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Obamagroomed for 30 years by Ford Foundation - Trilateral Commission to become president, family has long history with CIA....bisexual, Blackmail,   top   go to WMR report

CIA, Trilateral Commission, Ford Foundation groomed Obama for 30 years to become President.

  • Ann Dunham, developed microfinance programs under Peter Geithner, father of Tim Geithner,  more
  • A-W-I-P  Obama's CIA Pedigree, WMR reprint
  • Ayers, William Ayers
  • BlackListedNews son For an official-esque, sanitized timeline of Obama’s life, see here. It adds an explicit chronology and gives a skeletal overview
  • Carter, Jimmy Carter, a Trilateral Commission puppet, Wikipedia
  • CitizenWells 4/ 2011 NAYAK’S RECENT INVOLVEMENT “A mysterious “Individual D” in the ongoing Illinois political scandal to auction off President-elect Barack Obama’s vacant U.S. Senate seat has now been identified as Raghuveer Nayak, a millionaire Chicago area Indian businessman whose voice turned up on FBI wiretaps and bugs of Democratic Gov. Rod Blagojevich.    ...   Nayak is “Individual D” in the criminal complaint outlining the case against the governor, according to an exclusive story in Monday’s Chicago Tribune. Nayak is heard on the tapes being squeezed by Blagojevich to raise campaign money in return for naming Rep. Jesse Jackson Jr. to Obama’s vacant seat.    ...   Nayak, one of a savvy band of local moneymen who help fund the state’s Democratic political machine year-in-and-out, is now reportedly negotiating with federal prosecutors for immunity in return for his testimony.”
  • CPUSA Communist party, Obama more likely an existentialist, tut, gramps,  
  • DavidIcke  Rubin was Treasury Secretary to Bill Clinton and was followed in that post by Larry Summers (Bilderberg Group, Trilateral Commission, Council on Foreign Relations) - another insider appointed to Obama's team of 'change'. Summers is a fanatical supporter of 'free trade' (freedom to exploit) and 'globalization' (global dictatorship) and he wrote a memo in 1991, while chief economist to the World Bank, saying that the bank should dump toxic waste in poor countries
  • Davis, Frank Marshall Davis more  Obama like a son to him, see communism,
  • Death list, Obama death list, Obama body count, Donald Young, Nate Spencer, Larry Bland, all black, gay, and TUCC, Wright, and also John Stoger, Cook County Board President, and Orlando Jones, both conveniently dead, both targets of corruption inquiry,
  • DiscloseTV Donald Young, the openly-gay choir-director of the church in Chicago of which Obama was a member for some 20 years — Jeremy Wright’s Trinity United Church of Christ black liberation theology. Obama’s relationship with Young was confirmed by Larry Sinclair, who claims to have had two sex-cocaine trysts with Obama.
  • DeepPoliticsForum list of Trilateral Commission members, offices.
  • Dohrn, Bernadette Dohrn
  • EndGame  The Corporate Consensus: A Guide to the Institutions of Global Power, Part 2
  • EIR The most important of such "Jews who are not Jews," are the Rothschilds, who launched Soros's career. They are members of the Club of the Isles and retainers of the British royal family. This has been true since Amschel Rothschild sold the British Hessian troops to fight against George Washington during the American Revolution.
  • Existentialism, FMD disciple of Frantz Fanon, proto-fascist, Mussolini, prelude to fascism, Sartre, Camus, Heidegger, Nietzsche,
  • Fanon, racist terrorist Luddite
  • Globallabor blog
  • Global Research Bilderberger, Obama Manchurian Candidate, groomed for presidency.
  • Indonesia, Obama moved there in 1966, just as Suharto was consolidating power, CIA backed Suharto coup against leftist Sukarno, see mass murder by Suharto of Indonesian Chinese, Baperki Party, 1966, more
  • Indymedia, New Orleans  Rosen is also tied to Ted Olson, Coca Cola copyright controversy and a scandal now developing which will link Rosen to Rahm Emanuel and the Mossad in the sale of and transfer of PROMIS Software involving the alleged Russian spy Robert Hanson and the Chicago Mercantile Exchange and laundered profits to both Israel and the Russian Federation...
  • Infowars Ireland The Clear and Present Blackmail Threat ... Leading secret alternate life styles, Obama and his chief of staff provide classic blackmail threats. Considering Obama’s choice for the Supreme Court, Elena Kagan, who is reputedly a semi-open lesbian, the question must be posed how much Obama’s and Emanuel’s own covert life styles led to the decision to nominate Kagan ...
  • iSteve.blogspot ...and the Luo prince and Kenyan Vice-President Oginga Odinga, who sent his son Raila Odinga (the current Prime Minister, who claims, dubiously, to be Obama's first cousin) to college in East Germany and negotiated a huge arms deal with the Soviets.
  • LameCherry blog /i-did-not-have-sestak-with-that-man, Clinton blackmailing Obama,
  • Lobster Magazine  Issue 14, 1987,  and Wikipedia reference to Business International Corporation:  "The company has been identified as cover organization for the Central Intelligence Agency, e.g. see Lobster Magazine , issue 14 in 1987. According to a lengthy article in the New York Times in 1977, the co-founder of the company told the newspaper that "Eldridge Haynes [the other founder] had provided cover for four CIA employees in various countries between 1955 and 1960".[6]
  • Lucianne The GOP was convinced that Vera Baker, a former campaign fundraiser for Obama’s Senate race, had an affair with Obama and was then sent to Martinique to hide out during the election
  • Lukacs, Hungarian Marxist philosopher, postmodernism,
  • Malcolm X, Richard Wright, DuBois, Baldwin, Ralph Ellison, Langston Hughes,  and feelings of abandonment, missing his parents, read Black Moods, Tidwell was expert on Frank Marshall Davis, Living the Blues, socialist realist, bisexual, black cultural nationalist, 
  • Milfeugos blog  Suharto established the Bureau of Logistics (BULOG) that steered USAID-provided rice and other food staples to Suharto's business cronies. Suharto also relied on a group of U.S. economists, including Obama's mother, to re-engineer Indonesia's socialist economy. The group was called the "Berkeley mafia" and it ensured that Indonesia was compliant with dictates of the World Bank, International Monetary Fund, and large Western commercial banks. It is a family history that Obama refuses to comment on and one that is certainly nothing to be proud of.
  • MindBodyPolitic Obama bisexual allegations surface....   Giannoulias was a vice president and senior loan officer for his father’s bank, Broadway Bank, from 2002 to 2006. Broadway Bank made real estate loans to Antoin “Tony” Rezko, the chief of Rezmar Corporation. (from WMR)
  • Moment.net Reggie Love, a former Duke basketball and football player and unsuccessful National Basketball hopeful, currently serves as Obama’s personal trainer and White House “special assistant” — he has been called Obama’s “body man”
  • Mujaheddin, covert program to support, well underway during Obama's stay in Pakistan, more
  • Blagojevich tapes prove Bush illegal wiretaps.
  • NationalMultMedia.blog  The tape recorded conversations involving Emanuel and Blagojevich have been illegally withheld by Fitzgerald from a Federal Grand Jury investigating Emanuel in Illinois.
  • National Enquirer, Frank Biden, owes $880,000 in civil case, hit and run accident, Nicole Albano and Lorraina Albano father Michael Albano was killed by a speeding Jaguar  Biden was in the passenger seat and was shifting gears, there were two females in the back seat, Turton pleaded guilty to felony hit and run. .  ...on a suspended license. 
  • NoGW Obama, Scum in Office and Zionist Wolf in Sheeps Clothing NoGW CIA
  • OpEdNews The George W. Bush White House ordered electronic surveillance of Barack Obama during the 2008 presidential election in an effort to gather information that could be used to blackmail the new administration into ignoring Bush-era crimes. According to a new article at the Wayne Madsen Report (WMR), Obama and prospective chief of staff Rahm Emanuel were included in surveillance that led to the indictment of former Illinois Governor Rod Blagojevich. The operation apparently yielded damaging information about Team Obama, including Emanuel's ties to the Chicago gay community. But the Obama administration took steps to ensure that the information gathered under Bush-appointed U.S. Attorney Patrick Fitzgerald would focus on Blagojevich and not them.
  • Overlordsofchaos the world in run by Jews. Freemasons, empires, secret masters, zionists, Israelis, one world religion, new world order, Rothchilds, Christians, Spartans, Sparta, pedophilia, child abuse, Catholic Church, priests.
  • Palmer, Alice Palmer, thrown off ticket via Obama actions,
  • Podesta, John Podesta, former Clinton chief of staff and co-chair of the Obama transition team.
  • PrisonPlanet Madsen is vindicating Sinclair, forum  Wayne's report is a pay for view service and the following is a small excerpt from it. Wayne writes that not only is Obama gay but it names favorite clubs and a gay dating service run by Rev. Wright that Obama and another young man in the congregation used. The other young man was later murdered. According to WMR, Rahm (the boy ballet dancer) Emmanuel is also member of the gay club.
  • Ratical Indonesia 1958: Nixon, the CIA, and the Secret War By L. Fletcher Prouty  It is not well known in the United States that the 1958 rebellion led to a major Indonesian civil war. The CIA-inspired uprising in Indonesia, unlike the Bay of Pigs invasion of Cuba, was a full-scale military operation more
  • RawStory  Obama, Gianoulias
  • Rense  Our blockbuster Special Report reveals shocking charges of a link between gay murder victim Donald Young and Obama  Jeff Rense Radio interview with Larry Sinclair appears in 3 parts on YouTube.com   the intro,    part 1,    part 2
  • Rense, Webster Tarpley  Sinclair had come to the National Press Club to detail his charges that the self-proclaimed Democratic presidential nominee Barack Hussein Obama had indulged in two homosexual encounters complete with crack cocaine in early November 1999, that Obama was complicit in the December 2007 assassination of Donald Young, the gay choirmaster of Jeremiah Wright's Trinity United Church of Christ, and that's Obama's resident perception monger, David Axelrod, had paid the pornographic website Whitehouse.com $750,000 to organize a campaign of character assassination against Sinclair, culminating in a faked polygraph test.
  • RevolutionaryNewz Madsen video
  • RumorMillNews reprint WMR ...same bath house article
  • Rush, Bobby Rush, defeated Obama in state rep race,
  • notes Rezko was known as the money man or cashier to see about state jobs through the governor's office. He's known Obama since the early '90s, tried to hire him, did hire the law firm Obama worked for, became partners with the owner of that firm, advised Obama on buying his Hyde Park home and sold him a slice of the adjacent lot. Giannoulias family bank financed the deal. LA Times
  • ScribD Here are 10 of the key “British”—that is, Rothschild — operatives now ensconced in the Obama administration (more can be expected): Susan Rice—ambassador to the UN; Michael McFaul—head of the Russian desk at the National Security Council; Elena Kagan—solicitor general of the United States; Anne-Marie Slaughter—State Department policy planning staff; Neal S.Wolin—deputy counsel to the president for economic policy; Ezekial Emanuel—senior counselor at the White House Office of Management and Budget on health care policy; Lawrence Summers—head of the National Economic Council; Peter Orszag—director of the Office of Management and Budget; Peter Rouse—senior advisor to the president; Mona Sutphen—deputy chief of the White House staff.   and Globe page copies
  • Obama, wedding rings? getting repaired, right. 
  • Sikh Archives Obama Lifetime Member Of A Chicago Gay Club?   Its editor is Wayne Madsen, a former US Navy officer, Washington, DC-based investigative journalist, author and syndicated columnist, with an impressive c.v.
  • SourceWatch mob-connected Giannoulias ...Before he promised to raise funds for Obama, Giannoulias bankrolled Michael 'Jaws' Giorango, a Chicagoan twice convicted of bookmaking and promoting prostitution.
  • StewWeb PRESIDENT Barack Obama is caught up in a new gay sex and drug scandal - and his loving wife is heartbroken, sources tell GLOBE in a blockbuster world exclusive. Find out all the details of the letter Michelle Obama received from the MAN (Larry Sinclair) who claims to be her husband's lover, Clinton Blackmailed Barack Obama
  • Tarpley.net There are indications scattered across the internet that (Frank Marshall) Davis was bisexual. Officially he was married to Helen Canfield David of Chicago, reportedly a woman of some social standing.11 If Obama’s mentor of those years in fact had homosexual proclivities, this would be significant in explaining the later bisexual features of Obama’s life.  
  • Tarpley Part 1  US, Russia, China, World War III  and book
  • notes Culture Of Corruption: Barack Obama, Rezko, Blagojevich, Kennedy  ...   It appears that Obama friend Valerie Jarrett, an incoming senior White House adviser, is the person referred to repeatedly in court documents as “Candidate 1.” That individual is described as a woman who is “an adviser to the president-elect” and as the person Obama wanted appointed to the Senate seat. Court papers say that Candidate 1 eventually removed herself from consideration for the Senate seat. Hillaryis44
  • Towleroad A site with homosexula tendencies, Obama gay
  • VodPod bisexual-obama-secrets-exposed-by-puerto-rico-tv-station
  • notes: Obama, family, polygamy, Grandfather worked for the British, Kandu, Tanganyika, Nairobi, worked as a butler, cook, worked for leading imperialist politicians, bought land, beat his wives, moved to Alego, ancestral home, rejected Jesus / Christianity, exposed to Islam, converted, took on the name Hussein, Sarah, third wife, devout Muslim, opposed to marriage of Ann Dunham, high statistical correlation between interracial marriage and proximity to the Communist Party, Obama Sr. abusive polygamist, egomaniac, bigamist, Obama Sr. and Ann Dunham met and married in Hawaii, pregnant, he abandoned them, 1961, to accept Harvard offer, perhaps leads to need for validation, bisexual behavior, Ann Dunham became Ford Foundation operative, loan sharking, Johnny Walker Black Label, no Koran,
  • notes: The Woods Fund of Chicago, with Ayers and Obama on the board for several years before 2002, appears to function as a funding conduit for certain US-controlled or US-influenced factions of the highly factionalized and crisis-ridden Palestine Liberation Organization and Palestinian Authority. Whether these US-manipulated factions are violent or moderate is less important than the fact that they represent CIA tentacles inside the PLO. The fact that various Palestinian or PLO factions are controlled by foreign states is, or ought to be, well-known. The Soviets had some of these factions. The Israelis were known to control a part of the central committee of the Abu Nidal Organization, run by Sabri al-Banna, the son of the pro-British and later pro-Nazi founder of the Moslem Brotherhood. Ariel Sharon helped to create Hamas, and so forth. The French and the Vatican are not far behind.
  • Tarpley.net ‘Obama met Rezko soon after graduating from Harvard Law School. Rezko was well connected in Chicago’s African-American community, in part because he had worked with Jabir Herbert Muhammad, the son of Nation of Islam founder Elijah Muhammad, V. Obama’s Heart of Darkness: Rezko, Auchi, Alsammarae, and Chicago Graft 189 when he was managing the career of boxer Muhammad Ali, according to a May 2005 profile in the Chicago Tribune. Rezko moved into real estate and political fundraising, often a combustible combination in Chicago. Rezko offered Obama a job with his real estate company soon after they met, around 1991, but Obama declined. When Obama decided to run for the state Senate in 1995, ....Newton Minnow,
  • T-room wmr reprint  Dunham Soetoro’s work in Indonesia for USAID and Ford followed by two years President Lyndon Johnson’s dictate to Secretary of State Dean Rusk: “I am determined that no Government sponsorship of foreign area research should be undertaken which in the judgment of the Secretary of State would adversely affect United States foreign relations.” more
  • Veterans Today, Obama CIA past, reprints WMR articles / research.
  •  more search terms:  money behind Crown Chicago dynasty behind Obama, Sara Lee, Material Service, Freeman United Coal, Freeman Energy, Century-America, Tishman Speyer, Industrial Insurance, Aspen Skiing, Citation Oil & Gas, Crown Theaters,  Chicago Sweeteners, Eltek ASA Great DAne Trailers, Lakewood Homes, Lennar, Crown Golf, Wireless One, Active Screw, Plasco, Ojai Resort, Bush Hog,  and Obama,
  • Muckety relationships: College summit, C. Fred Bergsten, Han Sung-joo, Paul A. Volcker, Erik Belfrage, Mark Ndesandjo eugene Kang, Karen Elliott House, Clinton Bush Haiti fraud, Maya Soetoro-Ng, Yes We Can video Matthew Santos Appalachian Leadership and Education Foundation Clinton Global Initiative, Chrisopher Pl Lu, Melody C. Barnes, Katie Johnson Allan I. Gotlieb Indra K. Nooyi  Robert F. Bauer, Yotaro Kobayashi, Hope Fund, Samantha Power, Martin Nesbitt, James Reynolds Jr. Marvin Nicholson, Robert B. Barnett, Vinal K. Thummalapally, Illinois Board of Elections, Appalachian Leadership and Education Foundation, Davis Miner Barnhill & Galland, Martha L. Nimow, Cassandra Q. Butts, Laurence Tribe Fisher House Foundation, Sidley Austin LLP,  Jonathan T. Molot, Crystal Nix Hines, Thomas J. Perrelli Nancy L. McCullough, Karen Kornbluh, Punahou High School, Tobacco Regulation Bill, American Indian College, Peter M. Rouse, Emil Jones, Woods Fund, Laura D'Andrea Tyson, Jean Rudd, Harry S. Truman
  • trial notes:  Immediately following the Blagojevich verdict, federal prosecutors promised to quickly retry the case, leading The Washington Post to speculate whether the Obama White House would be dragged into the mess this time around… if U.S. Attorney Patrick J. Fitzgerald has his way, there will be a new trial. New attempts by the prosecution to build a case against Blagojevich. New efforts by the defense to subpoena Chief of Staff Rahm Emanuel and senior adviser Valerie Jarrett to the stand.  WIBW
  • Section 4, Twenty-fifth Amendment, Obama unfit for Office, presidential disabilities, resolves ambiguous, Article II, Section 1, Clause 6 of the Constitution, see President Pro Tempore, Speaker of the House, search terms: unable to discharge the powers and duties of his office, writen declaration, William Henry Harrison, Tyler precedent, Wilson's stroke, invoked six times, see Agnew, Nixon, Gerald Ford, Rockefeller, Reagan, Howard Baker, Bill Clinton impeachment, White House shrink, psychiatrist,  Johnson's war time depression, Nixon's paranoia, Thomas Eagleton, Sargent Shriver,
  • notes: Sheldon Sorosky, Blago lawyer, Rezko has challenged his own conviction, saying Supreme Court limited a law used in his prosecution.
  • In the 1959 book "The Manchurian Candidate" by Richard Condon — which has been made into two movies — an American soldier is captured during the Korean War, taken to Manchuria in China, and brainwashed into being an unwitting assassin for the communists.
  • Notes: Obama, 2012, Chicago base of reelection campaign, will cost one billion dollars, established campaign office in Chicago, Gibbs, Axelrod, Messina, fund raising,  WH political director, Patrick Gaspard, Electoral College Vote,
  • CitizenWells NAYAK’S RECENT INVOLVEMENT “A mysterious “Individual D” in the ongoing Illinois political scandal to auction off President-elect Barack Obama’s vacant U.S. Senate seat has now been identified as Raghuveer Nayak, a millionaire Chicago area Indian businessman whose voice turned up on FBI wiretaps and bugs of Democratic Gov. Rod Blagojevich.    ...   Nayak is “Individual D” in the criminal complaint outlining the case against the governor, according to an exclusive story in Monday’s Chicago Tribune. Nayak is heard on the tapes being squeezed by Blagojevich to raise campaign money in return for naming Rep. Jesse Jackson Jr. to Obama’s vacant seat.    ...   Nayak, one of a savvy band of local moneymen who help fund the state’s Democratic political machine year-in-and-out, is now reportedly negotiating with federal prosecutors for immunity in return for his testimony.”
    • Summary,
    • Obama, Gay  -- Fitzgerald suppressed evidence of this in Blagojevich trial.
    • CIA, Trilateral Commission and Ford Foundation created Obama, the President.
    • WayneMadsenReport, vindicates Larry Sinclair, gay lover of Obama  below
    • Madsen - Sinclair interview excerpt file Aug 7, 2010 Listen to MP3
    • Obama family CIA  connections more
    • Facebook, Opinion Maker, WMR reprint
    • Obama / Emanuel lifetime members of gay bathhouse Man's Club
    • Wikipedia: and go to CIA Activities in Indonesia
    • Timeline WMR
    • Norcal Blog, ...the coming Obama scandal
    • MediaMatters, Tamara Holder and Hannity suggest Fitzgerald is "protecting" Obama in Blagojevich investigation see video
    • or Obama: Zionist Puppet ? Search terms: Israel Zangwill, NAACP, Israel Cohen, "The Melting Pot", "A racial program for the 20th Century"
    • Amazon  book  Barack Obama & Larry Sinclair: Cocaine, Sex, Lies & Murder?  more below
    • 1981, Obama visited Pakistan where is mother worked for worked with the CIA. more
    • Tarpley, Obama, community organizing sham, Obama slum lord,
    • Snippits and Slappits.blog Why Obama is being blackmailed.
    • Jeremiah Wright, TUCC, operated gay matchmaking service, members included Donald Young, Barack Obama,
    • Ann Dunham (Obama's mother)was a Suharto operative during CIA backed Suharto coup against leftist Sukarno  more
    • RealZionist News  Brzezinski, Zionist Bankers control Obama
    • Global Research Bilderberger, Obama Manchurian Candidate, groomed for presidency.
    • WMR: 'play condo' owned by Rep. Rosa DeLauro wired, Emanuel, Obama, Bill Clinton on tape in trysts and other 'extracurricular activities'.  below  and NoGW
    • Stewweb Fitzgerald cover-up that  Emauel blackmailed Blago, to appoint Jarrett to Illinois Senate seat, see James Warren, Tribune, Jesse Jackson Jr,
    • Obama met Rezko soon after graduating from Harvard Law School. more
    • Wikipedia Tony Rezko
    • Emanuel known as 'Sugar Daddy', to gay lovers
    • WMR has learned that the Purple Hotel ...weekday afternoon parties were attended by Rezko, Levine, and Obama.  More
    • Lolo Soetoro, Obama's step father called back to Jakarta, to serve as an officer in the Indonesian army, to help launch CIA-backed genocide of Indonesian communists,  more
    • Obama family CIA connections
    • Citizen Wells Tony Rezko trial, key witness Stuart Levine, along time drug user, explained how he regularly entertained male friends in Springfield, the IL state capital, as well as in the Chicago area....MORE
    • List of Obama lovers below
    • OpEdNews The George W. Bush White House ordered electronic surveillance of Barack Obama during the 2008 presidential election in an effort to gather information that could be used to blackmail the new administration into ignoring Bush-era crimes.
    • NoGW Obama, Scum in Office
    • Valerie Jarrett has been subpoenaed by Blagojevich's defense team? more
    • Politifi Rahm Emanuel, DeLauro free rent tax dodge, (WMR: wired apartment, blackmail?) more from MoeLane
    • Obama made homosexual contacts at basketball games
    • CitizenWells Obama, down low, gay, Blago, Fitz, Rezko
    • MindBodyPolitic, Obama bisexual Allegations Resurface,
    • FireDogLake  Is Bush Blackmailing the Obama White House? more below
    • Blagojevich trial audio tapes show Obama / Emanuel gay evidence, Fitzgerald wants them suppressed. more below,
    • Man's Country, Chicago Bath House, Obama, Emanuel, members,
    • Frank Marshal Davis page
    • American Free Press The murders of Donald Young, more  Larry Bland, Nate Spencer, all gay, members of Obama's church, TUCC, GBMNews Donald Young pics
    • Frugal Emanuel / Massa, Congressional Showers?
    • TheObamaFile Is Obama Gay? Sidetracks on Showtunes nights, Little Jim’s or Northend on Halsted, or the Lucky Horseshoe at Belmont a
    • Clinton / Bush crime families above
    • Obama family CIA connections
    • Yahoo Answers
    • YouTube Larry Bland murder
    • AOL News (Blagojevich) The ex-governor says, for example, that Obama has "pertinent information" about Tony Rezko and tapes below
    • Silicon Investor I find it interesting that Joe Biden's son has Larry Sinclair arrested on 6/18/08 and Joe publicly starts talking about his interest in the VP job four days later, 6/22/08. What a hell of a coincidence.
    • to see why this story does not spread like a wildfire. six-jewish-companies-own-96-of-the-worlds-media 
    • Alexi Giannoulias search terms: family mob bank,, Broadway Bank seized, Michael 'Jaws' Giorango, Mark Kirk, Mike Rogers, Larry Craig, Mark Foley, Rezko, East Bank Club, State Treasurer, Judy Baar Topinka, Mangieri, Broadway Bank helped bankroll Obama campaign, Daley, Illinois Sudan Act, more
    • go to Michelle page , First Lady, Ernst and Young, surrendered, law license, sealed, Disciplinary Board, Valerie Jarrett, real estate.
    • ChicagoBreakingNews Witness in Blagojevich trial accused of shoplifting November 6, 2010 8:00 AM | No Comments A prominent businessman in Chicago's Indian community and an appointee of Rod Blagojevich who testified at the former governor's trial faces a felony retail theft charge in connection with a shoplifting accusation at a Far North Side home repair store, police said tonight. search terms: Rajinder Bedi, Jesse Jackson Jr., Obama transistion team, Home Depot
    • Jeremy Bernard, a senior staffer at the U.S. Embassy in Paris, has been named the new White House social secretary and special assistant to President Obama.  more 
  • The fundamental ideology of Zionism evolved much earlier with Moses Hess. He was one of Germany's earliest renowned Socialists. He was a Utopian, a Hegelian and a good friend of Karl Marx. Hess also wrote a contribution to The Communist Manifesto (1848) on the question of Religion as opium to the masses. He is considered by Zionists as the first Zionist. He wrote Zionism's Magnum Opus which Herzl later referred to as the book which says everything there is worth saying about Zionism.
  • AbovePolitics Possibly homosexual tryst, drug abuser, goes to a black supremecist church, likes Marxist liberation theology, has his own crooked land and stock deals to worry about.
  • ACORN, endorsed Obama in his Illinois Senate race, funded by Woods Fund, Joyce Foundation, uses race as divide-and-conquer strategy, Obama on board of directos,
  • Airlift Africa, China, Russia and US competition to control Africa,  attended by Barack Obama Sr.     more
  • Alsammarae, Aiham Alsammarae, Iraqi politician, search terms Allawi, Baath Party, opposed to Chalabi, Paul Bremmer, CPA, Green Zone safety,    Wikipedia
  • Amazon  book  Barack Obama & Larry Sinclair: Cocaine, Sex, Lies & Murder?  more
  • American Thinker on Vera Baker, alleged affair with Obama,  no flagrante delicto, limo
  • Annenberg Challenge, failed local control Chicago school reform effort, $110million, Ayers and Obama on board of directors. local school councils, artificial tactic for political wrecking and manipulation by ff and tc.  Ken Rolling, director, evaluation by Dorothy Shipps,
  • AOL News The ex-governor says, for example, that Obama has "pertinent information" about Tony Rezko that he has never shared before. Rezko, a former fundraiser for both Blagojevich and Obama, was convicted in 2008 for using his relationships to receive kickbacks in state contracts.
  • Amazon
  • Apollo Alliance, on whose board Jones sits with Podesta, Carol Browner and Al Gore. This is a coalition of radicals, leftwing union leaders and corporate recruits, which had a major role in designing Obama’s green economy plans
  • Atlantean Conspiracy secret societies, globalist one world system, Illuminati, end of the world, apocalypse, Jesus, God,
  • August Review stop the New World Order, socialistic fascism ruled by elite few.
  • Auchi, see relationship with Rezko,
  • BarackObamaVideos.net Is Obama  bisexual?, TUCC murders?
  • Before Its News, Obama's CIA Pedigree, reprint WMR  Obama’s mother worked for the CIA under non-official cover (NOC) in Indonesia while married to Lolo Soetoro Mangunharjo, a retired colonel in General Suharto’s CIA-backed ranks.
  • Benjamin Fullford typepad
  • Black Voices notes The Culture of Corruption by the Obama Administration is just rolling along as now Democrat Joe Sestak has reported that he was offered the job of the Secretary of the Navy by Rahm Emanuel of the Obama Administration through Bill Clinton to not run against Arlen Specter
  • Blago retrial, Rezko sentencing delayed, so he could testify at Blago retrial,  or testify in William Cellini, Blago first trial convicted in 1 of 24 charges,
  • Brzezinski, see Columbia U. Obama, 1981-83,
  • Cellini, William Cellini, Springfield insider, accused of shaking down a Hollywood producer, for Blago, for state business, on trial,
  • CitizenWells  It is a fact that Barack Obama has used drugs. It is also a fact that Obama had associates such as Stuart Levine that were regular drug users with other men. It is also a fact that 2 gay men in Obama’s church, Donald Young and Larry Bland, were murdered late in 2007. Donald Young was the choir director. more
  • Class Racer reprint WMR same bath house article
  • Columbia University, Zbigniew more Brzezinski was a professor of Obama,
  • Daley, Richard Daley, mayor of Chicago, close relationship with Obama,
  • Daily Voice, Pastor David Manning, ATLAH Missionary, wants to see O's birth certificate.  ... called "Obama Is A Good House Negro," says white people "have found themselves a good Negro" in Obama.
  • DLC, Down Low Club, or Democratic Leadership Council, right wing policy advisers, promotes military buildup, freetrade, union busting, privatization of Social Security, NAFTA,
  • Davis Miner Barnhill, Rezko's attorney firm,
  • Davis, Allison Davis, Illinois State Board of Investment, see Rezko, Operation Board Games, prosecution of Rezko fraud schemes,
  • DeepJournal comment: Obama was a poli-sci major with his speciality in international relations and a thesis topic that was Soviet nuclear disarmament. Now that has Brzezinski written all over it. In those years Brzezinski was on the campus at Columbia, he was the head of the Institute of Communist Affairs, an anti Soviet think tank.
  • Democratic National Committee,
  • Dianej.wordpress  Obama’s college years are pretty much a mystery – 1981, 1982 and 1983 especially   ...   We also know via New York’s Percy Sutton, Dr. Khalid Al Monsour was raising money for Obama and it is this man that asked Percy Sutton to write a letter to secure Obama’s admission into Harvard.
  • Digg  wondering if Barack Hussein Obama blackmailed Edwards into withdrawing AND endorsing him. This seems VERY likely...
  • Dodge County Jail, Wisconsin, where Rezko housed. Dec. 16, 2008, Rezko complained of conditions he faced in solitary confinement , downtown Metropolitan Correctional Center., is voluntarily serving jail time, he has no personal contact with family members, only seen through glass partition.
  • Dohrn, Bernadine,
  • European Union Times  Tarpley, ...war candidates are dominating the Democratic primaries. There is a danger they may be stolen by the Brzezinski clique of eastern European revanchists who run Obama from behind the scenes
  • Pfleger, Father Pfleger, Catholic,
  • Federal Election Commission,
  • Foro.Univision, reprint of WMR article, Is Obama gay? ...  WMR attempted to interview Blagojevich’s senior defense lawyer Sam Adam ... the tapes, if played, would highlight the corruption of not only Obama, Emanuel, and other member of Obama’s Chicago “brain trust” but also Fitzgerald himself.
  • Gawker Obama's Gay Lover Can't Pass Polygraph Larry Sinclair, Barak Obama's alleged former gay sex partner, was paid $10,000 by WhiteHouse.com to take a polygraph test, which he failed. Turns out the weird ugly rambling toothless gentleman from YouTube might not be telling the whole truth when he claims he gave Obama a blowjob in 1999!
  • Google Trends 2011 Blog  quotes WMR, Robert Gates, who Obama retained as his Secretary of Defense from the Bush administration, renamed the CIA’s Political Psychology Division the PoliticalPsychology Center (PPC) and transferred the group from the Office of Global Issues (OGI) to the Office of Scientific and Weapons Research (OSWR). The CIA’s political psychology program is directly linked to its overall psychological and behavioral science programs. In fact, the CIA continues to send CIA officers for training to the Stanford Institute for Political Psychology program at Stanford University. Stanford and Stanford Research Institute (SRI) figure prominently in the CIA behavioral science and modification programs that enabled Barack Obama to hurdleinto political office
  • HillBuzz  ...Man’s Country in Andersonville, which is a place both Obama and Rahm Emanuel frequented in the past. Obama until 2002 or so, and Emanuel through 2008  ... 
  • TheHindu U.S. President Barack Obama and first lady Michelle Obama visit the Istiqlal Mosque in Jakarta, Indonesia. Grand Imam Ali Mustafa Yaqub is also seen.
  • Ivillage reprint WMR bath house...
  • Jag Hunter
  • James4America
  • Joe.My.God blog puma site  HillBuzz, the Hillary Clinton PUMA site founded by gay political gadfly Kevin DuJan, has got the wingnut blogosphere all aquiver over a claim that some mysterious MSM journalist is at last investigating their ridiculous claim that the president and Rahm Emanuel were once regular patrons of the Chicago-area bathhouse, Man's Country.
  • Jones, Emil Jones, greased the wheels in Obama Senate campaign
  • Katz, Marilyn Katz, SDS Public Relations person, see Ayres
  • Khalidi, Rashid Khalidi, recipient of largess from CAC, see Woods, scholar at University of Chicago, Middle East Advisor, Palestinians,
  • LarrySinclair.com Larry Sinclair.com  Will Jeremiah Wright ever be asked about his role in the murder of Donald Young???? These are question's that Wright must be asked and required to answer.
  • LinkRink Is Rahm Emanuel Gay?
  • Man's Country Chicago Man's Country Chicago is a clean, safe place to hang out, meet guys who share the same interests as you, socialize, make friends, watch porn and play!
  • Manning, David Manning, Youtube     ATLAH Worldwide  called Obama's mother trash.  videos
  • MK Ultra video  Sirhan, The Manchurian Candidate, & CIA Mind Control Experiments (Part 2 of 3)
  • Moment.net Reggie Love, a former Duke basketball and football player and unsuccessful National Basketball hopeful, currently serves as Obama’s personal trainer and White House “special assistant” — he has been called Obama’s “body man”
  • NesaraNews
  • NoquartersUSA.net
  • Obamaers
  • Obama Chicago election headquarters,
  • Personal Liberty, Obama CIA ties
  • RezkoWatch blogspot In an exclusive interview with the Chicago Sun-Times, FBI "mole" John Thomas, "who's expected to be a key prosecution witness against indicted developer and political fund-raiser" Antoin "Tony" Rezko, is talking. ... recorded converstions. 
  • SDS Students for a Democratic Society, see Ayers, Dohrn, Carl Davidson, Fidelista,
  • SKSboards reprint Madsen, gay bath house story
  • Silicon Investor I find it interesting that Joe Biden's son has Larry Sinclair arrested on 6/18/08 and Joe publicly starts talking about his interest in the VP job four days later, 6/22/08. What a hell of a coincidence.
  • Soetoro, Maya Soetoro, Obama's sister, parents: Lolo Soetoro and Ann Dunham,
  • Tillman, Dorothy Tillman, legal extortion,
  • Universal Seduction, reprint WMR
  • VaticanAssassin  Mulatto Barry Davis Soetoro Obama is a 32nd Degree Prince Hall Rite Freemason, a Socialist-Communist and a Muslim. He is also an asset of the Black Pope’s Central Intelligence Agency as per this link.. Overseen by “the Company’s” DCI, White Roman Catholic Jesuit-trained Knight of Malta Leon Panetta, and directed by his immediate adviser, White Roman Catholic Jesuit-trained Vice President Joe Biden,  more
  • VIVANews, asdf New York Times journalist Tim Weiner wrote in his book "Legacy of Ashes: The History of the CIA" that former Indonesian Vice President Adam Malik was a Central Intelligence Agency (CIA) agent. This is controversial since Adam Malik is an Indonesian national hero. .... Vice President Jusuf Kalla has stated that he disagreed with the book. In Kalla's opinion, Malik's political ground was not in line with the US political principle. He said that Adam Malik was more of a socialist. "He was founder of Murba Party (Common People's Representative Party). It is impossible people from Murba became a CIA agent. Americans won't buy it," Kalla said.
  • Yahoo Answers Any of you heard of Larry Bland, Nate Spencer, Donald Young, or Larry Sinclair? All are homosexuals. Three are from Trinity United Church pastored by Obama's dear "uncle" Rev. Wright. Those three including Donald Young, the former choir director, are DEAD. They all died within 40 days of each other starting in November 2007.
  • WIBW Obama’s preferred candidate, at least initially, according to testimony, was Valerie Jarrett, currently the Senior Advisor and Assistant to the President for Intergovernmental Affairs and Public Engagement. (Obama and Jarrett go all the way back to the days when Obama was a law professor and Jarrett an alleged corrupt slumlord.)
  • 1313 gang,  Spellman Fund helped set it up, social engineering in favor of financier interests, totalitarian control, from the vision of Charles E. Merriam, and Louis Brownlow, nerve center of American public administration, played key roles in creating UN, UNESCO, UNRRA, financial oligarchies, Metro, Metropolitan government,
  • 9/12 Project The choir director of Senator Obama’s controversial church is found murdered execution-style, and there’s NO national media coverage!
  • A Conservative Lesbian Just 13 days passed between Obama telling the A-list homosexuals assembled at a Human Rights Campaign fundraising dinner in Washington, D.C., on October 10 that he will get “don’t ask, don’t tell” repealed so that homosexuals can serve openly in the U.S. military ... notes We spent a good amount of time on the ground in Uptown, Boystown, Andersonville, and Hyde Park yesterday with this reporter, also telling him everything we knew about Trinity United Church of Christ and the Down-Low Club it operated under Jeremiah Wright’s supervision / matchmaking
  • Barack Obama & Larry Sinclair  Cocaine, Sex, Lies and murder.
  • AIPAC,
  • Amazon Obama Nation to his long-term and close associations with former Weather Underground heroes William Ayers and Bernadette Dohrn
  • American Free Press  The bombshell may involve the murder of Donald Young, a 47-year-old choir master at former Rev. Jeremiah Wright’s Trinity United Church of Christ—the same congregation that Obama has attended for the past 20 years. Two other young black men that attended the same church—Larry Bland and Nate Spencer—were also murdered execution style with bullets to the backs of their heads—all within 40 days of each other, beginning in November 2007. All three were openly homosexual
  • American Enterprise Institute
  • American Turkish Council,
  • Ariel Capital, Loop Capital, Holland Capital and Capri Capital, “sharply increased their donations” to Obama’s State Senate campaign fund....  Tarpley,
  • Armey, Dick Armey, Freedomworks, Tea Party leader, see also Jim DeMint, FoxNews,
  • Atlah, reprints Madsen Obama gay blackmail
  • Ayers, Thomas Ayers, father of .... Ayers, on board of General Dynamics,
  • BarackObama.com  Ronald Reagan,
  • Barnhardt ...there were two men who attended Trinity UCC with Obama who were openly homosexual and linked to Obama sexually, who were murdered execution-style within a matter of weeks immediately before and after Obama's announcing his run for president in 2007.
  • BIC, founded by Eldridge Haynes, liberal democrat, 1 Dag Hammarskjold Plaza, Manhattan,  Wikipedia headquaters at 1 Dag Hammarskjold Plaza, Manhattan, recruit those on the left, round tables, Selassie, Restrepo, Ongania, Franco, Medici, Sugarto, MI-6
  • BigJournalism  Barton-Thomas was not called as a witness in the Rezko trial
  • Bilderberg
  • Bout, Victor bout, arms dealer, tied to 9/11 in planting WMD evidence in Iraq before the war, and tied to Fitzgerald, Blagojevich, Rezko in Blago trial.
  • Brzezinski, Zbigniew, Carter's National Security Advisor, hated, unpopular, Dr. Strangelove, 1981-1983, Volcker placed as head of Federal Reserve,
  • Brookings Institution
  • Business Council
  • Business Roundtable
  • BusinessWeek, Obama second term? campaign via email, YouTube video,  
  • Canada Free Press  not really a Manchurian candidate but a classic Mohammedan Candidate?
  • Cato Institute
  • Chicago 1313 gang, University of Chicago, see Spelman Trust, Merriam, Brownlow, total control of society, financial oligarchy,  collectivism based on Wall Street finance capital, not the proletariat,
  • CIA, Airlift Africa, gain influence over 280 students to counter Russian and China influence programs, program admin was Mboya, friend of Obama Sr., helped in CIA overthrow of Nkrumah, 1966. more
  • CIA Indonesia Factbook  The Dutch began to colonize Indonesia in the early 17th century; Japan occupied the islands from 1942 to 1945. Indonesia declared its independence after Japan's surrender, but it required four years of intermittent negotiations, recurring hostilities, and UN mediation before the Netherlands agreed to transfer sovereignty in 1949.
  • Citizens for a Sound Economy
  • Conference Board
  • Council on Foreign Relations
  • Council on Foreign Relations,
  • CountryWide Bank, sweetheart mortgages, Kent Conrad, Northe Dakota, Chris Dodd,
  • Business International Corporation, Wikipedia  CIA cover organization.
  • Canada Free Press, Obama Fanon Davis, Obama smoked cigarettes.
  • CIA, Obama family history with CIA, BIC, Financing Foreign Operations, Business International Money Report, Barry Soetoro, Lolo Soetoro, Columbia tuition debt paid by BIC,
  • CNN Obama 2012 re-election bid, "It begins with us," bundlers will raise $500 million, leaving the campaign to raise another $500 million and amass a record-breaking $1 billion war chest.
  • Commission on Subversive Activities to the Legislature of the Territory of Hawaii,
  • Columbia University  Institute for Communist Affairs, anti-Soviet think tank, Sadik Siddigi,
  • Committee of 300 Wikipedia
  • Commieblaster pic Obama, Berlusconi, Gordon Brown,  Communist China's President, Hu Jintao; Socialists International member and South Africa's President, Kgalema Motlanthe; Prince Saud Al Faisal of Saudi Arabia (country source of fifteen 9/11 terrorists); Ethipoian socialist, terrorist and NEPAD head, Meles Zenawi; Turkey's domineering, anti-secularist and Islamic Extremist Prime Minister, Recep Tayyip Erdogan; and Thailand's Prime Minister and Democrat, Abhisit Vejjajiva,
  • CFR
  • Rep. Rosa L. DeLauro (D - CT) Introduced legislation to make it illegal to grow vegetables in your own garden (HR875). Her husband, Stanley Greenburg, worked with Monsanto .. ... educate yourself HR875
  • Daily Paul   Barack Obama is a deeply troubled personality, the megalomaniac front man for a coup by the intelligence agencies
  • Democratic Leadership Council, Down Low Club, Obama a member of both.
  • East-West Center, University of Hawaii, Ann Dunham met Soetoro here, affiliated with the CIA, Howard P. Jones, chancellor, also ambassador to Indonesia, during Sukarno overthrow, PKI, see Untung, more
  • European Roundtable of Industrialists (ERT)
  • Federal Reserve System,
  • Fox4KC Leading secret alternate life styles, Obama and his chief of staff provide classic blackmail threats. Considering Obama’s choice for the Supreme Court, Elena Kagan, who is reputedly a semi-open lesbian,..."
  • FoxNews, Fox Entertainment Group, Glen Beck, Mormon, Rupert Murdoch News Corp, owner, hired Roger Ailes, founding CEO, promote conservative views, created to compete with NBC, ABC, CBS.  Bret Baier,
  • FreeDominion  As for the green movement, the environment will always by the cause of the wealthy liberal elite, supermodels and Hollywood. When you are out of work and have a family to feed, Slappy the squirrel can go to hell.
  • Frontpage The Manchurian Candidate By: David Horowitz
  • Ford Foundation, CIA front, more  see Dwight Hopkins, ff operative, black liberation theology,
  • Free Republic Call me evil, but as unbelievable as this media has been all along and given Obama such a messianic veneer... I would SO love for a gay affair with the pot smoking, munchie needing, lover of White Castle, KUMAR (of all freaking people!) to bring him down.
  • Free Republic  copy of David Manning's CIA Columbia Obama Cover Up, story
  • Gamaliel Foundation, satellite of the Ford Foundation, The Developing Communities Project, Obama. no real friend of the poor, considered being a slum lord.
  • GDMP
  • General Dynamics, see James Crown, Obama support, Colonel Harry Crown, pillars of the industrial military financier complex,
  • Heritage Foundation
  • Hoover Institution on War, Revolution and Peace
  • HotAir  The Manchurian President: Barack Obama’s Ties to Communists, Socialists and Other Anti-American Extremists.
  • Hudson Institute
  • Human Events, Alsammarae, Iraqi corruption, Ann Coulter
  • IMF, more
  • International Chamber of Commerce
  • JohnDeNugent white separatist, reprints WMR Obama Man's Country article.
  • Moment.net Homosexuality in the Bush Whitehouse,Jeff Gannon, kiss, hug Bush  Bush, gay, homosexuality in the White House
  • Frugal notes Did Obama’s Chief of Staff Rahm Emanuel, while naked, actually confront and argue about budget voting with former New York congressman Eric Massa in the congressional showers —
  • Gamaliel Foundation, a Ford Foundation satellite,
  • Geithner, Peter Geithner, father of Tim Geithner, bank bail out guy, oversay microfinance programs worked on by Ann Dunham, CIA, more
  • Hannity forum  I was browsing around and found this article on JAMES (Just Americans Making Ethical Statements). James4America  talks about Obama and Rahm being members of a Chicago gay bath house, called "Man's Country"  This is hillarious...
  • Joyce Foundation, Obama on board, social engineering, mind control, grants,
  • LA Times Nation 2008 Obama, Rezko  Under cross-examination by Rezko attorney Joseph Duffy, star prosecution witness Stuart Levine, a Chicago-area lawyer, is admitting to conspiracy, extortion, bribery, fraud and other bad acts while he “served” at the Illinois public school teachers pension fund board.
  • Maytag, destroyed by Crown family, Galesburg,
  • mengaji, devout muslim worship, education,
  • Mboya, Tom Mboya, administered African Airlift, Luo tribe mentor, and friend of Obama Sr. ...mission: obstruct Russians and Chinese in Africa  more also helped to rally pro-US pan-African support for CIA's overthrow of Nkrumah in Ghana in 1966
  • NewsMax Obama manchurian candidate  David Horiwitz, there are general elections, primaries, local, only white male property owners could vote in the 18th and 19th century, women's suffrage changed that, felons still can't vote, Republicans make incredible efforts to disenfranchise blacks, students, felons, Latinos, the poor,
  • NewsMax  Federal prosecutors' decision to "protect" Obama administration officials by not calling them to testify against former Illinois Gov. Rod Blagojevich is "absolutely" responsible for the prosecution's stunning failure to get convictions on 23 of 24 counts, a Fox News legal analyst who closely followed the trial tells Newsmax.
  • New York Times, Obomber, Libya, failed to enact the public option in healthcare reform, due to lobbyist pressures, seeking Oval Office, 'Change', Guantanamo still open, select rulers, not monarchs, suffrage, always male dominated, vail of representation a hoax, redistricting, gerrymandering all leave elections as dangerous hoaxes on naive, uninformed populations, data mining, Electoral College a total joke,
  • Northern Trust,  loaned Obama $1.32 million for restored Georgian mansion, Susan Crown, close relative, vp Henery Crown and Company, important Obama backer, Yale trustee,
  • Occidental College, bong hits, cocaine,
  • TheObamaFile Is Obama Gay? Sidetracks on Showtunes nights, Little Jim’s or Northend on Halsted, or the Lucky Horseshoe at Belmont and talk to guys who’ve lived the scene, been there, done that, and will admit to being lifelong fans of Man’s Country.
  • Pakistan, Obama, partridge hunting sith the Soomros related to unknown CIA business,
  • Palin, Sarah Palin, 2012 candidate,
  • Palwenty, Rubio, Gingrich, Bush?
  • Politico, Ties to Blago threaten Dems
  • Power of Prophecy Texe Marrs Surrounding Obama in the White House and in Washington, D.C. is a frightening array of Jewish radicals and Zionist agents of influence. Jewish controllers—including White House Chief of Staff Rahm Emanuel and chief political advisor David Axelrod—monitor and guide Obama in his work of destruction. Behind them all is a hidden cabal led by the powerful Rothschild family
  • Punahou School, elite
  • RAND
  • RandysRight  Republicans will abandon Kirk not because he is gay, oddly enough, but because he is a liar and a hypocrite
  • Schlussel, Debbie  ederal Sources: Fitzgerald Held Off Blagojevich Bust to Protect Obama Election Chances; Did Obama Fail Ethics Requirements of Illinois Bar?
  • Skull and Bones, see Austin Goolsbee, Obama campaign
  • Stop the ACLU Obama and Rahm at Man's Country
  • TexasFred  Nationally Syndicated radio talk show host Sean Hannity, continued his commitment of the “Stop Obama Express”, by providing a forum for Pastor James David Manning, of ATLAH World Ministries, to launch yet another unsubstantiated and slanderous attack against Senator Obama (D-IL). The most recent allegation leveled against the candidate [Obama] is the claim of a “Homosexual Relationship” between he and his former Pastor Jeremiah Wright,
  • TheAbsurdReport  Sinclair is saying that he and Barack Obama had sexual relations with one another in the back of his limousine and in a hotel room back in November of 1999�at the same time that Barack Obama was serving the state of Illinois as a state senator. Larry Sinclair is also claiming that Barack Obama obtained crack cocaine for himself and some powdered cocaine for Sinclair.RealTruthAboutAlexi Michael Giorango pled guilty in 1989 of "helping direct a south suburban bookmaking ring that used threats of bombings, beatings and robbery to collect unpaid debts." more search terms: tax violations, bookmaking, Chicago Heights, gambling boss, Dominic Barbaro, 'The Circuit', nationwide gambling ring, Lorraine Hotel, Miami, Demitri Stavropoulous, Chief Loan Officer, 1201 S Western, 2601 Associates, Sun & Ocean Properties, Highland Park Real Estate, Development Corp.
  • TheRightSideofLife Obama timeline
  • University of Hawaii, Barack Obama Sr. was first African student more
  • Transatlantic Business Dialogue (TABD)
  • Trilateral Commission, founded by Rockefeller and Brzezinski, Samuel Huntington, recruiting young political talent which they could develop, groom, indoctrinate, brainwash, Wikipedia
  • University of Chicago, Milton Friedman, economics,  
  • Union of Industrial and Employers'
  •  Confederations of Europe (UNICE)
    United Nations
  • University of Chicago 1313 gang,  Spelman Fund helped set it up, social engineering in favor of financier interests, totalitarian control, from the vision of Charles E. Merriam, and Louis Brownlow, nerve center of American public administration,
  • USAID, CIA front,   more
  • U.S. Chamber of Commerce
  • USAToday Amid budget talks, government shut down, record levels of debt, campaign team will file papers, March, will seek second term, attend Democratic Party fundraisers, Ronald Reagan,
  • U.S. Export-Import Bank
  • U.S. Federal Reserve Bank
    U.S. Overseas Private Investment
  • Corporation (OPIC)
  • USA*Engage
  • Vanity Fair, Obama admitting systematic drug use,
  • Washington Post Do the two leading Democrats running for president think homosexuality is immoral? That question arose this week after Sens. Hillary Rodham Clinton (N.Y.) and Barack Obama (Ill.) seemed slow to criticize remarks by Gen. Peter Pace, the chairman of the Joint Chiefs of Staff, that "homosexual acts between two individuals are immoral."
  • Washinton Post Along the way, Rezko allegedly funneled tens of thousands of dollars in bogus real estate fees to Blagojevich's wife, Patti, who is named as a conspirator but has not been charged. Rezko also allegedly delivered a series of $10,000 payments to the governor's then-chief of staff Lon Monk, who has pleaded guilty and will testify for the government.
  • Washington Post Weiner also shared his thoughts on Massa's alleged naked argument with White House chief of staff Rahm Emanuel in the showers at the House gym, which Emanuel has denied, saying: "I have very few hard and fast rules. One of them is not to have sword fights in the morning with Rahm Emanuel."
  • Washington Times, Obama another four more years, amidst government shutdown threat, red, white and blue, cost $1 billion, presidential run,
  • Woods Fund, (money to Obama) Chicago, family owned coal mines, provided coal to Commonwealth Edison, Thomas Ayers, the father of terrorist Bill Ayers, was a principle.
  • Wikipedia Lolo Soetoro, whitewash
  • World Bank - International Monetary Fund
  • World Business Council for Sustainable Development
  • World Economic Forum (Davos)
  • WorldNetDaily  Larry Sinclair  Sinclair, who lives in Duluth and describes himself as "gay," claims he "personally engaged in sexual activity and personally used illegal drugs in November 1999" with the man who is now the leading Democratic presidential candidate. He claims the activity took place in the back of Sinclair's limousine and occurred again, later, in his hotel. Sinclair also says he personally no longer uses drugs.
  • World Trade Organization (WTO)
  • WorldNetDaily  is it possible he's a Manchurian candidate – harboring an ominous secret agenda few understand, a man destined to wreak havoc on America should he become president?
  • ZackJonewIsHome The BOPAC Report,
  • Webster Tarpley Brzezinski predicted that “Power will gravitate into the hands of those who control information” (Brzezinski 1), adding that surveillance and data mining will foster “tendencies through the next several decades toward a technocratic era, a dictatorship leaving even less room for political procedures as we know them” (Brzezinski 12). Information Technology would become the key to mass social control: “Unhindered by the restraints of traditional liberal values, this elite would not hesitate to achieve its political ends by the latest modern techniques for influencing public behavior and keeping society under close surveillance and control.” (Brzezinski 252
  • Amazon The biggest untold story of the 2008 U.S. Presidential Election... Finally, the no-holds-barred, 100% true story of Barack Obama's use and sale of cocaine; his homosexual affairs and the December 23, 2007 murder of Barack Obama's former lover and choir director of Obama's Chicago church of 20 years, Donald Young, just days before the 2008 Iowa Caucus. This searing candid story begins with Barack Obama meeting Larry Sinclair in November, 1999, and subsequently procuring and selling cocaine, and then engaging in consensual, homosexual sex with Sinclair on November 6th and again on November 7, 1999. You'll read in riveting detail how Sinclair, in 2007, repeatedly contacted and requested that the Obama campaign simply come clean about their candidate's 1999 drug use and sales. You learn how the Obama campaign, David Axelrod and Barack Obama used Donald Young (the homosexual lover of Barack Obama) to contact and seek out information from Sinclair about who he had told of Obama's crimes and actions. You'll read how the Obama campaign used internet porn king Dan Parisi and Ph.D. fraud Edward I. Gelb to conduct a rigged polygraph exam in an attempt to make the Sinclair story go away. The Obama team and the controlled media - specifically MSNBC's Chris Matthews, Keith Olbermann, the New York Times, CNN, Politico's Ben Smith, The DailyKos, The Huffington Post and others - attacked the National Press Club for making its facilities available to Larry Sinclair for a news conference to present his evidence and allegations to the world media. You'll read how Vice President Joe Biden's son, Delaware Attorney General Beau Biden, issued an arrest warrant on completely false, fabricated charges to attempt to discredit Mr. Sinclair's National Press Club news conference. This is a staggeringly true story of how the sitting U.S.President with the help of the Mainstream Media, the Chicago Police Department, the FBI, the Delaware Attorney General and others got away with murder and more....
  • CitizenWellsHere’s how Tony Rezko fared on each of the 24 charges he faced and what each involved: GUILTY: COUNT 1, Mail Fraud: A completed questionnaire sent July 18, 2003 via United Parcel Service from Glencoe Capital, a Chicago-based private equity firm, to the Illinois Teachers’ Retirement System’s Springfield office. COUNT 2, Mail Fraud: Glencoe Capital presentation materials sent to TRS via United Parcel Service July 30, 2003. COUNT 4, Wire Fraud: An April 14, 2004, phone call from Stuart Levine in Highland Park to attorney Joseph Cari in Hong Kong to discuss the name of a consultant to receive a finder’s fee from the Virginia-based investment firm, JER Partners, in exchange for an allocation from TRS. COUNT 5, Wire Fraud: A $750,000 compensation agreement faxed May 19, 2004, from a firm in the Turks & Caicos Islands, British West Indies, to JER in Virginia on May 19, 2004. COUNT 6, Wire Fraud: A May 20, 2004, phone call from Chicago attorney Joseph Cari pressuring JER to sign the compensation agreement. COUNT 7, Mail Fraud: A May 10, 2004, Federal Express shipment of materials related to investment firm Sterling Financial’s application for an allocation of TRS assets. COUNT 8, Mail Fraud: A May 19, 2004, Federal Express envelope from Sterling to TRS containing materials related to its planned presentation at the May 2004 TRS board meeting. COUNT 11, Mail Fraud: A Nov. 25, 2003, letter from contractor Jacob Kiferbaum seeking the contract for construction of a hospital in Crystal Lake and offering help in obtaining approval for the project from the Illinois Health Facilities Planning Board. COUNT 12, Mail Fraud: A May 24, 2004, letter from the planning board to Mercy Hospital confirming that the board approved the hospital project. COUNT 13, Wire Fraud: An April 17, 2004, phone call from Levine to friend and partner Dr. Robert Weinstein to discuss the applications of three money management firms, Stockwell, IMH and Capri Capital for TRS allocations. COUNT 14, Wire Fraud: An April 21 phone call from Levine to Weinstein to discuss IMH and Mercy Hospital. COUNT 15, Wire Fraud: A May 21, 2004, phone call from Levine to Weinstein to discuss JER, IMH, Capri, Mercy Hospital and TRS assets. COUNT 17, Aiding and Abetting Bribery: Plan under which Chicago money manager Sheldon Pekin was told by Levine to split a finder’s fee from Glencoe Capital and pay Rezko business associate Joseph Aramanda $250,000. COUNT 20, Aiding and Abetting Bribery: The illegal solicitation by Levine of funds from JER to be paid to a consultant named by Rezko and Levine. COUNT 23, Money Laundering: A March 24, 2004, check from Pekin to Aramanda for $125,000, part of a fee from Glencoe Capital. COUNT 24, Money Laundering: An April 26, 2004, check from Pekin to Aramanda for $125,000, part of a fee from Glencoe Capital.
  • Before Its News,  In 1967, Dunham moved with six-year old Barack Obama to Jakarta. In 1966, as Suharto consolidated his power, Colonel Soetoro was battling Communist rebels in the country. Dunham moved back to Hawaii in 1972, a year after Obama left Indonesia to attend school in Hawaii, and she divorced Soetoro in 1980. Soetoro was hired by Mobil to be a liaison officer with Suharto’s dictatorship. Soetoro died in 1987 at the age of 52. Ann Dunham died in 1995, also at the age of 52. Obama, Sr. died in an automobile accident in Kenya in 1982 at the age of 46. Obama, Sr. attended the University of Hawaii courtesy of a scholarship arranged by Kenyan nationalist leader Tom Mboya. Obama and Dunham married in 1961, however, Obama, at the time, had a wife back in Kenya. Obama and Dunham officially divorced in 1964, the same year Dunham married Soetoro.
  • more search terms: US Attorney Northern District of Illinois, Dearborn, Daniel Gillogly, Randall Samborn, Dr. Robert Weinstein, defrauding Medical school and charity of millions with Stuart Levine, Robert J. Weinstein, Rosalind Franklin University of Medicine and Science, Finch, Chicago Medical School, Northshore Supporting Organization, misuse trustee positions, taking money belonging to CMS and NSO, lying to federal agents, Illinois Health Facilities Planning Board, Operation Board Games, Robert D. Grant, FBI, James Banderberg, inspector general, Developer A, Co-Schemer S, secret middleman, sham transactions, Illinois Health Facilities Planning Board, Certificate of Need, Mercy Health System Corp, US Attorney Kaarina Salovaara,
  • Webster Tarpley ... The biggest absurdities are that Obama is really a Moslem, or else that Obama is really a Marxist AND Communist. We state emphatically here at the outset: Obama is a creature and puppet of finance capital and of the Wall Street bankers and investment bankers, as represented by the Trilateral Commission, Bilderberger Group, Council on Foreign Relations, Skull and Bones Society, Ford Foundation, and Chicago School of Friedmanite economics. The family business which Obama inherited from his mother (a Ford Foundation anthropologist and counterinsurgency operative who also worked for the World Bank and the US Agency for International Development) was to work for foundations. And this is what Obama has done in his life, working at various times for or with the Gamaliel Foundation, the Woods Fund, the Joyce Foundation, the Annenberg Foundation, and other foundations and entities which notoriously look to the Ford Foundation for guidance and leadership. Obama is best described as a foundation-bred counterinsurgent, that is to say an operative in the service of the US financier ruling class whose task it is to wreck and abort any positive outcomes that might be forthcoming from the political ferment which is shaking the globe, and above all from the deep political upsurge which is clearly at hand in this country.
  • Webster Tarpley,  The Obama campaign is very fond of pointing to the great personal sacrifice made by their candidate after leaving Harvard Law School. They stress that with his prestigious law degree, Obama could have written his own ticket to any number of lucrative positions in Wall Street, the corporate world, or the top law firms. But this type of propaganda ignores the fact that Obama’s career was now being guided, fostered, assisted, and directed by the networks of the Trilateral Commission and its banking allies. Obama was now a young man who was destined for great things thanks to these super-rich and powerful backers. Again and again we will see the marvelous process by which obstacles are removed from Obama’s path, and adversaries are eliminated, even as wonderful and unprecedented opportunities open up for him as if by magic. It was clear to Obama’s Trilateral case officers that a career solely played out in the elitist world of board rooms and country clubs would not be sufficient to provide him with a left cover required should candidacy for political office be part of his future, as they fully intended that it would. Therefore, Obama had to be sheep-dipped in the world of community organizing during the 1980s to develop his ability to manipulate and con the people he met in the streets. Now, he needed an entrée into the left-leaning Chicago Democratic political machine, where radical black nationalists and veterans of the Weatherman terrorist group were well represented Obama needed to burnish his resume with activities that would reinforce his image and credentials as a true progressive, while banishing any suggestion that he was in fact an agent of finance capital. ‘Interestingly, after his first year in law school Obama returned in the summer of 1989 to work as a summer associate at the prestigious Chicago law firm of Sidley & Austin. This in and of itself is a bit unusual. Very few top tier law students work for big law firms during their first summer. The big law firms discourage it because if you work for them in the first summer you are likely to work for a second firm the following year and then the firms have to compete to get you. So, why or how did Obama - at that point not yet the prominent first black president of the Harvard Law Review (that would happen the following year) - end up at Sidley? Sidley had been longtime outside counsel to Commonwealth Edison. The senior Sidley partner who was Comm Ed’s key outside counsel, Howard Trienens, was a member of the board of trustees of Northwestern alongside Tom Ayers (and Sidley partner Newton Minow, too). It turns out that Bernardine Dohrn worked at Sidley also. She was hired there in the late 80s, because of the intervention of her fatherin- law Tom Ayers, even though she was (and is) not a member of any state bar. Dohrn was not admitted in either NY or Illinois because of her past jail time for refusing to testify about the murderous 1981 Brinks robbery in which her former Weather Underground (now recast as the “Revolutionary Armed Task Force”) “comrades,” including Kathy Boudin (biological mother of Chesa Boudin, who was raised by Ayers and Dohrn) participated. She was finally paroled after serving 22 years of a plea-bargained single 20-to-life sentence for her role in the robbery where a guard was shot and killed and two police officers were killed. … Trienens recently explained his unusual decision to hire Dohrn, who had never practiced law and had graduated from law school (before going on her bombing spree 17 years before in 1967) to The Chicago Tribune saying, “[W]e sometimes hire friends.” I can only speculate, but it is possible that Tom Ayers introduced Obama to Sidley. That might have happened if Obama had met up with Bill and Tom and John Ayers prior to attending law school when Obama’s DCP group was supporting the reform act passed in 1988. Or it might have been Dohrn who introduced Obama to the law firm. Dohrn’s CV indicates that she left Sidley sometime in 1988 for public interest work prior to starting a position at Northwestern (again, hired there by some accounts because of the influence of Tom Ayers and his Sidley counsel Howard Trienens). Obama and Dohrn would likely not have been at the firm at the same time, although if Obama and Dohrn met before Obama left to attend Harvard Law School, she might have discussed the firm with him and introduced him to lawyers there. My best guess, though, is that it would have been Tom Ayers who introduced Obama to Sidley and that would have helped him get the attention of someone like Newton Minow. And that would have come in very handy later in Obama’s career as Kaufman suggests. (Recently I heard from Nell Minow, daughter of Newton Minow, who tells me her sister Martha, a Harvard law professor, had Obama as a student at HLS and that she called her father to tell him about Obama. While Nell contends on the basis of this anecdote that her family met and supported Obama before he met Bill Ayers, she was unable to provide me any evidence of when in fact Obama met Ayers, either Bill or Tom.) In any case the summer of 1989 was eventful for Obama as he did meet his future wife, Michelle, there, already a lawyer and working as a Sidley associate. Michelle was Obama’s first supervisor or mentor there. Obama went back to Harvard in the fall of 1989 where, of course, he became president of the law review in the spring of 1990. After graduation in 1991 he went back to Chicago to run a voter registration campaign (which would turn out to be an important step in his career).’ (Steve Diamond, ‘Who “sent” Obama?’ globallabor.blogspot.com, April 22, 2008) AFTER LAW SCHOOL: BUILDING A RESUME FOR A POLITICAL CAREER After law school, Obama returned to Chicago to work as a civil rights lawyer, joining the firm of Miner, Barnhill & Galland, an unsavory enterprise to which we will return later… He became a modest adjunct lecturer at the University of Chicago Law School, while helping to organize a voter registration drive during Bill Clinton’s 1992 presidential campaign. Abner Mikva, a five-term congressman from Illinois who was at that time Chief Judge of the United States Court of Appeals for the D.C. circuit, tried to recruit Obama as his law clerk, a position that might have been a stepping stone to clerking on the Supreme Court, but Obama declined the offer. David B. Wilkins, the Kirkland and Ellis professor of law, said he advised Obama in 1991 to become a Supreme Court Clerk. “Obama knew there was honor in pursuing that post,” Wilkins said, but Obama quickly added that it was not for him. “He said that he wanted to write a book about his life and his father, go back to Chicago, get back into the community, and run for office there. He knew exactly what he wanted and went about getting it done,” Wilkins said. More accurately, Obama’s Trilateral case officers knew what the next steps for their young protégé and asset needed to be. “He could have gone to the most opulent of law firms,” said David Axelrod, the Chicago machine hack who is now Obama’s campaign boss gushed. “After Harvard, Obama could have done anything he wanted.” Axelrod’s specialty has long been to help black candidates get white votes with a utopian litany of messianic platitudes; he also got Deval Patrick elected as Governor of Massachusetts. Obama served as an associate attorney with Miner, Barnhill & Galland from 1993 to 1996. During this time, he says he represented community organizers, discrimination claims, and voting rights cases. His part-time adjunct work in constitutional law at the University of Chicago Law School lasted from 1993 until his election to the U.S. Senate in 2004.

