FEATURE: Who is Roger Tamraz? This White House coffee-drinker has a very interesting past that includes close links to BCCI and Libya

The American Spectator;

5/1/1997; James Ring Adams Kenneth R. Timmerman

The American Spectator




The case of Roger Tamraz has pushed Bill Clinton's fundraising follies to a more sinister level, and ensnared a host of Clintonites along the way. Don Fowler, chairman of the Democratic National Committee, interfered with the National Security Council on Tamraz's behalf, enlisting the CIA to help the party chase big bucks. And it was Anthony Lake's obliviousness to this abuse of security staff that killed his own nomination, in spite of the self-serving preachments about a confirmation system "gone haywire." For the wheeling-dealing Tamraz, however, it was business as usual.

A nattily dressed Park Avenue businessman with just a trace of a French accent, the 57-year-old Tamraz has exploited politicians and intelligence services for nearly a quarter of a century. His career moves in circles that transcend national boundaries, ethnic conflicts, and party lines -- and he divides his time between New York, Paris, and Detroit. Though this go-round he was dealing with influential Democrats, his oldest allies in the U. S. have been the Texas oil Republicans, including the late John Connally.

He is also frequently referred to as a "fugitive banker"; Tamraz is dodging an outstanding Interpol warrant from Syrian-controlled Lebanon -- which he dismisses as retaliation for his dealings with Israel. But another set of ties goes deep into the notorious Bank of Credit and Commerce International (BCCI) scandal which plagued George Bush and may yet taint the Clintons. So far, press attention on the Chinese infiltration of Clinton's fundraising apparatus has ignored another primary source of foreign influence-buying -- Arab money. And this is where Roger Tamraz becomes such an important player.

A civilized man

Tamraz is the son of a self-made millionaire, and was raised in Egypt to be part of the cosmopolitan Middle Eastern elite. He spent his childhood in Cairo's exclusive Zamalek district; he attended British grammar schools, across the street from which British officers played cricket and rode polo ponies at the fashionable Gazira Sporting Club.

After taking a degree from the American University in Cairo and studying economics at Cambridge, Tamraz crossed the Atlantic in the early sixties to take an MBA at the Harvard Business School. The contacts he made on the banks of the Charles helped shape his role as an agent for the Arab elites. In 1967, Tamraz joined the Wall Street firm of Kidder Peabody, and he didn't take long to make his mark. Just two weeks into his tenure at Kidder, he proposed a rescue plan for the Intra Bank of Beirut that had recently failed; he soon wound up working on the project.

In late summer 1969, a coup in Libya started a chain of events that greatly increased the prospects for a Harvard MBA with a Middle Eastern background. When Muammar Qaddafi, then a young army officer, overthrew King Idris IV, he promptly nationalized the oil industry. The pro-American Shah of Iran needed money for his own ambitions, and started to jack up the price of his oil. Major oil companies had meanwhile underestimated consumer demand; the ensuing shortfall was widely misread as the start of a global exhaustion of fossil-fuel reserves: the "energy crisis" was in full swing. As Petrodollars flooded the Middle East, middlemen like Tamraz fell into the fabulous business of reinvesting the wealth in the West. But recycling that money wasn't quite the clean or efficient process that starry-eyed Western bankers thought it would be.

By 1973, Tamraz was ready to leave Kidder to found his own investment bank, the First Arabian Corporation. Now Tamraz was acting as the highly visible front man for a shadowy but powerful group of Saudi backers, the most intriguing of whom was Sheikh Kamal Adham. Called al-Turki because he was raised in Istanbul, Adham was the brother of the late King Faisal's favorite wife, Queen Iffat. During his reign, King Faisal used Adham as something of a one-man intelligence agency; with help from the real CIA, Adham did the job surprisingly well.

Tamraz found an even more direct royal connection in Prince Abdullah bin Musaid bin Abdul Rahman, whose father had helped rescue the kingdom from bankruptcy in a late 1950's stint as finance minister. Another major shareholder was the wealthy (but non-royal) Sheikh Salem bin Ladin, a scion of the kingdom's largest construction contractor. (A renegade relative, Osama bin Ladin, was ostracized by the family after throwing in his lot with religious extremists. See "Terrorism in Our Face," TAS, April 1997.) But the shareholder destined for the most notoriety was a classmate from Harvard Business School named Ghaith Pharaon.


