ch-02 5/29/2008 10:52 AM Page 44the BCCI frauds is equally difficult.However, it is evident that prisonsentences, when and where they were handed out, although heavy in light of typical sentences for corporate crime, were light in relation to the personaldisasters BCCI frauds brought upon countless victims.They are even lighterwhen compared to sentences routinely handed out for non-violent robberies,embezzlement and theft committed by individuals lacking the corporateshield.ParmalatThe Parmalat scandal is another case heralded as  the largest corporate fraudin history , earning the press title of  Italy s Enron.The Italian dairy and foodsgiant, with more than 35,000 employees in 30 nations, was forced into bank-ruptcy on 27 December 2003 when $4.9 billion in supposed company assetswere revealed to be a complete fiction.For years, Parmalat had concealed itstrue financial condition from investors and financers using a combination offalsified revenue statements, offshore holding companies, and even outrightforgery (done by pasting a note of asset confirmation to a Bank of America let-terhead and running the form through a fax machine multiple times).Thefrauds were set in motion to cover up and offset losses and to allow the com-pany to continue borrowing.Debt reports were hidden through elaboratedeals with investment banks that allowed the company to claim loans as investments , thus allowing Annual Reports to show inaccurate borrowing fig-ures.In addition, a system of  double billing to the company s retail customersensured that Parmalat s accounts would appear to be healthier than they actu-ally were [ Pobierz caÅ‚ość w formacie PDF ]