  • WayneMadsenReport  July 2010  "The story about President Barack Obama's bi-sexual past will not go away. Now, in an exclusive interview with The Globe, Norma Jean Young, the 76-year old mother of the late Trinity United Church of Christ choir director Donald Young, has spoken out and declared that persons trying to protect Obama murdered her son at the height of the 2007 Democratic presidential primary to protect Obama from embarrassing revelations about his homosexual relationship with her son. Donald Young's bullet-ridden body was found in his Chicago apartment on December 23, 2007, in what appeared to be an assassination-style slaying.......see full story at WMR ....Larry Sinclair, the gay man who claimed to have had two sexual encounters with Obama in Chicago in 1999, wrote a book, "Cocaine, Sex, Lies & Murder," in which he states that Obama was linked to Young's murder. Sinclair wrote that he was in contact with Young shortly before his murder and Young revealed his relationship with Obama. At the time of his revelations about Obama at a National Press Club news conference, WMR doubted the veracity of Sinclair's story due to the absence of corroborating evidence coupled with a bizarre news conference. However, since that time, WMR has received corroboration from a number of sources in a number of locations, including Chicago, Alabama, Georgia, and Washington, DC. WMR has received information that various competing camps, including the Hillary Clinton and John McCain campaigns, attempted to co-opt Sinclair and his revelations for their own political purposes. Sinclair, it should be noted, has not deviated from his original story or charges against Obama.    ...    Sinclair's book is now the subject of a defamation lawsuit [Daniel Parisi, et al v. Lawrence W. Sinclair a/k/a "Larry Sinclair," et al] brought by Dan Parisi, the proprietor of the website, Whitehouse.com, who is mentioned in Sinclair's book with regard to his involvement in polygraphs administered to Sinclair after he made his allegations against Obama public during the 2008 presidential campaign. The lawsuit is being handled by the politically powerful Patton & Boggs law firm, the same firm that represented George W. Bush's top political adviser Karl Rove in the Valerie Plame Wilson/CIA leak, and has been filed against Sinclair, his publishing company, and distributors, including Barnes and Noble and Amazon.com in the U.S. District Court for the District of Columbia. Sinclair is currently a resident of Florida.    ...   On June 19, 2008, WMR reported: "WhiteHouse.com held a news conference following Sinclair's at which a video of Sinclair's polygraph was to be shown. After experiencing technical difficulties with the video presentation, Parisi abruptly canceled the news conference and took no questions." The aborted news conference was as bizarre as Sinclair's. Sinclair was arrested by Washington, DC police following his news conference based on a warrant from Delaware issued by Vice President candidate Joseph Biden's son, Delaware Attorney General Beau Biden. The Delaware charges against Sinclair were later dropped.    ...    The lawsuit against Sinclair has been assigned to Judge Richard Leon, the Republican deputy chief minority counsel on the House Select Committee to Investigate Covert Arms Transactions with Iran, aka, the Iran-contra scandal. From 1988 to 1989, he served as Deputy Assistant Attorney General and from 1992 to 1993 was the Republican chief minority counsel on the House Foreign Affairs Committee's October Surprise Task Force investigating the 1980 Reagan-Bush campaign's secret dealings with Iran to ensure the defeat of President Jimmy Carter. Leon Leon was nominated for the federal bench by President George W. Bush on September 10, 2001. Leon's involvement in so many high-level cover-ups of White House misconduct makes him an illogical choice to hear a case involving serious allegations against President Obama.    ...   Sinclair has told WMR that he believes the Obama White House is trying to have his book withdrawn from circulation to avoid any further embarrassments about Obama's homosexual past and the possible involvement of his top lieutenants in Young's murder. The Globe reported in May 2008 that a top Chicago private detective said he believed Young was "rubbed out" because of his relationship with Obama. Sinclair has echoed the private eye's beliefs about Young and Obama. The Globe reports that before his death, Young was planning to flee to Africa to teach. The information was provided to The Globe by Young's mother, who also now fears for her life and plans to leave her Peoria, Illinois home for a secret location. Mrs. Young said the Chicago police have warned her that her life is in danger.    ...search terms, Young, Africa, secret location, more at WMR
  • Examiner  President Obama’s long-time friend and first lady Michelle Obama’s former associate at the University of Chicago, Dr. Eric E. Whitaker , MD, MPH, is tied to an Illinois state investigation of improper use of funds in relation to ‘faith-based spending’ as well as the Illinois Department of Health’s health-awareness campaigns, according to published accounts. Whitaker served as the Director of the Illinois Department of Health from 2003 to 2007, which encompasses the time period in which funding is being scrutinized. Prior to getting the position with the Blagojevich administration, President Obama recommended Whitaker for the job when Obama was an Illinois State Senator in 2003. More ironic than that, Obama’s recommendation of Whitaker was given to none-other than the Chicago political fundraiser and real estate developer who was convicted of bribery and fraud two years ago (2008), Antoin ‘Tony’ Rezko. At the time, Rezko was advising Blagojevich as to whom he should hire to top Illinois state positions. Not surprising, the White House is reportedly not talking about this situation. Additionally, when questions are directed from the press to the Illinois States Attorney’s Office, nothing is being divulged either. Of the information that is known at this time, the investigation questions the misuse of funds that were apparently to be used for different aspects of public health, primarily delivering the message of health safety, warnings, and dangers to African-Americans and other minority groups through various local organizations. ....more
  • Blago trial search terms: U. S. District Judge James Zagel, U.S. Atty. Carrie Hamilton, gag order, Blago called Lon Monk a liar, straw donation ($10,000) to Obama campaign, Joseph Aramand, Rezko associate, illegal 'finders fee', state teacher-pension investment fund, fund raiser Christopher Kelly, Michael Gillespie - Blago attorney, Blago appearance on Donald Trump's Celebrity Apprentice, Doug Scofield, Blago aid, testified against, Blago accused of attempting to sell Obama's vacated Senate seat after Obama won the presidency, "I've got this thing and it's [explitive] golden. I'm not just giving it up for [explitive] nothing.", demigod, reality television appearances, Blago attorney William Quinlan, three top political consultants, Doug Sosnik (Clinton aid), Bill Knapp, Fred Yang, make Obama happy and appoint Valerie Jarrett to the Senate, the Tribune's been writing about every one of her (Patti) real estate clients, Blago charges: racketeering, conspiracy, attempted extortion, bribery, Rezko was participant, shaking down individuals and businesses who sought government appointments, contracts, jobs, Patti recieved hefty payments for doing no work, River Realty, 2004, Robert Williams, Roosevelt Clark project, consulting fees, auditor Shari Schindler,
  • Iran Attack, search terms: Asia Times, David Moon, BP, Deepwater Horizon, oil spill, deliberate, Straights of Hormuz closed, Gulf oil, 10 month supply, Saudi Arabia, green light, Israel use Saudi air space, Meir Dagan, Iran's uranium enrichment facility, attack route a great circle around Iraq, IAF logistics, F-15I, F16I fighter bombers, up Mediterranean, Latakin, KC-707 aeriel tanker, skirt Turkish Air Space, NATO, G-550, NCCT, Senior Suter, fly low across northern Syria, defense radar, worm, incapacitating air defense network, Big Safari, AGM-88 high speed anti-radiation missile (HARM), and Ofek-7, cut the Kurdish corner, split into Q and E flights, Qom, Natanz, Esfahan, heavy water reactor complex, Popeye Turbo cruise missiles, Iraeli submarines, from Arabian Sea, see Iranian air defense, RC-135 Rivet Joint ELINT platforms, Central Command, National Security Council, IAF KC-707, Air Force AWACS, EC-2 Hawkeye, E-3 Sentry, SPY-1 radar, Gulf Cooperation Council, plausible deniability, create cover and confusion, attack Hezbollah, USS Harry S Truman, task force, transit Suez Canal, German frigate Hessen
  • FireDogLake According to a new article at the Wayne Madsen Report (WMR), Obama and prospective chief of staff Rahm Emanuel were included in surveillance that led to the indictment of former Illinois Governor Rod Blagojevich. The operation apparently yielded damaging information about Team Obama, including Emanuel’s ties to the Chicago gay community. But the Obama administration took steps to ensure that the information gathered under Bush-appointed U.S. Attorney Patrick Fitzgerald would focus on Blagojevich and not them.    ...   Was the Bush effort at blackmail successful? Does it explain the Obama administration’s reluctance to investigate justice-related matters, such as the political prosecutions of Don Siegelman in Alabama and Paul Minor in Mississippi? The answer, according to WMR, appears to be yes.  more
  • Gawker  Rahm Emanuel's Illegal D.C. Basement Rental He's the cheapskate of staff. Rahm Emanuel, Barack Obama's right-hand man, lives in a basement apartment on Capitol Hill rented to him by Congresswoman Rosa DeLauro. Just one problem: He's not allowed to live there. ... That's what private investigator Joseph Culligan discovered after asking questions of D.C. officials. A zoning administrator responded to Culligan's inquiry and told him that DeLauro's house at 816 E. Capitol St. NE was listed as a single-family dwelling, and as such, could not be rented out. ... Emanuel, who splits his time between Chicago and D.C., will not have this low-rent problem for very long. He's looking for a new home in Washington. Still, he should consider himself lucky if his firetrap of a residence is the worst dirt one can dig on him. Compared to Tim Geithner and Tom Daschle's unpaid tax bills, it's a lower-middle-class problem.
  • Citizenwells.blog Secret Tapes Helped Build Graft Cases In Illinois, Washington Post, December 22, 2008, Pamela Meyer Davis, IL Health Planning Facilities Board, Stuart Levine, Blagojevich, Rezko, Barack Obama IL senate, Board rigged, 9 members, Obama corruption   CHICAGO — Washington Post article excerpts:   The wide-ranging public corruption probe that led to the arrest of Illinois Gov. Rod Blagojevich got its first big break when a grandmother of six walked into a breakfast meeting with shakedown artists wearing an FBI wire. Pamela Meyer Davis had been trying to win approval from a state health planning board for an expansion of Edward Hospital, the facility she runs in a Chicago suburb, but she realized that the only way to prevail was to retain a politically connected construction company and a specific investment house. Instead of succumbing to those demands, she went to the FBI and U.S. Attorney Patrick J. Fitzgerald in late 2003 and agreed to secretly record conversations about the project..... more search terms: Joseph Cari Jr., DNC committee member, wiretaps, Operation Board Games, flip, pay-to-play, on steroids, Rep. Jesse L. Jackson Jr., Obama transistion team,  Meyer Davis, Chicago Medical School, student housing project, Stuart Levine, GOP fundraiser, courted Blago, health facilities board, teachers pension board, wiretap, discussions with Rezko,  Levine indicted in 2005, extortion, kickbacks, cooperation, plea bargain, star witness agains Rezko,  Better Government Association, Illinois Finance Authority, Ali Ata, Rezko had shaken him down, large campaign contributions,  Jackson's wife for a lottery post,   Washington Post
  • Say Anything blog comment: The “specifically named individual” is Michelle Obama, who was appointed to the Board of TreeHouse Foods, a WAL-MART vendor, on June 25, 2005, even though she did not have experience in the private sector previous to the appointment. Here are the benefits the Obama family received as a result of Michelle Obama’s stint with the WAL-MART vendor:
    According to the couple’s tax returns, Mrs Obama earned $51,200 (£25,700) for her work as a non-executive director on Treehouse’s board last year, on top of the $271,618 salary she was paid as a vice-president of the
    University of Chicago Hospitals.
    She also received 7,500 Treehouse
    stock options, worth a further $72,375, as she did the previous year, when she banked a $45,000 salary from the company.
  • EIR On the board of directors of Soros's Quantum Fund N.V. is Richard Katz, a Rothschild man who is also on the board of the London N.M. Rothschild and Sons merchant bank, and the head of Rothschild Italia S.p.A. of Milan. Another Rothschild family link to Soros's Quantum Fund is Quantum board member Nils O. Taube, the partner of the London investment group St. James Place Capital, whose major partner is Lord Rothschild. London Times columnist Lord William Rees-Mogg is also on the board of Rothschild's St. James Place Capital.
  • Cameldog The bombshell may involve the murder of Donald Young, a 47-year-old choir master at former Rev. Jeremiah Wright’s Trinity United Church of Christ—the same congregation that Obama has attended for the past 20 years. Two other young black men that attended the same church—Larry Bland and Nate Spencer—were also murdered execution style with bullets to the backs of their heads—all within 40 days of each other, beginning in November 2007. All three were openly homosexual.   ...  Another questionable Obama associate is openly homosexual. That person is Stanford law professor Lawrence Lessig, who was listed during the 2008 campaign as being part of Obama’s “technology initiative.”
  • Reggie Love, Obama personal trainer
  • Big Head DC (virus attack!) reported earlier on Wednesday that Obama was due to �personal business.� The fourth was a Thursday, and Obama wouldn�t have needed to be back at the TheAbsurdReport: General Assembly for several days thereafter.   Here is a recent audio interview with Sinclair from Rense Radio�.  Bp0.blogger  Additional interviews can be heard Rense and GSradio and GSradio 
    • African-American Gay Community Scared Over Deaths  CHICAGO (CBS) ? Then on December 23, 47-year-old Donald Young, the choir director at Trinity United Church of Christ, (Obama�s Church) was shot multiple times in his South Side apartment. His roommate found his body.
December 7-8, 2010 -- SPECIAL REPORT. Link between Obama's CIA front employer and mother's Asian work revealed
December 7-8, 2010 -- SPECIAL REPORT. Link between Obama's CIA front employer and mother's Asian work revealed

WMR has uncovered CIA-archival documents that point to a link between Barack Obama's post-Columbia University CIA front employer, Business International Corporation (BIC), and his mother's two employers, the U.S. Agency for International Development (USAID) and the Asian Development Bank. WMR has also discovered CIA files that point to the use of field anthropologists abroad, working under foundation cover, by the CIA. Obama's mother, Stanley Ann Dunham/Obama/Soetoro/Sutoro worked as a field anthropologist in Indonesia under the cover of the Ford Foundation.

BIC and the Ford Foundation maintained a close relationship through the BIC's running of the Business International Roundtable. Papers maintained at the John F. Kennedy Library provide a linkage between David E. Bell, the Director of the Bureau of the Budget from 1961 to 1962 and administrator of the USAID from 1963 to 1966, and the Ford Foundation, where Bell served as executive vice president from 1966 to 1981, and Business International, where Bell participated in one of their Business International Roundtables on December 17, 1965, at the National Academy of Sciences in Washington. The Joseph P. Kennedy, Sr. Foundation helped fund the CIA's Airlift Africa project that saw it used to bring Barack H. Obama, Sr. to the University of Hawaii in 1960, as well as over two hundred other African students to other American universities, as part of the CIA's program to counter the Soviet Union's efforts to provide scholarships to African college students in newly-independent African nations at the People's Friendship University in Moscow (later Patrice Lumumba University).

BIC also attempted to infiltrate members of Students for Democratic Society (SDS) at Columbia University in the 1960s by offering them money from Rockefeller family coffers. BIC, which ran Business International Roundtables, was cited in its attempts to infiltrate SDS and other leftist groups.

BIC, which helped propel Obama into international affairs and, later, a profession in politics, was a key to the co-option of leftist groups by Rockefeller and other corporate interests. The following video describes how BIC attempted to infiltrate SDS and other leftist groups beginning after 28 minutes.

In a book titled "The Strawberry Statement," James Kunen described Business International, as related by an unnamed 1968 SDS conference attendee, as leading an effort to finance SDS demonstrations in Chicago in the late 1960s. BIC is described in the book as "the left wing of the ruling class."

Obama was inserted into the south side of Chicago at the same time the CIA, FBI, and other U.S. intelligence agencies were focused on the foreign connections of the El Rukn gang, the Nation of Islam, and the Black Panthers. Obama's membership in a leftist organization at Occidental College in Los Angeles appears to have been a continuation of the infiltration efforts by BIC and its major funder, the CIA. WMR previously reported that Obama was a key asset to the penetration of radical black organizations in south Chicago in the mid-1980s. Of particular interest to the CIA after Obama's graduation from Columbia, was the connections of the El Rukns and Nation of Islam to the Muammar Qaddafi government in Libya, in addition to foreign connections of the Hispanic gang, the Latin Kings, also active in Chicago.

In 1986, BIC was sold to The Economist Group in London and merged with the Economist Intelligence Unit. [BIC had maintained "Business International UK Ltd.," which, according to n internal CIA memorandum, subscribed to all the CIA's unclassified publications]. However, the BIC International Roundtables appear to continue under various academic and foundation auspices, including at Obama's former guest law lecturing employer, the University of Chicago. In addition, the BIC International Roundtables appear to be a continuation of the Roundtables first organized by Africa's greatest colonialist plunderers, Cecil Rhodes. Rhodes's business roundtables of the wealthiest elites eventually morphed into the Council on Foreign Relations (CFR. In fact, Obama, the first African-American president of the United States, is a direct product of BIC and its Roundtables, originally founded by Africa's most infamous looter and pillager of diamonds, gold, and other natural resources and promoter of white minority rule and colonialism, Rhodes.

On June 14, 1976, Senator John Durkin (D-NH) said there was llittle the Senate could do to reduce the ability of "the Business Roundtable or the Chamber of Commerce . . . to attempt to influence votes, either through sheer force of logic or sheer force." On June 19, 1975, Representative Wright Patman (D-TX) railed on the House floor that "in 1973 and 1974 -- when the previous audit bill was up -- the Federal Reserve and its Chairman entered into some highly questionable lobbying tactics, ending up with the involvement of the big banks and the big business combines incluidng the fat cat Business Roundtable." Obama's current subservience to Wall Street and the Federal Reserve can be seen through the lens of his employment with BIC, a virtual mouthpiece for what Patman described as the "fat cats."

BIC was used by the State Department as a diversion for a delegation of General Accounting Office (GAO) representatives who visited Hong Kong in August 1974 looking for information on possibilities for U.S.-Chinese trade after Richard Nixon had opened China up to the United States. A formerly Confidential cable from the U.S. Consulate General in Hong Kong to the State Department, with copies to the U.S. Liaison Office in Peking and U.S. embassy in Tokyo, dated August 21, 1974, bragged about the consulate's success in diverting the GAO's interest from consulate files on "PRC economic affairs (general), foreign trade and trade promotion, (which includes our files on the Canton Trade Fair)" even though the GAO team told the consulate it was "not supposed to do that." The consulate's problem appeared to be that some of the files were classified. In order to stymie the GAO group, the consulate directed them to conversations with "companies, third country representatives (identified as UK, Canadian, Australian, and West German trade officials in Hong Kong), Far Eastern Economic Review, and Business International staffs." The GAO delegation was particularly interested in potential oil and mining deals with China.

It is apparent that the consulate and BIC wanted to keep what they knew about Chinese trade under wraps, even from Congress. A few weeks after the GAO team was in Hong Kong, a new head of the U.S. Liaison Office in Peking replaced Ambassador David Bruce. His name was George H. W. Bush.

BIC was also used by the State Department and CIA to keep tabs on U.S. firms on the Arab boycott blacklist for investing in or trading with Israel. A Congressional Record insertion in 1965 stated, "Business International reported in January 1964 that there were 164 U.S. firms on the Arab blacklist, adding that, "many American businessmen who have wanted to trade or invest in Israel have been deterred by Arab threats."

BIC also enjoyed a cozy relationship with USAID in 1982, the year before Barack Obama graduated from Columbia and joined BIC's staff in New York. Obama's mother had been a long time employee of USAID, an agency with historical links to the CIA.

On June 8, 1962, in a hearing on "U.S. Policies and Programs in Southeast Asia" held by the Senate Subcommittee on East Asian and Pacific Affairs and chaired by Senator S. I. Hayakawa (R-CA), Elise R. W. duPont, the Assistant Administrator for Private Enterprise for USAID, testified that her agency was "working with Business International to develop country specific information on laws, regulations, and policies in developing countries that affect investment." DuPont specifically stated that USAID was using the information from BIC to conduct "bureau reconnaissance missions" in Indonesia and Thailand and this included support for "a venture capital firm and a leasing firm in Indonesia." BIC, along with a CIA-connected firm called InterMatrix, also conducted country risk analyses for the CIA.

Obama's first employer acted as a bridge between the U.S. intelligence world, with USAID and other government fronts as cover, and the print media. On May 4, 1967, Acting Secretary of Commerce Alexander B. Trowbridge told the East-West Trade Conference as Bowling Green State University that U.S. trade missions to the Soviet Union and Eastern Europe were facilitated by "TIME, Inc. and Business International." Trowbridge said the use of "trade publications," such as those for whom Obama worked after graduating from Columbia, "stimulated" the exchange of information between East and West.

BIC's relationship with the U.S.governments sensitive trade channels with the East Bloc continued through 1979. A "Cuban Chronology," dated April 1979 and issued by the CIA's National Foreign Assessment Center, states that from November 20 to 25, 1977, BIC sponsored "meetings in Havanaof representatives of 50 US firms and their contact points in the Cuban government." WMR has learned from a reliable source that Obama's grandfather, Stanley Dunham, had traveled to Cuba in 1960 on CIA business with Obama's mother, Ann Dunham. It has also been strongly rumored by informed sources with connections to the Cuban government that Barack H. Obama, Sr. was not the father of Barack Obama, Jr. but that his actual father was an Afro-Cuban who Ann Dunham met during the 1960 trip with her father.

A formerly classified CIA "East Europe Branch Notes," report, dated February 4, 1974, states "A three-day roundtable conference between Business International and East German officials concerned with the promotion of trade opened in East Berlin on February 4. Orville Freeman, President of Business International, heads the foreign participants, comprising presidents, vice presidents, and board members of important US and West European enterprises. GDR Premier Sindermann told the group further steps toward detente have a favorable effect on the expansion of foreign economic activities. He also said that East Germany plans to expand substantially its economic relations with non-socialist cluntries. The remainder of the report from East Germany's roundtable with BIC is redacted.

BIC, along with the CIA, also participated in private conclaves sponsored by an entity called the "Center for the Study of Democratic Institutions," operating from Post Office Box 4068 in Santa Barbara, California and funded by a non-profit corporation called "The Fund for the Republic," which were held periodically on top of Eucalyptus Hill, overlooking the Pacific Ocean, in Santa Barbara. A fellow of the Center was Edward Engberg, the Managing Editor for Business International who was also a former assistant editor for Fortunemagazine. Other center fellows and consultants included Associate Justice of the US Supreme Court William O. Douglas; former President of the University of California Clark Kerr; former President of the University of Chicago Robert M. Hutchins (also the President of the center); and Isidor Rabi, Professor of Physics at Columbia University; Stanley Sheinbaum, former consultant to the government of South Vietnam; John R. Seeley, Chairman of the Sociology Department at Brandeis University; and Harvey Wheeler, co-author of the book "Fail Safe."

CIA files contain a 1967 letter to the editor of the Daily Emerald from three anthropology professors at the University of Oregon supporting a decision of the American Anthropological Association (AAA) condemning the "intelligence meddling" of the CIA and Defense Department in anthropological field work. 1967 was the same year that Ann Dunham was performing such anthropological "field work" for USAID, a front for the CIA, in Java, Indonesia. The AAA's Professor Ralph Beals [from UCLA] report stated that the Pentagon and CIA "repeatedly interfered with anthropological work abroad, and have clearly jeopardized our chances, as anthropologists, to do meaningful foreign research."

And in what is the clearest evidence yet that Ann Dunham was working for the CIA in Indonesia and elsewhere, the Beals Report stated: "several anthropologists, especially younger ones who had difficulty in securing research funds, were approached by 'obscure' foundations or were offered support from such organizations only to discover later that they were expected to provide intelligence information to the CIA." The report added, "agents of the CIA have posed as anthropologists, much to the detriment of the anthropological research programs."

In Ann Dunham/Soetoro's case, her foundation "sugar daddy" was the Ford Foundation and USAID. Her boss at Ford was none other than Peter Geithner, the father of President Obama's current Treasury Secretary, Tim Geithner.

December 14-15, 2010 -- Obama's CIA brief: infiltrate the Marxist Left and "de-communize" it
It is apparent that one of Barack Obama, Jr's major tasks for the CIA, through his work with Business International Corporation, his membership in leftist student groups at Occidental College in Los Angeles and Columbia University in New York, and his work as a "community organizer" in south Chicago was to infiltrate and "de-communize" the Marxist left and bring it into the capitalist globalist fold.

Obama's work complemented that of his mother, alleged Kenyan father, and grandfather in peddling the CIA's influence to leftist nationalists in newly-independent nations in what was once known as the "Third World."

The goal of the CIA's infiltration of leftist movements through Obama's post-Columbia "leftist outreach" employer, Business International Corporation (BIC) was to carry out the tactics championed by former Office of Strategic Services (OSS) and CIA officer Herbert Marcuse, a German-born Jew and self-proclaimed "Hegelian" and "Marxist." Marcuse's agenda included what Yuri Zhukov wrote in Pravda on May 30, 1968: "radical and global negation of all the elements constituting [the industrial socialist society], including Communist Parties." Marcuse, as Zhukov wrote, sought to "cast doubt on the chief role of the working class in the struggle for progress, democracy, and socialism."

Obama's "liberal" policies have succeeded in destroying the progressive left in the United States, including the labor union movement and the social security and welfare programs instituted by the Franklin Roosevelt, Harry Truman, John F. Kennedy, and Lyndon Johnson administrations. Obama was groomed by the CIA to do what no Republican or conservative politician could ever do: destroy the American middle class and the American social safety net -- and accomplish these deeds from a contrived "leftist" position. Obama has accomplished his task.