Taking Detroit

Tamraz began to work the intersection of oil money and American politics in late 1973, with the rescue of Detroit's Bank of the Commonwealth. Local businessmen were trying to put the troubled bank back on its feet when they received a feeler from a Texas lawyer. The lawyer was Frank Van Court, from the Houston firm of Vinson, Elkins, Searls, Connally & Smith, whose name partners included John Connally, former governor of Texas and secretary of the treasury under Richard Nixon. When Van Court came to Detroit he brought along Tamraz, who told the bank owners that he was financial adviser to a yet-unnamed Middle Eastern figure. After nearly a year of soundings, Tamraz told the Detroiters he represented his Harvard classmate Ghaith Pharaon.

Pharaon had gone to high schools in Paris and Beirut and then studied petroleum engineering at the Colorado School of Mines; later he switched to business at Stanford and Harvard. His father's court connections helped him launch his holding company, Saudi Research and Development Corporation (REDEC) in 1966. By 1974, Pharaon claimed an annual income of $300 million, fueled by middleman commissions from Western companies looking for Saudi business. He was pouring his apparent wealth into American hotels, chemical and oil companies, and banks. On the eve of the Detroit deal, Pharaon had emerged as a major shareholder in Armand Hammer's maverick Occidental Petroleum Company.

Pharaon went public as new owner of Bank of the Commonwealth in February 1975. He was welcomed warmly by the auto industry, which had been pursuing its own deals in the Arab world. But when his connections couldn't help the bank after a year of shrinking business, Pharaon turned to Tamraz for help. Tamraz's First Arabian stepped in to buy out Pharaon's shares and pump another $10 million into Bank of the Commonwealth; the group then installed Matthew Steckel as Commonwealth chairman. Steckel had been executive vice president of First Arabian and a Harvard Business School classmate of Pharaon and Tamraz. Pharaon continued to have an interest in the bank and a partnership with Tamraz.


The Pharaon Connection

Far from turning Pharaon against banks, the experience in Detroit seemed to whet his appetite. The First Arabian bailout freed him to expand holdings elsewhere. In September 1977 he became part-owner of the Main Bank of Houston, a smaller institution with its own problems. His highly interesting group of co-owners included John Connally, who was then beginning to consider a presidential run against Jimmy Carter. The other major figure was the Saudi banker Khaled bin Mahfouz, whose father had founded the largest privately owned bank in the kingdom, the National Commercial Bank of Saudi Arabia. According to one history of the BCCI, Connally introduced Pharaon and bin Mahfouz to Herbert and Bunker Hunt, heirs to the Hunt billions, and the Saudis joined in the Hunts' ill-fated attempt to corner the silver market, which made them all much less rich. In addition to this disaster, bin Mahfouz and Pharaon were later entangled in the largest single bank scandal in history.

Pharaon's troubles started in late 1977, when he bought the shares in the National Bank of Georgia belonging to Jimmy Carter's political confidant, T. Bertram Lance. (One unsuccessful bidder for those shares was Mochtar Riady, owner of Indonesia's Lippo Group, who later found another entry into American politics. The deal was handled by Jackson Stephens of Little Rock's Stephens Inc.) Pharaon set up shop in Savannah, Georgia, making it the headquarters of his American subsidiary, Interedec Inc. He soon bought the nearby former estate of Henry Ford II and threw lavish parties whose guest lists ranged from the likes of Carter to Alexander Haig.

Only later did it emerge that Pharaon was not using his own money in the Georgia deal; as he would in later deals, Pharaon was acting as a front man for BCCI. Since it had begun operations in 1972, BCCI lost money steadily, seeking high profits by providing services to drug lords, arms dealers, spies, and terrorists -- and covering its deficits by fraud. By the time it was closed down in 1991, the bank was hiding a shortfall of nearly $12 billion, making it easily the largest single bank fraud in history. BCCI concealed the fraud by dazzling Westerners with lists of wealthy Saudi shareholders, prominent among them Tamraz's partner Kamal Adham and the Main Bank investor Khaled bin Mahfouz. Both Adham and bin Mahfouz later arranged plea bargains with Manhattan District Attorney Robert Morgenthau, the most aggressive of the BCCI's investigators.

Barred from a full-scale U.S. presence by suspicious regulators, BCCI was trying a back-door entry into the American system throughout the eighties by illegally taking hidden ownership of several different banks. From 1977 to 1982, Pharaon bought shares in the National Bank of Georgia and then turned them over to a BCCI-controlled bank chain based in Washington, D.C. -- First American Bankshares, Inc.

In 1985 Pharaon was also involved in buying the Independence Bank of Encino, California, which BCCI's number two man later testified was meant to be the base for an eventual BCCI relocation to the U.S. Two years later Pharaon plunged into the savings and loan racket by purchasing a quarter of the shares of Miami's Centrust Savings Bank. A sale of bonds to BCCI kept Centrust afloat until 1990; when regulators took over the Miami thrift, they discovered some $2 billion in losses, making it one of the largest casualties of the S&L debacle.