Obama's "radical" campus activities mirror those of University of Paris sixties student radical Daniel Cohn-Bendit, who led "Maoist" and "Trotskyite" student riots while on a stipend from the West German government. Cohn-Bendit's activities on behalf of the CIA and the French extreme right were revealed by French General Confederation of Labor Benoit Franchon on May 27, 1968, while addressing workers at a Renault automobile plant, "Right now, a whole cohort of people do nothing but 'feed the fires,' showering all kinds of praise on the young people's enthusiasm, while actually they are preparing a trap and a snare for us."

One of the CIA tasks of the French student protesters in Paris in 1968 was the derailing of the Paris peace talks between the United States and North Vietnam. The leftist "fifth columnists" were, thus, responsible for continuing the Indochina war well into the Nixon administration. Just as with his his French "radical" for-bearers, Obama came into office on a wave of American anti-war feelings and then not only continued the U.S. military presence in Iraq but boosted it in Afghanistan and Yemen.

Obama's membership in a Marxist Club at Occidental, one of the CIA's favorite campuses for recruiting agents, fit a pattern of CIA meddling in student organizations, particularly leftist ones like Students for a Democratic Society and the National Students' Association, across the nation. Obama's alma mater, Columbia, has a long association with U.S. intelligence that even predates the CIA. The Russian Institute of Columbia University was the brainchild of Professor Gerold T. Robinson in 1944 while he was on loan from Columbia to the OSS. The institute later trained many Slavic language linguists for the CIA's Radio Free Europe and U.S. Air Force personnel who flew signals intelligence missions against the USSR, Hungary, and Albania. Columbia also excelled in training CIA operatives for Ann Dunham-type agricultural "field work" in South Vietnam, Thailand, Bolivia, and Guatemala -- all targets for CIA anti-Communist activities.

In 1967, the year Obama's mother whisked him off to post-coup Indonesia, the CIA was revealed to have had several U.S. college students studying abroad on summer studies programs acting as agents. The Independent Research Foundation, co-founded by "leftist" feminist Gloria Steinem, was revealed to have been a CIA front tasked with attending World Youth Festivals and compiling dossiers on attendees.

Columbia's School of International Affairs (SIA) conducted detailed studies of socialist countries, including the USSR, that were extremely similar to those produced by BIA. Columbia also maintained close links with the Pentagon and the National Security Agency through its support for the Institute for Defense Analysis (IDA).

Obama's "faux" journalism work for BIC was authorized by both the CIA and the company's management. Before the post-Watergate restrictions on CIA activities, CIA agents were able to recruit journalists, usually "stringers," without Langley's approval. That changed after the Frank Church and Otis Pike congressional hearings. Somewhere in the bowels of Langley may be CIA-BIC agreements on the use of BIC personnel as CIA assets or agents. And those files may contain the name or names "Barry Obama," "Barry Soetoro," "Barack Obama," or "Barack Sutoro." Obama's other alma mater, Harvard, also maintained close ties with the CIA.

The FBI also had a penchant for hiring informers in liberal and black communities like south Chicago. Informers were screened in files known as PSIs and PRIs: potential security informant and potential racial informant and were paid a stipend. After being approved, PSIs and PRIs became "reliable informants" and were assigned a cover name, an informant number, and a regular salary. A scan of the FBI's files for anyone of Obama's appellations during his time in south Chicago may reveal one or more of such informant files.

The Rockefeller family was fond of funding a number of left-wing organizations. Groups devoted to the anti-nuclear movement were linked to the Rockefeller Family Fund-supported Corporate Data Exchange. Inc. (CDE), a BIC-like "research organization" albeit a tax-exempt one, founded in 1975 to "investigate economic decentralization and corporate control," according to an April 21, 1983, article in the Pittsburgh Tribune-Reviewtitled "Foundations Bankrolling Anti-Nuclear Causes." Three of the CDE's founders were associated with intelligence-gathering for the North American Congress on Latin America (NACLA), a progressive organization that is ostensibly opposed to U.S. interventionism in Latin America.

The CIA archives contain an undated paper titled "The Agency and the Young Employee," that describes the CIA's outreach to young people: "The young Agency employee or potential employee shares common experiences with his counterparts in the sub-culture and, although he may not have been in most instances an active participant in this counter-culture, he has been in close touch with it and its views." The tract continues, ""menial work -- until he 'knows the business' -- is anathema and is met with derision. He similarly views long periods of training, job orientation, and job rotation as wasteful of his time . . . The CIA is just beginning to see the influx of the new generation . . . They can be a great asset to the present and future of CIA."

Indeed, with Barack Hussein Obama, Jr., he was a great asset and continues to be one for the CIA.


Tales from the Obama Crypt  (Obama maternal grandparents)
April 5-6, 2011 -- Tales from the Obama Crypt

WMR has spoken to a number of individuals familiar with Barack Obama, Jr. at Harvard and in the city of Chicago. Combined, these individuals who researched Obama during his early lawyer and politician years are painting a very different portrait of Obama and his mother and maternal grandparents.

In fact, and as WMR previously reported, Obama's mother, Stanley Ann Dunham and maternal grandfather, Stanley Armour Dunham, both were affiliated with the Central Intelligence Agency. We have also reported on Obama's maternal grandmother, Madelyn Dunham, and her link to CIA money laundering accounts at the Bank of Hawaii in Honolulu.

However, it is now evident, from information gleaned from African-American associates of Obama's in Chicago in the mid-1980s, that Stanley Armour and Madelyn Dunham, like their daughter Stanley Ann Dunham, have fabricated personal histories.

From an African-American political activist in Chicago who knows President Obama, we have learned that Obama's mother was not born in Wichita, Kansas but was born in Beirut, Lebanon while her parents were serving with the wartime Office of Strategic Services (OSS), the forerunner to the CIA. Ann Dunham's birth date is reported to have been November 29, 1942. This was during the time after which Lebanon's Vichy-led government collapsed --July 14, 1941 -- and when the leader of the Free French, General Charles de Gaulle, proclaimed Lebanon nominally independent. After Lebanon's nominal independence was declared on November 26, 1941, the United States opened an embassy in Beirut at ambassadorial level. Soon, the U.S. embassy in Beirut became one of the top OSS listening in the Middle East and U.S. Army personnel, seconded to the OSS, arrived in the city.

Stanley Armour Dunham reportedly enlisted in the U.S. Army on January 18, 1942, a few months after Lebanon's nominal independence was granted under French domination. It is not certain when Mr. Dunham actually joined the Army because his service records in the military have been curiously sealed. It has been reported that Dunham served in England with the 1830th Ordnance Supply and Maintenance Company, Aviation in support of the 9th Air Force in the lead up to the June 6, 1944 Allied invasion of Normandy. However, from 1942 to 1944, little is known of Dunham's military service.

Dunham's wife, who supposedly worked at a Boeing B-29 assembly plant in the Dunhams' hometown of Wichita, reportedly gave birth to Stanley Ann Dunham on November 29, 1942. However, we have now learned that Mrs. Dunham was, in fact, posted to Beirut with her OSS husband in 1942 when she gave birth to Obama's mother.

The Dunhams would not have been the only couple working together for the OSS. Famed chef Julia Child met her husband Paul Child during their joint service for the OSS during World War II. Julia Child served in Ceylon and China during the war and she met Paul during her OSS service abroad. They married in 1946. Before joining the OSS, Julia Child worked for a furniture store in New York City, W. & J. Sloane. The fascination of retail store people for OSS, and later, CIA work is uncanny. One of the OSS's and Britain's Secret Intelligence Service's (SIS) top "archaeologist" spies in Peru, Cuba, and Chile during World War II was William J. Clothier II, grandson of the co-founder of the Strawbridge & Clothier Department Store chain based in Philadelphia. Another archaeologist who was a spy for the United States in both World Wars I and II was Samuel Lothrop, who, according to David H. Price in his book "Anthropological Intelligence: The Deployment and Neglect of American Anthropology in the Second World War," was not only from a wealthy New England family but was friends with New York socialite and one of Franklin Roosevelt's intelligence advisers, Vincent Astor. Lothrop was kin to Alvin Lothrop of Chelsea, Massachusetts, who, with Samuel Woodward founded the Woodward and Lothrop department store chain in Washington, DC.

Nor would anthropologist spies been unknown to the Dunhams in Beirut. According to Price in his book, one of the OSS's leading anthropologist spies, Derwood Lockard, served in Beirut toward the end of World War II after having served in Kenya from 1943 to 1944.

Stanley Armour Dunham supposedly was discharged from the Army on August 30, 1945, but because his military records are sealed, this cannot be verified. In the post-war years, the Dunhams were said to have moved to Berkeley, California; Ponca City, Oklahoma; Vernon, Texas; El Dorado, Kansas; and Mercer Island in Seattle, Washington before moving to Honolulu, Hawaii in 1960. Stanley Armour Dunham, according to what is now appears to be a biography concocted by the CIA, for whom Dunham began working for in 1947 after the transition from the OSS. Mr. Dunham supposedly worked for a chain of furniture stores. Not much is known about the Dunhams' daughter, Stanley Ann, until she was enrolled in Mercer Island High School in 1956.

However, if the Dunhams were stationed in Beirut up until the time Stanley Ann Dunham was enrolled in Mercer Island High School in 1956, all the furniture store jobs held down by Stanley Armour and all the restaurant waitress jobs held by his wife were clever ruses devised by the CIA to mask their actual war-time work in the Middle East. From Oklahoma to Washington state and finally to Hawaii, Stanley Dunham reportedly worked for four furniture stores: J. G. Paris in Ponca City, Doces Majestic and Standard-Grunbaum in Seattle, and Pratt Furniture in Honolulu. There is no documentation to show that Pratt in Honolulu existed beyond a Hawaii-registered shell company. In addition, Madelyn Dunham's wartime OSS work with her husband in Lebanon would explain why she became one of the first female vice presidents at the Bank of Hawaii in Honolulu and was trusted to handle the escrow accounts used to bribe CIA-financed leaders in Indonesia, South Korea, Taiwan, Japan, and the Philippines. Madelyn was enrolled at the University of Washington before moving to Hawaii but she never obtained her degree.

Evacuating Madelyn Dunham and her daughter from Lebanon in 1956 would have made sense for the CIA. In 1956, what had been a peaceful country conducive to a CIA family posting became embroiled in conflict between the Christian Maronite President Camille Chamoun on one side and Sunni Muslim Lebanese Prime Minister Rashid Karami and Egypt's President Gamal Abdel Nasser on the other side. The UK, French, and Israeli invasion of Suez, although not supported by President Dwight Eisenhower, caused problems for the Americans in Lebanon. The pro-U.S. Chamoun was accused by Karami and Nasser of not taking stronger action against London and Paris, including severing diplomatic relations, for their attack on Egypt. The creation of the United Arab Republic (UAR) by Egypt and Syria in 1958, the calls by Lebanese Sunnis for Lebanese accession to the UAR, and the overthrow of the Hashemite monarchy in Iraq the same year, promoted Eisenhower to land U.S. Marines in Lebanon in 1958 in response to a request from Chamoun. By that time, the Dunham mother and daughter had been safely inserted into Mercer Island, which had a heavy concentration of CIA and Pentagon personnel. It is quite possible that Stanley Armor Dunham's "furniture store" cover in Seattle was used to mask his actual continued work in Lebanon for Eisenhower's OPERATION BLUE BAT Marine landing in Beirut.

There is a photographic clue as to the Dunhams presence in Beirut in the early to mid 1950s. In the photograph above, a ten- or elevem-year old Stanley Ann Dunham (left) is wearing a sash with the stylized abbreviation "NdJ" on the sash of her school uniform. WMR has had it confirmed by African-Americans in Chicago who knew Obama that the abbreviation stands for "Notre-Dame de Jamhour," a private Catholic school in Beirut, which, as WMR previously reported, "NdJ was a male-only school until 1975 but there is also information that NdJ has had a sponsorship arrangement with Catholic educational institutions in Lyon, France."

As with his mother and maternal grandparents, there are huge holes in the history of President Obama. Although it has been previously reported that his academic records from Occidental and Columbia remain sealed, there are facets of Obama's time at Harvard Law School. Obama was elected the first black president of the Harvard Law Review in 1990. Although Obama was quotedin The New York Times, at the time, saying, "The fact that I've been elected shows a lot of progress . . . It's encouraging . . . But it's important tat stories like mine aren't used to say that everything is O.K. for blacks. You have to remember that for every one of me, there are hundreds or thousands of black students with at least equal talent who don't get a chance."

However, according to an African-American contemporary of Obama at Harvard in 1988, two years before Obama's election to head the Harvard Law Review, there was another painted of Obama. Our source happened to hear a speech by an unknown law school student on campus who was railing against black student activism on campus, cautioning those present that such activism was counter-productive. Our source listened intently to the student's speech and turned to a colleague and inquired, "who is that mulatto up there speaking against our interests?" The answer from the other student was, "That's Barry Obama." The last name was pronounced by some Harvard African-American students as "O-Bama," as in "ALA-bama," a reference to Obama's conservative views that accommodated white faculty and students on campus. Our source did opine tohis colleague at the time, "that mulatto is going places with that attitude."

Michael Scott
November 17, 2009 -- There's a political ill wind blowing for Obama in Chicago

A long-serving member of the Chicago Police Department who now tracks corruption in city politics told WMR that the last-minute trip by President Barack Obama to Copenhagen on October 2 to appeal to the International Olympic Committee (IOC) was part of a strategy hatched by Obama's Chicago real estate friends and contributors to cash in on profits on speculative real estate investments had Chicago secured the 2016 Summer Olympics. Instead, the IOC awarded the Summer games to Brazil.

Our Chicago source revealed that Valerie Jarrett, the director of the White House Office of Public Liaison that works with state and local governments, was a key player in the deal to bring the 2016 games to Chicago. Jarrett's firm, Habitat, Inc., WMR was told, played a key part in the Chicago Olympic development scheme. Jarrett had served as Vice Chairman of Chicago 2016, the non-profit organization established to lure the games to the city, and she worked closely with Michael Scott. A key member of Mayor Richard Daley's Olympic committee, real estate developer Scott, who was also President of the Chicago Board of Education and a confidante of the Chicago school system's former CEO, Arne Duncan, President Obama's friend and current Education Secretary, was found dead in the early morning of November 16. Scott's body was found in the Chicago River and the Chicago medical examiner reported Scott died from a self-inflicted gun shot wound to the head.

Scott owned Michael Scott & Associates, a real estate development and investment firm. Scott and his firm stood to make a fortune in the sale of land in Chicago's Douglas Park had Chicago been awarded the 2016 games. Scott also teamed up with Chicago real estate developer Gerald Fogelson in 2002 to form FS Associates LLC to develop Chicago West Side properties. Scott and Fogelson were eyeing the multi-billion Olympic Village project. Fogelson, through Fogelson Companies, Inc. and Jersen Investments, LLC, was a major contributor to Democratic candidates, including presidential candidate Barack Obama.

Jarrett served as Chair of the Chicago Transit Board from 1995 to 2005 and also had inside knowledge of public and private land since the Transit Board was a major player in acquiring land for transit projects. Our Chicago source pinpoints Jarrett as the key player in the Olympic land grab deal, along with senior members of the Daley adminisration and Michelle Obama, the First Lady.

This past September, Chicago constructor and top fundraiser for impeached Illinois Governor Rod Blagojevich, Christoper Kelly, was found dead from apparently overdosing on a pain killer. Kelly, who was involved in construction projects at O'Hare International Airport, pleaded guilty to federal fraud counts. O'Hare's expansion was part of the incentive package used by Chicago to lure the 2016 Olympic games to the city.

WMR has been told that there are "smoking gun" documents dealing with Habitat Inc.'s involvement with the Chicago Olympic bid and we are trying to obtain them.


WMR White House battles U.S. intelligence factions via WikiLeaks and Anonymous  March 12-13, 2012
The Obama White House is running a covert operation that is using authorized leaks of information through groups such as WikiLeaks and Anonymous to battle against other parts of the U.S. intelligence community that are resisting Obama efforts to engage in massive warfare in cyber-space, according to well-placed Pentagon insiders.

Using the assets of the U.S. Cyber Command, headed by General Keith Alexander and continuing warrantless wiretapping authorities carried over from the Bush administration, a covert group of White House conspirators working under the direction of White House Office of Information Regulatory Affairs (OIRA) chief Cass Sunstein and National Security Council adviser Samantha Power, Sunstein's wife, cyber-hackers have gained access to various computer networks and released information damaging to White House enemies in the intelligence community. The most recent target of such activity was the private intelligence firm Stratfor, an Austin, Texas-based company that is close to Republicans and employs a number of former CIA and military intelligence personnel.

While the White House has actively engaged in indicting and punishing government whistleblowers who have contacted the media, the OIRA-led group has been responsible for leaking volumes of data to the media, using WikiLeaks and members of the hacker group as go-betweens. Although the Justice Department is trying Army Private First Class Bradley Manning and is seeking the extradition of Australian WikiLeaks co-founder Julian Assange, the White House and State Department have admitted that none of the State Department cables, the highest classified as "Secret," released through WikiLeaks were damaging to U.S. national security. However, Manning and Assange were unwitting pawns in high-stakes warfare between the Obama White House and its accomplices the U.S. intelligence community, including Alexander and CIA director David Petraeus.

U.S. government infiltration of activist groups

Two low-level operatives of the White House operation have already been identified as working as confidential informants for the FBI. Adrien Lamo helped to lure Manning into his web in order to provide the covert White House team with a "patsy" to ensure "plausible deniability" of White House involvement in the State Department cable release. And more recently, Hector Monsegur, aka "Sabu," was identified as an FBI informant within the ranks of the hacker group LulzSec, which is linked to the hacking activities of Anonymous.

The entire covert White House operation is designed to advance cyber-space as a battleground in which to wage information warfare against various governments around the world with a view to undermining their credibility and causing them to fall as a result of U.S.-orchestrated street action and "themed" or "color" revolutions. It is known that there was resistance to such activities from career State Department foreign service officials, as well as current and retired CIA and Defense Intelligence agency personnel, some of whom work for Stratfor.

The leak of some 250,000 State Department cables and 5 million Stratfor e-mails by the covert White House group was engineered to undermine members of the Foreign Service and older and retired members of the U.S. intelligence community who oppose the use of non-governmental organizations (NGOs) in actions that contributed to the ouster of regimes long-supported by the CIA and some senior U.S. diplomats, including those in Egypt, Tunisia, Libya, and Yemen.

U.S. government-sponsored campaigns of opinion-shaping and disinformation

The release by Invisible Children, an NGO with dubious motives, of the viral video about Ugandan warlord Joseph Kony and his long-time abuse of child soldiers, "Kony 2012," on YouTube, an act encouraged by the Sunstein/Power husband-wife team, is seen by State Department Africanists as a way to inject the already war-weary Pentagon into internal African civil warfare to the benefit of U.S. Africa Command (AFRICOM) clients in the region, including Ugandan dictator Yoweri Museveni, Kenyan Prime Minister Raila Odinga, and Rwandan dictator Paul Kagame.

However, the White House team was sloppy in not thoroughly checking the content of the Stratfor emails. The push-back against the White House hacking and disinformation team can be seen in two Stratfor e-mails that mentions the operations of one of the members of the Sunstein/Power team, off-and-on State Department official Jared Cohen of Movements.org, one of the many organizations that are partly or fully funded by George Soros's Open Society Institute (OSI). Cohen is now the director of Google Ideas.

In one email, dated February 11, 2011, Stratfor's Fred Burton refers to Cohen as a "loose cannon" who is using his Google position to engage in "regime change" through a "scorched earth" policy. Burton suggests that Israel's security agency Shabak pick Cohen up for an "interview" while entering Gaza after being involved in fomenting street protests in Tunisi8a and Egypt. The e-mail also says it was uncertain whether Cohen was acting on his own -- "driving without a license" -- or working on the "part of leftest [sic] fools inside the WH who are using him for their agendas."

WMR has learned from Pentagon sources that Cohen was, in fact, acting on behalf of the Sunstein/Power group. In addition, we have learned that Cohen's operation was supported by Sarah Sewall, the founder of the Mass Atrocity Response Operations (MARO) Project at the Harvard Kennedy School of Government's Carr Center and a close adviser to Petraeus and Obama. Sewall was a member of the Obama Transition Team for national security and she served as the Deputy Assistant Secretary of Defense for Peacekeeping and Humanitarian Assistance in the Clinton administration. Along with Petraeus, Sewall wrote a foreword to the U.S. Army and Marine Corps Counterinsurgency Manual, released in 2007.

Along with Sunstein, Power, U.S. ambassador to the UN Susan Rice, U.S. ambassador to Russia Michael McFaul, and chief Obama policy adviser Valerie Jarrett, Sewall is part of the "brain trust" running the covert White House computer hacking and information warfare team. After successfully engineering the toppling of the Ben Ali, Mubarak, Qaddafi, and Saleh regimes in Tunisia, Egypt, Libya, and Yemen, respectively, the team is now concentrating on regime changes in Syria, Iran, Cuba, Venezuela, Myanmar, Sudan, Algeria, Russia, and China.

Conversely, the White House operation, using automatic "sock puppet" software among other tactics, is attempting to forestall the popular overthrow of unelected supranationally-installed austerity governments in Greece and Italy by spreading the meme that the Greek and Italian working class are lazy tax evaders who have been living off the public dole.

In a March 29, 2011, e-mail, Stratfor's Sean Noonan wrote that Cohen was part of a State Department initiative in 2008 that saw the foundation of Movements.org and that this was part of a program initiated during the Bush administration to engage in "public diplomacy" over the Internet. The email cites the 21st Century Diplomacy and Civil Society 2.0 programs as being part of this initiative and that one of the first operations of the State Department team was to organize a worldwide protest against the Revolutionary Armed Forces of Colombia (FARC) in 2008. But where the Stratfor analysis was mistaken was its conclusion that Cohen's Movements.org had split with the U.S. government. If one defines the covert White House information operations team as separate from the U.S. government, Stratfor would be correct. However, the Sunstein/Power/Sewall/Rice/Jarrett/McFaul team has been officially sanctioned by President Obama, CIA director Petraeus, and Secretary of State Hillary Clinton. Even though Power referred to Mrs. Clinton as a "monster" during the 2008 presidential election campaign, this has not curbed Clinton's enthusiasm for using the "soft power" of Facebook, Twitter, NGOs, and propagandized Al Jazeera, Voice of America, and other media to bring about regime change in targeted countries. The Noonan email states that Cohen and Movements.org established cells across Cairo in support of the Egyptian April 6 Youth Movement.

The White House covert information warfare program also enjoys the support of International Criminal Court chief prosecutor Louis Moreno Ocampo who is ensuring that officials of the United States and its allies are not accused of war crimes in fomenting and stoking the flames of internal rebellions.

The Noonan email cites the role of two organizations funded by the CIA, used to mount and anti-government uprising in Serbia, and inspired by the Albert Einstein Institutions Gene Sharp, the architect of the current CIA blueprint for co-opted revolutions -- the Center for Applied NonViolent Action and Strategies (CANVAS) and OTPOR! The role of the 2008 State Department-sponsored Alliance for Youth Summit in New York in backing the future April 6 Youth Movement in Egypt is also referenced. The email also states that Otpor! lost much of its steam after the 2003 assassination of Otpor's favored leader, Serbian Prime Minister Zoran Dindic, in 2003. In a "not for publication" paragraph, the email states, "Serbia is exactly what we don't want to see"---Otpor needed a political leader and was able to create that, but Dindic was assassinated in 2003 and the momentum of Otpor has not been maintained afterwards."

The Noonan email also states that Myanmar and Cuba are targets for Movements.org in organizing themed revolutions. The information corresponds to the information WMR received about the current priorities of the covert White House information operations group.

Re: movements.org founder Cohen Email-ID 1113596 Date 2011-02-11 19:42:49 From burton@stratfor.com To bokhari@stratfor.com, scott.stewart@stratfor.com, secure@stratfor.com The dude is a loose canon.

GOOGLE is trying to stop his entry into Gaza now because the dude is like scorched earth.

Its unclear to GOOGLE if he's driving w/out a license, but GOOGLE believes he's on a specific mission of "regime change" on the part of leftest fools inside the WH who are using him for their agendas.

I would hope the Shabak pick him up for "an interview".

Re: [alpha] INSIGHT- US/MENA- Movements.org Email-ID 1140035 Date 2011-03-29 23:45:20 From burton@stratfor.com To alpha@stratfor.com List-Name alpha@stratfor.com

From: Sean Noonan Sender: alpha-bounces@stratfor.com Date: Tue, 29 Mar 2011 16:17:19 -0500 (CDT) To: Alpha List ReplyTo: Alpha List Subject: Re: [alpha] INSIGHT- US/MENA- Movements.org He is a co-founder and board member. So he oversees the show, but isn't doing day-to-day work.

On 3/29/11 4:12 PM, Bayless Parsley wrote:

So what is Cohen's current ties with them?

On 3/29/11 4:04 PM, Reginald Thompson wrote:

SOURCE: n/a ATTRIBUTION: STRATFOR source SOURCE DESCRIPTION: Main organizer at movements.org PUBLICATION: Some is not for publication. Rest is background SOURCE RELIABILITY: ITEM CREDIBILITY: [in terms of knowing what movements.org is doing, they are A-1, but in terms of what the other groups are doing, source is not great] SPECIAL HANDLING: none SOURCE HANDLER: Sean

My Notes:

How Movements.org got started: [This part is not for publication] in 2008 it became apparent to the USG that they needed to do public diplomacy over the internet. So Jared Cohen was at DoS then and played a major role in starting the organization. The main goal was just spreading the good word about the US. Similar inititiaves have come aobut in 21st Century Diplomacy and Civil Society 2.0, but movments.org has since split from the US government. A key turning point in leading to its creates was seeing Oscar Morales organize a Global Day of Protest against FARC in 2008. This is the first time social networking was really used to organize a protest. [This part is not for publication]

Three goals- Taking people wanting social change from the internet to constructive activism by: 1. monopolizing on initial success (this generally means getting popular on facebook) 2. Staying secure 3. Peer-to-peer training

Currently choosing "Unlikely Leaders" to be invited to the next Global Summit. These are people that for example start a facebook activisit group that becomes very popular and then suddenly are completely unprepared--much like April 6 in Egypt. CANVAS will also be invited. Source is familiar with them, but has not been through their training.

they are part of a network of NGOs ready to negotiate with Facebook when activist accounts are deleted or hacked. Movements.org wants a sort of Facebook customer service to be created just to deal with activism, since there are positives and negatives to allowing anonymous accounts, and those will probably never be allowed anyway.

Movements.org is engaging with these groups once they actually get popular. This is the main criteria for their involvement, or inviting them to their Summits.

Answer to the neutrality issue-- "we are by no means trying to overthrow governments." Movements.org goal is to develop civil society and social movements.

[Not for Pub. And don't let this get back to RS501, for now] "Serbia is exactly what we don't want to see"---Otpor needed a political leader and was able to create that, but Dindic was assinated in 2003 and the momentum of Otpor has not been maintained afterwards. [Not for pub]

The Internet is helpful in bring people together, but the hard part is keeping them together. The first real examples politically were the color revolutions and now MENA. But the challenge has been keeping the momentum going to keep these social movements alive. They were a case study in the power of technology for short-term political change, but that's it.

Movements.org was communicating with someone at April 6 who said they had established different cells across Cairo in case one group was arrested. [not sure if we knew this]

Egyptians are now presented with two choices--1. to find a political leader and take power or, 2. To create a sustainable social movement. Source sees this as a dichotomy.

Manuel Castells is the only academic to have really examined the internet in terms of social networks.

Agrees with S-weekly on Social media. The impetus for these revolutions is there already, social media is just tapping into that.


First, to explain the thing about Serbia- the source is pretty set on trying to create these long-term sustainable social movements that are effective over various issues, rather than new political parties that take power. The criticism of OTPOR is interesting, and is telling about how Movements.org would like to work.

I get the idea that this organization is actually farther behind then we are--understaffed and inexperienced. I don't mean this critically, because really no one is that experienced in online organization--they are breaking new ground. They have a pretty good understanding of the challenges presented by social media--and that is really what they are focusing on, but don't really have solutions yet. Their main response to this is to develop this peer-to-peer training done through people they designate as ambassadors to work with others in their own country or region. So really what Movements.org is doing right now is creating a database of training materials and valuable networks for groups to learn from each other--not doing direct training like CANVAS.

They are also doing everything after things get started--waiting for these groups to get big, then trying to work with them. This means they aren't identifying countries or groups to start some shit in. Though, I get the impression they would like to be more active in th emore oppresive countries like Cuba and Myanmar. You can probably see how the idealism bleeds through.


Forgery, Obama Birth Certificate, Technical Proof.   Back

Proof the Birth Certificate was created in Adobe Illustrator.


See Layers

Mara Zebest, Nationally recognized computer expert who has written 10 books on advanced computer graphics says the birth certificate is a forgery.

Amazon.com Mara Zebest



Safety paper and watermark issues.


Chromatic aberrations from scanning are missing.

A person skeptical that the birth certificate was forged opens the document and discovers the 'layers' and concludes its a fake.
Kerning.  The document presented by Obama contains kerning (adjusting the spacing between characters of a proportional font).  This was not possible on a 1960's typewriter.
Obama bagman is sent to jail over $3.5m payment by British tycoon
Barack Obama    ...   Barack Obama says that he was bone-headed to get involved with Antoin Rezko James Bone in New York, Dominic Kennedy in London TimesOnline Prosecutors motion for Tony Rezco's arrest | <TimesOnline> Mr Rezko's response <TimesOnline> Mr Rezko's loan filing | <TimesOnline> Sunday Times Rich List: Nadhmi Auchi   ...  An undeclared $3.5 million (£1.8 million) payment from a corrupt Iraqi-British businessman has landed Barack Obama’s former fundraiser behind bars.

The payment, disclosed in court papers, is the first time that Mr Obama’s long-serving bagman Antoin “Tony” Rezko, a Syrian immigrant to the United States, has been linked to Nadhmi Auchi, the Iraqi-born billionaire who is one of Britain’s richest men. The relationship is a potential embarrassment for Mr Obama, who has made his opposition to the Iraq war a central plank of his campaign.

Court papers describe Mr Rezko as a close friend of Mr Auchi. The two are involved in a large Chicago land development together. But it is unclear how long the two men have known each other or whether they were linked before the 2003 Iraq war. Neither side would discuss their relationship.

The Times has, however, discovered state documents in Illinois recording that Fintrade Services, a Panamanian company, lent money to Mr Obama’s fundraiser in May 2005.

Fintrade’s directors include Ibtisam Auchi, the name of Mr Auchi’s wife. Mr Auchi’s spokespeople declined to respond to a question about whether he was linked to this business.

Mr Rezko, to be tried for corruption this month, had his bail revoked on Monday after he disobeyed a court’s instructions to keep it informed of changes to his finances. Prosecutors feared that he could try to flee abroad.

The property developer has been condemned by Hillary Clinton as a “slum landlord”.

According to prosecution documents Mr Rezko tried to persuade unnamed Illinois officials to help Mr Auchi to get a US visa after he was convicted of fraud in France. Mr Obama’s aides deny that he was approached.

Mr Rezko has been indicted for pressuring companies seeking state business for kickbacks and campaign contributions, although none for Mr Obama. He was granted bail in October 2006. He told a judge that he had no access to overseas money. But in April 2007 Mr Auchi’s business, General Mediterranean Holding (GMH), wired $3.5 million to Mr Rezko from a bank account in Beirut via a law firm.

The Chicago businessman has already been an embarrassment to Mr Obama’s campaign. The presidential challenger has tried to dampen criticism by paying $150,000 to charity to make up for donations from Mr Rezko. The Illinois senator has said that he made a “bone-headed mistake” to get involved in a property deal with Mr Rezko at a time when he was known to be under investigation.

Mr Auchi has attracted attention at Westminster because of his closeness to politicians and the Establishment. He says that his brother was executed by Saddam Hussein’s regime.

His business partners in Britain have included Lord Steel of Aikwood, the former Liberal leader, and Keith Vaz, the Labour MP and Home Affairs Committee chairman.

On the 20th anniversary of his business in 1999, Mr Auchi received a greeting card signed by 130 politicians, including Tony Blair, William Hague and Charles Kennedy, who were then leaders of their respective parties.

Norman Lamb, the Liberal Democrat MP, went on to table parliamentary questions asking why the Blair Government appeared slow to respond to a French extradition request.

Mr Lamb said last night: “It’s a matter of public interest to understand why the payments were made. This deserves thorough investigation.”

Mr Auchi founded GMH in 1979, a year before he left Iraq. He says that he did business with his native country when it was considered a friend of the West but ceased to trade with Saddam’s regime once sanctions were imposed after the invasion of Kuwait.

US prosecution documents recall Mr Auchi’s suspended jail sentence and €2 million fine for corruption in France five years ago.

Defence lawyers said that Mr Auchi lent the $3.5 million for legal and family expenses. Most of the money had gone directly to law firms and there had been no attempt to flee. “While the Government attempts to besmirch Mr Auchi’s character,” they said, “he is one of Britain’s wealthiest men, has been a guest at the White House and met with two of the last three presidents, was Co-Chair of the Kennedy School of Government at Harvard, is President of the

Anglo-Arab Organisation, and has received numerous awards and honorary positions from heads of state, including Queen Elizabeth II, Pope John Paul II, and King Abdullah II of Jordan.”

Mr Auchi’s lawyers added: “Mr Auchi flatly and categorically denies any wrongdoing in relation to the matters that led to his conviction in France and he is pursuing an appeal against it.” Mr Auchi is also suing the oil company Elf in France for dragging him unwittingly into the scandal.


Spring 2004: Nadhmi Auchi visits Illinois and Michigan, attending an event at Four Seasons Hotel in Chicago. Senator Obama shakes hands with Middle East businessmen at event at Four Seasons in Chicago, but aides say he does not remember Mr Auchi

2004: Mr Auchi makes first investment in 62-acre land development project Riverside Park in Chicago, according to Mr Rezko's lawyer.

June 16, 2004: AR Pizza established in Delaware. Mr Auchi is "passive investor" in the company

April 28 2005: Mr Auchi's conglomerate General Mediterranean Holding (GMH) lends $3.5 million to Tony Rezko

May 23 2005: Fintrade Services SA, a Panamanian company related to Mr Auchi, registers loan to Mr Rezko, secured by Mr Rezko's stake in AR Pizza

June 15 2005: Mr Rezko's wife Rita buys garden plot on same day as Obamas buy neighbouring mock Georgian mansion from same seller. Mrs Rezko pays asking price of $625,000, with a $500,000 mortgage. Obamas pay $1.65 million, which is $300,000 less than the asking price

September 30 2005: GMH makes $11 million loan to Mr Rezko

November 2005: Mr Rezko lobbies US State Department and, apparently, elected officials to try to get a US visa for Mr Auchi, prosecutors say

December 7 2005: AR Pizza sued by Papa John's pizzeria chain

from: http://www.timesonline.co.uk/tol/news/world/us_and_americas/us_elections/article3433363.ece



Times Online - Newspaper Edition

Iraqi billionaire bids to take Leeds back to football big time David Leppard and Robert Winnett A CONTROVERSIAL Iraqi billionaire is preparing to buy the ailing Leeds United football club in an attempt to restore it to its former glory. Nadhmi Auchi, a British-based businessman with a fortune claimed to be worth £1.3 billion, is drawing up detailed plans to take control of the debt-ridden club. He hopes to move it to a purpose-built stadium, redeveloping the current Elland Road ground to pump millions into the Coca-Cola Championship side. Yesterday, sources close to Auchi confirmed he was interested in buying the club. One said: “This is one of the most important clubs in the country and Auchi believes he can help the supporters and the local community but still make a profit. Everything now depends on the price.” A former Ba’ath party member whose brothers were killed by Saddam Hussein’s regime, Auchi left Iraq in the late 1970s to settle in London. He is one of Britain’s wealthiest and best connected citizens, yet maintains a low profile. Lord Lamont, a former Tory chancellor, sits on the board of Auchi’s holding company and the billionaire hosts regular dinners attended by royals, Middle Eastern leaders and MPs. He has also bought tables at Labour fundraising dinners. He has quietly built a business empire comprising 120 firms across the world in property, construction and hotels. However, his business dealings have often proved controversial. Last year, in France, he was convicted of paying kickbacks to the oil firm Elf. Auchi, who was born in Baghdad in 1937, received a 15- month suspended jail sentence and a £1.39m fine. He says the prosecution was politically motivated and is appealing against it. In Britain, a pharmaceutical firm he owns is co-operating in a criminal investigation by the Serious Fraud Office into an alleged price-fixing cartel involving supplies for the National Health Service. Auchi’s interest in Leeds is believed to have begun this year when it was about to be relegated from the Premiership after a financial meltdown. Leeds United was once one of Britain’s most successful football clubs. During its heyday in the 1960s and 1970s, its star players included legends such as Billy Bremner, Jack Charlton and Norman Hunter. However, the club’s fortunes took a disastrous turn in the 1990s when it invested heavily in players without succeeding on the pitch. It was rescued from administration last February by local businessmen. However, the club was relegated and is languishing in the bottom half of the Championship with estimated debts of £40m. Auchi is thought to have drawn up a 10-year business plan for Leeds. It involves moving the club and redeveloping the Elland Road ground with flats, shops and community facilities. The ground lies in an attractive area for property developers — close to motorways — and this is thought to have sparked Auchi’s interest. This weekend Auchi was unavailable for comment but a friend said: “This will be a big redevelopment. He wants to help the community, help a very old established football club and make some money. He wants to be seen to be investing in England and creating jobs.”


NADHMI AUCHI is a member of an elite club known as Le Cercle. It consists of transatlantic businessmen and politicians and is often compared with the Bilderberg Group. The secretive group of 100 people meets twice a year to discuss global politics and business. The next meeting is scheduled to be held in Washington this month.

The club, which has close links to the intelligence services, was founded in the 1950s by former French prime minister Antoine Pinay and former German chancellor Konrad Adenauer. Guests at the club's meetings have included Richard Nixon, Henry Kissinger, the Sultan of Oman, Romania's Ion Illiescu and King Hussein of Jordan. The current chairman is Lord Lamont, the former Tory chancellor, and other members are thought to include Anthony Cavendish and Geoffrey Tantum, who are both former MI6 officers.

WSWS Total oil in France’s biggest postwar financial scandal By Keith Lee 11 July 2003 While oil companies are scrambling to take advantage of the vast profits to be made from the plunder of the Iraqi oil industry, one of those bidding for contracts—Total formerly known as TotalFinaElf—is currently involved in a court case in France that has exposed corruption on a vast scale that goes to the highest levels of the state. It has been called France’s biggest postwar financial scandal. TotalFinaElf was awarded the rights to 2 million barrels of Iraqi oil as the US administration tried to allay fears that contracts would only be given to US and British companies. The investigation into corruption at TotalFinaElf has been going on for eight years. Magistrates have filed a report that names close to 40 executives, politicians and middlemen that were part of a network that took nearly three billion francs in kickbacks from Elf in the early 1990s. The case, which is set to conclude in the next two months, has so far used the services of over 80 lawyers. Investigative judge Eva Joly, who presided over the case in 1994, has written a book on the trial since her retirement last year. In extracts published in the French press she speaks of the case being hampered by government resistance, claims she received death threats and is now protected by bodyguards around the clock. The book, which was due out June 19, was the subject of a temporary ban until July 7 when the defence were due to present their closing statements in the trial. The book, “Is this the world we want to live in?”, argues that France is institutionally corrupt. Total originated as Elf Aquitaine, founded by General De Gaulle. Elf Aquitaine was privatised in 1994 and merged into TotalFinaElf. It has routinely served as a cover for secret French governmental operations, which included the bribing of African leaders and money laundering in Latin America. Elf’s activities in Africa were organised in the 1950s by President Charles de Gaulle and his adviser, the late Jacques Foccart. It used a series of networks as a way of accumulating oil wealth, via Elf, from newly independent colonies in West Africa. Elf used a system of split commissions as a way of maintaining French influence and later subsidising Gaullist political activities. This work was carried on by Charles Pasqua, 74, a Gaullist who was twice interior minister. Evidence presented in the court case showed that he used Elf corporate planes on more than 70 occasions. It has been alleged that the trips were for political and personal reasons. The free travel was said to have been organised by an Elf adviser named Andre Guelfi. Guelfi has far reaching global business connections, largely through contacts he made as an intermediary for the International Olympic Committee. This activity was so frequent that it came to be dubbed “Air Elf”. The court case has exposed the link between the top levels of the French state and a shadowy network of middlemen, outright crooks and corrupt businessmen. Elf former Chief Executive Loik Le Floch-Prigent has been accused of using company money to pay his divorce settlement, with the permission of the late French President Francois Mitterrand. Le Floch-Prigent was convicted in 2001 in an earlier trial. That case also brought convictions in May 2001 for Roland Dumas, France’s former foreign minister, who was jailed for six months for receiving illegal funds from Elf from 1989-1992. The political ramifications of the case have gone beyond the borders of France. In 2001 a prosecution was instigated by the Spanish Supreme court against the former foreign minister, Josep Pique, over alleged financial irregularities. The investigation related to the sale of a Spanish company Ertoil to Elf in 1991. Pique was a high-ranking executive at Ertoil. The Supreme court voted 10-2 in favour of charging Pique with suspicion of misappropriation of funds, tax evasion and fraud. The $206 million from the sale to Elf was channelled into a holding company in Luxembourg. The investigation committee has not been able to trace where over half the money has gone. The sale of Ertoil to Elf has formed a substantial part of the court case. Recently the person who brokered the Spanish deal, Nadhmi Auchi, gave evidence to the court. The French authorities in a statement published by Channel Four News said, “He has been charged on the warrant with three charges of conspiracy to defraud involving the takeover of Ertoil by General Mediterranean Holdings (GMH) [Auchi’s arms company] and its subsequent sale to Elf between December 1990 and August 1994.” Auchi is an Iraqi-born British businessman who has recently been extradited to France from Britain. It has taken the French authorities nearly two years to get the extradition as it was blocked by the Blair government. While in Britain Auchi developed some very powerful friends. Former Conservative Chancellor Lord Lamont was chosen to serve on the board of his Luxembourg banking company Cipaf and former Liberal Party leader Lord David Steel agreed to take up a directorship in Auchi’s arms company General Mediterranean Holdings. Auchi also developed a close relationship with the present Labour government. On the 20th anniversary of GMH’s founding he was presented with an oil painting of parliament by the billionaire Lord Sainsbury on behalf of the Prime Minister Tony Blair. The painting was signed by 100 MPs, including former Conservative Party leader William Hague and Liberal Democrat leader Charles Kennedy. He used his newfound friends in the Labour Party to hire Keith Vaz MP as a director of GMH. Although Vaz resigned once he became a minister he still kept in contact with Auchi. As Europe Minister Vaz made enquiries on his behalf over the French extradition warrant. Auchi is Britain’s seventh richest man. He was formally a member of the Baathist party and a close confidant of Saddam Hussein. Auchi was tried alongside Hussein for his involvement in the conspiracy to assassinate the Iraqi Prime minister in the 1950s. He made his money using his influence with the Baathist regime to establish a banking empire in Britain and Luxembourg in the early 1980s. In 1987, he had been involved for four years with one of Italy’s most controversial bankers, Pierfrancesco Pacini Battaglia. Together they were exposed in Italy’s “Clean Hands” investigation into financial corruption. The investigation showed that when Saddam Hussein sought to construct a giant pipeline from Iraq to Saudi Arabia in 1987 it was one of the most lucrative projects in the world. The Italian-French joint venture used Auchi and Battaglia to secure the contract. In his confession Battaglia said Auchi was used to pay bribes to the Iraqi government to deal with the Italians. According to the April 6 Observer newspaper in Britain Battaglia said, “To acquire the contract it was necessary, as is usual, especially in Middle Eastern countries, to pay commission to characters close to the Iraqi government... In this case, the international intermediary who dealt with this matter was the Iraqi Nadhmi Auchi.” Once in court Battaglia told how he paid millions of pounds in kickbacks to French oil executives. He said this was standard practice at Elf and was claimed to have been told by Elf Executives, “What was good for Elf was good for France.” While Auchi made millions out of this deal it was nothing compared to his money made in the sale of a Kuwaiti-owned oil field in Spain, which is at the heart of the ongoing court case. At the time of Saddam Hussein’s invasion of Kuwait in 1991, its government decided to sell one of its oil refineries in Spain to raise extra cash. When red tape in Europe impeded the sale, the Kuwaitis decided to speed things up using Auchi as an intermediary. It has been alleged that for the deal, secret commission payments were made to Auchi. French investigators believe that a substantial proportion of the payments from Elf-Aquitaine found their way back into the pockets of senior executives, one such being Alfred Sirven who organised the deal. It appeared to the investigators that “kickbacks” were being made and that this “web of corruption” involving the French oil company went to the heart of the French government. Investigators think that Auchi got a total of 5.6 billion pesetas for organising the deal for Elf and siphoned off 2.4 billion to Sirven to be put into a secret account at Auchi’s bank in Luxembourg. Auchi has protested his innocence and has always claimed that the money received in the Ertoil refinery deal was a legitimate commission. The scandal provides some insight into the corrupt world of the transnational oil corporations and their political representatives in whose interests innocent men, women and children are slaughtered in Iraq and elsewhere.
America in Jeopardy  on Dr. Carroll Quigley  back
Georgetown University professor, Dr. Carroll Quigley, because of the secrecy surrounding Rhodes dealings, it cannot be verified. Dr. Quigley named the following as being included as key players or Initiates with Rhodes: Nathan Rothschild, Baron Rothschild; Sir Harry Johnston; William T. Stead; Reginal Brett; Viscount Esher; and Alfred Milner, Viscount Milner; Alfred Beit; Archibald Primrose, Earl of Rosebery; Arthur James Balfour; Lionel Curtis; Viscount Waldorf Astor and Lady Astor. The Association of Helpers or the Inner Circle included: Philip Kerr, Marquess of Lothian; Lionel Curtis; Jan Smuts; and Arnold Toynbee; The Outer Circle included: Robert Cecil, Viscount Cecil of Chelwood and Isaiah Berlin (Quigley, The Anglo-American Establishment, 311-313).After the death of Rhodes, Lord Rothschild, Alfred Beit, and Stead carried out the plans in his seven wills, which includes the Rhodes Scholarship program. According to Dr. Carroll Quigley who wrote from an insiders point of view in his book, Tragedy and Hope,In 1891, Rhodes organized a secret society with members in a 'Circle of Initiates' and an outer circle known as the 'Association of Helpers' later organized as the Round Table organization. In 1909- 1913, they organized semi-secret groups known as Round Table Groups in the chief British dependencies and the United States. The Round Table Groups were semi-secret discussion and lobbying groups whose original purpose was to federate the English speaking world along lines laid down by Cecil Rhodes. In 1915, Round Table groups existed in England, South Africa, Canada, Australia, New Zealand, India, and the United States. Money for their activities originally came from Cecil Rhodes, J. P. Morgan, the Rockefeller and Whitney families, and associates of bankers Lazard Brothers and Morgan, Grenfell and Company. In New York, it was known as the Council on Foreign Relations and was a front for J.P. Morgan and Company, in association with the very small American Round Table Group.Quigley also wrote,There does exist and has existed for a generation, an international Anglophile network which operates to some extent in the way the Radical Right believes the Communists act. In fact, this network, which we may identify as the Round Table Groups, has no aversion to cooperating with the Communists, or any other groups, and frequently does so.According to one expert on the dream of Cecil Rhodes', the U.S. Roundtable Group, known as the Council on Foreign Relations-CFR is the equivalent of the British Royal Institute for International Affairs, now known as Chatham House. Another group is the Pilgrims Society of which Queen Elizabeth II is the patron. There are other related groups. Many of the people who are members of one group are also members of other related groups. President Bill Clinton was our first Rhodes Scholar president and he, along with most of our presidents, and key officials, throughout the present and past administrations, are members of the CFR.In several previous newsletters on oil, I discussed the role of President Nixon and Henry Kissinger's National Strategic Study Memorandum 200, as well as, the role of the Council on Foreign Relations with regard to keeping third world countries backward, so they would not need their own oil resources for industry or manufacturing plants. The old adage, "He who owns the gold, makes the rules" will always be true. If gold were not important or valuable, Rhodes would not have waged vicious wars over it. The same is true for diamonds. When will gold lose its shine? When diamonds lose theirs.
Trilateral members   back
Madeleine K. Albright, Principal, The Albright Group LLC, Washington, DC; former U.S. Secretary of State Graham Allison, Director, Belfer Center for Science and International Affairs, Harvard University, Cambridge, MA G. Allen Andreas, Chairman and Chief Executive Officer, Archer Daniels Midland Company, Decatur, IL Michael H. Armacost, President, The Brookings Institution, Washington, DC; former U.S. Ambassador to Japan; former U.S. Under Secretary of State for Political Affairs C. Michael Armstrong, Chairman and Chief Executive Officer, AT&T, New York D. Euan Baird, Chairman of the Board, President and Chief Executive Officer, Schlumberger Limited, New York Charlene Barshefsky, Senior International Partner. Wilmer, Cutler & Pickering, Washington, DC; former U.S. Trade Representative C. Fred Bergsten*, Director, Institute for International Economics, Washington, DC; former U.S. Assistant Secretary of the Treasury for International Affairs Susan V. Berresford, President, The Ford Foundation, New York Lord Black of Crossharbour, Chairman of the Board and Chief Executive Officer, Hollinger International, Inc. and Hollinger Canadian Publishing Holdings, Inc. Geoffrey T. Boisi, Vice Chairman, JPMorgan Chase, New York; Co-Chief Executive Officer, JPMorgan Stephen W. Bosworth, Dean, Fletcher School of Law and Diplomacy, Tufts University, Medford, MA; former U.S. Ambassador to the Republic of Korea Harold Brown, Counselor, Center for Strategic and International Studies, Washington, DC; General Partner, Warburg Pincus & Company, New York; former U.S. Secretary of Defense John H. Bryan, Chairman, Sara Lee Corporation, Chicago, IL Zbigniew Brzezinski*, Counselor, Center for Strategic and International Studies, Washington, DC; Robert Osgood Professor of American Foreign Affairs, Paul Nitze School of Advanced International Studies, Johns Hopkins University; former Assistant to the President for National Security Affairs Gerhard Casper, President Emeritus, Stanford University, Stanford, CA William T. Coleman, Jr., Senior Partner and Senior Counselor, O’Melveny & Myers, Washington, D.C.; former U.S. Secretary of Transportation William T. Coleman III, Chairman and Chief Executive Officer, BEA Systems, Inc., San Jose, CA Timothy C. Collins, Chief Executive Officer, Ripplewood Holdings, New York Richard N. Cooper, Maurits C. Boas Professor of International Economics, Harvard University, Cambridge, MA; former Chairman, National Intelligence Council; former U.S. Under Secretary of State for Economic Affairs E. Gerald Corrigan, Managing Director, Goldman, Sachs & Co., New York; former President, Federal Reserve Bank of New York Michael J. Critelli, Chairman and Chief Executive Officer, Pitney Bowes Inc., Stamford, CT Douglas Daft, Chairman and Chief Executive Officer, The Coca Cola Company, Atlanta, GA Dennis D. Dammerman, Vice Chairman and Executive Officer, General Electric Company, Fairfield, CT Lodewijk J. R. de Vink, Chairman, Global Health Care Partners, Peapack, NJ; former Chairman, President, and Chief Executive Officer, Warner-Lambert Company André Desmarais, President and Co-Chief Executive Officer, Power Corporation of Canada, Montréal; Deputy Chairman, Power Financial Corporation John M. Deutch, Institute Professor, Massachusetts Institute of Technology, Cambridge, MA; former Director of Central Intelligence; former U.S. Deputy Secretary of Defense Peter C. Dobell, Founding Director, Parliamentary Centre, Ottawa Wendy K. Dobson, Professor and Director, Institute for International Business, Rotman School of Management, University of Toronto; former Associate Deputy Minister of Finance Jessica P. Einhorn*, Consultant, Clark and Weinstock, Washington, D.C.; former Managing Director for Finance and Resource Mobilization, World Bank Jeffrey Epstein, President, J. Epstein & Company, Inc., New York; President, N.A. Property Inc. William T. Esrey, Chairman and Chief Executive Officer, Sprint Corporation, Kansas City, MO Dianne Feinstein, Member (D-CA), U.S. Senate Sandra Feldman, President, American Federation of Teachers, Washington, D.C. Martin S. Feldstein, George F. Baker Professor of Economics, Harvard University, Cambridge, MA; President and Chief Executive Officer, National Bureau of Economic Research; former Chairman, President’s Council of Economic Advisors Stanley Fischer, Vice President, Citigroup, Inc., New York; former First Deputy Managing Director, International Monetary Fund, Washington, DC Richard W. Fisher, Managing Partner, Fisher Family Fund LP, Washington, DC; former U.S. Deputy Trade Representative Thomas S. Foley*, Partner, Akin, Gump, Strauss, Hauer & Feld, Washington, DC; former U.S. Ambassador to Japan; former Speaker of the U.S. House of Representatives: North American Chairman, The Trilateral Commission L. Yves Fortier*, Senior Partner and Chairman, Ogilvy Renault, Barristers and Solicitors, Montréal; former Canadian Ambassador and Permanent Representative to the United Nations Stephen Friedman, Senior Principal, MMC Capital, Inc., New York; former Chairman, Goldman, Sachs & Co. Richard N. Gardner, Professor of Law and International Organization, Columbia Law School, New York; Of Counsel, Morgan, Lewis & Bockius LLP; former U.S. Ambassador to Italy and to Spain David Gergen, Public Service Professor of Public Leadership, John F. Kennedy School of Government, Harvard University, Cambridge, MA; Editor-at-Large, U.S. News and World Report, Washington, DC Louis V. Gerstner, Jr., Chairman and Chief Executive Officer, International Business Machines, Armonk, NY Peter C. Godsoe, Chairman and Chief Executive Officer, The Bank of Nova Scotia, Toronto Allan E. Gotlieb*, Senior Consultant, Stikeman Elliott, Toronto; Chairman, Sotheby’s, Canada; former Canadian Ambassador to the United States; North American Deputy Chairman, The Trilateral Commission Jeffrey W. Greenberg, Chairman and Chief Executive Officer, Marsh & McLennan Companies, New York Maurice R. Greenberg, Chairman and Chief Executive Officer, American International Group, Inc.,New York Robert D. Haas*, Chairman, Levi Strauss & Co., San Francisco, CA William A. Haseltine, Chairman and Chief Executive Officer, Human Genome Sciences, Inc., Rockville, MD Charles B. Heck, Former North American Director, The Trilateral Commission, New Canaan, CT Carla A. Hills*, Chairman and Chief Executive Officer, Hills & Company, Washington, DC; former U.S. Trade Representative; former U.S. Secretary of Housing and Urban Development Richard Holbrooke, Vice Chairman, Perseus LLC, New York; Counselor, Council on Foreign Relations; former U.S. Ambassador to the United Nations; former Vice Chairman of Credit Suisse First Boston Corporation; former U.S. Assistant Secretary of State for European and Canadian Affairs, and for East Asian and Pacific Affairs; former U.S. Ambassador to Germany James R. Houghton, former Chairman and Chief Executive Officer, Corning Inc., Corning, NY James A. Johnson, Vice Chairman, Perseus LLC, Washington, DC; former Chairman and Chief Executive Officer, Federal National Mortgage Association (Fannie Mae) Alejandro Junco de la Vega, Publisher, El Sol, El Norte, and Reforma, Mexico Henry A. Kissinger, Chairman, Kissinger Associates, Inc., New York; former U.S. Secretary of State; former U.S. Assistant to the President for National Security Affairs Jacques Lamarre, President and Chief Executive Officer, SNC-Lavalin, Montreal Kenneth L. Lay, Lay Interests, LLC, Houston, TX; former Chairman and Chief Executive Officer, Enron Corporation Jim Leach, Member (R-1st IA), U.S. House of Representatives, Gerald M. Levin, Chief Executive Officer, AOL Time Warner, Inc., New York Winston Lord, Chairman, International Rescue Committee, New York; former U.S. Assistant Secretary of State for East Asian and Pacific Affairs; former U.S. Ambassador to China E. Peter Lougheed, Senior Partner, Bennett Jones, Barristers & Solicitors, Calgary; former Premier of Alberta Roy MacLaren, Former Canadian High Commissioner,Toronto; former Canadian Minister of International Trade Whitney MacMillan, Chairman Emeritus, Cargill, Inc., Minneapolis, MN Antonio Madero, Presidente Ejecutivo del Consejo, San Luis Corporacion, S.A. de C.V., Mexico City Jessica T. Mathews, President, Carnegie Endowment for International Peace, Washington, DC Sir Deryck C. Maughan*, Vice Chairman, Citigroup, New York; former Chairman and Chief Executive Officer, Salomon Brothers Inc. Jay Mazur, President Emeritus, Union of Needletrades, Industrial and Textile Employees (UNITE), AFL-CIO, New York; Vice President, AFL-CIO and Chairman, AFL-CIO International Affairs Committee H. Harrison McCain, Chairman of the Board, McCain Foods Limited, Florenceville, New Brunswick Hugh L. McColl, Jr., Chairman and Chief Executive Officer, Bank of America Corporation, Charlotte, NC William J. McDonough*, President, Federal Reserve Bank of New York Henry A. McKinnell, President and Chief Executive Officer, Pfizer, Inc., New York Lucio A. Noto, former Vice Chairman, ExxonMobil Corporation; former Chairman of the Board and Chief Executive Officer, Mobil Corporation; Greenwich, CT Joseph S. Nye, Jr.*, Dean, John F. Kennedy School of Government, Harvard University, Cambridge, MA; former U.S. Assistant Secretary of Defense for International Security Affairs Richard N. Perle, Chairman, Defense Policy Boad, U.S. Department of Defense; Resident Fellow, American Enterprise Institute, Washington, DC; William J. Perry, Michael and Barbara Berberian Professor, Stanford University, Stanford, CA; former U.S. Secretary of Defense Franklin D. Raines, Chairman and Chief Executive Officer, Federal National Mortgage Association, Washington, DC; former Director, Office of Management and Budget, Office of the U.S. President Charles B. Rangel, Member (D-15th NY), U.S. House of Representatives Lee R. Raymond, Chairman and Chief Executive Officer, ExxonMobil Corporation, Irving, TX Hartley Richardson, President and Chief Executive Officer, James Richardson & Sons, Ltd., Winnipeg Charles S. Robb, Fellow, Harvard University; former Member, U.S. Senate; McLean, VA William V. Roth, Jr., former Member, U.S. Senate; Wilmington, DE John D. Rockefeller IV, Member , U.S. Senate David M. Rubenstein, Managing Director, The Carlyle Group, Washington, DC Luis Rubio, Director-General, Center of Research for Development (CIDAC), Mexico City George F. Russell, Jr., Chairman, Sunshine Management Services, LLC, Gig Harbor, WA Arthur F. Ryan, Chairman, President and Chief Executive Officer, The Prudential Insurance Co. of America, Newark, NJ Henry B. Schacht, Chairman, Lucent Technologies, Murray Hill, NJ; former Director and Senior Advisor, E.M Warburg, Pincus & Co., LLP Raymond G.H. Seitz, Vice Chairman, Europe, Lehman Brothers International, London; former U.S. Ambassador to the United Kingdom Jaime Serra, SAI Derecho & Economia, Mexico City; former Mexican Minister of Trade Gordon Smith, Director, Centre for Global Studies, University of Victoria, British Columbia; Chairman, Board of Governors, International Development Research Centre; former Deputy Minister of Foreign Affairs of Canada and Personal Representative of the Prime Minister to the Economic Summit George Soros, Chairman, Soros Fund Management LLC, New York; Chairman, The Open Society Institute Ronald D. Southern, Chairman and Chief Executive Officer, ATCO Group, Calgary Lawrence H. Summers, President, Harvard University, Cambridge, MA; former U. S. Secretary of the Treasury Strobe Talbott, Director, Yale Center for the Study of Globalization, New Haven, CT; former U. S. Deputy Secretary of State Luis Tellez, Executive Vice President, Sociedad de Fomento Industrial (DESC), Mexico City; former Minister of Energy, Mexico John Thain, President and Co-Chief Operating Officer, Goldman Sachs & Co., New York G. Richard Thoman, Senior Advisor, Evercore Partners, Stamford, CT; former President and Chief Executive Officer, Xerox Corporation; Laura D’Andrea Tyson, Dean of London Business School, London; former Dean, Haas School of Business, University of California, Berkeley; former Head, National Economic Council; former Chairman of the President’s Council of Economic Advisers. Paul A. Volcker*, former Chairman, Wolfensohn & Co., Inc., New York; Frederick H. Schultz Professor Emeritus, International Economic Policy, Princeton University; former Chairman, Board of Governors, U.S. Federal Reserve System; Honorary North American Chairman and former North American Chairman, The Trilateral Commission Glenn E. Watts, President Emeritus, Communication Workers of America, Chevy Chase, MD Lorenzo H. Zambrano*, Chairman of the Board and Chief Executive Officer, CEMEX, Monterrey, NL, Mexico; North American Deputy Chairman, The Trilateral Commission Ernesto Zedillo, former President of Mexico, Mexico City Mortimer B. Zuckerman, Chairman and Co-Founder of Boston Properties; Chairman and Editor-in-Chief, U.S. News & World Report, New York

Robert S. McNamara, Lifetime Trustee, The Trilateral Commission, Washington, DC; former President, WorldBank; former U.S. Secretary of Defense; former President, Ford Motor Company. David Rockefeller, Founder, Honorary Chairman, and Lifetime Trustee, The Trilateral Commission, New York

*Executive Committee

Former Members In Public Service

Richard B. Cheney, Vice President of the United States Paula J. Dobriansky, U.S. Under Secretary of State for Global Affairs Bill Graham, Minister of Foreign Affairs and International Trade, Canada Richard N. Haass, Director, Policy Planning Staff, U.S. Department of State Paul Wolfowitz, U.S. Deputy Secretary of Defense Robert B. Zoellick, U.S. Trade Representati


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25 Total References Web References James B. Nicholson, Trustee vs. Harmon - Witness John McCain www.kycbs.net, 22 Oct 2008 [cached] Gokal introduced Keating to Alfred Hartmann, a BCCI director and president of the Bank's Geneva branch. ... Steven Pizzo reported in the NATIONAL MORTGAGE NEWS that Hartmann provided $3 billionin loans to Saddam Hussein for nuclear, chemical and ballistic missile programs just preceding the Gulf war and is the director most closely linked to the laundering of Medullin Cartel drug money. ... In 1986, Keating, Hartmann and other BCCI directors met in London, Paris, Zurich, Phoenix and the Bahamas where they founded a corporation known as TRENDINVEST. The British, Muslim Terrorism and September 11 www.redmoonrising.com [cached] After the BCCI took over this bank it installed Alfred Hartmann as manager. Hartmann then became the chief financial officer for BCC Holding and thus one of BCCI's most influential directors. Hartmann was a member of the British banking establishment through his connections with the Rothschild family, being a member of the board of directors of N.M. Rothschild and Sons, London, and president of Rothschild Bank AG of Zurich. (4) progressive era » 2009 » July progressiveera.start4all.com, 16 July 2009 [cached] July 9, 2009 Al, The Villages, Fl writes: Roger S is demand. most of all I forced to authorize to in, when it comes to the renewable or unripened vivacity, my counterbalance is to command what vivacity? most of all Although there are some favourable things that could be done with renewable force, most reports that I cause scanned talk source to force outputs that at one's desire not beneath any condition reach the levels of power start that can power a notable entity. most of all When VP Biden said they misread the conciseness, he actually meant to command they misread description. most of all We at one's desire invest a stacks of loaded on body of laws projects but not more any nationalistic mixture. ... Alfred Hartmann, a bizarre Swiss banker who was also an administrator of the Bank of Credit and Commerce International (BCCI). Hartmann also was president of the Swiss Chemical Manufacturer's Society. In 1989 the U.S. Sto-ries in the Swiss compress cite Hartmann in 1986 complaining that sales of Swiss chemical producers was MO down and that hip markets had to be developed. George Soros and the Rothschild Connection privacynfreedom.homelinux.org, 9 May 2007 [cached] was Dr. Alfred Hartmann, the managing director of the Swiss branch of the BCCI (Banquede Commerce et de Placement SA), head of the Zurich Rothschild bank AG and member of the board of N.M. Rothschild & Sons in London.He was also on the board of the Swiss branch of the Bruce Rappaport, Alfred ... ampedstatus.com, 14 Oct 2001 [cached] Bruce Rappaport, Alfred Hartmann, and BCCI ... BCCI and BNL shared a key figure in common, Alfred Hartmann, who was on the board of directors of both banks and the head of BCCI's secretly controlled Swiss affiliate, Banque de Commerce et Placements (BCP).


The Mysterious BNL Affair By Stephen Pizzo, http://www.stephen.pizzo.com OpEdNews

Originally published on October 22, 1992. Awarded one of 1992 - Sonoma State University's 10 Most Censored Stories Award

Preface I wrote the story that appears below a decade and half ago. Why am I re-posting it here, now? In part, it has to with those pesky non-existent WMD and what the George H. Bush administration knew and what they did about it. And, since they knew a lot, if what they told sonny, W. Bush, when as he greased up the wheels of war.

At the time I wrote the original piece, then Chairman of the House Banking Committee, Rep. Henry Gonzalez (D-Tx) was conducting an aggressive investigation into the failure of an Italian bank that happened to have a branch in Atlanta, Georgia. The reason the failure drew the attention of the crusty old congressman was that the bank had been a conduit for billions of dollars in US government guaranteed loans to Iraq. The money was supposed to be used to buy US agricultural products but instead had gone to beefing up Saddam Hussein's military machine. There were also hints the money had been used to buy chemicals for the production of chemical weapons.

Few people gave Gonzalez much credit pursuing the case, even when the CIA hinted that they would prosecute him if he kept disclosing classified information he got out of them using his subpoena powers as chairman of the banking committee. Despite his best efforts the investigation died when Bush was defeated by Bill Clinton the January following the publication of the story that follows. ( I have more to say about that at the end of the story.)

So why dredge this old news up now? Because the Obama Department of Justice is still withholding many documents from that era as well as documents from the Bush II era. It's time to cough that stuff up. Because otherwise we can never understand the chain of events that led to war with Iraq. It began long, long ago....

One final note before I let you dive in to this remarkable tale. What you are about to read is, in my experience as a journalist, the most aggressive and successful cover-up in modern times. Punishing those responsible is less important than understanding how wrong things go when government officials choose to operate in the shadows, depriving themselves of dissenting voices and alternative views.

-------------------------- Story as it was published on October 22, 1992

Washington: Amidst the din of election year rhetoric a new "gate" has been added to the political lexicon: "Iraqgate." What hasn't yet been understood is how serious a matter this new scandal is. The gravity of the Iraqgate affair was brought home to me one day when I went to the mailbox. There I found a reporter's most blessed sight a fat manila envelope with no return address. Even better, it bore a Washington, D.C., postmark.

When I opened the package, I found a stack of government documents still arrogantly sporting their official "Classified" and "Secret" stamps. The documents had been organized in chronological order beginning with a June 12, 1984, Department of State document memo addressed to Donald Gregg at the White House.

Gregg was then Vice President George Bush's national security adviser. The memo was a cover letter for "talking points for the Vice President in calling Eximbank Chairman William Draper concerning Exim financing" for Iraq.

As I peeled back page after page, a remarkable drama unfolded before my eyes. Even before I reached the final page, I had concluded that President George Bush had participated in at least two felonies and could be impeached. Here is what the documents showed.

First a bit of history The Reagan/Bush administration had spent a good portion of its first term in office secretly selling arms to Iran in an abortive attempt to get our hostages in Lebanon released and a more successful program to fund a rogue Contra supply network. The nation would not loam much about that until well into their second term.

Meanwhile war had broken out between Iran and Iraq and by 1984 Iran was licking Iraq. The administration had to figure out how to balance the fight so that neither side could actually win. But they could hardly go to Congress for funding to aid Iraq since then they might have to explain why Iran was so well equipped.

So the administration again chose the now familiar covert route. They had already gotten Congress to remove Iraq from the list of countries harboring terrorists, clearing the way for non-military trade. All Iraq needed now was funding. The administration decided to supply the funding via two federal loan-guarantee pre-grams administered by two executive branch departments, Agriculture and Commerce, and overseen by the State Department.

The two loan programs-the Export/Import Bank (Exim) and Commodity Credit Corporation-could funnel billions of dollars secretly to Iraq by simply authorizing that the bank loans made to Iraq carry a 100 percent U.S. payback guarantee. Of course, the law limited the loan proceeds to specific, non-military uses, such as buying grain from American farmers. But never mind. That little problem could be easily overcome if they used the right bank.

The little bank that could The bank they chose for this specialized operation was the Banco Nazionale del Lavaro (BNL), an Italian-owned bank that just happened to have a branch in Atlanta, Georgia. This was no ordinary bank. BNL also just happened to have former Secretary of State Henry Kissinger on its board of advisers, and his consulting firm, Kissinger Associates, represented BNL. At the time the loan program began in 1985 the vice chairman of Kissinger Associates was Larry Eagleburger (now acting Secretary of State) and the KA's president was Brent Scowcroft (now White House National Security Adviser.)

(On the international scene BNL had even more interesting connections. Its wholly owned subsidiary in Zurich, Lavaro Bank, AG, was headed by Dr. Alfred Hartmann, a mysterious Swiss banker who was also a director of the Bank of Credit and Commerce International (BCCI). Hartmann also was president of the Swiss Chemical Manufacturer's Society. Sto-ries in the Swiss press quote Hartmann in 1986 complaining that sales of Swiss chemical producers was way down and that new markets had to be developed. In 1989 the U.S. Federal Reserve would report that tens of millions of dollars were funneled from BCCI through Lavaro Bank to BNL/Atlanta and then to Iraq at the very time Saddam Hussein was building his chemical warfare capabilities.)

With the CCC/Exim loan program in place at BNL/Atlanta, the administration approved $1 billion a year for five years in CCC and Exim bank loans to Iraq $5 billion in all. At least $2.6 billion of the money was directly spent on military equipment, particularly on Iraq's chemical, nuclear, and ballistic missile programs. What American pain and rice Iraq did buy with the money was more often than not shipped to third countries and bartered for additional military equipment.

When George Bush became president in 1988 the loan program was perking right along. Not only had a rearmed Iraq fought Iran to a stalemate, but Bush had the added bonus of being able to brag to U.S. farmers that he was helping them sell grain through the CCC loans to Iraq. After the 1988 election, Larry Eagleburger and Brent Scowcroft left Kissinger Associates and joined the new Bush administration. Henry Kissinger remained on BNL's board and his firm continued providing advice to BNL.

But by early 1989 the Iraq loans began making some administration officials nervous. The classified documents show that Treasury Secretary Nicholas Brady, Commerce Secretary Robert Mosbacher, and Agriculture Secretary Clayton Yeutter were getting squeamish. One 1989 memo from Exim Bank officials warned the White House, Commerce, and Treasury that Iraq was a very bad credit risk and probably would not repay the money, leaving the taxpayer to pick up the tab. Also CIA memos to the White House warned that Saddam Hussein was using his money to buy gear for his budding nuclear bomb program. Still the White House pushed for continued approval for Iraq's CCC loans.

Then in August 1989 a monkey wrench was thrown into the machinery that threatened not only to end the loan program, but to expose the White House's role in the scheme. The Iraqi loan program's real purpose had been considered so sensitive by the administration that no one had briefed the FBI or Customs. So when those two agencies got a tip that something was rotten at BNL, they raided the bank and hauled off its records.

The raid caused panic in both Washington and Rome. If the U.S. Congress got wind of the loan scam, it could strip the CCC loans of their U.S. guarantee, leaving Italy holding the bag for Baghdad's $5 billion in loans. A still classified cable to the State Department from the U.S. ambassador to Italy expressed the Italians' alarm. Also Italy had seen how Israel had been embarrassed when its involvement with the Reagan administration in the Iran/Contra affair was aired during congressional hearings. The Italian ambassador told the U.S. ambassador to let the White House know that his government wanted the BNL affair "raised to a political level...to achieve some kind of damage control."

But damage control was already on the White House agenda. An uncontrolled investi-gation into BNL would certainly compromise the White House. To further complicate

Bush's life, all this happened just when Iraq was due for its 1990 fiscal-year CCC loan. And Iraq sent its foreign minister, Tariq Aziz, to Washington to personally collect. No one ever accused Iraq of being either shy or subtle and Aziz was not interested in George Bush's little problem down in Atlanta. He said Iraq wanted its $1 billion, all of it, and right now BNL scandal or not.

It was around this time that House Banking Chairman Henry Gonzalez (D-Texas) began asking the White House just how this crooked little Italian bank had gotten approval to make so many U.S. guaranteed loans to Iraq. Attorney General Thornburgh tried to silence Gonzalez by inviting him to a private briefing. Gonzalez told Thornburgh if he had anything to reveal about BNL, he could do so under oath when he testified before his committee. Fearing they'd be dragged deeper into the BNL affair, the secretaries of Treasury, Commerce, and Agriculture began hedging their support of the Iraqi loan demand.

But none of this reduced President Bush's enthusiasm for the Iraqi loan program and he insisted that the full $1 billion loan be ap-proved. In order to give his three nervous agency secretaries the political and legal cover they needed, Bush signed National Security Directive 26 on Oct. 4, 1989, less than two months after BNL was raided. NSD-26 ordered all executive branch agencies to do everything possible to facilitate and expand cooperation and trade with Iraq. Under cover of NSD-26 the agencies fell into line, and under intense lobbying from Eagleburger at State, they each approved the release of the first $400 million of Iraq's $1 billion in 1990 CCC loans.

But Saddam decided not to wait for the rest of the money. In August 1990 he used his U.S.-financed arms to attack and occupy Kuwait. Now the White House had a real problem. Bush had to rally the nation and a shaky coalition of Arab states into a unified force to fight a righteous battle.

How could he pull off such a feat if it was revealed that he had been Saddam Hussein's personal banker?

The cover-up begins Phase 1 of the BNL scandal ended as phase 2, the cover-up, began. The White House General Counsel's Office phoned Gale McKenzie, the assistant U.S. attorney in Atlanta. Department of Justice officials in Washington phoned her, too just to inquire about the case, they later said, nothing improper. But notes of that conversation scribbled by a department official indicate that the Atlanta prosecutor "was sensitive to the embarrassment potential" of the case. Sensitive enough, it turned out, to hold off bringing indictments in the case until one day after the shooting stopped in the Gulf.

But even when the war in the Gulf was over, the danger the case posed to the administration was as great as ever, and now the administration turned its attention to solving the problem once and for all. First the U.S. attorney in Atlanta was replaced. But the new appointee, Joe Whitley, was forced to recuse himself from the BNL case when the Atlanta Joumal disclosed that his law firm had represented an Ohio company, Matrix-Churchill, which had been one of the key U.S.-Iraqi front companies funneling the CCC loan money into illegal military purchases. Just a coincidence, Whitney said. Small world.

The case was then turned completely over to Assistant U.S. Attorney Gale McKenzie, who in early 1992 announced she had finally cracked the case. Indicted and blamed for the entire $5 billion scheme was Christopher Drogoul, BNL's Atlanta lowly branch manager. Drogoul, 45, was charged with over 300 counts of bank fraud and agreed to plead guilty to 65 counts. No U.S., Iraqi, or Italian officials were charged or even questioned.

But U.S. District Judge Marvin Shoob was uneasy about accepting Drogoul's plea. He complained from the bench that he believed that federal prosecutors were not revealing anything they knew about about BNL. Ms. McKenzie assured the judge that it was a simple case and that Drogoul was the culprit The only culprit. Unconvinced, Judge Shoob put off Drogoul's sentencing until September 1992.

But as his sentencing approached, Drogoul began to realize that neither the Italian government nor anyone in U.S. intelligence was going to come to his rescue. Drogoul began to openly complain to the media that he was being made the fall guy for what he claimed was an. approved covert operation. His complaints reached famed Atlanta trial lawyer Bobby Lee Cook, who agreed to represent Drogoul with-out charge.

In court, Cook savaged the prosecutor's case, peppering the court with classified government documents he claimed had been "shoved under his hotel room door during the night." However Cook got the documents, they were the final straw for Judge Shoob, whose angry glare finally convinced Ms. McKenzie to agree to allow Drogoul to withdraw his guilty plea and go to trial.

Two weeks later another shoe dropped. The court now knew that someone within the U.S. government had deliberately withheld evidence from the court. With a full-blown trial coming up, Cook was certain to produce even more government documents that the prosecutor had earlier claimed didn't exist. That's obstruction of justice a felony. Someone had to cook up an explanation for the missing documents, and pretty quick.

On Oct. 5, CIA Director Robert Gates suddenly admitted that the CIA had withheld documents relating to the BNL affair. The Department of Justice breathed a sigh of relief and was quick to claim that, had the CIA told it of this evidence, it would have certainly shared it with the court.

But wait. Why would the CIA, which rarely admits or denies anything it does, voluntarily step forward and admit this? The same question occurred to Senate Intelligence Commit-tee Chairman David Boren, who summoned the. CIA behind closed doors and demanded straight answers. Gates owed his confirmation as director of the CIA to Boren, who vouched for him when others on the committee wanted to deny confirmation because of his role in the Iran/Contra affair. On Oct. 8, under Boren's angry questioning, Gates admitted that the CIA had not withheld the documents on its own. He said the agency had been instructed to withhold the documents by senior officials at the Justice Department. Attorney General Barr, who now headed the depart-ment, had come there from the CIA several years earlier.

(It was not the first time an administration had tried to have the CIA take the fall in order to stop a growing scandal. Richard Nixon's first tried containing Watergate by pinning it on the CIA and to throw the cloak of national security over the whole matter.)

The Justice Department angrily denied the CIA's charge, and a remarkable public fight broke out between the two federal agencies. FBI Director William Sessions had been watching all this from the sidelines. When federal Judge Shoob first began complaining that he believed someone in government was hiding information from the court, Sessions had suggested to his Justice Department superiors that the FBI investigate the charge. But Sessions was denied permission to investigate. On Oct. 10, after the CIA admission, Sessions acted on his own, announcing that he had ordered the FBI to open an investigation. On Oct. 12 the Justice Department's Office of Public Integrity announced that it had opened a criminal probe, too-a probe into anonymous allegations that Sessions had charged private phone calls and travel to the agency.

Sessions had earned a reputation as a straight-shooter since his appointment in 1986. Close associates were outraged and went public, charging that Sessions was being punished for his long-standing refusal to politicize the FBI for the current administration. Sessions has been in frail health since he was appointed. When he was made FBI director, he did not take his job for six weeks while he recuperated in hospital for a chronic bleeding ulcer.

But things had gone too far now to stop the great unraveling of the BNL scandal. Sen. Boren called on the Justice Department to step aside and appoint a special prosecutor. Last Friday, Oct. 16, Attorney General Barr held a news conference and announced that he would not appoint a special prosecutor, but did name retired federal Judge Frederick Lacey to con-duct an independent investigation of the Justice Department's handling of the BNL case. This investigation would not be completed before the November election.

The presidential campaign and congressional recess have kept the Iraqgate scandal from exploding into full bloom. But once the dust settles in January, that will quickly change. First Drogoul's trial will be marked by sensational public testimony about how the Bush administration circumvented Congress to secretly fund Saddam Hussein's military buildup and the cover-up that followed.

Those revelations will in turn spark congressional hearings as Democrats, now in con-trol of the White House for the first time in a dozen years, smell Republican blood. By piling this scandal atop the Iran/Contra affair, they will try to drive a final nail in the coffin of the Republican Party for many years to come.

But for George Bush and those he dragged into this sordid scheme, things look particu-larly bleak. Out of power, presumably, and no longer in control of the Department of Justice, Bush can no longer manipulate events. Even the shredder won't save him this time. Rep. Henry Gonzalez grabbed the incriminating documents confirming administration complicity in the scheme before they could be shredded-and if he should misplace his copies, he is welcome to mine.

End of original story

2001 Update: As I promised in the introduction there is more to tell. During the 1992 Presidential campaign I spoke to the folks in the Clinton/Gore campaign in Little Rock. They were fully aware of the BNL scandal having better contacts within the Gonzalez investigation than I had. I asked them why they were not using it in the campaign. Rank and file workers for the campaign, particularly those working in opposition research, were equally baffled, and frustrated. They had presented the materials to the campaign leadership and had received an icy reception.

The campaign ended with a Clinton/Gore victory and, it was only months later that Republicans were dragging out dirt on Clinton's dealings with Madison Guarantee Savings and loan in Little Rock. Sources I had among savings and loan regulators in Washington assured me that the Bush administration had been fully briefed on Madison Savings and the Clinton loans during the campaign. Why didn't they use them then?

We move now from what I know to what I believe. I believe that the Bush people got a message to the Clinton/Gore people; "We know about the Madison Savings deals. Use BNL against us and we will use Madison Savings against you. Mutually assured destruction.. political style.

It's the only explanation that makes any sense to me. The BNL caper was pure dynamite. Clinton could have made plenty of political hay with it had he chosen to. He didn't, I believe, because he blackmailed not to.

It's become just a footnote in history now.


BCCI stuff
Arbusto Energy 1977, investor James Bath (director of BCCI bank), Ghaith Pharaon, ... Salem bin Laden died, assets went to Kalid bin Mahfouz (funded al Queda), Arbusto became Bush Exploration, 1982 merged with Spectrum 7, then 1985 bought by Harken Energy (see Pharaon, BCCI), then see Carlyle, Desmarais, Barrick Gold, Total oil deals with Sadam, ... United Defense, Booz Allen -NSA DHS deals, Frank Carlucci (Rand) - Wackenhut, ... Randal Quarles (IMF and Assistant Sec of Treas under Bush 43) ... Allan Gotlieb Trilateral, Arthur Levitt AIG, David Moffet Freddie Mac (Emanuel?), Karl Otto Pohl Bundesbank 'Group of Thirty', www.group30.org... The 1001 Club - www.isgp.eu... Salem Bin Laden was a member, as was Agha Hasan Abedi, who founded the BCCI bank. Other members include Nelson B. Hunt, a Texas oil man with ties to the Bush families, Lous Mortimer Bloomfield (founded Permindex, of JFK assassination fame), and the founder was Prince Bernard of the Netherlands, who is the man infamous for creating the Bilderberg conferences! see Nelson B. Hunt 1001, The principal financiers of Permindex were a number of U.S. oil companies, H.L. Hunt, Clint Murchison, John De Menil, Solidarist director of Houston, John Connally, as executor of Sid Richardson estate, Haliburton [sic] Oil Co., Sen. Robert Kerr of Okla., Troy Post of Dallas, Lloyd Cobb of New Orleans, Dr. Oechner of New Orleans, George and Herman Brown of Brown & Root, Attorney Roy M. Cohn, Chairman of the Board for Lionel Corp., New York City, Schenley Industries of New York City, Walter Dornberger, ex-Nazi general and his company, Bell Aerospace, Pan American World Airways and its subsidiary, Intercontinental Hotel Corp., Paul Raigorodsky of Claiborne Oil of New Orleans, Credit Suisse of Canada, and Heineken's Brewery of Canada and a host of other munitions makers and NASA contractors directed by the Defense Industrial Security Command. ... Louis Mortimer Bloomfield close friends with David Ben Gurion, SOE, OSS, He was a member of the 1001 Club with Tibor Rosenbaum, who was a Mossad agent. Along with Edmond de Rothschild, he set up the BCI bank in Switzerland, which was a forerunner to the BCCI bank. Rosenbaum and his BCI directors laundered illegal drug and gambling money from mafia boss Meyer Lansky by investing it in real estate. Through the BCI Mossad and Permindex operations were financed and reportedly Rosenbaum was a significant stakeholder in Permindex. In the early 1960s, the BCI bought a significant stake in Henry Luce's Time Life. Permindex has been the main suspect of having coordinated the 1963 JFK murder. Edmond de Rothschild introduced Rosenbaum to Bernhard in the mid-1960s. In 1970 Bernhard invited Rosenbaum into the 1001 Club, but after Rosenbaum got in trouble for having embezzled money of the BCI, Bernhard had to expel him again. This happened in 1973-1974. In 1974, Prince Bernhard sold his Castle Warmelo to the Evlyma Trust in Liechtenstein, a subsidiary of Tibor Rosenbaum's BCI. The Trust was managed by 1001 Club member Herbert Batliner, a person later linked to laudering funds for Marcos, Mobutu, Escobar, and Helmut Kohl. www.isgp.eu... Meyer Lansky was the head of the Jewish Mafia in New York City, and 1001 Club members who had ties to him included Robert Vesco, a CIA agent and banker with ties to Prince Bernard of the Netherlands, Daniel K. Ludwig, founder of National Bulk Carriers and Bohemian Grove participant, and the above mentioned Tibor Rosenbaum ... So I was looking into another member of the Carlyle Group, Canadian public servent Alan Gotlieb. First of all, his wife, Sondra Gotlieb was a member of Hollinger Inc, the Canadian parent company of the Sun-Times Media Group. Check out how many newspapers the Sun-Times Media Group owns: en.wikipedia.org... Hollinger, which has on its Board of Directors Evelyn Rothschild, was created by Canadian globalist Conrad Black, a close friend of Henry Kissinger. The two worked for an organization called National Interest, and also a company called Trireme Partner LLP. Trireme, set up two months after 9/11, is a venture capital company that invests in technology, goods, and services related to Homeland Security and defense. It argued that the fear of terrorism would increase the demand for such products in Europe and in countries like Saudi Arabia and Singapore. Richard Perle (good friend of former Cercle chairman Brian Crozer) is the company's managing partner, with another partner being Gerald Hillman, a friend of Perle. The above mentioned Richard Perle was a strong advocate of the Iraq War whose influence over the Bush administration had been described as "insidious." He is also a close friend of the aforementioned arms dealer Adnan Khashoggi, who not only has ties to the Bushes and Bin Ladens, but worked with BCCI in the Iran-Contra scandal. I also learned that Conrad Black was a member of the 1001 Club and a Bilderberg participant! I also discovered that one of the directors of Hollinger was a friend of the Rothschilds and Rockefellers by the name of Paul Volcker. Volcker is a member of the Pilgrims Society, chairman of the Federal Reserve and member of a mysterious group called Le Cercle. What is Le Cercle? Le Cercle is a secretive, privately-funded and transnational discussion group which regularly meets in different parts of the world. It is attended by a mixture of politicians, ambassadors, bankers, shady businessmen, oil experts, editors, publishers, military officers and intelligence agents, which may or may not have retired from their official functions. The participants come from western or western-oriented countries. Many important members tend to be affiliated with the aristocratic circles in London or obscure elements within the Vatican, and accusations of links to fascism and Synarchism are anything but uncommon in this milieu. www.isgp.eu... The seems to be a significant overlap between Le Cercle members and that of the 1001 Club. Furthermore, Paul Volcker worked for the Barrick Gold Corporation that I mentioned earlier, with its connections to the 1001, the Bin Ladens, and the Bush family! Going back to Allan Gotlieb, who was a director of the Trilateral Commission, I also learned he is a stronger supporter of the concept of a North American Union. On September 11th, 2002, he wrote an article entitled "Why Not A Grand Bargain With the United States?", in which he presents the idea of a partnership between the US and Canada. It can be read here: www.canada.com... One year after 9/11, leading commentators have weighed in on how this country should reinvent itself to meet the challenges of the international war on terrorism and our changing relationship with the United States. The following essays are the last in our five-part series. Check this out: Zbigniew Brzezinski was a member of Hollinger. Brzezinski was responsible for the initial founding and training of the mujaheddin to draw the USSR into "their own Vietnam War." Look at these quotes from him: Brzezinski was also an associate, during the Cold War, of Jan Nowak-Jezioranski, the head of the Polish division of Radio Free Europe. Radio Free Europe was a CIA funded operation run by former Nazi spymaster Reinhard Gehlen, a member of the above mentioned Le Cercle. His partner was J. Peter Grace, a member of the 1001 Club. Paul Volcker, Brzezinski, and Kissinger all sat on the board of Hollinger. They all also sat on the board of the RAND Corporation, which is a a nonprofit global policy think tank first formed to offer research and analysis to the United States armed forces. The organization has since expanded to working with other governments, private foundations, international organizations, and commercial organizations. It is known for rigorous, often-quantitative, and non-partisan[2] analysis and policy recommendations ... Members of RAND also include Frank Carlucci, who is part of the Carlyle Group, Donald Rumsfeild, and Condoleeza Rice. It was rumoured that in 1972, Richard Nixon enlisted RAND to see what the ramifications of canceling the elections, though RAND denies this. www.hawkscafe.com... There are linked radio interviews on the site making some very unusual allegations about 9/11 and a list of "not the usual suspects" who might be behind it, including some very prominent Canadians. Clearstream bank. Clearstream Banking S.A. (CB) is the clearing division of Deutsche Börse, based in Luxembourg. It was created in January 2000 through the merger of Cedel International and Deutsche Börse Clearing, part of the Deutsche Börse Group, which owns the Frankfurt Stock Exchange. Cedel, established in 1971, specialized in clearance and settlement. In 1996 it obtained a bank license. In July 2002 Deutsche Börse purchased the remaining 50% of Clearstream International for €1.6 billion. Deutsche Börse's strategy is to be a vertical securities silo, providing facilities for the front and back ends of securities trading. By 2004 Clearstream contributed €114 million to Deutsche Börse's total Earnings Before Interest and Taxes (EBIT) of €452.6 million. It handled 50 million transactions, and was custodian of securities worth € 7,593 trillion. In Révélation$ (2001), by investigative reporter Denis Robert and ex-Clearstream banker Ernest Backes, Clearstream was accused of being an international platform for money laundering and tax evasion via an illegal system of secret accounts (the "Clearstream Affair"). Not surprisingly, the BCCI maintained accounts with Clearstream, thus linking it back to Iran-Contra and the other multitudes of shady dealings that this bank was implicated in, including funding al-Qaeda. Clearstream has its own history of corruption: Kremlingate: The Bank Menatap held accounts with Clearstream. This bank diverted some $4.8Billion IMF funds. www.nationmaster.com... Banco Ambrosiano held an account with Clearstream. This main Vatican bank was under the control of the renegade P2 Masonic lodge. From CIA man Richard Brenneke: "The P2 was involved in the operation for which I ended up in court, that is the delay in the liberation of the American hostages in Iran in 1980" (known as "October surprise"). October Surprise: Ernest Backes [Clearstream employee] also indicated in Révélation$ that he was in charge of the transfer of $7 million from Chase Manhattan Bank and Citibank, on January 16, 1980, to pay for the liberation of the American hostages held in Tehran's embassy (Iran). He gave copies of files that he asserted shed new light on the October surprise conspiracy to the French National Assembly. And here's the big kicker: Could the country risk another scandal as with Bahrain International Bank, who transmitted funds through non-published accounts of Clearstream, the clearing division of Deutsche Bank? At the time it was considered as one of Luxembourg's major financial scandal. www.cafebabel.com... Based in Luxembourg, Clearstream, "a bank of banks" which practice "financial clearing", centralizing debit and credit operations for hundreds of banks, has been accused of being a major operator of the underground economy via a system of un-published accounts; Bahrain International Bank, owned by Osama bin Laden, would have profited from these transfer facilities. www.solarnavigator.net...
LA Times  and pic  BCCI Official in Venture With Keating  back
BCCI Official in Venture With Keating : Banking: The ex-owner of Lincoln Savings reportedly formed an offshore firm with a director of scandal-plagued Bank of Credit & Commerce International in 1986. October 05, 1991| JAMES S. GRANELLI | TIMES STAFF WRITER

Former Lincoln Savings & Loan owner Charles H. Keating Jr., moving into the international investment arena in 1986, helped to form an offshore currency trading firm with a key director of the scandal-ridden Bank of Credit & Commerce International.

The director, Alfred Hartmann, also was chairman of a small BCCI-owned bank in Geneva that has been linked to drug-money laundering and was chairman of a Zurich-based institution involved in providing $3 billion in loans to fund Saddam Hussein's nuclear, chemical and ballistic missile programs in Iraq.