Pharaon invested in Independence and Centrust in spite of his own financial problems. In the mid-eighties, the putative energy crisis had turned into an oil glut. Along with other Saudis, Pharaon began to take large losses -- and in December 1985, his REDEC declared a moratorium on its debt. His main profit center came to be his illegal fronting for BCCI purchases. (An administrative law judge for the Federal Reserve last year estimated that Pharaon made a profit of $91 million in selling Bert Lance's old bank to BCCI.)

Pharaon is now a fugitive from federal and New York State bank fraud charges, and the Federal Reserve Board of Governors earlier this year fined him $37 million for lying about the takeover of the Independence Bank.


Not in the background for long

After the Detroit bail-out, Tamraz appears to have kept Pharaon at arms length. His name doesn't show up in any of the Saudi's more notorious deals, or in the heyday of the BCCI. But one of Tamraz's reported interests played a crucial role at a second degree of separation. The European financial press identifies Tamraz as an organizer of the Paris-based Banque Arab et Internationale d'Investissements (BAII), originally jointly owned by two consortia of sixteen Arab banks and twenty-one non-Arab ones. (Like the BCCI, the holding company was based in Luxembourg, which had limited resources for regulation.) The BAII had close links with BCCI, even hiring a BCCI director as its chief executive.

The BAII provided cover for BCCI. It helped fund the takeover of First American. According to the Federal Reserve, it provided a letter of credit for Pharaon's purchase of Independence Bank, without mentioning that the financing was backed up by the BCCI. The BAII had bad loan problems of its own, and in the summer of 1990 it was taken over by the Banque Nationale de Paris, the French central bank, at a loss of $100 million.

Tamraz re-entered BCCI's orbit after it was seized in 1991. He offered to pick up the pieces of the bank and pay depositors 90 cents on the dollar. But his still unidentified backers soon learned how much this offer would really cost, and the deal collapsed. (The ultimate rescue, negotiated with majority shareholder Sheikh Zayed of Abu Dhabi, paid about 40 cents on the dollar.)

Tamraz makes an interesting parallel with Mochtar Riady of Lippo Group. Perhaps the most spectacular of the BCCI's failures came in Hong Kong, where it sparked a bank run and wiped out a good part of the fortune of the famous Burmese opium warlord Khun Sa. Lippo was the leading contender to take over BCC (Hong Kong) Ltd., until the losses turned out to be much higher than expected.

In the current uproar over Tamraz, his links to Pharaon and BCCI have largely been forgotten. Tamraz emerged as a political contributor in the fall of 1995, when he donated $50,000 to the Democratic National Committee. In the off-election year, his contacts at the DNC suggested the best use of his cash would be the tight race for control of the Virginia House of Delegates. On August 25, he gave $25,000 in his own name to the Democratic Party of Virginia, and followed on October 19 with $75,000 in the name of Tamoil, Inc. By the end of 1996, his state and national Democratic contributions totaled $177,000. After Tamraz opened his purse, White House doors opened to him. He attended four of Clinton's coffee tastings, making him one of the most frequent outside guests.

Tamraz had plenty of business to talk over with the administration. His most publicized current project is construction of a pipeline to bring untapped Caspian Sea oil reserves to the West. Since the collapse of the Soviet empire, Central Asian oil has been the focus of much geopolitical wrangling. Caspian reserves could equal those of Kuwait or even Saudi Arabia -- and four pipeline consortia are already exploring routes through the tricky terrain of Russia or Iran. On June 6, 1995, Tamraz announced his own plan: his New York-based Oil Capital Corporation wants to build a $2 billion pipeline spanning the Caucasus and traversing Turkey. The Tamraz route would avoid Russia and Iran and eliminate the shipping bottleneck of the Bosphorus, but it requires the diplomatic feat of reconciling newly independent Armenia and Azerbaijan, whose ethnic rivalries span millennia.

Another problem is that the bulk of Tamraz's financing is pledged by the People's Republic of China. The China Petroleum Engineering and Construction Company, owned by the China National Petroleum Company, agreed to put up $1.5 billion, and provide engineering, construction, and raw materials.

Shortly before announcing the project, Tamraz spelled it out to a National Security Council specialist on June 2. The meeting went badly. NSC official Sheila Heslin, who handles Central Asian and Caspian Sea affairs, later told the Wall Street Journal that she felt his pipeline proposal didn't have much chance and recommended against further meetings with him.