The National Mortgage News, a trade publication, reports in its Monday edition that, according to federal sources, the relationship that Keating formed with the Swiss businessman may help to explain million of dollars in losses that Irvine-based Lincoln's parent company, American Continental Corp., claimed from speculating in foreign currency trading.

The possibility of a link also revives calls to freeze Keating's personal assets abroad. Lawyers for small investors who lost more than $250 million in the April, 1989, collapse of Keating's empire had sought such a freeze nearly two years ago. But Keating said then that he had no personal bank accounts, cash or investments abroad.

"It was clear to us back then that he was involved in significant movement of money offshore," Ronald Rus of Orange, a lawyer for the investors, said Friday. "We wanted to determine what his offshore activity was."

Congressional investigators have been examining possible ties between Keating and BCCI through Hartmann. There is no indication, however, that Keating was aware of Hartmann's affiliation with Luxembourg-based BCCI, and Keating recently said he never dealt with the worldwide institution.

Stephen C. Neal, who is defending Keating in a criminal securities fraud trial in Los Angeles Superior Court, said he did not know of any connection between his client and BCCI.

"Everyone is trying to find sinister connections when none exist," Neal said. "The fact that Hartmann had a BCCI affiliation at the same time he was on Trendinvest (the offshore trading company) is totally irrelevant."

BCCI, part of the Abu Dhabi-controlled banking empire, has been accused of a multinational fraud and of financing terrorists and drug cartels. It is the target of numerous criminal and civil actions and investigations.

In 1986, American Continental set up a subsidiary called Dungiven Investments Ltd., whose only purpose was to invest $17.52 million in a Bahamas trading company called Trendinvest Ltd. On Nov. 10, 1987, Dungiven sold the stock back to Trendinvest for a profit of only $1,504.

Trendinvest, which traded foreign currencies, listed both Keating and Hartmann as directors, the National Mortgage News found in reviewing public records that were filed in a House Banking Committee hearing two years ago on Lincoln's April, 1989, collapse. The thrift's failure is the biggest to date, costing taxpayers $2.6 billion.

Hartmann is emerging as a major figure at BCCI. He was chairman of BCCI-owned Banque de Commerce et de Placements in Geneva until it was sold in July, and he quit recently as its president. The first U.S. indictment of BCCI officials on drug-money laundering charges in Tampa in 1988 stated that some of the drug proceeds were transferred into accounts at BCP. A federal investigator has described BCP as "a major link" in the BCCI chain, according to the Financial Times of London.

Hartmann also was chairman of a Zurich-based subsidiary of Banco Nazionale del Lavoro, an Italian-owned bank that routinely handled overnight transactions between BCCI and the central bank of Iraq, according to the National Mortgage News. The FBI raided the Italian bank's Atlanta branch in July after learning that it had made more than $3 billion in illegal loans to Hussein's government.

Hartmann also is chairman of the Swiss Society of Chemical Industries and has been a vice chairman of F. Hoffman-La Roche & Co., the giant Swiss drug and chemical company.

Times staff writer Doug Frantz in Washington contributed to this story.


For those who do not know, the Bank of Credit and Commerce International (BCCI) was a massive and complex financial institution, founded by a Pakistani wheeler-dealer named Agha Hasan Abedi in partnership with Sheikh Zayed bin Sultan al-Nahyan, then leader of Abu Dhabi. Among the other founding shareholders who helped run the operation were the Gokal family of Pakistan; a close-knit network of Saudi billionaires; and the ruling family of Dubai, which is (like Abu Dhabi) part of the United Arab Emirates.

In 1991, BCCI was forced to close its doors after New York District Attorney Robert Morgenthau declared that it was the “largest bank fraud in world financial history.” Eventually, prosecutors demonstrated that it had done illegal business with everyone from La Cosa Nostra and Colombian drug cartels to shady arms dealers and rogue intelligence agents.

BCCI, as we will see, was also a major player, along with U.S. financiers tied to the Mafia, in the savings and loan bust outs that wrought havoc on the U.S. economy in the late 1980s. Meanwhile, several of BCCI’s subsidiaries, such as First Commerce Securities, specialized in manipulating the U.S. markets. By most accounts, some of BCCI’s principals even played a major role in masterminding the 1973 OPEC oil embargo that quadrupled the price of oil, causing the inflationary recession (“stagflation”) that crippled the United States for the remainder of that decade.

The 1970s oil embargo is evidence enough that the U.S. economy is vulnerable to attack by politically motivated financial operators. BCCI co-founder Sheikh al-Nahyan of Abu Dhabi initiated the embargo as a way to retaliate against the United States for providing military aid to Israel, which had just fought a coalition of Arab states in a war that broke out in October 1973. As Sheikh al-Nahyan has said, the idea for retaliating against the United States with an embargo came to him in consultations with his BCCI co-founder, Abedi.

The details of the plan were worked out with Sheikh Ahmad Turki Yamani, then the Saudi minister of petroleum; and Sheikh Abdel Hadir Taher, the governor of the Saudi state oil company Petromin. Both of those Sheikhs were also shareholders in BCCI. And the mammoth oil profits that these Sheikhs earned from the embargo were, to a large extent, delivered to BCCI, which opened for business just before the embargo went into effect. It was, in fact, this new oil money that made BCCI a powerhouse in the world of finance and a giant criminal enterprise capable of plundering the U.S. economy throughout the latter half of the 1970s and the 1980s.

Henry Kissinger once said that the oil embargo was “one of the pivotal events in the history of the [twentieth] century.” Kissinger was not referring to BCCI, but the emergence of BCCI as destructive criminal element was certainly an important outcome. And it is not out of the question that some of the acts that BCCI subsequently perpetrated against the United States were, like the oil embargo, motivated to some extent by ideology and the by the resentment that the sheikhs felt as a result of the 1973 Arab war with Israel. After all, a principal tenet of both Salafi Islam (the brand of Islam subscribed to by the sheikhs behind both BCCI and the oil embargo) and radical Shiite Islam (subscribed to by a number of BCCI’s key executives) is that Muslims should fight their enemies by “plundering their money.”

Regardless of what the motives of BCCI’s founders were in the past, it is clear that most of them are, to this day, major players in the global financial system. They have more than enough firepower to inflict damage on the U.S. markets. And, as the French intelligence report noted, “directors and cadres of the bank [BCCI] and its affiliates, arms merchants, oil merchants, Saudi investors” have been among the most important financial supporters of America’s Enemy Number One – Al Qaeda.

By way of introducing just a few of the billionaire BCCI figures who support Al Qaeda, I need to relate a story about Benevolence International, the Al Qaeda front that was accused by the U.S.. government of having contacts with people trying to obtain nuclear weapons for Osama bin Laden.


One billionaire member of the Golden Chain, according to the Benevolence International document, was Sheikh Khalid Bin Mahfouz, who had been among the masterminds and co-founders of BCCI, and had paid more than $200 million to settle charges for his role in that massive criminal enterprise. Sheikh Mahfouz, who passed away under somewhat mysterious circumstances in 2009 (there were unconfirmed rumors that he was murdered), had also founded National Commercial Bank, which is the single largest financial institution in the Middle East.


Viktor Bout was also closely tied to Abu Dhabi’s ruling family, whose leading members (like Dubai’s ruling family) probably first came into contact with organized crime while they were presiding over the criminal operations of BCCI. Some cargo planes that Bout used to smuggle weapons to Afghanistan were registered as belonging to a company called Flying Dolphin, which was owned by Sheikh Mansour Al Nayan, the present ruler of Abu Dhabi.


Re: The Miscreants’ Global Bust-Out Post by sandi66 on May 6, 2011, 5:17am

The Miscreants’ Global Bust Out (Chapter 3): Michael Milken and the BCCI Criminal Enterprise

Posted on 05 May 2011 by Mark Mitchell Tags: 650 Fifth Ave, Abbas Gokal, Alavi Foundation, Alfred Hartmann, Ali Nazerali, Antonio Commisso, BCCI, Capcom, Cecil Kirby, CenTrust, Charles Keating, Drexel Burnham, First Commerce Securities, Gokal, Iran, Irving Kott, ISI, Ivan Boesky, Lincoln Savings and Loan, Mafia, Mahfouz, Marc Rich, Michael Milken, Ndrangheta, organized crime, Pakistan, Saudi intelligence, Swaleh Naqvi, Vic Cotroni

This is Chapter 3 in a multi-chapter story…

The year was 1979, and the outsized profits derived from the OPEC oil embargo had fueled the rise of BCCI, whose massive criminal enterprise was now expanding its operations into the United States. Meanwhile, radical Islamists had just taken control of Iran, and a man named Ivan Boesky was about to fly to Tehran, where he planned to spend a year developing relationships with the new regime.

These seemingly unrelated events would have figured in the thoughts of a man named Irving Kott, who one day that year got into his car and started the engine. But Kott suddenly remembered that he forgot something in the house, and he jumped out of the car. Lucky for him, because that’s when a powerful bomb exploded, turning Kott’s car into giant fireball of mangled metal. Kott took some shrapnel, but he survived, and the first thing he did, according to some of his associates, was call his friend, Ali Nazerali.

Kott was livid – he wanted to know what the deal was with the car bomb. Ali Nazerali said he’d ask around. After a few hours, Nazerali called back and said the word on the street was that a hit man named Cecil Kirby planted the bomb, and Kirby worked for Canadian mob boss Vic Controni. It seemed Kott had run a stock scam with Controni, who was then one of North America’s biggest market manipulators, and Kott stole Controni’s share of the deal.

Later court filings revealed that Kirby (and Kott) had also done some work for Antonio Commisso, a.k.a. L’avvocatu, or The Lawyer – a Toronto boss of the Ndrangheta Mafia organization, also known as the Siderno Group, because it has its origins in Siderno, Italy. One way or another, Nazerali offered to patch things up with the Mafia – and he did a good job of it. Commisso ordered Kirby to lay off, and a couple of years later Kott, Nazerali and the Mafia were all in business together, running a brokerage called First Commerce Securities.

Nazerali had spent his formative years working in key positions for the powerful Gokal family of Pakistan. According to “False Profits” (one of the definitive books on the BCCI scandal), as of the early 1980s, the Gokals (who were closely intertwined with Pakistan’s intelligence services) controlled the Gulf Group, which was BCCI’s most important satellite company. The Gokals had also become the most important business partners of the Iranian regime, and served that regime as semi-official financial advisers, handling everything from budgets to the procurement of sophisticated weaponry.

Nazerali was also a blood relative of Swaleh Naqvi, the chief executive officer of BCCI, and through his relative and his dealings with the Gokals, he had come to be a trusted business associate of the Iranian regime and of BCCI’s other principals. He was especially close to Sheikh Mahfouz, the future Al Qaeda Golden Chain financier, but he also sealed business relationships with the ruling families of Abu Dhabi and Dubai. It was through Sheikh Mahfouz that Nazerali came to be an important business partner of Yasin al Qadi, the future “Specially Designated Global Terrorist.”

Nazerali dabbled in arms dealing, delivering weapons to war zones in Africa and to the mujahedeen in Afghanistan, but his primary line of business in the early 1980s was his Mafia brokerage, First Commerce Securities, which soon became an important component of the BCCI syndicate. The importance of First Commerce to BCCI was evidenced not only by Nazerali’s relationship to BCCI’s CEO, but also by the fact that the CEO dispatched his relative, Kazem Naqvi (who is also Nazerali’s relative), to visit First Commerce’s offices almost every day.

Meanwhile, according to “False Profits”, a number of First Commerce’s top executives were simultaneously employees of BCCI, or had worked for BCCI affiliates before joining the Kott-Nazerali operation. At least two of First Commerce’s top executives – Sinan Raouff and Walter Bonn – had previously worked, along with Nazerali, for the Gokal family in Pakistan. Raouff, who was not only a stock manipulator, but also an arms dealer, had previously worked for the Iraqi foreign ministry, and helped BCCI traffic weapons to both Iraq and Iran.

The Gokals brokered many of the weapons sales to Iran, laundering the money through BCCI, and skimming large amounts of the bank’s profits for themselves. The Gokal family patriarch, Abbas Gokal, would eventually be sentenced to 14 years in prison for his role in the BCCI scandal, and at his sentencing, the judge said that Gokal was among the most destructive criminals ever to be prosecuted. Gokal and his associates (including Sheikh Mahfouz, who paid a $200 million fine to settle charges for his role in the BCCI fraud) had, according to the judge, almost single-handedly “shattered the integrity” of the global financial system.

BCCI’s contribution to this destruction was accomplished with considerable help from Mafia-tied entities such as the Nazerali and Kott operation, First Commerce Securities, which is often referred to as “penny stock” brokerage, though that is to underestimate the extent to which it was involved not only in manipulating penny stocks, but also in undermining the broader markets.

One of First Commerce’s former business partners, himself an associate of the Mafia, says that the brokerage was a major player in the “death spiral” finance game, and that it took down many good companies. These were mostly small to mid-sized companies, but Nazerali and his associates would in later years move on to bigger prey.

* * * * * * * * *

Around the time that Nazerali opened First Commerce, Syed Ziauddin Ali Akbar, who had served as BCCI’s treasurer, formed Capcom Financial Services, a commodities futures and investment management firm. Akbar’s sister was married to Nazerali’s relative, Swaleh Naqvi, the chief executive officer of BCCI, and all of Capcom’s key shareholders were BCCI people. Soon, the firm, like First Commerce (and probably trading in concert with First Commerce), became one of BCCI’s most important affiliates.

Later, much of Capcom’s money would disappear into the hands of Saudi intelligence operatives who used the money to buy shares in and penetrate American communications companies, including Western Tele-Communications and American Telecommunications Corporation. A Congressional Subcommittee would later state that the purpose of this operation was probably to gain the capability to track communications in the United States.

Another purpose was to manipulate the companies’ stock prices, and the operation could not have succeeded without the full support and complicity of a man named Michael Milken, who was then the most powerful financial operator on Wall Street. Milken’s operation at the Beverly Hills offices of Drexel Burnham Lambert, which was, in the 1980s, one of the largest investment banks in America, brokered much of the trading conducted by BCCI’s Capcom unit. All told, according to Capcom’s former president, Milken’s operation transacted Capcom securities contracts worth more than $90 billion, an astounding sum at that time.

If you believe what you read in the press, Milken is a financial genius who revolutionized the markets for high-yield debt, also known as “junk bonds.” Most journalists refer to him as the “junk bond king” while noting with admiration that he is also a “prominent philanthropist.” Even the usually reliable Economist magazine published an article in September 2010 that hailed Milken as an “innovator” whose junk bond finance helped build some of America’s greatest companies.

It is true that Milken’s finance contributed to the growth a few major companies – Ted Turner’s CNN and Rupert Murdoch’s News Corp., for example – but Milken and his cronies destroyed far more companies than they built. Among the many corporations that they wiped out were a number of America’s biggest savings and loans companies – massive financial operations whose collapse triggered the famous savings and loan crisis that inflicted serious damage on the economy and cost American tax-payers billions of dollars.

As was later noted by the Federal Deposit Insurance Corp (one of the government agencies that cleaned up this mess), Milken and his closest associates “willfully, deliberately, and systematically plundered certain S&Ls.” And while Milken’s impressive public relations machine has successfully convinced America’s financial journalists to forget the past, it should be remembered that Milken was, in 1989, indicted on 99-counts of securities fraud, market manipulation, and insider trading. He was sentenced to ten years, two of which he served in a federal penitentiary. At the time, most people in America knew Milken as the greatest financial criminal ever to operate on Wall Street.

It is important to understand how the Milken criminal enterprise functioned, because some of the same tactics (and some of the same people) contributed to the financial collapse of 2008.

A principal feature of the Milken operation was a variation on what mobsters refer to as a “bust out.”

In the olden days, Mafia thugs would take over, say, the corner bar, load it up with debt, siphon out the cash, and declare bankruptcy. Milken elaborated on the “bust out” and brought it to the world of high finance. The best book on this is Ben Stein’s “License to Steal”, though Connie Bruck’s “The Predators’ Ball” describes Milken’s larger scheme as well.

The scheme worked as follows: Milken issued junk bonds to finance about a dozen of his closest associates, who used the finance to take over good companies. Under the direction of Milken’s cronies, the companies took on ever greater amounts of Milken’s junk bond debt. But rather than use the finance to grow the companies, the Milken cronies simply looted the companies of their cash.

To create the illusion that there was a liquid market for the junk bonds, the Milken cronies traded their bonds amongst each other at stair-stepping prices, in an illegal process known as “daisy-chaining.” As the government’s indictments of Milken made clear, this junk bond merry-go-round was conducted with Mafia-like secrecy – nobody other than Milken’s closest associates knew that the only buyers for the junk bonds were Milken’s other closest associates.

Meanwhile, Milken presided over a nationwide network of brokerages and fund managers who traded on inside information about these companies and manipulated their stock prices.

When the Milken junk bond cronies were done looting their companies, Milken would cut off access to credit and other traders in his network would attack the companies with waves of short selling. This sent the companies’ stock price spiraling downwards, so that even if the companies’ boards were to remove the Milken cronies, the company would be unable to raise finance from more reputable sources.

When the companies went bankrupt, Milken and the other short sellers would make a fortune. Other Milken cronies would make still more money by purchasing the companies’ assets at fire-sale prices in the bankruptcy proceedings. And then they would repeat the process all over again, assured that junk bond merry-go-round would supply a constant stream of lootable finance.

But, of course, this scheme eventually collapsed – and it must be stressed, the vast majority of the companies that Milken financed ultimately disappeared.

In later years, the “bust out” concept was refined into such schemes as the “death spiral” PIPEs finance that was pioneered with help from Al Qaeda Golden Chain member Shiekh Yamani’s Investcorp and other outfits. Always, the basic idea is to finance a company, load it with debt, and then take it down.

In the 1980s, Milken and his cronies orchestrated a number of bust outs in league with BCCI and its proprietors, including future Al Qaeda Golden Chain member Shiekh Mahfouz, who remained one of Milken’s closest associates until Sheikh Mahfouz’s death in 2009.

I need to be specific about what I mean by “closest associate.” Milken has thousands of associates and not all of them are bad. But the three dozen or so people who are his closest associates are, every one of them, criminals. These include the dozen or so people who benefited the most from his junk bond merry go-round; his former top employees at Drexel Burnham; and a select number of brokers and fund managers, many of them best known as short sellers.

One of the outfits that benefited the most from Milken’s junk bond merry-go-round and the subsequent bust outs was, as I mentioned, BCCI. For example, Milken’s junk bonds financed the take-over of a savings and loan called Centrust, which became a BCCI subsidiary. Centrust was eventually looted and destroyed, but not before it played a role in the larger panoply of BCCI crimes.

Another key participant in Milken junk bond “bust out” schemes was a monumental criminal named Charles Keating. With Milken’s finance, Keating seized control of the giant Lincoln Savings and Loan, and began looting the company with help from two BCCI big wigs – Alfred Hartmann (a BCCI board member and head of BCCI’s Swiss subsidiary, Banque de Commerce et de Placements), and Abbas Gokal (the BCCI conspirator, adivsor to the the Iranian regime, and Pakistani intelligence asset who had formerly employed Ali Nazerali).

Meanwhile, back at First Commerce Securities, Ali Nazerali and BCCI’s Kazem Naqvi were busy stuffing cash and checks into large sacks that they tossed into the back of a white van, and then drove to Schiphol Airport, where they loaded the sacks onto a private jet destined for Geneva. When the sacks of proceeds of various stock manipulation schemes arrived in Geneva, they were delivered to Milken crony Charles Keating’s partner in crime, Alfred Hartmann, who laundered the money through BCCI’s Swiss subsidiary, Banque de Commerce et de Placements.

Later, the Senate Foreign Relations Committee began investigating BCCI for its role in financing Pakistan’s nuclear program. In announcing the investigation, the Committee said that it intended to take close look at Keating’s relationships with the Gokal family.

While it is unclear what came out of that investigation, it is certain that BCCI did, in fact, play a major role in Pakistan’s nuclear profliferation efforts. The top two scientists for that program, Abdul Qadeer Khan (known as the “Father of the Islamic Bomb”) and Bashiruddin Mahmood, have since both met with Al Qaeda. Mahmood especially is believed to have shared nuclear know-how directly with Osama bin Laden.

Of course, this is not to suggest that Keating himself had anything to do with Al Qaeda, which had not yet been created , but he was definitely a major figure in the overall BCCI criminal enterprise. It is also certain that Lincoln and Savings and Loan was one of the biggest bust outs in history. When Keating was finished looting Lincoln and Savings, the multi-billion dollar financial institution was an empty husk. And by way of complicated foreign exchange transactions, much of Lincoln’s money was diverted to an outfit called TrendInvest, which was, in effect, another subsidiary of BCCI.

The Senate Foreign Relations Committee, meanwhile, investigated the business relationships between BCCI and another of Michael Milken’s closest associates, Marc Rich, who was (and is) the most powerful commodities trader in the world. In 1983, Rich had been indicted for illegally trading with Iran during the Iran hostage crisis. Key to Marc Rich’s transactions with Iran was the Gokal family and probably BCCI itself.

While Rich was illegally trading with Iran, his office was located in a New York building at 650 Fifth Avenue that was owned by the Alavi Foundation, which advertised itself as a charity. The FBI later discovered that the Alavi Foundation was not a charity – it was a front for the Iranian regime’s covert activities in the United States. In 2009, the Justice Department convicted the Alavi Foundation and its subsidiary, the Assa Corporation, which was a vast business enterprise, with espionage and funding Iran’s covert nuclear weapons program.

Also working out of the Alavi Foundation’s building in the 1980s was Ivan Boesky, the fellow who had spent a year in Tehran in the late 1970s. Boesky ran what was then one of the nation’s most powerful arbitrage funds (today it would be called a hedge fund), and quickly gained a reputation on the Street as a mysterious character who liked to operate in the shadows – a guy known to deliver suitcases full of cash to gorillas with handguns holstered on their hips. Boesky often told people that he had spent his time in Iran working as a CIA agent.

In 1989, when Boesky was indicted on multiple counts of stock manipulation and insider trading, prosecutors described in colorful detail his suitcases full of cash, but Boesky’s claims to have been working as a CIA agent in Iran were dubious to say the least.

Boesky is the most famous of Michael Milken’s criminal co-conspirators, and prosecutors made it clear that he was a key figure in the stock manipulation network that Milken ran in the 1980s. It is more than likely, as one of Boesky’s former business colleagues confirmed in an interview with Deep Capture, that Boesky (like Marc Rich, the Gokals, and the other BCCI figures in Milken’s network) had deep ties not to the CIA, but to one of America’s most dangerous foes – the regime in Iran.

There might, in fact, be something to be gleaned from the court documents that were made public during the prosecution of the Alavi Foundation, the Iranian outfit that owned the building where Boesky and Marc Rich kept their offices. The court documents describe how the Iranian agents who ran the Alavi Foundation and its subsidiary, the Assa Corporation, took their orders from Iranian diplomats, including the Iranian ambassador, assigned to United Nation’s mission in New York.

These are the same diplomats who helped direct the activities of Palestinian Islamic Jihad leader Sami al-Arian, who was among the more important figures in the SAAR Network of terrorist financiers that included some BCCI principals, such as the Al Qaeda Golden Chain member Shiekh Mahfouz. The court documents also describe notes found by the FBI in the files of the Alavi Foundation’s one-time director, Ali Ebrahami. The stream-of-consciousness notes are strange and hardly conclusive, but they nonetheless worth considering.

They say, in part, “Conspiracy…to tell the truth > lie > risk > Imam’s birthday gathering…urgent situation > talk > everything > Mafia…”

The word “Mafia” was italicized in the original.

After the word “Mafia,” Ebrahami wrote – “Duty.”

It is not clear to what Ebrahami was referring, but if Iranian agents (or, for that matter, Al Qaeda financiers, Pakistani intelligence assets, and Saudi spies such as those who traded with Milken) ever desired to carry out a “conspiracy” with the “Mafia”, there would certainly be an abundance of Mafia-tied financiers for them to contact. Indeed, they already have made contact with Mafia-tied financiers, many of whom are close associates of Michael Milken.

In upcoming installments, we will explore these contacts in detail. And we will see what this network might have had to do with the financial crisis of 2008. First, though, I must present evidence that the Milken network is, in fact, tied to organized crime, and that these relationships are by no means incidental.

Regular readers of Deep Capture will know that this point has been proved and proved again. But the Milken network’s ties to organized crime are deeper than what we have previously revealed. Indeed, as we will begin to see in the next chapter, it is not an exaggeration to say that Michael Milken’s closest associates were, more than anyone else, responsible for bringing La Cosa Nostra and the Russian Mafia to Wall Street.



Election fraud Rothschild
  • 2000 WatchdogCentral  The ES&S (Election Systems & Software) company (Wikipedia)  has just purchased Diebold (Wired, Diebold Sells),   MarketWatch comment: Election Systems & Software, Inc. (ES&S) is the world's largest election management company. Headquartered in Omaha, Nebraska with over 400 employees located in eight regional U.S. offices and agents on five continents, ES&S has supported more than 40,000 elections worldwide for over 30 years. In the 2000 U.S. elections alone, ES&S systems counted over 100 million ballots. ES&S' hardware and software solutions support the entire election process to include voter registration, ballot production, voting, vote tabulation, and results reporting. and Wikipedia ES&S acquired Premier Election Solutions on 3 September 2009.[3][7] The US Department of Justice and 14 individual states have launched investigations into the acquisitions on antitrust grounds.[8] The company then sold it to Dominion Voting Systems
  • Wikipedia Election Systems & Software Election Systems & Software (ES&S) is an American company that provides voting services. ES&S is a subsidiary of McCarthy Group, LLC, which is jointly held by the holding firm and the Omaha World-Herald Company, the publisher of Nebraska's largest newspaper. As of 2007 it was the largest manufacturer of voting machines in the United States, claiming customers in 1,700 localities. As of 2007 it had approximately 350 employees; 2005 revenues were $117 million.[1] In December 2011, the Election Assistance Commission issued a formal notice of investigation into the DS200 Precinct Count Optical Scanner because of three operational anomalies.[2]   ...   Election Systems & Software was founded in 1979[1] as American Information Systems Inc. (AIS), it merged with Business Records Corp  (Rothschild Company). the following year and changed its name to ES&S. It was one of the top four providers of voting equipment used in the November 2004 election; the other three were Diebold Election Systems (now Premier Election Solutions is now ES&S - Premier Elections, Wikipedia Premier Election Solutions.   VotingNews  Omaha World-Herald Sells interest in ES&S, Tennessee needs a paper trail for every vote.   see also Sequoia Voting Systems and Hart InterCivic.
  • 2004 Diebold, an Ohio-based maker of ATMs and security systems, purchased its elections business from Global Election Systems in January 2002, just as Congress was passing the Help America Vote Act, which allocated billions to states to purchase new voting machines. Diebold Elections Systems, however, barely had time to bask in the flow of federal funds before it ran headlong into controversy in 2003 when Diebold Inc. CEO Walden O’Dell, a fundraiser for former President George Bush, wrote in a letter to Republican supporters that the company was “committed to helping Ohio deliver its electoral votes to the president” in 2004.
  • 2009 NFU Who Makes Voting Machines  search terms: Omaha World Herald, McCarthy Group, Chuck Hagel...ES&S  Omaha World Herald  The Omaha World-Herald Co. is a minority owner of ES&S
  • SCYTL is a portfolio company of leading international venture capital funds Nauta Capital, Balderton Capital and Spinnaker.
  • 2012 Jan BusinessWire SCYTL-Acquires-SOE-Software-Leading-Election-Software    BlackBoxVoting, Wikipedia Bev Harris 
  • EndOfTheAmericanDream a Spanish company known as Scytl will be reporting election results.. and Human Events Scytl: Voter fraud facts and fiction 
  • TheLandesReport  Voting Machine Companies  home  and NewsMine Voting Machines Rothschild
  • NewsMine In a groundbreaking effort, writer Bev Harris of Talion.com and journalist Lynn Landes of EcoTalk.org are compiling extensive information on the voting machine companies operating in the United States.   ...   Voting machine companies are privately held and extremely secretive. They form a web of overlapping ownership, financing, staff, and equipment that makes it difficult to separate one from the other. These companies are also owned by individuals and organizations with vested interests.   ...   According to U.S. Senator Chuck Hagel's (R-NE) Wikipedia press office, in 1995 Hagel resigned as CEO of American Information Systems (AIS), the voting machine company that counted the votes in his first Senatorial election in 1996. In January 1996 Hagel resigned as president of McCarthy & Company, part of the McCarthy Group that are one of the current owners of Election Systems and Software (ES&S), which itself resulted from the merger of AIS and Business Records Corporation. see (Rothschild Apparatus Chart, mentions BRC) According to Bev Harris, Hagel is still an investor in the McCarthy Group. ES&S is now the largest voting machine company in America and one of its largest owners is the ultra-conservative Omaha World-Herald Company. According to Nebraska's Elections Office, ES&S is the only voting machine company certified to count votes in the state. Twenty percent of the vote in Nebraska is hand-counted. ES&S claims to have counted 56% of the vote in the last four presidential elections. Bob and Todd Urosevich founded its predecessor AIS in the 1980's. Bob is now president of Diebold-Global, while brother Todd is a vice president at ES&S. Business Records Corp. which was merged with AIS to become ES&S, was partially owned by Cronus, a company that seems to have a lot of connections to the infamous Hunt brothers from Texas, as well as other individuals and entities, including Rothschild, Inc.. Right wing Republicans Howard Ahmanson (who financed AIS) and Nelson Bunker Hunt have both heavily contributed to The Chalcedon Institute, an organization that mandates Christian "dominion" over the world.
  • Timeline,    Summary,    Alphabetic index   TOP   NFU
  • Wikipedia former Sen. Chuck Hagel, Although he was pressured by some to run for Governor of Virginia, where he had lived for 20 years, in 1992 Hagel moved back to Nebraska to become president of the McCarthy Group, an investment banking firm. He also served as a Chairman and was CEO of American Information Systems Inc. (AIS), a voting machine manufacturer. In 1992, as President of investment group McCarthy & Co.,McCarthy Capital  Hagel assumed ownership and became Chairman of American Information Services (AIS), later known as Election Systems & Software (ES&S), a manufacturer of computerized voting machines. On March 15, 1995, Hagel resigned from the board of AIS as he intended to run for office.  Hagel is now Chairman of the Intelligence Advisory Board with David L Boren Wikipedia The PIAB, through its Intelligence Oversight Board (IOB), also advises the President on the legality of foreign intelligence activities.
  • Chuck Hagel  Race42012 and  American Free Press, Hagel at Bilderberg  Hagel is a member of the CFR.


OECD The Next Regional Corporate Governance Challenge  back
Words to Action: The Next Regional Corporate Governance Challenge 6th Annual Regional Conference 31 October – 1 November 2011 Dubai, United Arab Emirates Monday, 31 October 8:00 – 8:30 Registration 8.30 – 9:30 Keynote Address H.E. Eng. Sultan bin Saeed Al Mansoori, Minister of Economy, United Arab Emirates Welcome Remarks Dr. Grant Kirkpatrick, Deputy Head, Corporate Affairs Division, OECD Dr. Nasser Saidi, Executive Director, Hawkamah Institute Mr. Osman Sultan, CEO, Du 9:30 – 11.00 Corporate Governance Developments: What's New? Key topics: Empowering shareowners, investor activism, women on boards, ESG developments, state of corporate reporting, dealing with concentrated ownership structures in the region, linkages between MENA and other emerging/developed markets Chair Dr. Grant Kirkpatrick, Deputy Head, Corporate Affairs Division, OECD Panellists Emerging market developments Mr. Philip Armstrong, Head, Global Corporate Governance Forum EU Green Paper and other governance developments Dr. Godelieve Quisthoudt-Rowohl, Member of the European Parliament (tbc) US governance regulations and impact to region Mr. Joe Tortorici, Partner, Weil Gotshal (tbc) Governance regulations and push for board effectiveness Ms. Vanessa Jones, Director of Policy, Institute of Chartered Accountants for England and Wales Reference materials: OECD, Second Wave of CG in the MENA Region Page 3 11:00-11.15 Coffee Break 11:15 – 12:30 Supervision: How To Enforce without Forcing? Key topics: effective awareness raising, enforcement actions, powers available to supervisors, supervision of unlisted firms, reporting requirements Chair Mr. Paul Koster, CEO, Dubai Financial Services Authority Panellists Off-shore regulator's perspective Mr. George Pickering, Managing Director, Policy Enforcement and Risk, Qatar Financial Centre Regulatory Authority Central bank's perspective Mr. Raed Charafeddine, First Vice Governor, Central Bank of Lebanon Capital market authority's perspectives H.E. Yahya Al Jabri, Executive President, Capital Market Authority Oman (tbc) Mr. Bekir Safak, Deputy Chairman, Capital Markets Board of Turkey; Member of the Bureau, OECD Corporate Governance Committee (tbc) Reference materials: International Centre for Financial Regulation: Corporate Governance in Emerging Markets 12:30 – 1:30 Lunch 1:30 – 3:00 Board Capacity: How Independent are the Independent Directors? Key topics: CEO nomination, election and replacement of board members, independent director selection, role of independent directors in board committees, board assessment Chair Mr. Leonardo Peklar, Consultant, Mudara; International Chairman’s Forum Panellists Family advisor's perspective Dr. Abdellatif Khemakhem, Advisor, Saudi bin Laden Group Listed company's perspective H.H. Sheikh Ahmed Bin Saeed Al Maktoum, Chairman, Emirates Airlines (tbc) Page 4 Regulator’s perspective H.E. Mohammed bin Sulaiman al Jasser, Governor, Saudi Arabia Monetary Authority (tbc) Non-executive director's perspective Dr. Abdullah Al Abdulgader, Founding Executive Director, GCC BDI (tbc) Reference materials: GCC BDI Report on GCC Boards OECD Report on Board Practices: Incentives and Governing Risks McKinsey Report: Governance Since the Economic Crisis (Global) Bridging Board Gaps: Report on the Study Group of Corporate Boards (US) 3.00 – 4:30 Institutional Investors: Are They Willing and Capable to Make a Difference? Key topics: role of sovereign wealth funds, role of institutional investors in cg, reporting by institutional investors, attracting foreign institutional capital Chair Mr. Phil Armstrong, Head, Global Corporate Governance Forum Panellists Investment advisors' perspectives Ms. May Nasrallah, Partner, De Novo Mr. Paul Reynolds, Chairman, Middle East Investor Relations Society; Senior Partner, Rothschild’s Middle East Sovereign wealth fund's perspectives Mr. John Knight, COO, Bahrain Mumtalakat Mr. Hassan Al-Nabhani, CEO, Oman Investment Fund (tbc) Bank's perspective Dr. Charbel Cordahi, Head of Investor Relations, Al Khaliji Bank Reference materials: OECD Study on the Role of Institutional Investors IFC Study on Sustainable Investing 4:30 – 5:30 Risk Management: What Kind of Measures for What Risks? Key topics: setting risk appetite, the role of a Chief Risk Officer, related party transactions and boards, role of boards in monitoring compliance, internal controls and risk management Chair Steve Fowler, CEO, Institute for Risk Management Page 5 Panellists Industry association’s perspective Mr. Jeffrey Thomson, CEO of Institute for Management Accountants Internal audit perspective Mr. Avinash Totade, Head of Internal Audit, Dubal Company perspective Mr. John Williams, Chief Risk Officer, Bank of Sharjah Regulator's perspective H.E. Dr. Sinan Al Shabibi, Governor, Central Bank of Iraq Reference materials: Institute of Risk Management: Consultation Paper on Risk Appetite and Risk Tolerance Marsh Report: Governance and the Boardroom Agenda 1 November, Tuesday 9:30 – 10:45 Arab Spring: What Impact on Corporate Governance? Key topics: anti-corruption and corporate governance, role of anti- corruption agencies, expectations of CSR, ownership disclosure, shareholder and stakeholder engagement Chair H. H. Sheikh Sultan bin Saud al Qassimi, Dubai School of Government Panellists CEO's perspectives Mr. Fadi Ghandour, CEO, Aramex Advisor's perspective Dr. Abellatif Khemakhem, Advisor, Saudi Bin Laden Group and a Tunisian business leader NGO's perspective Dr. Hisham Awartani, Executive Director, Palestine Corporate Governance Institute Mr. Majdi Hassen, Director, Institute Arabe des Chefs D'entreprises, Tunisia Reference materials: Dr. Saidi, Article in ICGN Annual Report 10:45 – 11:00 Coffee Break Page 6 11:00 – 12:30 State Owned Enterprises: What Role for the State as an Owner after the Arab Spring? Key topics: accountability of the state, state ownership frameworks, the role of state audit institutions, transparency and disclosure of SOEs, SOE corporate governance codes Chair Dr. Nasser Saidi, Executive Director, Hawkamah Panellists Perspectives from state audit institutions Mr. Samih Youssef, Executive Director, Financial Audit & Professional Regulation, Abu Dhabi Accountability Authority (tbc) Mr. Abdulrahman Al Harthy, Director General, Oman State Audit Institution (tbc) Representative, DP World/Dubai World Central (tbc) State's perspective Ms. Amina Benjelloun, Head of Mission, Ministry of Economic and General Affairs, Morocco (tbc) Reference materials: Regional publication on CG of SOEs (pre-publication version) 12:30 – 1:30 Lunch 1:30 – 3:00 Corporate Governance Research in the Region: What's the Value of Good Governance? Key topics: long-term shareholder value creation, dealing with concentrated ownership, benefits of transparency and disclosure, remuneration and company performance, Islamic finance and corporate governance Chair Dr. Grant Kirkpatrick, Deputy Head, Corporate Affairs Division, OECD Panellists Dr. Neil Jones, Dean, INSEAD, Adu Dhabi Campus Dr. Assem Saffieddine, Rami Makhzoumi Chair on Corporate Governance, American University of Beirut Dr. Rob Melville, Professor, Cass Business School Dr. Mohamed Belkhir, Asst. Professor of Finance, UAE University Page 7 Reference Materials: Hawkamah Policy Brief on Islamic Financial Institutions 3:00 – 4:30 Good governance: How to Create the Right Incentives? Key topics: listing requirements and second-tier markets, listing family owned enterprises, voluntary vs comply-or-explain codes, regulatory impact analysis Chair Ms. Alissa Amico (Koldertsova), Manager, Middle East and North Africa, Corporate Affairs Division, OECD Panellists International organisation's perspective Mr. Chris Razook, Program Manager, International Finance Corporation (IFC) Capital market's perspective Dr. Shahira Abdel Shahid, Advisor, Chairman, Egyptian Stock Exchange SME's perspective Mr. Alexandar Williams, Director, Dubai SMEs Regional perspective Mr. Yasser Akkaoui, Vice Chairman, Lebanese Institute of Directors; Chairman, Capital Concept Governmental perspective H.E. Hameed Youssef Rahma, Ministry of Commerce, Bahrain Reference materials: OECD Report on the Role of MENA Stock Exchanges in CG 4:30 – 5:00 Concluding Remarks and Conference Declaration Dr. Nasser Saidi, Executive Director, Hawkamah Institute Dr. Grant Kirkpatrick, Deputy Head, Corporate Affairs Division, OECD
George Hayduke   back
“Some U.S. investigators are intrigued by Adham’s and Khalil’s intelligence connections. Both men, of course, were veterans of Saudi intelligence and were closely associated with U.S. intelligence operatives. This relationship has fueled speculation that some of the money may have been used to finance covert operations by the Saudis and the CIA.”

Adham Kamal: The former head of Saudi Arabia’s intelligence agency, Adham is a brother-in-law of the late King Faisal and still advises the ruling family. He was listed as a shareholder in Attock Oil, BCCI, Capcom and First American Bankshares.

Abdul-Raouf Khalil: A Saudi communications and intelligence maven, Khalil was also a shareholder in BCCI, Capcom and First American.

Quote: “Many of the big commodity trading companies certainly benefited greatly from Akbar’s apparent foolhardiness, and none more so than Capcom, the BCCI satellite in London. Until BCCI stopped its trading in options and futures, the bank was Capcom’s main source of business, generating revenues ofsome $16.7 million in 1985. But once the scale of the bank’s losses became apparent in October, 1985, it stopped trading in these markets.” p. 203

“When Akbar left BCCI in 1986, he became head of Capcom. Who owned Capcom? Its controlling shareholders included major BCCI stockholders like Adham and Khalil, the same people who had been “victimized” by Akbar’s reckless trading. Why would they willingly hire Akbar? Moreover wasn’t it also strange that BCCI continued to deal with Capcom after Akbar took over, even though he had presided over the options-trading debacle? Akbar had not even been fired from BCCI, according to former bank officials. He left of his own accord and was even allowed to keep his company car and other benefits.” p. 204

“Capcom was launched in 1984, and two years later BCCI’s former treasury department chief, Syed Ziauddin Ali Akbar, became head of the firm. Tens of millions of dollars would ultimately disappear from Capcom. Some of the evidence suggests that that money was used by BCCI insiders and Saudi intelligence operatives to penetrate American communications companies.” p. 147

On the CIA:

“One man who became aware of the BCCI-CIA relationship was Norman Bailey, a senior member of President Reagan’s NSC staff. Baily has recalled that “very early on in 1981, after I joined the staff at the National Security Council, I began to see the name BCCI on a number of different documents.” It became clear to him that the bank was involved in a wide range of illegal activities, including “terrorist activities, drug running, guerilla movements, technology-transfer violations, embargo-and-boycott violations, things of that kind.” The CIA according to Bailey, “used the BCCI for certain of its payments, and obviously doing that would make them less favorable to blowing the BCCI cover.”

“The CIA may have had another reason for turning a blind eye to the activities of its Saudi friends. William Casey and other Reagan administration officials frequently asked the Saudi government to provide financial assistance for covert operations in Afghanistan and other parts of the world. It was a convenient arrangement for both sides. When the Saudis provided the funding, the administration was able to bypass Congress. The Saudis benefited by earning the goodwill from the American officials who provided them with arms and military protection.” P. 153

“BCCI had no qualms about helping both sides in the Iran-Iraq war. … Through its branch in Amman, Jordan, and its Swiss subsidiary, BCCI also financed the merchants who supplied Iraq with arms and materiel.” P. 139

BCCI laundered arms sales to the Iranians by rogue elements within the U.S. government and the CIA. “Beyond the Iran-contra arms trades, BCCI waas an important part of Iran’s efforts to obtain weaponry and materiel. … BCCI was prepared to do business with the Iranian banks, most of which were shunned by the major Western institutions after the Iranian revolution. BCCI was also willing to falsify documents and letters of credit to disguise arms sales to Iran to get around the U.S. and other Western embargoes.” p. 137

BCCI helped bankroll the purchase of nuclear weaponry materials by a Pakistani brigadier general (Inam ul-Haq) in Canada. Those materials were “high-strength metal, so-called maraging 350 steel, used to manufacture weapons-grade uranium.” … “BCCI allegedly helped bankroll that purchase. Its senior officer in Canada, Omar Khan, said his bank was to have acted as the agent for the transaction because the Pakistani bank designated to handle the financing did not have a Canadian office.” p. 144

Summary on cooking books to create illusion of profits:

“With the temporary help of the Bin Mahfouz investment, Abedi and Naqvi survived the increasing strains of backing the Gokals’ crumbling empire, of huge treasury losses, and of handing out favors to some of BCCI’s backers in the Persian Gulf. But they had incurred massive costs: the bank’s books were now a catalogue of manufactured loans, false profits, hidden loans and stolen deposits. They had also plundered the staff pension fund, stealing the future livelihood of their own employees. And they had to offer lucrative enticements to draw in a big, new backer.” p. 208

BCCI was propped up by laundered drug money: “One customer was General Khun Sa, a warlord in Burma, who was reputed to control up to 80 percent of the region’s opium trade. (In 1990, he was indicted in the United States on federal drug charges but remains a fugitive.) In mid-1991, it was estimated that he had deposited at least $300 million in BCCI. The accounts, according to an associate of his, were fed from Taiwan and Hong Kong.” p. 211

“BCCI officers in the United States also dealt with heroin traffickers. One client of BCCI’s Miami branch was a Nigerian drug dealer named Olutende (Steve) Fafowora. In late 1987, a federal jury in Washington, D.C., convicted him of racketeering and conspiracy to distribute heroin. Fafowora deposited money in BCCI in the name of a company he controlled, Afro Caribbean Connections. The prosecution called it “a sham corporation through which Fafowora invested his drug proceeds.” Records seized from BCCI “were totally consistent with money laundering” because all of the deposits were in cash and cashier’s checks.

The trafficker’s brother, Oladapo …, happens to be a prominent figure in Nigeria. In the early 1980s, he was its deputy permanent representative to the United Nations and later became head of the Manufacturers Association of Nigeria. (I)t is worth noting that the two brothers were the sole owners of the company used to launder heroin money through BCCI.” p. 211

“BCCI’s “prosperity” in Colombia was closely tied to the drug trade. Indeed, that was one of the main reasons that BCCI bought (a) bank (there). “We knew that the money that we would be getting in Colombia would be drug money,” BCCI’s Abdur Sakhia later said. Two of the Colombian unit’s branches were in Medellin, the home of the country’s most important cocaine kingpins, and BCCI officials aggressively solicited deposits from them. In thewords of one U.S. investigator, BCCI “absolutely and specifically sought out narco money.” He added that the bank offered counseling to those people and told them how to invest and cover the money. One client was Jose Gonzalo Rodriguez Gacha, a cartel leader who stashed millions of dollars in BCCI. An Interpol report states that seven BCCI employees –one Colombian and six Pakistanis—gave “instructions as to the administration of his bank accounts in Luxembourg.” p. 217

“From 1984 to 1987, the DEA conducted Operation Pisces, a probe of Colombian drug traffickers. Undercover agents dealt with Anibal Zapata, an accountant for the Medellin cartel leader Pablo Escobar Gaviria. Zapata gave millions of dollars to agents and told them where to deposit the money; it turned out that one of his preferred banks was BCCI. The agents, in the words of one report, made “80 wire transfers to named and numbered accounts provided by Zapata at BCCI … in Panama. The total involved was more than $26 million.” p. 219

“Early in their relationship, Awan boasted to Mazur that the BCCI group could well be much bigger than it appeared. In January, 1988, he casually mentioned that First American was “unofficially owned by us” but he did not go into detail. Two months later, he indicated that BCCI had been close to both First American and National Bank of Georgi. The following September, Awan went into greater detail about BCCI’s ties to First American an dthe men who ran it, Clark Clifford and Robert Altman.” P. 242

“Investigators found that Amjad Awan had channeled millions of dollars of Noriega’s money through a BCCI account at First American. Even worse, defendants in Operation C-Chase had laundered nearly $7 million in drug money through First American.” P 254

“BCCI received advice on lobbying and public relations from several sources, including Kissinger Associates, the advisory firm owned by the former secretary of state, according to internal BCCI records. Henry Kissinger’s ties to associates of Abedi’s dated from at least the early 1970s(.)” p. 255

“In 1985, agents of the Drug Enforcement Administration and the IRS obtained strong evidence that BCCI was involved in laundering heroin money. That August, the head of the Iranian heroin ring introduced an undercover DEA agent (posing as a drug buyer) to a BCCI official. The agent taped a conversation in which the banker explained how to hide and launder drug money.” P348

“One peculiar feature of the plea bargain that has generally been overlooked is that the defendant Capcom –which the government knew to be an affiliate of BCCI’s—was not included in the deal, yet the prosecutors did not pursue that company. Capcom was apparently ignored by the Justice Department for a year and half, when it was named as a defendant in a federal indictment announced on September 5, 1991. Justice Department officials maintain that British Customs had agreed to take responsibility for following up on Capcom.” P. 349

On the Bushes:

“During Bush’s tenure as CIA director, the agency was allegedly involved in a very curious business deal with James R. Bath, a Texas businessman who is a friend and sometime financial backer of one of Bush’s sons. Bath was also a business associate of Khalid Bin Mahfouz, an important BCCI insider.

For years, the CIA secretly owned several airline companies –“proprietaries” in agency jargon. The most famous of these was Air America, which ferried CIA agents around Southeast Asia during the Vietnam War. After the CIA scandals of the 1970s, the agency was obliged to dispose of much of its fleet, and in 1976 it sold several planes to Skyway, a frim managed by Bath, according to Bill White, a former business partner of his. Bath denies any CIA involvement in the deal. White, who has been in bitter litigation with Bath for years, also says that Skyway was owned by Saudi interests, including Bin Mahfouz. Later, as we shall see, Bath provided financing to George W. Bush, the future president’s eldest son, when he went into the oil business.” P 365

“John E. (Jeb) Bush socialized frequently with Abdur Sakhia, the manager of BCCI’s Miami branch and later the bank’s top official in the United States.” The two families got together a dozen times. P. 368

“George W. Bush … has not been nearly so successful, but there is an important similarity: rich and powerful friends have financed him. When he set up Arbusto Energy Inc. in the 1970s, some of the financing came from James R. Bath, the Texas Businessman who, as we have seen, was allegedly involved with Khalid Bin Mahfouz in the purchase of airplanes from the CIA. Bath had other ties to BCCI insiders: he has invested money in the United States on behalf of Bin Mahfouz and he was a part-owner of Houston’s Main Bank with Bin Mahfouz Gaith Pharaoan. Arbusto fell on hard times in the mid-1980s, when it marged with another struggling oil concern to form Spectrum 7 Energy Corporation. But Spectrum 7 didn’t prosper either. In 1986, Harken Energy Corporation rode to the rescue, swapping some of its shares to acquire Spectrum 7. George W. Bush got roughly $600,000 worth of stock, joined the board of directors and became a consultant to Harken for $120,000 a year.

Harken a small and relatively obscure firm, was not particularly successful either. In 1987, it was rescued from financial trouble through a debt restructuring. A few years later, the company’s fortunes changed dramatically. In January 1990, Harken Energy was awarded one of the most coveted oil deals in the world: a concession to drill for crude off the coast of Bahrain. The decision stunned many people in the industry. Harken was not only a small firm, it had never drilled outside the United States, nor had it drilled offshore. The only explanation that made sense to many oil executives was that the Bahrain government wanted to do a favor for the family of President Bush.

The deal was certainly profitable for George W. Bush. After the concession was awarded to Harken, its stock price rose sharply. In mid-1990, Bush sold two thirds of his Harken shares at a big profit. (He failed to disclose this sale for several months –a violation of SEC rules.)” p. 369

Dirty Americans:

“In a conversation just hours before his ‘death,’ Hammoud told a friend, ‘If anybody knew how dirty the Americans are in this BCCI business, they’d be surprised. They’re dirtier than the Pakistanis.’” P. 381

“At a hearing on BCCI, Gonzalez said that ‘the existence of another foreign bank entity (BCCI) engaged in criminal activity comes as no great surprise,’ particularly because (Italy’s Banca Nazionale del Lavoro, which secretly funded Iraq,) ‘became Baghdad’s banker in the U.S. before our regulatory cops at the Federal Reserve could locate Iraq on the map.” … “There were suspicions that the White House was eager to sweep this messy scandal ounder the rug, since it threatened to highlight the government’s role in supporting Saddam Hussein before the invasion of Kuwait. As early as 1983, President Reagan had instructed the CIA to provide intelligence to help Iraq in its war with Iran. Washington continued providing aid to Baghdad for the next seven years –up to the time of the invasion.” P. 383

“As the investigations continued, it sometimes seemed as if half the characters in the BCCI and BNL affairs were either spies or politicians. As the charges and countercharges about BCCI echoed through Washington, most of the people responsible for its crimes were beyond the reach of the law. Many of them were shielded by friends in high places.” P. 384

A Dec. 1991 report put “BCCI’s total liabilities at $10.64 billion and its realizable assets at $1.16 billioin. In other words, a staggering $98.48 billion had vanished through a combination of mismanagement and fraud. There was no longer any doubt that the BCCI affair was one of the biggest larcenies in history.” P. 392

“If men like this were behind BCCI, it had to be a solid institution. When the deception was exposed, BCCI turned out to be an artfully contrived fake, with front men posing as stockholders, nonexistent capital, and profits manufactured out of thin air. It was an optical illusion, a mirage in the desert. BCCI was the bank that never was.” P. 420

“At its height, BCCI had more than $20 billion in deposits, and all of that money had been collected fraudulently. Many customers, of course, pulled their money out before the seizure, causing BCCI’s total liabilities to shrink by about half. Nevertheless, an incredible $9.5 billion was lost or stolen.” P. 421

(T)here are strong indications that BCCI was just one of several financial institutions looted by associates of Abedi’s. The Bin Mahfouz family’s National Commercial Bank seems to have been undermined by fraud. IN the BCCI Ponzi scheme, a large portion of the stolen deposits came from Feisal Islamic Bank in Cairo, an institution whose controlling shareholders include members of the Saudi royal family. New evidence has emerged linking BCCI to the BNL affair. In late 1992, investigators learned that Mohammed Hammoud, the BCCI front man, had borrowed millions from the (corrupt and dead) Italian bank.” P. 424

“The CIA seems to have protected BCCI and its backers for well over a decade.” P. 429

“The CIA –and its allies—may have assisted the bank in connection with the Tampa drug money case. Prosecutors who worked on the case say that they did not receive a single CIA report, even though some of the (CIA) reports (issued conveniently not to the fed but to the Treasury Dept., where they were ignored) alleged that BCCI was involved in money laundering--- the principle charge against the bank. …

“Various CIA allies have been involved in the campaign of lobbying and disinformation, aimed at squelching the investigations of the bank, after the Tampa indictment. BCCI was assisted by Hill and Knowlton, whose Washington office was headed by Robert Gray, a man with close ties to U.S. intelligence.” P. 430

“Since mid-1991, the federal official with overall responsibility for the BCCI case has been Attorney General William P. Barr. Like so many other characters in the drama he has connections with the intelligence world. Before becoming a lawyer, Barr spent four years as an employee in the general counsel’s office of the CIA. …

“The CIA’s hostility to Kerry’s inquiry is not at all surprising when one considers that BCCI was involved in some of the most sensitive intelligence operations of the Reagan-Bush years, including the secret sales of arms to Iran.” P. 431

“There are even indications that CIA officials were involved in the founding of BCCI. One former officer of the bank recalls a conversation he had in the early 1980s with a close associate of Abedi’s, a Pakistani who worked for United Bank and then joined BCCI when it was established. The Pakistani said that Abedi had worked with the CIA during his United Bank days and that the CIA had encouraged him in his project to launch BCCI, since the agency realized that an international bank could provide valuable cover for intelligence operations. The Pakistani mentioned one U.S. intelligence official by name: Richard Helms, the director of the CIA until early 1973. Helms, as we have seen, later became a legal client of Clark Clifford’s and a business partner of two BCCI insiders. ‘What I have been told,’ says this source, ‘is that it wasn’t a Pakistani bank at all. The guys behind the bank weren’t Pakistani at all. The whole thing was a (CIA) front.” P. 432

On Noriega:

“Noriega’s large deposits in BCCI could not possibly have come from his official salary. What was the source? Some of the money came from the U.S. government. For decades, Noriega was on Washington’s payroll as an informant, and the size of the payments increased in proportion to his political power. In January 1991, the U.S. government admitted that the CIA had paid Noriega $322,000 in cash and gifts over the years, but it is widely suspected that he received additional money through other channels. The CIA deposited Noriega’s “paychecks” into his BCCI account after first channeling the money through dummy companies. One former BCCI officer says he was told by a colleague who worked in Panama that Noriega used BCCI at the suggestion of the CIA.

“In 1982, investigators for the Senate committee reported that it was “common knowledge” that the (Panamanian) National Guard –led by Noriega—“has ties to and income from various traffickers in drugs, arms, and other contraband.” The investigators went on to say that the National Guard “provides warehousing for narcotics on their way north, assures the release, for bribes received, of drug traffickers arrested, guarantees the nonarrest of offenders wanted elsewhere who have paid a kind of ‘safe conduct’ fee, supervises the air transport of gold, arms, spies bound to and from North America, Cuba and Central America.”


948 F.Supp. 1107 (1996)

FIRST AMERICAN CORP., et al., Plaintiffs, v. Sheikh Zayed Bin Sultan AL-NAHYAN, et al., Defendants. Civil Action No. 93-1309 (JHG).

United States District Court, District of Columbia.

November 26, 1996.

Beth Rochelle Heifetz, MaryEllen Powers, Timothy J. Finn, Barbara McDowell, Christopher F. Dugan, David Elliott Miller, Stephen J. Brogan, Jones, Day, Reavis & Pogue, Washington, DC, George J. Moscarino, Jones, Day, Reavis & Pogue, Cleveland, OH, for plaintiffs First American Corp., First American Bankshares, Inc. John Thomas Szymkowicz, Milton Peden Buffington, Szymkowicz & Buffington, Washington, DC, for defendant Ali Mohammad Shorafa. Thomas Charles Green, Sidley & Austin, Washington, DC, for defendant Mohammed Bin Rashid Al-Maktoum, Sheikh. Plato Cacheris, Philip Thomas Inglima, Cacheris & Treanor, Washington, DC, for defendants Kamal Ibrahim Adham, Sheikh Adham Corporation. Thomas Jay Barrymore, Reichler, Milton & Medel, Washington, DC, for defendant Abdul Raouf Khalil. William Horace Jeffress, Jr., Herbert John Miller, Jr., Douglas Frank Curtis, Martin David Minsker, David S. Cohen, Miller, Cassidy, Larroca & Lewin, L.L.P., Washington, DC, William B. Shields, Washington, DC, for defendants Clark M. Clifford, Robert Alan Altman. Vincent Morgan Garvey, U.S. Department of Justice, Civil Division, Washington, DC, Karen Richardson, Federal Bureau of Investigation, Federal Programs Branch, Civil Division, Washington, DC, for movant U.S. Timothy M. Broas, Anderson, Hibey & Blair, Washington, DC, for movants BCCI Depositors' Protection Association, Adil Elias, Anthony P.J. Scott, Raad Al Zahawi, N.S. Auchi, Jordanian Depositors' Protection Association. Mark Daniel Hopson, Sidley & Austin, Washington, DC, for cross-defendants Estate of Sheikh Rashid Bin Said Al-Maktoum, Stock Holding Company, Mohammed Bin Rashid Al-Maktoum, Sheikh, Crescent Holding Company. Charles Eric Talisman, Jean V. MacHarg, Ronald S. Liebman, Patton Boggs, L.L.P., Washington, DC, for defendants, third-party defendants Zayed Bin Sultan Al-Nahyan, Sheikh, Khalifa Bin Zayed Al-Nahyan, Sheikh, Sultan Bin Zayed Al-Nahyan, Sheikh, Ghanim Faris Al-Mazrui, Department of Private Affairs of Sheikh Zayed Bin Sultan Al-Nahyan, Abu Dhabi Investment Authority. James Joseph Murphy, Bryan Cave, L.L.P., Washington, DC, for third-party defendant Humaid Bin Rashid Al-Nuaimi, Sheikh. James Joseph Murphy, Bryan Cave, L.L.P., Washington, DC, Charles Eric Talisman, Patton Boggs, L.L.P., Washington, DC, for third-party defendants Hamad Bin Mohammed Al-Sharqi, Sheikh, Mashriq Holding Company, S.A. Sara E. Moss, Robert P. Haney, Jr., P. Benjamin Duke, Howard, Darby & Levin, New York City, for third-party defendant Sayed Jawhary.

MEMORANDUM OPINION AND ORDER JOYCE HENS GREEN, District Judge. The central issue in this case involves an allegation that the defendants, as senior officers, managers, agents and nominees for the Bank of Credit and Commerce International ("BCCI"1), illegally and secretly sought to acquire ownership and maintain control of First American Corporation ("FAC") and First American Bankshares ("FAB"), collectively known as First American. The 282-page, 687-paragraph Complaint charges 30 defendants with violations of the Racketeer Influenced Corrupt Organizations Act ("RICO"), codified at 18 U.S.C. § 1962, common law fraud, breach of fiduciary duty, other tortious conduct, and civil conspiracy. Presently pending are the following motions: (1) Defendants Clark M. Clifford and Robert A. Altman's Motion for Reconsideration of this Court's August 25, 1995 Memorandum Opinion and Order or, in the Alternative, for Certification Pursuant to 28 U.S.C. § 1292(b) ("C & A's Motion for Reconsideration"); (2) Motion of Abdul Raouf Khalil to Dismiss Crossclaim; (3) Motion of Ali Mohammed Al-Shorafa to Dismiss the Cross-claims Filed by Defendants Clark M. Clifford and Robert A. Altman; (4) Joint Motion of Sheikh Kamala Adham, Sayed Jawhary and Adham Corporation to Dismiss the Third-Party Complaint ("Joint Motion"); (5) Motion of Defendants Estate of Sheikh Rashid Bin Said Al-Maktoum, Sheikh Mohammed Bin Rashid Al-Maktoum, Stock Holding Company, and Crescent Holding Company ("the Dubai Defendants") to Dismiss the Cross-Claims of Defendants/Cross-Claimants Clifford and Altman; (6) Motion of the Abu Dhabi Sovereigns to Dismiss Clifford and Altman's Third Party Complaint in its Entirety or, in the Alternative, to Strike it in the Interests of Justice and Judicial Economy and Request for Oral Hearing; (7) Motion of the Dubai Defendants to Dismiss the Complaint; and (8) Defendants' Motion for Reconsideration of Magistrate Judge Attridge's Order Denying Defendants Clifford and Altman's Motion for a Protective Order. I. Background There are two plaintiffs in this case, FAC and FAB. FAC is a Virginia corporation with its principal place of business in Washington, D.C. At all times relevant to the Complaint, FAC was a privately-held bank holding company, see 12 U.S.C. § 1841 et seq., which was wholly owned by Credit and Commerce American Investment, B.V. ("CCAI"), a Netherlands corporation which in turn was wholly owned by Credit and Commerce American Holdings, N.V. ("CCAH"), a Netherlands Antilles corporation. The only substantial asset of both CCAI and CCAH was the stock they held. Similarly, at all relevant times, FAB was a Virginia corporation and a registered bank holding company with its principal place of business in Washington, D.C. FAB, which was wholly owned by FAC, owned several regional banking companies, which owned subsidiary banks in the states of Florida, Georgia, Maryland, New York, Tennessee and Virginia. The Complaint names 30 defendants: 1. His Highness Sheikh Zayed Bin Sultan Al-Nahyan ("H.H. Sheikh Zayed"), President of the United Arab Emirates ("UAE") and Ruler of the Emirate of Abu Dhabi.2 H.H. Sheikh Zayed is also the Chairman of the Supreme Council of Rulers of the UAE, which is [ 948 F.Supp. 1113 ]

the UAE authority responsible for making policy decisions and promulgating and implementing UAE laws; 2. His Highness Sheikh Khalifa Bin Zayed Al-Nahyan ("H.H. Sheikh Khalifa"), the eldest son of Sheikh Zayed and Crown Prince and Deputy Ruler of the Emirate of Abu Dhabi. H.H. Sheikh Khalifa is the designated successor to H.H. Sheikh Zayed as the Ruler of Abu Dhabi. H.H. Sheikh Khalifa was appointed Prime Minister of Abu Dhabi in 1971 and is currently the Chairman of the Abu Dhabi Investment Authority, Chairman of the Supreme Petroleum Council and Deputy Supreme Commander of the UAE Armed Forces; 3. High Highness Sheikh Sultan Bin Zayed Al-Nahyan ("H.H. Sheikh Sultan"), the second eldest son of H.H. Sheikh Zayed and the Deputy Prime Minister of the UAE; 4. His Excellency Ghanim Faris Al-Mazrui ("H.E. Mazrui") the principal financial advisor to the Ruling Family of Abu Dhabi. This defendant is also the Secretary General of the Abu Dhabi Investment Authority, Chairman of the Department of Private Affairs of Sheikh Zayed, Chairman of the "Committee for the Follow-Up and Supervision of Private Investments" ("Investment Committee") and holds various positions in several Abu Dhabi banks, including BCCI Holdings, BCCI Overseas and BCCI S.A.; 5. Department of Private Affairs of Sheikh Zayed Bin Sultan Al-Nahyan ("DPA"), an organization which managed the private affairs of the Ruling Family of Abu Dhabi; 6. Abu Dhabi Investment Authority ("ADIA"), the corporate entity responsible for coordinating the commercial investment policy of Abu Dhabi; 7. Abdullah Darwaish ("Darwaish"), Chairman of the DPA and former Chairman of the Investment Committee, Chairman of the ADIA and UAE Ambassador to Pakistan; 8. Ali Mohammad Shorafa (so named in the Complaint, but in actuality is H.E. Ali Mohammad Al-Shorafa) ("H.E. Al-Shorafa"), the former Grand Chamberlain (Director) of the President's Court of the UAE and Director of Presidential Affairs for the UAE; 9. Sheikh Humaid Bin Rashid Al-Nuaimi ("Sheikh Humaid"), Ruler of the Emirate of Ajman, UAE; 10. Estate of Sheikh Rashid Bin Said Al-Maktoum ("Sheikh Rashid"), the former Ruler of the Emirate of Dubai who died in 1990. Until his death, he served as Vice President and Prime Minister of the UAE and as a member of the Supreme Council of Rulers of the UAE; 11. Stock Holding Company, c/o the Estate of Sheikh Rashid Bin Said Al-Maktoum ("Stock Holding Co."), purportedly the personal holding company of Sheikh Rashid; 12. Sheikh Mohammed Bin Rashid Al-Maktoum ("Sheikh Mohammed"), the third eldest son of Sheikh Rashid, is the current Minister of Defense of the UAE and brother of the current ruler of Dubai; 13. Crescent Holding Co., c/o Sheikh Mohammed Bin Rashid Al-Maktoum, allegedly the personal holding company and alter ego of Sheikh Mohammed; 14. Sheikh Hamad Bin Mohammed Al-Sharqi ("Sheikh Hamad"), Ruler of the Emirate of Fujairah, UAE, and member of the Supreme Council of Rulers of the UAE; 15. Mashriq Holding Company, S.A. ("Mashriq Holding Co."), a Luxembourg company of which Sheikh Hamad is the principal shareholder, and claimed to be the personal holding company of Sheikh Hamad; 16. Sheikh Kamala Ibrahim Adham ("Sheikh Kamala"), a Saudi Arabian businessman and former head of security for the Kingdom of Saudi Arabia; 17. Adham Corporation, purported to be the personal holding company and alter ego of Sheikh Kamala; [ 948 F.Supp. 1114 ]

18. Abdul Raouf Khalil ("Khalil"), a former Executive Administrator to Sheikh Kamala in Saudi Intelligence and one time Minister of Communications and Deputy Chief of Saudi Intelligence. Khalil is currently a business associate of Sheikh Kamala; 19. Sayed Jawhary (El Sayed El Gohari) ("Jawhary"), a business associate of Sheikh Kamala; 20. Faisal Saud Al-Fulaij ("Fulaij"), former Chairman of the Kuwait International Finance Company ("KITCO"), a BCCI affiliate in Kuwait, and director of two ICIC affiliates, Middle East Credit and Investment Company, S.A. and Finance and Investment International Limited; 21. Gulf Investment & Real Estate Company ("GIRECO"), an investment and real estate development company registered in Ajman, UAE; 22. Real Estate Development Company ("REDCO"), a publicly traded company incorporated in Kuwait; 23. Sheikh Khalid Bin Mahfouz ("Mahfouz"), a Saudi Arabian businessman and banker who served as deputy general manager of the National Commercial Bank of Saudi Arabia, the largest bank in Saudi Arabia; 24. Estate of Mohammed Mahmoud Hammoud ("Hammoud"), who allegedly had several front companies established in his name by BCCI; 25. Agha Hasan Abedi ("Abedi"), the principal and founder of BCCI/ICIC who served as its top corporate officer from 1973-1988; 26. Swaleh Naqvi ("Naqvi"), a principal of BCCI/ICIC and its second highest corporate officer from 1973-1988. Naqvi served as the top corporate officer from 1988-1990; 27. Zafar Iqbal Chaudhri ("Iqbal"), the Chief Executive Officer of Bank of Credit and Commerce (Emirates) ("BCC Emirates"), an Abu Dhabi affiliate of BCCI and a member of the governing boards of various BCCI/ICIC entities; 28. Ghaith R. Pharaon ("Pharaon"), a Saudi Arabian businessman; 29. Clark M. Clifford ("Clifford"), Chairman of First American from 1981-1991 and from 1982-1991 was the Chairman of FAB. Clifford was also a Managing Director of CCAI and CCAH; and 30. Robert A. Altman ("Altman"), President and a Director of First American from 1981-1991, member of the Board of Directors of FAB and a Managing Director of CCAI and CCAH. Of these defendants, thirteen have settled with plaintiffs3, four have yet to be served with the Complaint,4 six are in default,5 and two have been dismissed voluntarily.6 Only five are actively involved in this case as of this date: H.E. Al-Shorafa, Khalil, Sheikh Mohammed,7 and Clifford and Altman. As noted above, H.E. Al-Shorafa was the Director of Presidential Affairs for the UAE and Director of the Presidential Court. He also was a record shareholder of CCAH as of 1982, but plaintiffs claim that the use of his [ 948 F.Supp. 1115 ]

name as a shareholder by BCCI was fraudulent. Complaint ¶ 17(a). Plaintiffs aver that BCCI gave H.E. Al-Shorafa loans and advances "to purchase CCAH stock as a nominee for BCCI/ICIC in no-risk, sham transactions whereby Defendant Shorafa was not held liable for servicing or repayment of loans or advances and was indemnified against any loss he might sustain." Id. The Complaint states that H.E. Al-Shorafa was compensated for this "fraudulent use of his name." Id. Khalil was a record shareholder of BCCI, and he was a record shareholder of CCAH beginning in 1982. Complaint ¶ 29. Plaintiffs claim that Khalil, similar to H.E. Al-Shorafa, was a fraudulent shareholder of CCAH stock because he purchased it with money obtained from illegal no-risk, sham loans from BCCI/ICIC and held the stock as a BCCI nominee. Id. Sheikh Mohammed is the third eldest son of Sheikh Rashid. He is also the current Minister of Defense of the UAE and a brother of the present Ruler of Dubai. Complaint ¶ 22. The plaintiffs allege that Sheikh Mohammed permitted a corporate entity under his control — Defendant Crescent Holding Company — to participate as a fraudulent shareholder in the scheme to acquire First American. Id. The plaintiffs allege that Defendant Crescent Holding Company served as a "record shareholder" of CCAH from 1982 to 1986 using loans from BCCI/ICIC to purchase CCAH stock illegally as a BCCI nominee.8Id. ¶ 23. Sheikh Rashid, now deceased, ruled the Emirate of Dubai from 1958 until 1990. Complaint ¶ 20. The plaintiffs allege that he directed Defendant Stock Holding Company, his personal holding company and alter ego, to participate in the schemes alleged in the Complaint, including the scheme to acquire fraudulently and maintain illegally ownership of First American. Id. Stock Holding Company served as the "record shareholder" in CCAH from 1982 to 1986 and received loans from BCCI/ICIC to purchase CCAH illegally in sham transactions. Id. ¶ 21. Mr. Clifford was Chairman of FAC from 1981 to August 1991 and was Chairman of FAB from 1982 through August 1991. Complaint ¶ 42. He was also a Managing Director of CCAI and CCAH. Id. Mr. Altman was a Director and President of First American from 1981 to August 1991, and a Director of FAB of Managing Director and an officer of CCAI and CCAH. Id. Both Clifford and Altman were legal counsel to BCCI and the record shareholders of Financial General Bankshares ("FGB")/CCAH. In her Memorandum Opinion and Order of August 25, 1995, this Court denied Defendants Clifford's and Altman's Motion to Dismiss; denied Defendant H.E. Al-Shorafa's Motion to Dismiss except as to Count VIII, which was dismissed; denied Defendant Khalil's Motion to Dismiss except as to Count VIII, which was dismissed; denied Defendant Clifford's and Altman's Motion to Strike or for a More Definite Statement; and the Court directed the parties to commence discovery promptly, referring this matter to Magistrate Judge Patrick J. Attridge to resolve discovery disputes, if any. II. Discussion Presently pending are Defendants Clifford's and Altman's motion for reconsideration.9 Also pending are motions to dismiss Clifford's and Altman's cross-claims and third-party claims for contribution and indemnification.10 The Dubai Defendants, who [ 948 F.Supp. 1116 ]

were served after the Court's Memorandum Opinion of August 25, 1995 was issued, have also filed a motion to dismiss the main Complaint. Finally, Clifford and Altman have requested that this Court reconsider Magistrate Judge Attridge's decision to deny them a protective order from foreign deposition discovery. These matters will be taken up in turn. A. The Motion for Reconsideration Clifford and Altman seek reconsideration of the Court's prior ruling, because they disagree with this Court's interpretation of Bangor Punta Operations, Inc. v. Bangor & Aroostook R.R. Co.,417 U.S. 703, 94 S.Ct. 2578, 41 L.Ed.2d 418 (1974) (Bangor Punta), as well as with her disposition of the statute of limitations issue. Alternatively, Clifford and Altman seek certification pursuant to 28 U.S.C. § 1292(b). Both requests will be denied. In her previous opinion, the Court extensively analyzed Bangor Punta, concluding that based on the instant facts, it was not controlling. See Mem.Op., at 14-15. The Court also ruled that, assuming true the facts alleged in the Complaint, the Complaint was timely because the statute of limitations was tolled due to acts of fraudulent concealment. Id. at 26. While Clifford and Altman disagree with both rulings, in their motion for reconsideration, they neither offer the Court additional insight nor do they cite to new and pertinent authority. The arguments in their motion for reconsideration are no more compelling and persuasive than they were in their motion to dismiss, and they are rejected. The Court will also deny Clifford's and Altman's request for certification pursuant to 28 U.S.C. § 1292(b).11 The Court may, of course, issue an order granting interlocutory appellate review if she were to find that the issue involved a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal may materially advance the ultimate termination of the litigation. 28 U.S.C. § 1292(b). See generally 10 Wright, Miller & Kane, Federal Practice and Procedure: Civil 2d § 2658.2 (1983); 16 Wright, Miller, Cooper & Gressman, Federal Practice and Procedure: Jurisdiction § 3930 (1977 & 1996 Supp.). However, interlocutory appeals under 28 U.S.C. § 1292(b) are rarely allowed, see Palandjian v. Pahlavi,782 F.2d 313, 314 (1st Cir.) (per curiam), aff'd mem., 808 F.2d 1513 (1st Cir.1986), cert. denied, 481 U.S. 1037, 107 S.Ct. 1974, 95 L.Ed.2d 814 (1987); Tolson v. United States,732 F.2d 998, 1002 (D.C.Cir.1984), and movants Clifford and Altman bear the "burden of showing that exceptional circumstances justify a departure from the basic policy of postponing appellate review until after the entry of a final judgment." Chalfin v. Beverly Enter., Inc.,745 F.Supp. 1117, 1122 (E.D.Pa.1990) (internal quotations and citation omitted). Because they have not met their burden, the request for certification will be denied. As explained above, Defendants Clifford and Altman dispute the Court's conclusion that Bangor Punta does not mandate dismissal of the Complaint and the Court's determination that the plaintiffs are entitled to discovery to support their allegations that the defendants engaged in acts of fraudulent concealment sufficient to toll the statute of limitations. Mere disagreement, even if vehement, with a court's ruling on a motion to dismiss does not establish a "substantial ground for difference of opinion" sufficient to satisfy the statutory requirements for an interlocutory appeal. See Max Daetwyler Corp. v. Meyer,575 F.Supp. 280, 283 (E.D.Pa.1983), certified question answered by,762 F.2d 290 (3d Cir.), cert. denied, 474 U.S. 980, [ 948 F.Supp. 1117 ]

106 S.Ct. 383, 88 L.Ed.2d 336 (1985); In re Pyramid Co., 141 Vt. 294, 449 A.2d 915, 921-22 (Vt.1992) (under Vermont law). As have other courts, see, e.g., FSLIC v. Reeves,816 F.2d 130, 134 (4th Cir.1987); Meyers v. Moody,693 F.2d 1196, 1207-08 (5th Cir.1982), cert. denied, 464 U.S. 920, 104 S.Ct. 287, 78 L.Ed.2d 264 (1983); National Union Elec. Corp. v. Matsushita Elec. Indus. Co.,498 F.Supp. 991, 1003 (E.D.Pa.1980), this Court determined that Bangor Punta is inapposite and "considerably different" from the case before her. See Mem.Op. at 12 & 14. Other than their interpretation of Bangor Punta, Clifford and Altman have offered little to support their desired result, and they have not persuaded the Court that conflicting authority exists on the issue presented under these facts. See von Bulow v. von Bulow,634 F.Supp. 1284, 1312 (S.D.N.Y.1986). The mere claim that a decision has been wrongly decided is not enough to justify an interlocutory appeal. See, e.g., United States v. Grand Trunk W.R.R. Co., 95 F.R.D. 463, 471 (W.D.Mich.1981). While it is true that the facts underlying this suit are quite unusual, neither unusual facts nor legal issues of first impression require, or in this instance justify, certification of an interlocutory appeal. See Meyer, 575 F.Supp. at 283. Nor does the mere "lack of authority on a disputed issue ... necessarily establish [a] substantial ground for a difference of opinion under the statute." FDIC v. First Nat'l Bank of Waukesha,604 F.Supp. 616, 620 (E.D.Wis. 1985). The district court is the initial arbiter as to whether there is substantial ground for a difference of opinion, McNeil v. Aguilos,820 F.Supp. 77, 79 (S.D.N.Y.1993), and here, the Court concludes that there is not. Clifford and Altman also dispute the Court's decision (in resolving the motion to dismiss on the basis of the statute of limitations) not to impute Clifford's and Altman's alleged knowledge and actions to the other directors and senior managers of First American. See C & A's Motion for Reconsideration, at 20-24. They contend that since the other record shareholders had contemporaneous knowledge of their alleged wrongdoing, nothing could have been fraudulently concealed from First American. The Court concluded, however, that the Complaint adequately alleged that Clifford and Altman acted adversely to First American and engaged in acts of fraudulent concealment from First American's other directors and senior managers. See Mem.Op. at 23. Consequently, as have other courts, see, e.g., FDIC v. Nathan,804 F.Supp. 888, 893-95 (S.D.Tex.1992), this Court decided that the plaintiffs were entitled to discovery to prove both their allegations of fraudulent concealment and that the frauds alleged were committed against the corporation. See Mem.Op. at 25-26. These are simply not issues that raise substantial grounds for a difference of opinion to justify the extraordinary measure of an interlocutory appeal. B. The Motions to Dismiss the Third Party Complaint and Cross-Claims A motion to dismiss should not be granted "unless it appears beyond doubt that the plaintiff[s] can prove no set of facts in support of [their] claim which would entitle [them] to relief." Conley v. Gibson,355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957); Kenneda v. United States,880 F.2d 1439 (D.C.Cir.1989). The factual allegations of the complaint must be presumed true, Kowal v. MCI Communications Corp.,16 F.3d 1271, 1276 (D.C.Cir.1994); see 5A Wright & Miller, Federal Practice and Procedure: Civil 2d § 1357, at 304 (1990), and plaintiffs are entitled to all favorable inferences which may be drawn from those allegations. Scheuer v. Rhodes,416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974). Nonetheless, "the court need not accept inferences drawn by plaintiffs if such inferences are unsupported by the facts set out in the complaint." Kowal, 16 F.3d at 1276. On substantially the same grounds, all of the contribution and indemnification codefendants seek the dismissal of Clifford's and Altman's cross-claims/third-party complaint, which are, of course, based on Clifford's and Altman's potential liability under the main Complaint. Clifford and Altman are included in five of nine counts in this Complaint: Counts I and II, asserted under RICO, allege that Clifford and Altman conspired to acquire and/or maintain an interest in, or control of, First American (Count I), and in [ 948 F.Supp. 1118 ]

conducting or aiding and abetting in the conduct of BCCI's affairs through a pattern of racketeering activity (Count II). Counts III and V allege common law fraud and breach of fiduciary duties. Count IX alleges civil conspiracy. After the Court denied Clifford's and Altman's motion to dismiss these counts, they answered and filed the instant third party complaint and cross-claims, seeking contribution from all codefendants and indemnification from certain active and settling codefendants. See Answer of Clark M. Clifford and Robert A. Altman, at 98-101, ¶¶ 1-7. Specifically, Clifford and Altman contend that they were led to believe by the contribution defendants that "he or it was a bona fide owner of the CCAH shares standing in his or its name, or represented such an owner." Id. ¶ 5. They claim that they "justifiably relied on these representations in all actions ... that are the subject matter of this lawsuit." Id. Clifford and Altman demand contribution from each contribution defendant to the extent such defendant or defendants "should be found in this lawsuit to have acted fraudulently or illegally as alleged by First American." Id. ¶ 6. Additionally, Clifford and Altman seek indemnification from those who served as directors and officers of First American and made representations, express or implied, or took certain actions, on which Clifford and Altman allege that they justifiably relied. Almost all of the codefendants argue12 that neither RICO nor the common law (at least as to intentional conduct) provide a basis for Clifford and Altman to seek contribution. See Joint Motion of Sheikh Kamala, et al., at 7-10 & 14; Motion of H.E. Al-Shorafa, at 4 & 6; Motion of Abu Dhabi Sovereigns, at 5-7, 8 & 11; Motion of Abdul Raouf Khalil, at 4-5. Cf. C & A's Opposition, at 8 n. 7. ("Messrs. Clifford and Altman do not contest that a finding of civil liability under the applicable RICO provision (18 U.S.C. § 1964(c)), or under theories grounded in fraud or conspiracy, must be based upon a finding of intentional wrongful conduct, and that, under current law, contribution claims are unavailable thereunder. However, Messrs. Clifford and Altman reserve the right to seek contribution from their co-defendants on those claims as well if liability is allowed to be imposed on any less exacting standard."). Courts have uniformly denied contribution to defendants in both civil RICO actions, e.g., Friedman v. Hartmann,787 F.Supp. 411, 417 (S.D.N.Y.1992); Jacobson v. Western Montana Prod. Credit Ass'n,643 F.Supp. 391, 396 (D.Mont.1986); Boone v. Beacon Bldg. Corp.,613 F.Supp. 1151, 1154 (D.N.J.1985), and under the common law. E.g., Carriers Insur. Exch. v. Truck Insur. Exch.,310 F.2d 653, 658-59 (4th Cir.1962) (construing Virginia law); Early Settlers Insur. Co. v. Schweid,221 A.2d 920, 923 (D.C. 1966); Hudgins v. Jones,205 Va. 495, 501, 138 S.E.2d 16 (Va.1964); see also Va.Code § 8.01-34 (no contribution in favor of an intentional tortfeasor). Similarly, indemnification is unavailable under RICO. E.g., Friedman, 787 F.Supp. at 418; In re Olympia Brewing Co. Secs. Litig.,674 F.Supp. 597, 616-17 (N.D.Ill. 1987). Although Clifford and Altman refuse to concede their lack of entitlement to indemnification under the common law, see C & A Opposition, at 17, there is simply no doubt that a defendant may not obtain indemnification for liabilities arising out of intentional tortious acts. E.g., Early Settlers Ins. Co., 221 A.2d at 923 ("when a person knows, or must be presumed to know, that his act is unlawful ... he will be denied indemnity"); Philip Morris Inc. v. Emerson, 235 Va. 380, 411, 368 S.E.2d 268 (Va.1988) (indemnification unavailable for wrongful conduct or active negligence); see National R.R. Passenger Corp. v. Consolidated Rail Corp.,698 F.Supp. 951, 971-72 (D.D.C.1988) (under D.C. law, contract provision providing for indemnifying intentional conduct void as against public policy), vacated on other grounds,892 F.2d 1066 (D.C.Cir.1990). Defendants Clifford and Altman cling to their contribution and indemnification theory on the contention that First American also [ 948 F.Supp. 1119 ]

seeks to hold them liable for negligent conduct. In the 282-page, 687-paragraph complaint, Clifford and Altman point to three paragraphs that suggest an allegation of negligent conduct. See C & A's Opposition, at 9 (citing Complaint ¶¶ 42(b), 43(b) & Count V, ¶ 662). Only Count V and the breach of fiduciary duty allegations contain even a whisper of negligence. While it is true that the Complaint alleges that Clifford and Altman "intentionally, recklessly and/or negligently breached their fiduciary duties," Complaint ¶ 662 (Count V), upon analyzing their contribution and indemnification claim, these few references are insufficient to save it. Clifford's and Altman's theory fails at the outset, because whether or not the word "negligence" is used in the Complaint, Count V survived Clifford's and Altman's initial motion to dismiss only because this Court held that the "Plaintiffs assert[ed] that ... Clifford and Altman engaged in illegal activities." Mem.Op. at 32 (emphasis added). Such activities constitute intentional, as opposed to negligent, acts, depriving them of any right to contribution or indemnification.13 Clifford and Altman are also precluded from seeking contribution from their settling codefendants (although they might be entitled to a pro rata credit on any adjudged liability). Washington v. Washington Hosp. Ctr,579 A.2d 177, 187-88 (D.C.1990); Washington Healthcare Corp. v. Barrow,531 A.2d 226, 230 (D.C.1987); Lamphier v. Washington Hosp. Ctr.,524 A.2d 729, 733 (D.C.1987); Hayman v. Patio Prod., 226 Va. 482, 487-88, 311 S.E.2d 752 (Va.1984); see also Va.Code § 8.01-35.1. Additionally, they are barred from asserting claims against H.H. Sheikh Zayed, the sitting head of state of the United Arab Emirates, because he is entitled to immunity from the Court's jurisdiction. See Ex parte Peru,318 U.S. 578, 588-89, 63 S.Ct. 793, 799-800, 87 L.Ed. 1014 (1943). Contrary to Clifford's and Altman's argument that the Foreign Sovereign Immunities Act, 28 U.S.C. § 1602 et seq., governs H.H. Sheikh Zayed's immunity, the enactment of the FSIA was not intended to affect the power of the State Department, on behalf of the President as Chief Executive, to assert immunity for heads of state or for diplomatic and consular personnel. Lafontant v. Aristide,844 F.Supp. 128, 137 (E.D.N.Y.1994); see, e.g., 22 U.S.C. § 254a-e. The United States has filed a Suggestion of Immunity on behalf of H.H. Sheikh Zayed, and courts of the United States are bound to accept such head of state determinations as conclusive. Ex parte Peru, 318 U.S. at 589, 63 S.Ct. at 800; Spacil v. Crowe,489 F.2d 614, 617 (5th Cir.1974); Lafontant, 844 F.Supp. at 137 & 139; see Abdulaziz v. Metropolitan Dade County,741 F.2d 1328, 1331 (11th Cir.1984); Carrera v. Carrera,174 F.2d 496, 497 (D.C.Cir.1949). Accordingly, the Suggestion of Immunity as to H.H. Sheikh Zayed will be accepted here. For the above stated reasons, Defendants Clifford's and Altman's cross-claims and third party complaint will be dismissed. Their claims against the contribution and indemnification defendants are rejected for failure to state a claim; the following motions to dismiss will be granted: (1) the Motion of Abdul Raouf Khalil; (2) the Motion of H.E. Al-Shorafa; (3) the Joint Motion of Sheikh Kamala Adham, et al.; (4) the Motion of the Dubai Defendants;14 and (5) the Motion of the Abu Dhabi Sovereigns. [ 948 F.Supp. 1120 ]

C. The Dubai Defendants' Motion to Dismiss The Dubai Defendants move to dismiss First American's Complaint, raising many of the same arguments that this Court has before rejected. The Dubai Defendants contend: (1) that the Court lacks subject matter jurisdiction on a variety of grounds: they are foreign sovereigns and no FSIA exception applies; they are immune from suit under the doctrine of head of state immunity; that the action is barred by the act of state doctrine; and that the FSIA precludes a Civil RICO claim against foreign sovereigns; (2) that the Court lacks personal jurisdiction over them; (3) that Stock Holding Co. and Sheikh Rashid lack a legal capacity to be sued; (4) that the RICO claim must be dismissed against Sheikh Rashid, because punitive measures do not survive a defendant's death; (5) that First American's claims are barred by the statute of limitations; and (6) that the common law counts fail to state cognizable claims and must therefore be dismissed. 1. Subject matter jurisdiction First, the Dubai Defendants assert that this Court has no subject matter jurisdiction over this case with regard to them due to the FSIA, act of state doctrine and doctrine of head of state immunity. They argue that "as members of the Ruling Family of the Emirate of Dubai or their alleged `alter egos' [Stock Holding Company and Crescent Holding Company], [they] are foreign sovereigns, and their investments are investments of public funds." Dubai Defendants' Motion to Dismiss, at 2 & 7-11 (emphasis in original). They contend that their alleged conduct does not fall within an exception to the FSIA, id. at 12, and that both the act of state doctrine and doctrine of head of state immunity bar this suit. Id. at 22-27. The FSIA is the "sole basis for obtaining jurisdiction over a foreign state in our courts." Argentine Republic v. Amerada Hess Shipping Corp.,488 U.S. 428, 434, 109 S.Ct. 683, 688, 102 L.Ed.2d 818 (1989). Its focus, however, "is towards corporate and government entities — legal yet nonnatural `persons.' Nowhere does the FSIA discuss the liability or role of natural persons, whether governmental officials or private citizens." Herbage v. Meese,747 F.Supp. 60, 66 (D.D.C. 1990), aff'd, 946 F.2d 1564 (D.C.Cir.1991). Nonetheless, reason dictates "that the sovereign immunity granted in the FSIA does extend to natural persons acting as agents of the sovereign," because FSIA immunity is based not on the "identity of the person or entity so much as the nature of the act for which the person or entity is claiming immunity." Id. (emphasis added). Applying these principles, the FSIA does not apply to these defendants' actions. The Complaint plainly alleges that the Dubai Defendants are being sued for acts directing their "personal holding compan[ies] and alter ego[s]" to participate in the scheme to fraudulently acquire and maintain ownership of First American. Complaint at ¶¶ 20-23 (emphasis added). Use of corporate entities created under the laws of a third country, as the plaintiffs allege Sheikh Rashid and Sheikh Mohammed used their alter egos — Stock Holding Company and Crescent Holding Company — are "presumptively engaging in activities that are either commercial or private in nature." H.R.Rep. No. 94-1487, 94th Cong., 2d Sess. 15 (1976) U.S.Code Cong. & Admin.News 6604, 6613-14; S.Rep. No. 94-1310, 94th Cong., 2d Sess. 15 (1976) U.S.Code Cong. & Admin.News 6604, 6613-14; see Leith v. Lufthansa German Airlines,793 F.Supp. 808, 810 n. 2 (N.D.Ill.1992). The acts alleged as private investments to act as sham nominees are not activities that are traditionally considered to be "sovereign or governmental in nature." Herbage, 747 F.Supp. at 67. Assuming the facts alleged are true, the plaintiffs have adequately pled that the Dubai Defendants accepted sham loans from BCCI in their personal capacities to acquire and maintain ownership of First American. The FSIA is, therefore, no bar to this suit against these defendants.15 [ 948 F.Supp. 1121 ]