Unsavory friends

Tamraz is still thought perhaps to have tried to intercede with the American government on behalf of both Saddam Hussein and Muammar Qaddafi. In 1983, Tamraz bought a northern Italian chain of gas stations and a refinery from Chicago-based Amoco, calling it Tamoil. Two years later, some $200 million in debt, he sold 70 percent to the Libyan Arab Foreign Bank, rejecting a bid from Kuwait. After the United Nations slapped a partial embargo on Libya over the terrorist bombing of Pan Am flight 103, Libya turned over a controlling stake in Tamoil to private Italian investors. But the company still appears on the U.S. Treasury's list of blocked foreign assets under the name Gatoil Suisse, SA.

Proud of his name recognition, however, Tamraz brought the Tamoil label to the U.S. in 1995, incorporating an American version in Delaware. He denies there's a connection to Libya, and on the surface the U.S. hasn't let up on Qaddafi. In August 1996, Clinton signed a bill imposing unilateral sanctions on companies doing business with those countries. According to backers of the measure, however, the original administration version applied only to Iran; Congress added Libya. But the administration has been slow to enforce the law against Tripoli, and in October, Qaddafi even endorsed Clinton for president.

The Caspian pipeline and Libyan sanctions make a pretty full agenda by themselves, but there are still areas where Tamraz might have wanted to exert influence. Both the Bush and Clinton administrations have shown a marked reluctance to get to the bottom of the BCCI case, which is why the lead in unraveling the fraud has fallen to Manhattan D.A. Robert Morgenthau. His complaints about the non-cooperation of the Justice Department under Bush Attorney General Richard Thornburgh may have been a major factor in Thornburgh's failure to win the U. S. Senate race in Pennsylvania in 1990, an upset widely misread as a demand for health-care reform. But curious things have happened under Clinton, too.

In July 1994, a crucial witness named Abbas Gokal decided to cooperate with Morgenthau's investigators; while en route to New York, police arrested him in Frankfurt in the name of Great Britain's Serious Fraud Office. The British had apparently been tipped off by the American State Department, and Gokal remains in British custody. That same month, the Justice Department sponsored a plea bargain with the BCCI's number two man, Swaleh Naqvi, provoking an unusual protest to the sentencing judge from Morgenthau. "Naqvi has consistently failed to proffer new information in a significant investigation or prosecution of unindicted individuals or anyone else in the United States," Morgenthau wrote. Privately, other investigators say Naqvi was rewarded for not talking.

One of the cases that Naqvi could have helped reached into the White House. A former BCCI official named S. K. A. Akbar left the bank in 1986 with about $27 million in hush money to found a commodity trading firm called Capcom. (Its major shareholders included Kamal Adham.) Capcom had extremely close ties to the Chicago firm Refco, from which Hillary Clinton made her killing in cattle futures. (See "The Ties That Blind," TAS, August 1994.)

Naqvi was represented by the well-known former prosecutors Joseph DiGenova and Victoria Toensing, who were then partners in the law firm of Manatt, Phelps & Phillips. The head of the firm, Charles Manatt, was a former Democratic National Committee head; another partner was Clinton fundraiser and trade representative Mickey Kantor. Internal BCCI documents are said to show that the bank used the Manatt firm to lobby the National Security Council in 1992 in an attempt to close down Morgenthau's Manhattan investigation.


Familiar faces

As noted above, the fatal blow to Anthony Lake's nomination was the discovery that Roger Tamraz had used the CIA to lobby the NSC. When NSC specialist Sheila Heslin recommended a cold shoulder for Tamraz, Democratic National Committee chairman Don Fowler produced a favorable memo on Tamraz from a CIA specialist (who later went to work for Tamraz) and paved his way to the White House.

It wasn't the first time Fowler had crossed paths with Arab money. In 1978, when Fowler was Democratic Chairman of South Carolina, Jimmy Carter named the former South Carolina governor John West as ambassador to Saudi Arabia. Prominent Southern Democrats soon began to do big business in the Kingdom of Saud, and one of these was Democratic National Committeeman Charles Ward, who owned a school bus manufacturer in Conway, Arkansas. Ward Industries landed a big contract to provide buses for the annual pilgrimage to Mecca, and received a $3 million loan from the BCCI. Ward went to Saudi Arabia to drum up more business, and took along as his consultant none other than Donald Fowler.

Now, we know, Fowler brought Tamraz to the White House. Tamraz brought Pharaon to Detroit. Pharaon brought the BCCI to the U.S.. The BCCI brought a loan to Ward Industries, which brought Donald Fowler along for the ride. One suspects that the case of Roger Tamraz may soon become central to the investigations of troubled Democratic fundraising.


Kenneth R. Timmerman



Copyright 1997 The American Spectator