The act of state doctrine is equally inapplicable. This doctrine only applies if "the relief sought or the defense interposed would have required a court of the United States to declare invalid the official act of a foreign sovereign performed within its own territory." W.S. Kirkpatrick v. Environmental Tectonics Corp.,493 U.S. 400, 405, 110 S.Ct. 701, 704, 107 L.Ed.2d 816 (1990). As noted above, the allegations against the Dubai Defendants do not implicate "official act[s] of a foreign sovereign;" therefore, the act of state doctrine does not apply. Nor are the Dubai Defendants entitled to head of state immunity as members of the ruling family of Dubai. The State Department has not suggested immunity on their behalf, and their claim is further undermined since the United States recognizes the Emirate of Dubai only as a political subdivision of the UAE, not as an independent state. See Drexel Burnham Lambert v. Committee of Receivers,810 F.Supp. 1375, 1377 (S.D.N.Y.1993), rev'd on other grounds,12 F.3d 317 (2d Cir.1993), cert. denied, 511 U.S. 1069, 114 S.Ct. 1645, 128 L.Ed.2d 365 (1994). Moreover, while there is considerable doubt whether Dubai has the defining characteristics of an independent state under international law, see 1973 Dig.U.S.Prac.Int'l Law 17; Restatement (Third) of Foreign Relations § 201 (1987), even were Dubai entitled to recognition as an independent state, the Dubai Defendants would not be entitled to head of state immunity, because none is a sitting head of state. See, e.g., Lafontant, 844 F.Supp. at 132; Republic of Philippines v. Marcos,665 F.Supp. 793, 797 (N.D.Cal. 1987). See generally Jerrold L. Mallory, Note, Resolving the Confusion Over Head of State Immunity: The Defined Rights of Kings, 86 Colum.L.Rev. 169 (1986). 2. Personal jurisdiction As with Defendants H.E. Al-Shorafa and Khalil, see Mem.Op. at 17-18, the Court has personal jurisdiction over the Dubai Defendants. The District of Columbia long-arm statute permits this Court to exercise "personal jurisdiction over a person, who acts directly or by an agent, as to a claim for relief arising from the person's — (1) transacting any business in the District of Columbia." D.C.Code Ann. § 13-423(a). A defendant need not transact extensive business in the District of Columbia to be subject to personal jurisdiction here. Mitchell Energy Corp. v. Mary Helen Coal Co.,524 F.Supp. 558, 563 (D.D.C.1981); Environmental Research Int'l, Inc. v. Lockwood Greene Eng'rs, Inc.,355 A.2d 808, 811 (D.C.1976) (en banc). In fact, "a nonresident defendant need not have been physically present in the District" to be subject to personal jurisdiction here. Mouzavires v. Baxter,434 A.2d 988, 992 (D.C.1981) (en banc), cert. denied, 455 U.S. 1006, 102 S.Ct. 1643, 71 L.Ed.2d 875 (1982). The critical inquiry for § 13-423(a)(1) purposes is whether the business transacted within the District of Columbia "can be reached jurisdictionally without offending the due process clause." Id. at 993; see Dooley v. United Tech. Corp.,786 F.Supp. 65, 71 (D.D.C.1992); Brown v. Artery Org., Inc.,654 F.Supp. 1106, 1110 (D.D.C.1987). This standard is met here with respect to the Dubai Defendants. The Complaint alleges that the Dubai Defendants, directly or through their personal holding companies, acted as fraudulent "record shareholders" of First American's parent and engaged in transactions that affected the ownership and control of a Washington, D.C. bank. E.g., Complaint ¶¶ 20-23, 26, 37, 73-77, 86 & 237. It also alleges that they knowingly accepted sham "loans," acting as nominees to further the scheme to conceal the identity of First American's true owners. Id. at ¶¶ 77, 86, 230, 237, & 321. And, the Complaint alleges that the Dubai Defendants joined the other defendants in acts to perpetuate BCCI's secret ownership of a District of Columbia-based institution. Id. at ¶¶ 77, 86-88, 230-31, 237, 351-53, 360, 398-99. This is enough to establish a prima facie case of personal jurisdiction against the Dubai Defendants.16 [ 948 F.Supp. 1122 ]

3. Legal capacity to be sued The Dubai Defendants argue that both Stock Holding Company and Sheikh Rashid lack the legal capacity to be sued. They contend that Stock Holding Company, a Luxembourg corporation, merged with Crescent Holding Company and lost its independent capacity to sue and be sued. Similarly, they argue that since there is no designated legal representative or formal probate upon the death of a Ruler of Dubai, the suit against the late Sheikh Rashid must be dismissed. While the Dubai Defendants' assertions may turn out to be accurate, the plaintiffs have alleged sufficient facts to survive the motion to dismiss; the plaintiffs will be entitled to engage in discovery to confirm the identity of, or identify, those entities or persons who have assumed the legal obligations of Stock Holding Company and Sheikh Rashid.17See Estate of Rosenberg by Rosenberg v. Crandell,56 F.3d 35, 37 (8th Cir.1995); Swartz v. Gold Dust Casino, Inc., 91 F.R.D. 543, 546 (D.Nev.1981); Saffron v. Wilson, 70 F.R.D. 51, 56 (D.D.C.1975). 4. Whether RICO claims survive a defendant's death Relying principally upon Genty v. Resolution Trust Corp.,937 F.2d 899, 912-13 (3d Cir.1991), the defendants argue that the RICO count against Sheikh Rashid's estate must be dismissed, because it is punitive in nature. The plaintiffs counter that the Dubai Defendants have ignored the Supreme Court's holding that RICO's legislative history "reveals the ... emphasis on the remedial role of the treble-damages provision," Shearson/American Express, Inc., v. McMahon,482 U.S. 220, 240, 107 S.Ct. 2332, 2345, 96 L.Ed.2d 185 (1987), and that the only federal appellate court to have been presented with a similar issue has held that RICO claims survive a plaintiff's death, because the "primary purpose" of RICO is remedial. Plaintiffs' Opposition, at 38 (citing Faircloth v. Finesod,938 F.2d 513, 518 (4th Cir.1991)). The plaintiffs also point out that numerous district courts "have concluded that a civil RICO suit is remedial, not penal, and accordingly survives the death of a party." Id. (quoting United States v. Private Sanitation Indus. Assoc. of Nassau/Suffolk, 159 F.R.D. 389, 390 (E.D.N.Y.1994) (collecting cases)). Recognizing the split of authority on the question, compare Confederation Life Ins. Co. v. Goodman,842 F.Supp. 836, 838 (E.D.Pa.1994) with County of Oakland v. Detroit,784 F.Supp. 1275, 1285 (E.D.Mich. 1992), the Court is persuaded that a civil RICO suit survives the death of a defendant. Although the treble damages provisions of a civil RICO suit may suggest a punitive element, the overriding purpose of RICO is to provide a remedy to persons injured as a result of racketeering activity. E.g., McMahon, 482 U.S. at 240, 107 S.Ct. at 2344-45; Faircloth, 938 F.2d at 518. The statute itself illustrates Congress's general intent: "the provisions of this title shall be liberally construed to effectuate its remedial purpose." Pub.L. No. 91-452, § 904(a), Title IX, 84 Stat. 947, reprinted in 18 U.S.C.A. § 1961 note (emphasis added). Significantly, civil RICO recovery runs to a private individual, and the mere inclusion of treble damages within a statutory scheme does not operate to make it punitive. See Mitsubishi Motors v. Soler Chrysler-Plymouth, Inc.,473 U.S. 614, 635, 105 S.Ct. 3346, 3358, 87 L.Ed.2d 444 (1985) (purpose of treble damages provisions in Clayton Act is primarily compensatory). The principal case upon which the defendants rely is neither controlling nor persuasive. While the Genty court concluded that the treble damages provisions of RICO were punitive in a case involving potential municipal liability where actual damages were easily calculated, 937 F.2d at 913, it is not persuasive authority for the broad proposition that all RICO claims are punitive in nature, even where, as here, the actual damages arising from a specific defendant's actions may be difficult to assess. Consequently, this Court joins those courts that have concluded that a civil RICO suit survives the death of the defendant. See, e.g., Private Sanitation Indus. Assoc., 159 F.R.D. at 390; County of Oakland, 784 F.Supp. at 1285; In re National Mortgage Equity Corp. Mortgage Pool Cert. Sec. Lit., [ 948 F.Supp. 1123 ]

636 F.Supp. 1138, 1154 (C.D.Cal.1986); State Farm Fire & Cas. v. Estate of Caton,540 F.Supp. 673, 682 (N.D.Ill.1982). 5. Statute of limitations Defendants next claim that this action is barred by the applicable statute of limitations. For the same reasons stated previously, the Dubai Defendants' argument will be rejected. See Mem.Op. at 23-26. 6. The common law counts The Dubai Defendants assert substantially the same challenges to the common law counts that the Court addressed previously and, with one exception, were found to be without merit. See Mem.Op. at 32. As stated before, Count III adequately asserts a claim for fraud against all defendants because the knowledge of the defendants will not be imputed to First American. Moreover, the substantial allegations in the Complaint simply cannot be said to violate Fed.R.Civ.P. 9(b)'s requirement that fraud claims be pleaded with specificity. Count VI sufficiently states a claim of aiding and abetting in breach of fiduciary duties, because it alleges that all of the defendants, including the Dubai Defendants, aided Clifford and Altman, who had a fiduciary duty to First American as an entity. Clifford and Altman are alleged to have engaged in illegal activities, and it is irrelevant that many of the shareholders may have ratified their illegal actions. See Safety Int'l, Inc. v. Dyer,775 F.2d 660, 662 (5th Cir.1985); Sellers v. Head, 261 Ala. 212, 73 So.2d 747, 750 (Ala.1954). The plaintiffs' claim in Count VIII that the Dubai Defendants engaged in reckless and negligent misconduct will be dismissed because there is no allegation that these defendants owed a duty of care to the plaintiffs. Finally, Count IX states a claim for civil conspiracy because actionable torts have been alleged. D. The Motion for Reconsideration of Magistrate Judge Attridge's Ruling Defendants Clifford and Altman request reconsideration by this Court of Magistrate Judge Attridge's order denying their motion for a protective order to stay foreign depositions pending a ruling on the Motion for Reconsideration addressed supra, at 9-13. Because this Court has reconsidered and rejected herein their Motion for Reconsideration, the motion to reconsider Magistrate Judge Attridge's order will be denied as moot. III. Conclusion For the reasons expressed above, it is hereby ORDERED that Defendant Clifford's and Altman's Motion for Reconsideration of this Court's August 25, 1995 Memorandum Opinion and Order or, in the Alternative, for Certification Pursuant to 28 U.S.C. § 1292(b) is denied; it is FURTHER ORDERED that the motions to dismiss by the contribution and indemnification codefendants are granted. Defendants Clifford's and Altman's cross-claims and third party complaint are dismissed; it is FURTHER ORDERED that the Motion of the Dubai Defendants is granted in part and denied in part. Count VIII is dismissed; it is FURTHER ORDERED that Defendants Clifford's and Altman's Motion for Reconsideration of Magistrate Judge Attridge's Order Denying a Protective Order is denied as moot; and it is FURTHER ORDERED that discovery shall close on October 31, 1997. By separate order issued this date, this case has been consolidated with Clifford v. First American, Civ.A. No. 95-0877(JHG) (D.D.C.), for the purposes of discovery. IT IS SO ORDERED. Footnotes

1. "BCCI", as used herein, refers collectively to BCCI Holdings (Luxembourg) S.A. ("BCCI Holdings"), its two operating subsidiaries, Bank of Credit and Commerce International S.A. ("BCCI S.A.") and Bank of Credit and Commerce International (Overseas) Limited ("BCCI Overseas"), and International Credit and Investment Company (Holdings) Limited ("ICIC Holdings"), an entity previously found to be the alter ego of the other BCCI entities. Back to Reference 2. The UAE is comprised of seven Sheikdoms, the largest and wealthiest of which is the Emirate of Abu Dhabi. Back to Reference 3. H.H. Sheikh Zayed, H.H. Sheikh Khalifa, H.H. Sheikh Sultan, H.E. Mazrui, DPA, ADIA, Mahfouz, Sheikh Kamala, Adham Corp., Jawhary, Sheikh Hamad, Mashriq Holding Co. and Sheikh Humaid ("settling co-defendants"). The Abu Dhabi defendants settled with First American on January 21, 1994, see Notice of Dismissal, Annex A (docket # 120), and Sheikh Kamala, Adham Corp. and Jawhary settled in July of 1994. See Joint Motion, at 19. Back to Reference 4. Iqbal, the Estate of Sheikh Rashid, Crescent Holding Co. and Stock Holding Co. Back to Reference 5. Fulaij, Abedi, Naqvi, Darwaish, Pharaon and Hammoud. The plaintiffs intend to seek default judgments against these defendants once liability has been resolved against the non-defaulting, non-settling defendants. Back to Reference 6. REDCO and GIRECO. Back to Reference 7. Counsel is appearing specially on behalf of the Estate of Sheikh Rashid Bin Said Al-Maktoum (Sheikh Rashid), Crescent Holding Co., and Stock Holding Co, none of which have yet been served with the Complaint. See Dubai Defendants' Motion to Dismiss at 2, n.*; Transcript of Status Conference, at 33 (statement of Thomas Green, Esq.) (Nov. 20, 1996). Back to Reference 8. Crescent Holding Co. may be in liquidation proceedings in Luxembourg. See Transcript of Status Conference, at 34 (statement of Thomas Green, Esq.) (Nov. 20, 1996). Back to Reference 9. A number of parties have requested oral argument under Local Rule 108(h). Whether to grant a request for oral argument is a matter committed to the discretion of the Court. In resolving these motions, which have been thoroughly briefed, the Court has determined that oral argument is unnecessary. Back to Reference 10. Clifford and Altman seek contribution from all 28 of their codefendants ("contribution defendants") and indemnification against H.H. Sheikh Zayed, H.H. Sheikh Khalifa, H.H. Sheikh Sultan, ADIA, Darwaish, H.E. Al-Shorafa, Sheikh Humaid, Sheikh Rashid, Stock Holding Co., Sheikh Mohammed, Crescent Holding Co., Sheikh Hamad, Mashriq Holding Co., Sheikh Kamala, Adham Corporation, Khalil, Jawhary, Fulaij, GIRECO, REDCO, Mahfouz and Hammoud ("indemnification defendants"). Back to Reference 11. This provision provides: When a district judge, in making in a civil action an order not otherwise appealable under this section, shall be of the opinion that such order involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation, he [or she] shall so state in writing in such order. The Court of Appeals may thereupon, in its discretion, permit an appeal to be taken from such order, if application is made to it within ten days after the entry of the order: Provided, however, That application for an appeal hereunder shall not stay proceedings in the district court unless the district judge or the Court of Appeals or a judge thereof shall so order. Back to Reference 12. The Dubai Defendants did not present this argument. Because of the result herein, the Court does not reach the jurisdictional arguments raised by the Dubai Defendants on this issue. Back to Reference 13. If the Court had allowed Count V to go forward on a negligence theory, it would nevertheless be appropriate here to dismiss Clifford's and Altman's third party complaint for contribution and indemnification based on Rule 14(a). See Kosters v. Seven-Up Co.,595 F.2d 347, 356 (6th Cir.1979). See generally 6 Wright, Miller & Kane, Federal Practice and Procedure: Civil 2d § 1460 (1990). After peeling away the layers of their third party complaint, all that would be left is a very narrow ground for recovery on a very narrow theory on one count (and three paragraphs) of a lengthy complaint in an extremely complex case. Allowing Clifford and Altman to implead multiple defendants based on a mere whisper of negligence would confuse the principal issues in the case, create unreasonable but likely delay, and cause additional unnecessary expenses to the parties. See Kopan v. George Washington Univ., 67 F.R.D. 36, 38 (D.D.C. 1975). Back to Reference 14. As previously noted, the Dubai Defendants' motion to dismiss the cross-claims of Clifford and Altman is granted on grounds other than those asserted by the Dubai Defendants under the FSIA, and head of state and act of state immunity doctrines. Back to Reference 15. Because of the Court's determination that the Complaint adequately alleges that the defendants' acts were personal, as opposed to official, the Court does not reach the Dubai Defendants' alternative arguments premised upon their being foreign sovereigns. Back to Reference 16. Because of the conclusion that personal jurisdiction exists as a result of the defendants' acts outside of the District of Columbia, the Court does not reach the plaintiffs' jurisdictional argument based on a conspiracy theory. Back to Reference 17. The Court encourages the parties to confer and enter into any appropriate stipulations. Back to Referen


Reuben Jeffery  back
Mr. Reuben Jeffery, III serves as the Chief Executive Officer at Rockefeller Financial. Mr. Jeffery joined Rockefeller Financial on September 7, 2010 and is responsible for the general oversight and its four business groups: Rockefeller Wealth Advisors, Rockefeller Asset Management, Rockefeller Capital Partners, and Rockit® Solutions. Mr. Jeffery served as a Managing Director at Goldman Sachs Paris Inc. et Cie. from 1997 to 2001 and served in its European Financial Institutions Group from 1992 to 1997 in London, where he spent for 18 years. Previously, Mr. Jeffery served as a Senior Adviser of President's Office at Center for Strategic and International Studies, Inc. He served in the U.S. government as Under Secretary of State for Economic, Energy, and Agricultural Affairs. Mr. Jeffery advised the Secretary of state on international economic policy and led the work of the department on issues ranging from trade and investment to agriculture and aviation to bilateral economic relations. He was also the department's coordinator for international energy affairs. Prior to joining Goldman Sachs, Mr. Jeffery served as a Banking and Securities Lawyer at Davis Polk & Wardwell in New York. He served as a Commercial Banker at Morgan Guaranty Trust Company of New York. Mr. Jeffery served as the Chairman of the Commodity Futures Trading Commission. In that capacity, Mr. Jeffery served as a Member of the President's Working Group on Financial Markets. He served as a Special Assistant to the President and Senior Director for international economic affairs at the National Security Council. He has been a Director at Stirling Cooke Brown Holdings Limited since January 1996. Mr. Jeffery has been a Non-Executive Director of Barclays plc and Barclays Bank PLC since July 2009. Mr. Jeffery serves as Director of Rockefeller Financial. He serves as the Member of Senior Advisory Board of TowerBrook Capital Partners L.P. He serves as a Member of Board of Advisors at TASC, Inc. He serves as a Member of the Board of Visitors of Stanford Law School, the Council on Foreign Relations, and the World Economic Forum's Council on Systemic Financial Risk. Mr. Jeffery serves as a Member of the President's Council on International Activities at Yale University. Mr. Jeffery served as a Director of Transatlantic Holdings Inc. from May 2010 to March 29, 2011. Mr. Jeffery also served as Representative and Director of the Coalition Provisional Authority Office at the Pentagon. He began his government service as Special Adviser to the president for Lower Manhattan Development, where Mr. Jeffery was responsible for coordinating ongoing federal efforts in support of the long-term recovery and redevelopment of Lower Manhattan in the aftermath of September 11, 2001. He is a recipient of the Department of Defense Medal for Distinguished Public Service (2004) and the Secretary of State's Distinguished Service Award (2009). Mr. Jeffery received an M.B.A. and J.D. degrees from Stanford University and a B.A. degree in Political Science from Yale University.  see Libor fraud, Barclays, Rothschild

Pilgrims Society member Richard A. Debs was with the Federal Reserve Bank of New York, 1960-1976, and as an official, played his role in sucking up silver coins from the largest banking district in the nation for the eventual benefit of the Silver Users Association. At the Fed he chaired the Federal Reserve/Treasury Committee on Fiscal Agency Operations; meaning; he was intimately involved in the campaign to dispossess the citizenry of lawful silver coinage! In 1976 he became president of Morgan Stanley International, a position he held into 1987--- "Before joining Morgan Stanley, he was the Chief Operating Officer of the Federal Reserve Bank of New York, where he also served as an Alternate Member of the Federal Open Market Committee. He was the Fed’s principal contact with the OPEC countries with regard to petrodollar issues in the 70’s. During his transition from the Fed to Morgan Stanley, at the request of David Rockefeller, he served as a pro-bono financial advisor to President Sadat of Egypt. Through his consulting firm, R.A. Debs & Co., formed after he retired as president, Mr. Debs has been involved in variety of business and philanthropic activities. Among other business associations, he has served as Chairman of the Malaysia Fund; as a Director of IBJ Whitehall Bank, Mizuho Corporate Bank (USA), Aubrey G. Lanston & Co., Mizuho Securities USA, and Gulf International Bank (London); and as an advisor to the Industrial Bank of Japan, Dai-Ichi Mutual Life Insurance Company, the Nissho-Iwai Corporation, and Bank Julius Baer. Mr. Debs is Chairman Emeritus of the American University of Beirut, and serves on its International Advisory Council. He is also Chairman Emeritus of Carnegie Hall and serves on its Executive Committee. He also serves as a trustee of the Carnegie Endowment for International Peace, the Institute of International Education, the Federation of Protestant Welfare Agencies, and the Barenboim Said Foundation. He is past Chairman and a member of the New York Stock Exchange International Committee; the U.S. Chairman of the Bretton Woods Commission; the Vice Chairman of the U.S. – Saudi Business Council; and a member of the Group of Thirty and Chairman of its Study Group on Eastern Europe. He has served on the National Commission on the Public Service, the Carnegie Commission on the Role of the Multinational Development Banks, the Russian-American Bankers Forum, and the Board of Governors of the Foreign Policy Association; and on advisory committees of the Federal Reserve Bank of New York; the World Bank; the International Monetary Fund; the European Bank for Reconstruction and Development; as well as visiting committees of Princeton, Harvard, and Columbia Universities. He is a member of the Council on Foreign Relations; the Overseas Development Council; the Economic Club of New York; the American Council on Germany and the Japan Society. He has been honored with awards from the Fulbright Association, the Third Street Music School Settlement, the Federation of Protestant Welfare Agencies, the Arab American Bankers Association, and the National Academy of Design, as well as the Government of Saudi Arabia, with the King Abdul Aziz Medal, and the Government of Lebanon, with the Cedars of Lebanon Medal. During his 16 years at the Federal Reserve, he served as a member of the FOMC Committee on Foreign Currency, and the Committee on International Banking. He was also Chairman of the Federal Reserve – Treasury Committee on Fiscal Agency Operations, which under his direction created the first book-entry system for securities in 1970. He also served as an Advisor on the United States delegations to the IMF and IBRD annual meetings. Mr. Debs is married to Dr. Barbara Knowles Debs, former President of Manhattanville College and of The New York Historical Society."


Diana: a Link to Iran Contra and 9/11? by stuartbramhall   back
16 MAY Diana: a Link to Iran Contra and 9/11? by stuartbramhall in Challenging the Corporate Media, Things That Aren't What They Seem5 Comments The recent royal wedding and Cannes Festival release of Unlawful Killing has prompted a resurgence of public interest in the “conspiracy theory” that the royal family and British intelligence secretly arranged the car accident responsible for Princess Diana’s death. Mohammed Al Fayed, the billionaire father of Dodi Al Fayed, who was also killed in the, has spent millions of dollars on litigation attempting to prove that the French and British government guilty of a massive cover-up. He’s also a major backer of the new film.

Al Fayed’s case is based in part on statements Diana made to friends about a “black network” that wanted her dead and would set her up to die in a car accident. However it’s supported by numerous inconsistencies in the “official” account of the accident. The most serious is the claim by French police that the limousine driver’s blood alcohol level was three times the normal limit – which is disputed by the bodyguard Rhees-Jones, who survived the accident, as well as family, friends and work colleagues of the driver Henri Paul. The latter describe him as a highly conscientious professional who rarely drank to intoxication and never while on duty. Others include the failure of the French police to seal the crime scene and the extraordinary length of time it took to get medical attention for Diana, who was still conscious immediately after the accident. After taking thirty minutes to get to the scene, the ambulance drivers left her at the side of the road while they extracted other victims from the limousine. It then took the ambulance another hour to drive her four miles to the hospital.

Some researchers strongly suspect Henri Paul’s blood samples were tampered with. Here is a video link demonstrating how someone looks and acts at a blood alcohol level of 1.75 grams per liter: http://www.youtube.com/watch?v=yLzYJa8Wv88. The experimental subject was so intoxicated he could hardly walk and someone had to help him put his car in gear. The video also notes that the pathologist noted no smell of alcohol in Henri Paul’s stomach at autopsy.

While there definitely appears to be a cover-up, it has always puzzled me that people blame the Royal Family, without looking at some of Dodi Al Fayed’s unsavory connections through his uncle Adnan Khashoggi. As I wrote in my recent review of Chain of Command (see last blog) Khashoggi is a Saudi arms dealer and businessman with longstanding ties to the CIA and Bush family. His sister Samira married Mohammed Al Fayed and was the mother of Dodi Al Fayed, Diana’s companion at the time of the accident. At one point, Mohammed was also business partners with Khashoggi.

Adnan Khashoggi

A Long History of Unsavory Intelligence Connections

Khashoggi is best known for his role as the middleman responsible for the arms deal in the Iran-Contra affair. This was a complex transaction in which the Reagan administration with (CIA operative and Marine Colonel Oliver North serving as point man) illegally sold weapons to Iran, an enemy nation, to defy Congress in providing continued funding for the CIA-backed Contras (mercenaries) fighting to topple the democratically elected government of Nicaragua.

Khashoggi’s name first surfaces in intelligence archives as a partner with George H.W. Bush in a CIA-front company known as Barrick Gold and later as Barrick Resources International (a company that mysteriously wound up with the bulk of the gold various Nazi war criminals smuggled out of Europe). Khashoggi was also involved in BCCI (the bank used by the CIA to launder drug profits and to finance covert assassinations and other black operations prior to its shutdown by bank regulators in 1991). Moreover he was also closely linked with the off-the-books intelligence network Bush senior set up after Carter removed him as CIA director in 1997, with the help of the Saudi royal family and Saudi chief of intelligence Kamal Adham (this network is described in detail by Russ Baker in Family of Secrets). Following BCCI’s demise, Khashoggi used his own banking operations in Armenia and elsewhere to finance weapons deals and training cells for this off-the-books network, as well as to launder illicit drug profits.

Khashoggi is also linked to the murder of investigative reporter Danny Casolaro, killed in 1993 just as he was about to release more evidence of the direct involvement of high level US officials (including Bush senior) in Iran Contra, BCCI and the theft and misuse of innovative PROMIS personal tracking software. An interesting 2001 post on Disinformation reveals that Mohammed Al Fayed initially believed Casolaro’s murder was linked to Diana’s death but that the CIA stonewalled his efforts to prove it (http://old.disinfo.com/archive/pages/article/id902/pg1/index.html).

Khashoggi’s Link to 9/11

Khashoggi is linked to 9/11 in several ways. He was part owner with Adham of Oryx, the company that owned and operated Huffman Aviation in Florida, where Mohamed Ata and other members of his crew learned to fly airplanes (Huffman Aviation was also implicated in smuggling illicit drugs from South America). In addition, several of Khashoggi’s banks were also involved in funding terrorist camps and biological/chemical warfare laboratories in Nagorny Karabakh (a semi-autonomous region in Azerbaijan, one of the former Soviet republics).

However most significant was Khashoggi’s indictment in 2002 for a stock scam in which he clearly demonstrated foreknowledge of the giant Wall Street slump that would follow the twin towers collapse in September 2011. The scam involved Genesis Intermedia (GENI), a communications company. Khashoggi and a number of other Irangate figures who owned GENI stock loaned it to brokerage houses in return for cash collateral – leaving the brokerage houses with worthless stocks when share prices collapsed following 9/11.

Blaming the Royal Family

I have always suspected Mohammed Al Fayed knows more than he lets on about the true circumstances of Diana’s death. Perhaps he (rightly?) believes that it’s safer to blame the royal family than the deadly off-the-shelf intelligence network his brother-in-law Adnan Khashoggi belongs to. So for now he promotes an alternative scenario in order to keep the issue alive.

For a more detailed summary of Khashoggi’s financial scams and shadowy intelligence connections – as well as a full list of the dead bodies that litter his past (including Danny Casolaro) – consult Daniel Hopiscker Welcome to Terrorland www.madcowmorningnews.com and Alex Constantine Adnan Khashoggi Linked to 911 Terrorists http://webfairy.org/constantine/index.htm


Board of Director of Jones Lang LaSalle 
Sheila A. Penrose, Chairman of the Board Jones Lang LaSalle, The Boston Consulting Group, Northern Trust Corporation, University of Birmingham in England, London School of Economics, Stanford Graduate School of Business;  Colin Dyer President and Chief Executive Officer Jones Lang LaSalle, WorldWide Retail Exchange, CEO of Courtaulds Textiles, Managing Director of the Dutch retail chain, GDL, McKinsey & Company in Amsterdam, INSEAD, Imperial College in London; Hugo Bagué Group Executive Rio Tinto (United Kingdom), Hewlett Packard Corporation, University of Ghent in Belgium; Darryl Hartley-Leonard Retired Chairman and Chief Executive Officer, Hyatt Hotels Corporation,LaSalle Hotel Properties, holds a B.A. from Blackpool Lancashire College of Lancaster University and an honorary doctorate of business administration from Johnson and Wales University; DeAnne Julius Chairman Royal Institute of International Affairs, She is the Chairman of the Royal Institute of International Affairs, also known as Chatham House, was previously a founding member of the Monetary Policy Committee of the Bank of England and was the Chief Economist at each of British Airways and Royal Dutch Shell, World Bank, and a consultant to the International Monetary Fund, Roche Holding AG, Deloitte UK, member of the board of directors of BP PLC; Ming Lu Partner KKR & Co., L.P. Wuhan University of Hydro Electrical Engineering in China and an M.B.A. from the University of Leuven in Belgium; Lauralee E. Martin senior management positions with General Electric Credit Corporation. Thomas C. Theobald Partner and Senior Advisor Chicago Growth Capital Partners LLC Mr. Theobald has been a Director of Jones Lang LaSalle since July 1997. He has served as a Partner and Senior Advisor at Chicago Growth Capital Partners LLC,  he served as a Managing Director at William Blair Capital Partners. From July 1987 to August 1994, Mr. Theobald was Chairman of Continental Bank Corporation. He currently serves on the boards of directors of Ambac Financial Group, on the board of directors of Anixter International, a supplier of electrical equipment. Mr. Theobald holds an A.B. from the College of the Holy Cross and an M.B.A. from Harvard Business School.


Board of Directors HSBC Global London   back  back (libor page)
Board of Directors Directors D J Flint CBE, 56 Group Chairman Skills and experience: extensive governance experience gained through membership of the Boards of HSBC and BP; considerable knowledge of finance and risk management in banking, multinational financial reporting, treasury and securities trading operations; honoured with a CBE in recognition of his services to the finance industry; a member of the Institute of Chartered Accountants of Scotland and the Association of Corporate Treasurers. Fellow of The Chartered Institute of Management Accountants. Joined HSBC in 1995. Appointed to the Board: 1995 Current appointments include: director of The Hong Kong Association since 6 February 2011; and Vice Chairman and Chairman Designate (June 2012) of the Institute of International Finance. Former appointments include: Group Finance Director and Chief Financial Officer, Executive Director, Risk and Regulation. Co-Chairman of the Counterparty Risk Management Policy Group III; Chairman of the Financial Reporting Council's review of the Turnbull Guidance on Internal Control; a member of the Accounting Standards Board and the Standards Advisory Council of the International Accounting Standards Board; served on the Large Business Forum on Tax and Competitiveness and the Consultative Committee of the Large Business Advisory Board of HM Revenue and Customs; and a former partner in KPMG. Ceased to be Chairman and a member of the Nomination Committee on 2 December 2011. Ceased to be a non-executive director of BP p.l.c. on 14 April 2011.

S T Gulliver 53 Group Chief Executive Skills and experience: a career banker with over 30 years' international experience with HSBC; has held a number of key roles in the Group's operations worldwide, including in London, Hong Kong, Tokyo, Kuala Lumpur and the United Arab Emirates; played a leading role in developing and expanding Global Banking and Markets, the wholesale banking division of the Group with operations in over 65 countries and territories. Joined HSBC in 1980. Appointed to the Board: 2008 Current appointments include: Group Chief Executive and Chairman of The Hongkong and Shanghai Banking Corporation Limited since 1 January 2011; Chairman of HSBC France; and Chairman of the Group Management Board. Former appointments include: Chairman, Europe, Middle East and Global Businesses; Chairman of HSBC Bank plc and of HSBC Bank Middle East Limited; Head of Global Banking and Markets; Co-Head of Global Banking and Markets; Head of Global Markets; Head of Treasury and Capital Markets in Asia-Pacific. Ceased to be Deputy Chairman of HSBC Trinkaus & Burkhardt AG and a member of its Supervisory Board on 7 June 2011; and Chairman of HSBC Private Banking Holdings (Suisse) SA on 6 December 2011. S A Catz† 50 Skills and experience: a background in international business leadership, having helped transform Oracle into the largest producer of business management software and the world's leading supplier of software for information management. Appointed to the Board: 2008 Current appointments include: President and Chief Financial Officer of Oracle Corporation. Joined Oracle in 1999 and appointed to the board of directors in 2001. Former appointments include: Managing Director of Donaldson, Lufkin & Jenrette.

L M L Cha† GBS, 62 Member of the Corporate Sustainability Committee. Skills and experience: extensive regulatory and policymaking experience in the finance and securities sector in Hong Kong and mainland China; formerly Vice Chairman of the China Securities Regulatory Commission, being the first person outside mainland China to join the Central Government of the People's Republic of China at vice-ministerial rank; awarded Gold and Silver Bauhinia Stars by the Hong Kong Government for public service; formerly Deputy Chairman of the Securities and Futures Commission in Hong Kong; and has worked in the US and Asia. Appointed to the Board: 1 March 2011 Current appointments include: non-executive Deputy Chairman of The Hongkong and Shanghai Banking Corporation Limited; non-official member of the Executive Council of Hong Kong SAR; a director of Hong Kong Exchanges and Clearing Limited; and Tata Consultancy Services Limited; Chairman of the ICAC Advisory Committee on Corruption; a Hong Kong Deputy to the 11th National People's Congress of China; a member of the Advisory Board of the Yale School of Management, Millstein Center of Corporate Governance, and Performance at Yale University; a Senior International Advisor for Foundation Asset Management Sweden AB; and a member of the State Bar of California. Former appointments include: non-executive director of Bank of Communications Co., Ltd., Baoshan Iron and Steel Co. Limited, Johnson Electric Holdings Limited, and China Telecom Corporation Limited; and Chairman of the University Grants Committee in Hong Kong.

M K T Cheung† GBS, OBE, 64 Member of the Group Audit Committee. Skills and experience: a background in international business and financial accounting, particularly in greater China and the wider Asian economy; retired from KPMG Hong Kong in 2003 after more than 30 years; awarded the Gold Bauhinia Star by the Hong Kong Government. Fellow of the Institute of Chartered Accountants in England and Wales. Appointed to the Board: 2009 Current appointments include: non-executive director of Hang Seng Bank Limited; non-executive chairman of the Airport Authority Hong Kong; non-executive director of HKR International Limited; non-official member of the Executive Council of the Hong Kong SAR; non-executive chairman of the Council of the Hong Kong University of Science and Technology; and a director of The Association of Former Council Members of The Stock Exchange of Hong Kong Limited and The Hong Kong International Film Festival Society Ltd. Former appointments include: non-executive director of Sun Hung Kai Properties Limited and Hong Kong Exchanges and Clearing Limited; Chairman and Chief Executive Officer of KPMG Hong Kong; and a council member of the Open University of Hong Kong.

J D Coombe† 67 Chairman of the Group Audit Committee and member of the Group Risk Committee and Group Remuneration Committee. Skills and experience: a background in international business, financial accounting and the pharmaceutical industry; formerly Chief Financial Officer of GlaxoSmithKline with responsibility for the group's financial operations globally. Fellow of the Institute of Chartered Accountants in England and Wales. Appointed to the Board: 2005 Current appointments include: non-executive Chairman of Hogg Robinson Group plc; a non-executive director of Home Retail Group plc; and a council member of The Royal Academy of Arts. Former appointments include: executive director and Chief Financial Officer of GlaxoSmithKline plc; non-executive director of GUS plc; a member of the Supervisory Board of Siemens AG; Chairman of The Hundred Group of Finance Directors; and a member of the Accounting Standards Board.

J Faber† 61 Member of the Group Risk Committee from 1 March 2012. Skills and experience: a background in banking and asset management with significant international experience, having worked in Germany, Tokyo, New York and London; former Chief Executive Officer of Allianz Global Investors AG and a member of the management board of Allianz SE until 31 December 2011; 14 years experience with Citigroup Inc. holding positions in Trading and Project Finance and as Head of Capital Markets for Europe, North America and Japan. Has a doctorate from the University of Administrative Sciences in Speyer. Appointed to the Board: from 1 March 2012 Current appointments include: Chairman of Joh A. Benckiser SARL and Chair of the Investment Board of the Stifterverband for the Deutsche Wissenschaft; independent director of Deutsche Borse AG, Coty Inc.; a member of the advisory board of the Siemens Group Pension Board, and the boards of management of Deutsche Krebshilfe and the European School for Management and Technology; and a member of the Berlin Centre for Corporate Governance, the German Council for Sustainable Development and Allianz Climate Solutions. Former appointments include: Chairman of Allianz Global Investors Kapitalanlagegesellschaft and Allianz Global Investors Deutschland GmbH; Chairman of the board of management of Allianz Global Investors Italia SGR SpA; a member of the advisory board of Allianz SpA; and a member of the supervisory board of Bayerische Boerse AG.

R A Fairhead† CBE, 50 Chairman of the Group Risk Committee and member of the Group Audit Committee and Nomination Committee. Skills and experience: a background in international industry, publishing, finance and general management; formerly Finance Director of Pearson plc with responsibility for overseeing the day-to-day running of the finance function and directly responsible for global financial reporting and control, tax and treasury. Has a Master's in Business Administration from the Harvard Business School. Appointed to the Board: 2004 Current appointments include: Chairman, Chief Executive Officer and a director of Financial Times Group Limited. A director of Pearson plc and a non-executive director of The Economist Newspaper Limited; and a non-executive member of the board of the UK Government's Cabinet Office. Former appointments include: Executive Vice President, Strategy and Group Control of Imperial Chemical Industries plc; Finance Director of Pearson plc; and Chairman and a director of Interactive Data Corporation.

A A Flockhart†† CBE, 60 Chairman, Europe, Middle East, Latin America, Commercial Banking Skills and experience: a career banker, being an emerging markets specialist with over 35 years' experience with HSBC in Latin America, the Middle East, US and Asia; honoured with a CBE in recognition of his services to British business and charitable services and institutions in Mexico. Joined HSBC in 1974. Appointed to the Board: 2008 Current appointments include: Chairman of HSBC Bank plc since 1 January 2011 and a director of HSBC Bank Middle East Limited since 7 July 2011; Chairman of HSBC Latin America Holdings (UK) Limited; a director of HSBC Bank Australia Limited; and a member of the Group Management Board. Former appointments include: Chairman, Personal and Commercial Banking; Chief Executive Officer of The Hongkong and Shanghai Banking Corporation Limited; a director of HSBC Bank (China) Company Limited and Hang Seng Bank Limited, vice-chairman and a director of HSBC Bank (Vietnam) Limited; Chairman, HSBC Bank Malaysia Berhad; Chairman, President and Group Managing Director, Latin America and the Caribbean; Chief Executive Officer, Mexico; Senior Executive Vice-President, Commercial Banking, HSBC Bank USA, N.A.; Managing Director of The Saudi British Bank.

J W J Hughes-Hallett† SBS, 62 Member of the Group Risk Committee and Nomination Committee. Skills and experience: a background in financial accounting and experience of management of a broad range of international businesses, including aviation, insurance, property, shipping, manufacturing and trading in the Far East, UK, US and Australia; awarded the Silver Bauhinia Star by the Hong Kong Government. Fellow of the Institute of Chartered Accountants in England and Wales. Appointed to the Board: 2005 Current appointments include: Chairman of John Swire & Sons Limited; non-executive director of Cathay Pacific Airways Limited and Swire Pacific Limited; a trustee of the Dulwich Picture Gallery and the Esmée Fairbairn Foundation; a member of The Hong Kong Association and the Governing Board of the Courtauld Institute of Art. Former appointments include: non-executive director of The Hongkong and Shanghai Banking Corporation Limited.

W S H Laidlaw† 56 Member of the Group Remuneration Committee. Skills and experience: significant international experience, particularly in the energy sector, having had responsibility for businesses in four continents. Qualified Solicitor and Master's in Business Administration from INSEAD. Appointed to the Board: 2008 Current appointments include: Chief Executive Officer of Centrica plc; a member of the UK Prime Minister's Business Advisory Group; and the Lead Non-executive Board Member of the Department for Transport. Former appointments include: Executive Vice President of Chevron Corporation; a non-executive director of Hanson PLC; Chief Executive Officer of Enterprise Oil plc; and President and Chief Operating Officer of Amerada Hess Corporation.

J P Lipsky† 65 Member of the Group Risk Committee from 1 March 2012. Skills and experience: international experience having worked in Chile, New York, Washington and London and interacted with financial institutions, central banks and governments in many countries; served at the International Monetary Fund as First Deputy Managing Director, Acting Managing Director from 14 May 2011 and as Special Advisor from 1 September 2011 until retirement on 11 November 2011. Has a PhD from Stanford University. Appointed to the Board: from 1 March 2012 Current appointments include: Distinguished Visiting Scholar, International Economics Program at the Paul H. Nitze School of Advanced International Studies, Johns Hopkins University; co‑director of the Aspen Institute Program on the Global Economy; director of the National Bureau of Economic Research; a member of the advisory board of the Stanford Institute for Economic Policy Research and the Council on Foreign Relations. Former appointments include: Vice Chairman J P Morgan Investment Bank; director of the American Council on Germany and the Japan Society; and a trustee of the Economic Club of New York.

J R Lomax† 66 Member of the Group Audit Committee and Group Risk Committee. Skills and experience: experience in both the public and private sectors and a deep knowledge of the operation of the UK government and financial system. Appointed to the Board: 2008 Current appointments include: non-executive director of The Scottish American Investment Company PLC, Reinsurance Group of America Inc., Arcus European Infrastructure Fund GP LLP and BAA Limited; a director of the Council of Imperial College, London; and President of the Institute of Fiscal Studies. Former appointments include: Deputy Governor, Monetary Stability, at the Bank of England and a member of the Monetary Policy Committee; Permanent Secretary at the UK Government Departments for Transport and Work and Pensions and the Welsh Office; and Vice President and Chief of Staff to the President of the World Bank.

I J Mackay 50 Group Finance Director Skills and experience: extensive financial and international experience, having worked in London, Paris, US and Asia. Member of the Institute of Chartered Accountants of Scotland. Joined HSBC in 2007. Appointed to the Board: 2010 Current appointments include: member of the Group Management Board. Former appointments include: director of Hang Seng Bank Limited; Chief Financial Officer, Asia Pacific; and Chief Financial Officer, HSBC North America Holdings Inc; Vice President and Chief Financial Officer of GE Consumer Finance and Vice President and Chief Financial Officer of GE Healthcare - Global Diagnostic Imaging.

N R N Murthy† CBE, 65 Chairman of the Corporate Sustainability Committee. Skills and experience: experience in information technology, corporate governance and education, particularly in India; founded Infosys Limited in India; was its Chief Executive Officer for 21 years; under his leadership Infosys established a global footprint and was listed on NASDAQ. Appointed to the Board: 2008 Current appointments include: Chairman Emeritus of Infosys Limited; a director of the United Nations Foundation and Catamaran Management Services Pvt. Ltd. Former appointments include: former Chief Executive Officer of Infosys Limited; a director of Unilever plc and Unilever n.v.; and a non-executive director of DBS Group Holdings Limited, DBS Bank Limited and New Delhi Television Limited.

Sir Simon Robertson† 70 Deputy Chairman and senior independent non-executive Director Chairman of the Nomination Committee. Skills and experience: a background in international corporate advisory with a wealth of experience in mergers and acquisitions, merchant banking, investment banking and financial markets; honoured with a knighthood in recognition of his services to business; extensive international experience having worked in France, Germany, the UK and the US. Appointed to the Board: 2006. Current appointments include: non-executive Chairman of Rolls-Royce Holdings plc since 23 February 2011, which became the holding company of the Rolls-Royce group of companies on 23 May 2011 as part of a group restructuring. Chairman of Rolls-Royce Group plc, formerly the holding company of the Rolls-Royce group of companies, until 23 May 2011. The founding member of Simon Robertson Associates LLP; a non-executive director of Berry Bros. & Rudd Limited, The Economist Newspaper Limited and Royal Opera House Covent Garden Limited; a partner of NewShore Partners LLP; and a trustee of the Eden Project Trust and of the Royal Opera House Endowment Fund. Former appointments include: Managing Director of Goldman Sachs International and chairman of Dresdner Kleinwort Benson.

J L Thornton† 58 Chairman of the Group Remuneration Committee. Skills and experience: experience that bridges developed and developing economies and the public and private sectors; a deep knowledge of financial services and education systems, particularly in Asia. During his 23-year career with Goldman Sachs, he played a key role in the firm's global development and was Chairman of Goldman Sachs Asia. Appointed to the Board: 2008 Current appointments include: non-executive Chairman and a director of HSBC North America Holdings Inc.; professor and director of the Global Leadership Program at the Tsinghua University School of Economics and Management; Chairman of the Brookings Institution Board of Trustees; a non-executive director of Ford Motor Company, News Corporation, Inc. and China Unicom (Hong Kong) Limited; a director of National Committee on United States-China Relations; a Trustee of Asia Society, China Institute, The China Foreign Affairs University, a member of the Council on Foreign Relations and the China Securities Regulatory Commission International Advisory Committee. Former appointments include: non-executive director of Industrial and Commercial Bank of China Limited and Intel Corporation, Inc.; and President of the Goldman Sachs Group, Inc. Secretary R G Barber 61 Group Company Secretary Joined HSBC in 1980. Group Company Secretary since 1986 and Company Secretary of HSBC Holdings plc since 1990. Appointed a Group General Manager in 2006. Chairman of the Disclosure Committee. A member of the Listing Authority Advisory Committee of the Financial Services Authority and of the Primary Markets Group of the London Stock Exchange. Fellow of the Institute of Chartered Secretaries and Administrators. Former HSBC appointments include: Corporation Secretary of The Hongkong and Shanghai Banking Corporation Limited and Company Secretary of HSBC Bank plc. Adviser to the Board D J Shaw 65 An Adviser to the Board since 1998. A director of HSBC Bank Bermuda Limited, HSBC Private Banking Holdings (Suisse) SA and HSBC Private Bank (Suisse) SA. An independent non-executive director of Kowloon Development Company Limited and Shui On Land Limited. A solicitor and formerly a partner in Norton Rose.


AL RAJHI BANK, HSBC, terrorist financing  excerpt from: http://www.newsfollowup.com/us_senate_report_hsbc_saudi_arabia_drugs_money_laundering_terrorist_financing.htm
V. AL RAJHI BANK: DISREGARDING LINKS TO TERRORIST FINANCING For decades, HSBC has been one of the most active global banks in Saudi Arabia, despite AML and terrorist financing risks involved with doing business in that country. Among other activities, for more than 25 years, HSBC has provided a wide range of banking services to Al Rajhi Bank, Saudi Arabia’s largest private bank.1075 Those services included providing large amounts of physical U.S. dollars to the bank as part of HSBC’s U.S. banknotes business. After the 9-11 terrorist attack on the United States in 2001, evidence began to emerge that Al Rajhi Bank and some of its owners had links to organizations associated with financing terrorism, including that one of the bank’s founders was an early financial benefactor of al Qaeda. In January 2005, despite the fact that Al Rajhi Bank had not been indicted, designated a terrorist financier, or sanctioned by any country, HSBC Group Compliance recommended internally that, due to terrorist financing concerns, HSBC affiliates should sever ties with the bank. In response, some HSBC affiliates disregarded the recommendation and continued to do business with the bank, while others terminated their relationships but protested HSBC’s decision and urged HSBC to reverse it. The protests continued despite a U.S. indictment the next month, in February 2005, of two individuals accused, among other matters, of cashing $130,000 in U.S. travelers cheques at Al Rajhi Bank in Saudi Arabia and smuggling the money to violent extremists in Chechnya. In May 2005, four months after its initial decision, HSBC Group Compliance reversed itself and announced that all HSBC affiliates could do business with Al Rajhi Bank, thus allowing HBUS to decide for itself whether to resume the relationship. For nearly two years, HSBC Banknotes repeatedly asked its AML Compliance personnel to allow reinstatement of the Al Rajhi Bank relationship, despite ongoing concerns at HBUS about the bank’s possible links to terrorist financing. On December 1, 2006, despite concern that there is “no smoke without fire,” HBUS AML Compliance agreed to allow HBUS to reinstate the relationship and resume supplying U.S. dollars to Al Rajhi Bank. Earlier, Al Rajhi Bank had threatened to pull all of its business from HSBC if the U.S. banknotes business were not restored, while HSBC personnel estimated that restoring the U.S. banknotes business would produce annual revenues of at least $100,000. In 2007, additional information surfaced about Al Rajhi Bank’s possible links to terrorism, including articles on a 2003 report by the U.S. Central Intelligence Agency (CIA) entitled, “Al Rajhi Bank: Conduit for Extremist Finance,” which found that “[s]enior al-Rajhi family members have long supported Islamic extremists and probably know that terrorists use their bank.” Despite that and other troubling information, HBUS continued to supply U.S. dollars to the bank, and even expanded its business, until 2010, when HSBC decided, on a global basis, to exit the U.S. banknotes business. 1075 HSBC also operates an affiliate, HSBC Bank Middle East, with branches in Saudi Arabia; owns Saudi British Bank; and provides correspondent banking services to other Saudi financial institutions. 189 Al Rajhi Bank was not the only bank with links to terrorism serviced by HBUS. Two additional examples are Islami Bank Bangladesh Ltd. and Social Islami Bank which is also located in Bangladesh. In each case, in anticipation of revenues of $75,000 to $100,000 per year, HBUS Banknotes personnel disregarded troubling evidence of possible links to terrorist financing, opened accounts for the banks, and provided them with U.S. dollars and access to the U.S. financial system. A. Al Rajhi Bank Founded in 1957, Al Rajhi Bank is one of the largest banks in Saudi Arabia, with over 8,400 employees and assets totaling $59 billion.1076 Headquartered in Riyadh, the bank has over 500 branches, mostly in Saudi Arabia, but also in Malaysia, Kuwait, and Jordan.1077 The bank was founded by four brothers, Sulaiman, Saleh, Abdullah, and Mohamed, of the Al Rajhi family, one of the wealthiest in Saudi Arabia. The bank began as a collection of banking and commercial ventures which, in 1978, joined together as the Al Rajhi Trading and Exchange Company.1078 In 1987, the company converted to a joint stock company, and two years later renamed itself the Al Rajhi Banking and Investment Corporation.1079 In 2006, the bank rebranded itself as Al Rajhi Bank.1080 It is traded on the Saudi Arabian Stock Exchange (Tadawul), and about 45% of its shares are publicly owned.1081 Al Rajhi family members remain the bank’s largest shareholders.1082 Al Rajhi Bank offers a wide range of banking services including deposits, loans, investment advice, securities trading, remittances, credit cards, and consumer financing.1083 All services are offered in conformance with Islamic requirements, including the set aside of funds for “zakat,” which is used for charitable donations. The bank has won a number of awards for its operations in the Middle East. The bank’s most senior official is Sulaiman bin Abdul Aziz Al Rajhi, who at various times has held the posts of Chief Executive Officer, Managing Director, and Chairman of the Board of Directors.1084 1076Al Rajhi Bank website, “About Us,” The bank’s General Manager is Abdullah bin Abdul Aziz Al Rajhi. The board of directors consists of eleven directors, six of whom http://www.alrajhibank.com.sa/en/about-us/pages/default.aspx. 1077 Id. 1078 Id; Al Rajhi Bank website, “Our History,” http://www.alrajhibank.com.sa/our-history/index.html. 1079 Al Rajhi Bank website, “Our History,” http://www.alrajhibank.com.sa/our-history/index.html. 1080 Id. The bank also has various subsidiaries, including Al Rajhi Capital. See Al Rajhi Capital website, http://www.alrajhi-capital.com/en/Welcome+to+ARFS/Overview/. 1081 HBUS “Know Your Customer Profile” of Al Rajhi Banking & Investment Corp. (10/15/2010), HSBC-PSI-PROD- 0102310, (hereinafter “2010 HBUS KYC Profile on Al Rajhi Bank”), at 2. About 45% of the bank’s shares are publicly traded; the remainder is held primarily by members of the Al Rajhi family. Id. at 3. 1082 2010 HBUS KYC Profile on Al Rajhi Bank at 3. 1083 See Al Rajhi Bank website, http://www.alrajhibank.com.sa.aspx. 1084 See Al Rajhi Bank website, “About Us,” http://www.alrajhibank.com.sa/en/about-us/pages/board-ofdirectors. aspx. See also 2010 HBUS KYC Profile on Al Rajhi Bank at 3 (describing Sulaiman Abdul Aziz Al Rajhi as Chairman of the Board and Managing Director; Abdullah Sulaiman Al Rajhi as CEO; and Mohammed Lookman Samsudeen as General Manager and Chief Financial Officer). 190 are Al Rajhi family members: Sulaiman bin Abdul Aziz Al Rajhi, Chairman of the Board; Abdullah bin Abdul Aziz Al Rajhi; Sulaiman bin Saleh Al Rajhi; Mohamed bin Abdullah Al Rajhi; Abdullah bin Sulaiman Al Rajhi; and Bader bin Mohammed Al Rajhi.1085 The bank is part of an extensive group of Al Rajhi business and nonrpofit ventures, which include companies engaged in money exchange services, commodity trading, real estate, poultry, construction, and pharmaceuticals.1086 One business which also had an HBUS account was the Al Rajhi Trading Establishment, a money exchange business owned by Abdulrahman Saleh Al Rajhi,1087 Its HBUS account was closed in 2005, when it merged with seven other businesses to form a new Saudi bank. The largest nonprofit venture in the Al Rajhi group is the SAAR Foundation, which is named after Sulaiman bin Abdul Azis Al Rajhi, and supports nonprofit and business ventures around the world.1088 Sulaiman Al Rajhi and his family today have an estimated net worth of nearly $6 billion.1089 The Subcommittee contacted Al Rajhi Bank regarding its relationship to HSBC and the matters addressed in this section, but the bank has not provided any information in response to the Subcommittee’s inquiry. B. Saudi Arabia and Terrorist Financing The majority of Al Rajhi Bank’s operations take place in Saudi Arabia, which the United States has long identified as a country of concern in the area of terrorist financing.1090 Following the terrorist attack on the United States on September 11, 2001, the U.S. government began a decade-long intensive investigation into where and how terrorists obtain funding, repeatedly returning to Saudi Arabia, its banks, and its nationals as a suspected source. In 2004, the 9/11 Commission charged with investigating the terrorist attack issued a report which found that Osama Bin Laden and al Qaeda had relied on a “financial support network that came to be known as the ‘Golden Chain,’ put together mainly by financiers in Saudi Arabia and the Persian Gulf states.”1091 The Commission’s report explained: 1085 Rajhi Bank website, “About Us,” http://www.alrajhibank.com.sa/en/about-us/pages/board-of-directors.aspx. 1086 See, e.g., Sulimin Abdul Aziz Al Rajhi Holding Company website, http://www.alrajhiholding.com/. 1087 See, e.g., March 2002 email chain among HBUS personnel, “Al Rajhi Trading establishment,” OCC-PSI- 00381727, at 3; 9/8/2008 HSBC Financial Investigations Group (FIG) report on Al Rajhi Bank, HSBC-PSI-PROD- 0102813. 1088 See “Sulaiman Al-Rajhi’s life a rags to riches story,” Arab News (5/29/2012), http://www.arabnews.com/?q=economy/sulaiman-al-rajhi%E2%80%99s-life-rags-riches-story. 1089 See Profile of Sulaiman Al Rajhi & family (March 2012), Forbes, http://www.forbes.com/profile/sulaiman-alrajhi/. See also 2010 HBUS KYC Profile on Al Rajhi Bank at 3 (estimating family worth at $22.5 billion). 1090 See, e.g., International Narcotics Control Strategy Reports prepared by the U.S. Department of State, 2003-2012 (identifying Saudi Arabia as a country “of concern” with respect to money laundering and terrorist financing). 1091 The 9/11 Commission Report: Final Report of the National Commission on Terrorist Attacks upon the United States, (7/22/2004), at 55. 191 “Al Qaeda appears to have relied on a core group of financial facilitators who raised money from a variety of donors and other fund-raisers, primarily in the Gulf countries and particularly in Saudi Arabia. Some individual donors surely knew, and others did not, the ultimate destination of their donations.”1092 The Commission report stated: “Saudi Arabia’s society was a place where al Qaeda raised money directly from individuals and through charities. It was the society that produced 15 of the 19 hijackers.”1093 The report also stated that it “found no evidence that the Saudi government as an institution or senior Saudi officials individually funded [Al Qaeda],”1094 and that after terrorist attacks began occurring in Saudi Arabia, a “Saudi crackdown … ha[d] apparently reduced the funds available to al Qaeda – perhaps drastically – but it is too soon to know if this reduction will last.”1095 After several major terrorist attacks within its borders in 2003 and 2004, Saudi Arabia took a number of steps to combat terrorist financing. One report to Congress by the Congressional Research Service summarized those actions as follows: “Since mid-2003, the Saudi government has: set up a joint task force with the United States to investigate terrorist financing in Saudi Arabia; shuttered charitable organizations suspected of terrorist ties; passed anti-money laundering legislation; banned cash collections at mosques; centralized control over some charities; closed unlicensed money exchanges; and scrutinized clerics involved in charitable collections.”1096 Saudi Arabia also reported seizing illicit cash from terrorist organizations, shutting suspect bank accounts, designating several individuals as terrorist financiers, and killing two of them.1097 In addition, Saudi Arabia established a Permanent Committee on Combating the Financing of Terrorism and a Financial Investigation Unit which began operations in September 2005.1098 Despite those advances, U.S. government testimony and reports indicate that Saudi Arabia continued to be a focus of concern with respect to terrorist financing. In 2005, for example, U.S. Treasury Under Secretary for Terrorism and Financial Intelligence Stuart Levey testified before Congress: “[W]ealthy donors in Saudi Arabia are still funding violent extremists around the world, from Europe to North Africa, from Iraq to Southeast Asia.”1099 1092 Id. at 170. He also 1093 Id. at 370. 1094 Id. at 171. 1095 Id. at 383. 1096 “Saudi Arabia: Terrorist Financing Issues,” Congressional Research Service Report for Congress, RL32499 (9/14/2007), http://www.fas.org/sgp/crs/terror/RL32499.pdf (hereinafter “2007 CRS Report on Saudi Arabia Terrorist Financing Issues”), in the summary. See also 2007 International Narcotics Control Strategy Report, U.S. Department of State, at 355-357. 1097 2007 CRS Report on Saudi Arabia Terrorist Financing Issues, at 25. 1098 Id. at 24. 1099 Stuart Levey testimony before the House Financial Services Subcommittee on Oversight and Investigations and House International Relations Subcommittee on International Terrorism and Nonproliferation (5/4/2005). 192 testified that Saudi individuals may be “a significant source” of financing for the Iraq insurgency.1100 In 2007, in its annual International Narcotics Control Strategy Report, the U.S. Department of State wrote: “Saudi donors and unregulated charities have been a major source of financing to extremist and terrorist groups over the past 25 years.”1101 A 2007 report to Congress by the Congressional Research Service stated: “U.S. officials remain concerned that Saudis continue to fund Al Qaeda and other terrorist organizations.”1102 That same year, Congress enacted legislation which found that “Saudi Arabia has an uneven record in the fight against terrorism, especially with respect to terrorist financing,” and required the U.S. government to develop a long term strategy for working with Saudi Arabia to combat terrorist financing.1103 On the sixth anniversary of the 9/11 attack, Treasury Under Secretary Levey said in a televised interview on terrorist financing: “[I]f I could somehow snap my fingers and cut off the funding from one country, it would be Saudi Arabia.”1104 In 2008, the U.S. State Department issued the long-term strategy required by the 2007 law.1105 The strategy identified goals and “performance targets” to track progress in strengthening collaboration with Saudi Arabia to clamp down on terrorist financing. In April 2008, when questioned during a Senate hearing, Treasury Under Secretary Levey testified that, while Saudi Arabia had taken strong action against terrorists operating within its borders and was cooperating with the United States on an operational level, it was not working as hard to prevent funds from flowing to terrorists outside of its borders: “Saudi Arabia today remains the location from which more money is going to terror groups and the Taliban – Sunni terror groups and the Taliban – than from any other place in the world.”1106 In 2009, a report prepared for Congress by the U.S. Government Accountability Office (GAO) reviewed both the State Department’s long-term strategy and Saudi anti-terrorism efforts since 2005. GAO concluded: “U.S. and Saudi officials report progress on countering terrorism and its financing within Saudi Arabia, but noted challenges, particularly in preventing alleged funding for terrorism and violent extremism outside of Saudi Arabia.”1107 GAO wrote: “U.S. officials remain concerned about the ability of Saudi individuals and multilateral charitable organizations, as well as other individuals visiting Saudi Arabia, to support 1100 Stuart Levey testimony before the Senate Committee on Banking, Housing, and Urban Affairs (7/13/2005) (“Wealthy Saudi financiers and charities have funded terrorist organizations and causes that support terrorism and the ideology that fuels the terrorists' agenda. Even today, we believe that Saudi donors may still be a significant source of terrorist financing, including for the insurgency in Iraq.”). 1101 2007 International Narcotics Control Strategy Report, U.S. Department of State, at 355. 1102 2007 CRS Report on Saudi Arabia Terrorist Financing Issues, in the summary. 1103 See Section 2043(c), Implementing Recommendations of the 9/11 Commission Act, P.L. 110-53 (8/3/2007). 1104 “U.S.: Saudis Still Filling Al Qaeda’s Coffers,” Brian Ross, ABC News (9/11/ 2007). 1105 “U.S. Strategy Toward Saudi Arabia, Report Pursuant to Section 2043(c) of the Implementing Recommendations of the 9/11 Commission Act,” U.S. Department of State (1/30/2008). 1106 Stuart Levey testimony before Senate Committee on Finance, “Anti-Terrorism Financing: Progress Made and Challenges Ahead,” (4/1/2008). 1107 “Combating Terrorism: U.S. Agencies Report Progress Countering Terrorism and Its Financing in Saudi Arabia, but Continued Focus on Counter Terrorism Financing Efforts Needed.” U.S. Government Accountability Office, GAO-09-883 (Sept. 2009), http://www.gao.gov/new.items/d09883.pdf, at 1. 193 terrorism and violent extremism outside of Saudi Arabia. U.S. officials also noted that limited Saudi enforcement capacity and terrorist financiers’ use of cash couriers pose challenges to Saudi efforts to prevent financial support to extremists.”1108 GAO also noted that certain performance targets set by the State Department had been dropped in 2009, such as the establishment of a Saudi Commission on Charities to oversee actions taken by Saudi charities abroad as well as certain regulations of cash couriers.1109 GAO recommended that the United States reinstate the dropped performance targets to prevent the flow of funds from Saudi Arabia “through mechanisms such as cash couriers, to terrorists and extremists outside Saudi Arabia.”1110 Recently, Saudi Arabia won praise for its role in foiling a terrorist plan to smuggle a bomb onto an airline flight to the United States.1111 The State Department’s most recent annual International Narcotics Control Strategy Report contains no information about Saudi Arabia’s anti-money laundering or terrorist financing efforts.1112 C. Alleged Al Rajhi Links to Terrorism In the ten years after the 9-11 attack in 2001, U.S. government reports, criminal and civil legal proceedings, and media reports have alleged links between Al Rajhi family members and the Al Rajhi Bank to terrorist financing. The alleged links include that some Al Rajhi family members were major donors to al Qaeda or Islamic charities suspected of funding terrorism, established their own nonprofit organizations in the United States that sent funds to terrorist organizations, or used Al Rajhi Bank itself to facilitate financial transactions for individuals or nonprofit organizations associated with terrorism. Many of the suspicions regarding Al Rajhi Bank stem from 2002, when the name of its most senior official, Sulaiman bin Abdul Azis Al Rajhi, appeared on an internal al Qaeda list of financial benefactors, and when a network of Al Rajhi-related nonprofit and business ventures located in Virginia was subjected to search by U.S. law enforcement seeking to disrupt terrorist financing activities in the United States. Al Qaeda List of Financial Benefactors. The al Qaeda list of financial benefactors came to light in March 2002, after a search of the Bosnian offices of the Benevolence International Foundation, a Saudi based nonprofit organization which was also designated a terrorist organization by the Treasury Department, led to seizure of a CD-ROM and computer hard drive with numerous al Qaeda documents.1113 1108 Id. at 29. One computer file contained scanned images 1109 Id. at 15, 33. 1110 Id. at 3. 1111 See, e.g., “International sting operation brought down underwear bomb plot,” Los Angeles Times, Brian Bennett and Ken Dilanian (5/8/2012), http://latimesblogs.latimes.com/world_now/2012/05/underwear-bomb-plot.html. 1112 2012 International Narcotics Control Strategy Report, Volume II Country Database, U.S. Department of State, at 287-289. 1113 See United States v. Enaam Arnaout, Case No. 02-CR-892 (USDC NDIL), “Government’s Evidentiary Proffer Supporting the Admissibility of Coconspirator Statements,” (1/6/2003), 194 of several hundred documents chronicling the formation of al Qaeda.1114 One of the scanned documents contained a handwritten list of 20 individuals identified as key financial contributors to al Qaeda.1115 Osama bin Laden apparently referred to that group of individuals as the “Golden Chain.”1116 In a report prepared for Congress, the Congressional Research Service explained: “According to the Commission’s report, Saudi individuals and other financiers associated with the Golden Chain enabled bin Laden and Al Qaeda to replace lost financial assets and establish a base in Afghanistan following their abrupt departure from Sudan in 1996.”1117 One of the 20 handwritten names in the Golden Chain document identifying al Qaeda’s early key financial benefactors is Sulaiman bin Abdul Aziz Al Rajhi, one of Al Rajhi Bank’s key founders and most senior officials.1118 The Golden Chain document has been discussed in the 9-11 Commission’s report, in federal court filings, and civil lawsuits.1119 Media reports as early as 2004 noted that the al Qaeda list included the Al Rajhi name.1120 HSBC was clearly on notice about both the al Qaeda list and its inclusion of Sulaiman bin Abdul Aziz Al Rajhi.1121 http://fl1.findlaw.com/news.findlaw.com/wsj/docs/bif/usarnaout10603prof.pdf (hereinafter “Arnaout Evidentiary Proffer”), at 29. See also 2007 CRS Report on Saudi Arabia Terrorist Financing Issues, at 3; “Terrorism, 2002- 2005,” FBI report, at 12, http://www.fbi.gov/stats-services/publications/terrorism-2002-2005/terror02_05.pdf (“On August 18, 2003, Enaam Arnaout, the director of Benevolence International Foundation, was sentenced to 11 years in federal prison after pleading guilty on February 10, 2003, to terrorism-related racketeering conspiracy charges. Arnaout had been indicted on October 9, 2002, for conspiracy to fraudulently obtain charitable donations in order to provide financial assistance to al-Qa’ida and other organizations engaged in violence and terrorism.”). 1114Arnaout Evidentiary Proffer at 29. 1115 Id. at 30. 1116 Id. at 30. See also 2007 CRS Report on Saudi Arabia Terrorist Financing Issues,” at footnote 6. But see “Tangled Paths: A Sprawling Probe Of Terror Funding Centers in Virginia,” Wall Street Journal, Glenn Simpson (6/21/2004)(“Soon thereafter, a senior al Qaeda leader held by the Justice Department in New York confirmed the document's authenticity in an interview with the FBI, referring to it as the Golden Chain, U.S. government court filings say.”). 1117 2007 CRS Report on Saudi Arabia Terrorist Financing Issues,” at 3. 1118 A copy of the Golden Chain document was provided as Exhibit 5 to the Arnaout Evidentiary Proffer. Copies have also appeared on the Internet with English translations. See, e.g.,“The Golden Chain,” Wikipedia, http://en.wikipedia.org/wiki/The_Golden_Chain. 1119 See The 9/11 Commission Report: Final Report of the National Commission on Terrorist Attacks upon the United States, (7/22/2004), at 55. See also, e.g., Arnaout Evidentiary Proffer at 29-30; The Underwriting Members of Lloyd’s Syndicate 3500 v. Saudi Arabia, Case 3:11-cv-00202-KRG (USDC WDPA), Civil Complaint (9/8/11), http://www.investigativeproject.org/documents/case_docs/1680.pdf , at 20. 1120 See, e.g., “Tangled Paths: A Sprawling Probe Of Terror Funding Centers in Virginia,” Wall Street Journal, Glenn Simpson (6/21/2004). 1121 See, e.g., 7/26/2007 email from OCC Joseph Boss to HBUS Alan Ketley, “Saudi’s,” HSBC OCC 2830874-879 (transmitting 2007 Wall Street Journal article to HBUS and requesting its response); 2/3/2010 email from HBUS Jon K. Jones to HBUS Ali S. Kazmy, “Islami Bank Bangladesh Ltd. – Poss SCC,” OCC-PSI- 00453499 (“Al-Rajhi Bank got [its] start as a money chaining network and (Chairman Suleiman al-Rajhi appeared on the ‘Golden Chain’ of wealthy investors who supported Osama bin Laden.)”). 195 2002 Search Warrant. Also in March 2002, as part of Operation Green Quest, a U.S. Treasury effort to disrupt terrorist financing activities in the United States,1122 U.S. law enforcement agents conducted a search of 14 interlocking business and nonprofit entities in Virginia associated with the SAAR Foundation, an Al Rajhi-related entity, and the Al Rajhi family.1123 Over 150 law enforcement officers participated in the search, generating widespread media coverage.1124 A law enforcement affidavit supporting the search warrant detailed numerous connections between the targeted entities and Al Rajhi family members and related ventures.1125 The affidavit stated that over 100 active and defunct nonprofit and business ventures in Virginia were part of what it described as the “Safa Group,”1126 which the United States had reasonable cause to believe was “engaged in the money laundering tactic of ‘layering’ to hide from law enforcement authorities the trail of its support for terrorists.”1127 The SAAR Foundation is a Saudi-based nonprofit organization, founded by Sulaiman bin Abdul Aziz Al Rajhi in the 1970s, named after him, and used by him to support a variety of nonprofit endeavors, academic efforts, and businesses around the world. In 1983, the SAAR Foundation formed a Virginia corporation, SAAR Foundation, Inc., and operated it in the United States as a tax-exempt nonprofit organization under Section 501(c)(3) of the U.S. tax code.1128 In 1996, another nonprofit organization was incorporated in Virginia called Safa Trust Inc.1129 These and other nonprofit and business ventures associated with the Al Rajhi family shared personnel and office space, primarily in Herndon, Virginia. In 2000, SAAR Foundation Inc. was dissolved,1130 An affidavit filed by the United States in support of the search warrant alleged that the Safa Group appeared to be involved with providing material support to terrorism. Among other matters, it alleged that members of the Safa Group had transferred “large amounts of funds … directly to terrorist-front organizations since the early 1990’s,” including a front group for the Palestinian Islamic Jihad-Shikaki Faction, a designated terrorist organization. but the Safa Trust continued to operate. 1131 It also detailed a $325,000 donation by the Safa Trust to a front group for Hamas, another designated terrorist organization.1132 In addition, the affidavit expressed suspicion about a transfer of over $26 million from members of the Safa Group to two offshore entities in the Isle of Man.1133 1122 See “Operation Green Quest Overview,” U.S. Customs and Border Protection press release (2/26/2002), http://www.cbp.gov/xp/cgov/newsroom/news_releases/archives/legacy/2002/22002/02262002.xml. The 1123 See “Affidavit in Support of Application for Search Warrant,” In Re Searches Involving 555 Grove Street, Herndon, Virginia and Related Locations, (USDC EDVA), submitted by David Kane, Senior Special Agent, U.S. Customs Service (hereinafter “Kane affidavit”), at 3-4 (describing investigation). 1124 See, e.g., “Raids Seek Evidence of Money Laundering,” New York Times, Judith Miller (3/21/2002). 1125 See Kane affidavit throughout, but in particular 178-180. 1126 Kane affidavit at 1 (page 6). 1127 Kane affidavit at 5. 1128 Kane affidavit at 132. 1129 Kane affidavit at 135-136. 1130 Kane affidavit at 132. See also “Raids Seek Evidence of Money Laundering,” New York Times, Judith Miller (3/21/2002)(stating that, “although officially dissolved,” the SAAR Foundation had recently occupied the Virginia offices subject to search). 1131 Kane affidavit at 3. 1132 Kane affidavit at 10(g), 161. Executive Order 12947 (1995). 1133 Kane affidavit at 103-104. 196 affidavit further alleged that “one source of funds flowing through the Safa Group [was] from the wealthy Al-Rajhi family in Saudi Arabia.”1134 The search produced about 200 boxes of information which was then analyzed and used in other investigations and prosecutions, although neither the SAAR Foundation or Safa Trust has been charged with any wrongdoing.1135 In 2003, Abdurahman Alamoudi, who had worked for SAAR Foundation Inc. from 1985 to 1990, as executive assistant to its president,1136 pled guilty to plotting with Libya to assassinate the Saudi crown prince and was sentenced to 23 years in jail.1137 He had also openly supported Hamas and Hezbollah, two terrorist organizations designated by the United States.1138 According to an affidavit supporting the criminal complaint against him, Mr. Alamoudi admitted receiving $340,000 in sequentially numbered $100 bills from Libya while in London,1139 and planned “to deposit the money in banks located in Saudi Arabia, from where he would feed it back in smaller sums into accounts in the United States.”1140 According to the affidavit, he also admitted involvement in similar cash transactions involving sums in the range of $10,000 to $20,000.1141 The documents seized in the 2002 search were returned after about 18 months, but in 2006, were sought again through subpoenas issued by a federal grand jury in Virginia.1142 The Al-Rajhi related business and nonprofit ventures initially refused to re-supply the documents, then turned them over after a court imposed civil contempt fines totaling $57,000.1143 The Al Rajhi group then engaged in a four-year, unsuccessful court battle to nullify the fines.1144 In addition, in 2004, Al Rajhi Bank filed a defamation lawsuit against the Wall Street Journal for a 2002 article describing how Saudi Arabia was monitoring certain accounts due to terrorism concerns.1145 In 2004, the lawsuit settled; the Wall Street Journal did not pay any damages. It also published a letter from the bank’s chief executive,1146 and its own statement that the newspaper “did not intend to imply an allegation that [Al Rajhi Bank] supported terrorist activity, or had engaged in the financing of terrorism.”1147 1134 Kane affidavit at 111 (emphasis in original omitted). 1135 See In re Grand Jury Subpoena (T-112), 597 F.3d 189 (4th Cir. 2/24/2010), at 191-192. 1136 See United States v. Alamoudi, (USDC EDVA)(9/30/2003), “Affidavit in Support of Criminal Complaint,” submitted by Brett Gentrup, Special Agent with U.S. Immigration and Customs Enforcement, (hereinafter “Gentrup affidavit”), 29. 1137 See “Abdurahman Alamoudi Sentenced to Jail in Terrorism Financing Case,” press release prepared by U.S. Department of Justice (10/15/2004). 1138 See Gentrup affidavit at 35. 1139 Gentrup affidavit at 39, 43 1140 Gentrup affidavit at 44. 1141 Gentrup affidavit at 45. 1142 See In re Grand Jury Subpoena (T-112), 597 F.3d 189 (4th Cir. 2/24/2010). 1143 Id. 1144 Id. See also “A Court Sheds New Light on Terror Probe,” The New York Sun, Joseph Goldstein (3/24/2008). 1145 The article was “Saudis Monitor Key Bank Accounts For Terror Funding at U.S. Request,” Wall Street Journal, James Dorsey (2/6/2002), http://online.wsj.com/article/SB109813587680048521.html. 1146 “Al Rajhi Bank’s Statement on Journal’s Article,” Wall Street Journal, Abdullah Sulaiman Al Rajhi (10/19/2004), http://online.wsj.com/article/SB109813521879148492.html. 1147 HSBC Financial Intelligence Group Report of Findings on Al Rajhi Bank, HSBC OCC 7519413 (12/13/2004). 197 2003 CIA Report. While the widely publicized 2002 search fueled suspicions about Al Rajhi Bank’s association with terrorist financing, a 2003 CIA report, discussed in a news article in 2007, provided another basis for concerns about the bank. In 2003, the U.S. Central Intelligence Agency (CIA) issued a classified report entitled, “Al Rajhi Bank: Conduit for Extremist Finance.”1148 According to Wall Street Journal reporter, Glenn Simpson, this CIA report concluded: “Senior Al Rajhi family members have long supported Islamic extremists and probably know that terrorists use their bank.”1149 “Islamic extremists have used Al-Rajhi Banking & Investment Corporation (ARABIC) since at least the mid-1990s as a conduit for terrorist transactions, probably because they find the bank’s vast network and adherence to Islamic principles both convenient and ideologically sound. Senior al-Rajhi family members have long supported Islamic extremists and probably know that terrorists use their bank. Reporting indicates that senior al-Rajhi family members control the bank’s most important decisions and that ARABIC’s princip[al] managers answer directly to Suleiman. The al-Rajhis know they are under scrutiny and have moved to conceal their activities from financial regulatory authorities.” A later civil lawsuit, filed in 2011, provided a longer quotation from the same CIA report as follows: 1150 According to the same Wall Street Journal article by Glenn Simpson, the 2003 CIA report alleged that, in 2000, Al Rajhi Bank couriers “delivered money to the Indonesian insurgent group Kompak to fund weapons purchases and bomb-making activities.”1151 The report also allegedly claimed that in 2002, one year after the 9/11 attacks, the bank’s managing director ordered the Al Rajhi Bank’s board “to explore financial instruments that would allow the bank’s charitable contributions to avoid official Saudi scrutiny.”1152 The 2003 CIA report allegedly stated further that extremists “ordered operatives in Afghanistan, Indonesia, Pakistan, Saudi Arabia, Turkey, and Yemen” to use Al Rajhi Bank.1153 2005 Al Haramain Prosecution. A third source of suspicion regarding Al Rajhi Bank’s possible links to terrorism arose from a 2005 federal indictment of al-Haramain Islamic Foundation Inc. and two of its senior officials. Al-Haramain Islamic Foundation is a Saudibased nonprofit organization that, in 2005, operated in more than 50 countries around the world.1154 1148 “US Tracks Saudi Bank Favored by Extremists,” Wall Street Journal, Glenn Simpson (7/26/2007), Beginning in 2002, the United States designated multiple branches of the Foundation http://online.wsj.com/article/SB118530038250476405.html. 1149 Id. 1150 The Underwriting Members of Lloyd’s Syndicate 3500 v. Saudi Arabia, Case 3:11-cv-00202-KRG (USDC WDPA), Civil Complaint (9/8/2011), http://www.investigativeproject.org/documents/case_docs/1680.pdf (hereinafter “Lloyd’s lawsuit”), at 370. 1151 “US Tracks Saudi Bank Favored by Extremists,” Wall Street Journal, Glenn Simpson (7/6/2007), http://online.wsj.com/article/SB118530038250476405.html. 1152 Id. 1153 Id. 1154 United States v. al-Haramain Islamic Foundation Inc., Case No. 6:05-CR-60008-HO (USDC Oregon) Indictment (2/17/2005) at B. 198 as terrorist organizations.1155 After freezing the assets of two such branches for “diverting charitable funds to terrorism,” a U.S. Treasury Department press release stated: “The branch offices of al Haramain in Somalia and Bosnia are clearly linked to terrorist financing.”1156 In 2004, a Treasury Department statement called al-Haramain Foundation “one of the principal Islamic NGOs [Non-Governmental Organizations] providing support for the Al Qaida network and promoting militant Islamic doctrine worldwide.”1157 That same year, the United States added the U.S. branch of the organization to the SDN list for acting as an “underwrit[er] of terror.”--1158 The Saudi government issued a similar 2004 designation and ordered the al- Haramain Islamic Foundation to be dissolved.1159 In 2008, however, Treasury noted that, despite the Saudi government’s action, the organization’s leadership appeared to have reconstituted itself under a new name and continued to operate.1160 In the United States, representatives of the al-Haramain Islamic Foundation formed, in 1999, an Oregon corporation named al-Haramain Islamic Foundation, Inc. which set up offices in Ashland, Oregon.1161 The corporation was operated as a nonprofit organization under Section 501(c)(3) of the U.S. tax code.1162 In 2004, the Office of Foreign Assets Control (OFAC) at the Treasury Department deemed al-Haramain Islamic Foundation Inc. in Oregon a “Specially Designated Global Terrorist Entity.”1163 In 2005, the United States indicted the Foundation and two of its senior officials, Pirouz Sedaghaty and Soliman Al-Buthe who was later designated by the United States as a terrorist financier.1164 Since both men were out of the country when the indictment was filed, the case was dormant for two years.1165 1155 See “Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten To Commit, or Support Terrorism,” 66 FR 49079 (9/23/2001). In 2007, Mr. Sedaghaty returned to 1156 3/11/2002 “Designations of Somalia and Bosnia-Herzegovina Branches of Al-Haramain Islamic Foundation,” U.S. Treasury Department, http://www.fas.org/irp/news/2002/03/dot031102fact.html. 1157 “Treasury Announces Joint Action with Saudi Arabia Against Four Branches of al-Haramain In The Fight Against Terrorist Financing,” U.S. Treasury Department press release No. JS-1108 (1/22/2004), http://www.treasury.gov/press/releases/js1108.htm. 1158 See Executive Order No. 13,224 (2004); “U.S.-Based Branch of Al Haramain Foundation Linked to Terror,” U.S. Treasury Department press release (11/9/2004). 1159 See, e.g., 2007 CRS Report on Saudi Arabia Terrorist Financing Issues, at 19. 1160 See “Combating Terrorism: U.S. Agencies Report Progress Countering Terrorism and Its Financing in Saudi Arabia, but Continued Focus on Counter Terrorism Financing Efforts Needed.” U.S. Government Accountability Office, GAO-09-883 (Sept. 2009), http://www.gao.gov/new.items/d09883.pdf, at 35. 1161 See United States v. al-Haramain Islamic Foundation Inc., Case No. 6:05-cr-60008-HO (USDC Oregon) Indictment (2/17/2005) at B. 1162 Id. 1163 See Executive Order No. 13224 (2004); “U.S.-Based Branch of Al Haramain Foundation Linked to Terror,” U.S. Treasury Department press release (11/9/2004); Al Haramain Islamic Foundation Inc. v. U.S. Dep’t of Treasury, 660 F.3d 1019, 1023 (9th Cir. 2011). 1164 See United States v. al-Haramain Islamic Foundation Inc., Case No. 6:05-CR-60008-HO (USDC Oregon) Indictment (2/17/2005). The case was featured in the U.S. State Department’s annual report on money laundering issues. See 2005 International Narcotics Control Strategy Report, Volume II, “Money Laundering and Financial Crimes,” U.S. State Department, at 16. See also “U.S.-Based Branch of Al Haramain Foundation Linked to Terror,” U.S. Treasury Department press release No. JS-1895 (9/9/2004); “Tax Case Ends Against Charity,” Les Zaitz, The Oregonian (8/5/2005). 1165 Because neither individual was in the United States, the prosecution later dropped the Foundation from the case, to prevent the case from proceeding in a piecemeal fashion. See Al Rajhi Banking & Investment Corp. v. Holder, Case No. 1:10-MC-00055-ESH, Memorandum of Points and Authorities In Support of Petitioner’s Motion to Quash USA Patriot Act Subpoena (1/19/2010), at 5. 199 the United States and was arrested at an airport.1166 In 2010, he stood trial, was convicted of two felonies, and sentenced to nearly three years in prison.1167 In the incident that led to his conviction, he and Mr. Al-Buthe used funds from an Egyptian donor to purchase $130,000 in U.S. travelers cheques from a bank in Oregon; Mr. Al-Buthe then traveled to Saudi Arabia and, in 2000, cashed the travelers cheques at Al Rajhi Bank; the money was then smuggled to violent extremists in Chechnya.1168 Al Rajhi Bank’s role in the events that formed the basis for the prosecution attracted media attention in 2005, when the indictment was filed; in 2007, when Mr. Sedaghaty was arrested; and in 2010, when the trial took place. Over the years, it became public that Mr. Al- Buthe, a designated terrorist financier, had been a client of Al Rajhi Bank in Saudi Arabia in 2000,1169 as had the al-Haramain Islamic Foundation, later designated a terrorist organization.1170 In 2007, a Wall Street Journal article reported that Al Rajhi Bank had maintained at least 24 accounts for the al-Haramain Islamic Foundation and handled unusual transactions for it.1171 In January 2010, after the United States served an administrative subpoena on Al Rajhi Bank to obtain authenticated bank documents for use in the al-Haramain Foundation criminal trial, the bank refused to produce them and filed a motion in court to quash the subpoena,1172 leading to media reports that it was refusing to cooperate with a terrorist financing prosecution.1173 Links to Suspect Banks. In addition to the Golden Chain document, the U.S. search of Al-Rajhi related businesses and nonprofits in the United States, and the al Haramain Foundation prosecution, still another source of concern about Al Rajhi Bank involves its alleged links to other banks suspected of financing terrorism. In 2011, a civil lawsuit filed by an insurance syndicate against Saudi Arabia and others seeking to recover insurance payments made after the 9-11 terrorist attack discussed two of those 1166 Id. 1167 “Former U.S. Head of Al-Haramain Islamic Foundation Sentenced to 33 Months in Federal Prison,” U.S. Attorney’s Office for the District of Oregon press release (9/27/11) at 1. 1168 Id. 1169 See, e.g., Al Rajhi Banking & Investment Corp. v. Holder, Case No. 1:10-MC-00055-ESH, Memorandum of Points and Authorities In Support of Petitioner’s Motion to Quash USA Patriot Act Subpoena (filed 1-19-10), at 6. 1170 See, e.g., “U.S. Tracks Saudi Bank Favored by Extremists,” Wall Street Journal, Glenn Simpson (7/26/2007), http://online.wsj.com/article/SB118530038250476405.html. See also 7/26/2007 email from OCC Joseph Boss to HBUS Alan Ketley, “Saudi’s,” HSBC OCC 3391185 (transmitting the article to HBUS); email from HBUS Ketley to HBUS colleagues, Saudi’s,” HSBC OCC 3391262 (sharing the article within HBUS). 1171 “US Tracks Saudi Bank Favored by Extremists,” Wall Street Journal, Glenn Simpson (7/26/2007), http://online.wsj.com/article/SB118530038250476405.html. 1172 See Al Rajhi Banking & Investment Corp. v. Holder, Case No. 1:10-MC-00055-ESH, Memorandum of Points and Authorities In Support of Petitioner’s Motion to Quash USA Patriot Act Subpoena (1/19/2010). This case was later closed as “moot.” See Order Dismissing Action As Moot (3/2/2010) (“It is hereby ordered that this action is dismissed as moot in light of the ruling issued on February 26, 2010, by Judge Michael R. Hogan of the U.S. District Court for the District of Oregon in United States v. Sedaghaty…granting the government’s motion to compel petitioner Al-Rajhi Banking and Investment Corp.’s compliance with an administrative subpoena.”) (emphasis in original omitted). 1173 See, e.g., “Saudi Bank Refuses to Cooperate in U.S. Investigation into Terrorist Financiers,” For The Record - The IPT Blog (1/26/2010), http://www.investigativeproject.org/1753/saudi-bank-refuses-to-cooperate-in-us. 200 suspect banks, Bank al Taqwa and Akida Bank Private Ltd.1174 Both banks have been deemed by the United States as Specially Designated Global Terrorist Entities.1175 Regarding Bank al Taqwa, the lawsuit noted that two individuals who were former executives at Bank al Taqwa, Ibrahim Hassabella and Samir Salah, were also associated with the SAAR Foundation.1176 Mr. Hassabella was a former secretary of al Taqwa Bank and a shareholder of SAAR Foundation Inc. Mr. Saleh was a former director and treasurer of the Bahamas branch of al Taqwa Bank, and president of the Piedmont Trading Corporation which was part of the SAAR network. The U.S. Treasury Department has stated: “The Al Taqwa group has long acted as financial advisers to al Qaeda, with offices in Switzerland, Lichenstein, Italy and the Caribbean.”1177 Regarding Akida Bank, the lawsuit complaint alleged that Sulaiman bin Abdul Aziz Al Rajhi was “on the board of directors of Akida Bank in the Bahamas” and that “Akida Bank was run by Youssef Nada, a noted terrorist financier.”1178 As explained below, Al Rajhi Bank was also associated with Islami Bank Bangladesh Ltd., which was located in a country at high risk for money laundering, provided an account to a Bangladeshi accused of involvement with a terrorist bombing, and had been fined three times for violating AML requirements in connection with providing bank services to “militants.”1179 HSBC’s own research indicated that the Al Rajhi group held about one-third of the bank’s shares. In addition, Al Rajhi Bank provided a correspondent account to Social Islami Bank, a Bangladesh-based bank whose largest single shareholder for many years was the International Islamic Relief Organization, which was designated by the United States in 2006, as a terrorist organization.1180 A second shareholder was the precursor to the Benevolence Islamic Foundation, also later designated by the United States as a terrorist organization. Suspect Bank Clients. A final source of concern about Al Rajhi Bank involves accounts it provided to specific clients linked to terrorism. The accounts provided to the al-Haramain Islamic Foundation and Soliman Al-Buthe, both designated by the United States as linked to terrorism, have already been discussed. Another example is the International Islamic Relief Organization (IIRO) which, as mentioned earlier, is a Saudi-based nonprofit organization which was added to the SDN list by the United States for “facilitating fundraising for Al Qaida and affiliated terrorist groups”.1181 1174 See Lloyd’s lawsuit at 459-460. This lawsuit was withdrawn 11 days after being filed, with no prejudice against its re-filing in the future. See Lloyd’s lawsuit, Notice of Voluntary Dismissal, Docket document 5, 9/19/2011. In 2003, HSBC’s internal Financial Intelligence Group (FIG) 1175 See “The United States Designates Twenty-Five New Financiers of Terror,” U.S. Treasury Department press release (8/29/2002), http://www.treasury.gov/press-center/press-releases/Pages/po3380.aspx. See also E.O. 13224, “Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten To Commit, or Support Terrorism,” 66 FR 49079 (9/23/2001); Kane affidavit at 112. 1176 Lloyd’s lawsuit at 459. 1177 Statement by Treasury Secretary Paul O’Neill (11/7/2001). 1178 Lloyd’s lawsuit at 459. Youssef Nada was designated as a terrorist financier by the United States in November 2001. See “Recent OFAC Actions,” U.S. Department of the Treasury, (11/7/2001), http://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20011107.aspx. 1179 See Subsection (i), below. 1180 See Subsection (i), below. See also “Islamic Charity Charged with Terrorist Financing,” U.S. Justice Department, (1/16/2008), http://www.justice.gov/usao/mow/news2008/iara.ind2.htm. 1181 See 8/3/2006 press release, “Treasury Designates Director, Branches of Charity Bankrolling Al Qaida Network,” U.S. Treasury Department, reprinted in 8/3/2006 email from HBUS Sharyn Malone to HBUS Stephanie Napier and others, “Social Investment Bank, Bangladesh,” HSBC OCC 3259936. See also 8/3/2006 “Treasury Takes 201 raised questions about the IIRO; in 2006 a FIG report noted that the IIRO had been linked to Al Qaeda and other terrorist groups, plots to assassinate President Bill Clinton and the Pope, attacks on the Brooklyn Bridge and Lincoln Tunnel, and the 1993 attack on the World Trade Center.1182 According to a CRS report, press reports indicated that, until at least December 2004, the IIRO had arranged for donors to send donations directly to accounts it held at Al Rajhi Bank, advertizing the accounts in various publications.1183 In addition, the Lloyd’s lawsuit alleged that Al Rajhi Bank made or arranged for large donations to the IIRO.1184 Sulaiman bin Abdul Aziz Al Rajhi, the most senior official at Al Rajhi Bank, is also alleged to have been an officer of IIRO.1185 Al Rajhi Bank gained notoriety as well for providing banking services to several of the hijackers in the 9-11 terrorist attack, including Abdulaziz al Omari who was aboard American Airlines Flight 11. A civil lawsuit described the bank’s involvement with him as follows: “[M]oney was funneled to the Hamburg, Germany al Qaeda cell through the Al Rajhi Bank to businessmen Mahmoud Darkazanli and Abdul Fattah Zammar, who in turn provided the al Qaeda cell of September 11th hijackers with financial and logistical support. Through Al Rajhi Bank, September 11th hijacker Abdulaziz al Omari received funds into his Al Rajhi Bank Account Number…. Al Omari frequently utilized a credit card drawn on Al Rajhi Bank in the planning of the attacks. On September 7, 2001, four days before the 9/11 attacks, al Omari received a wire transfer from Al Rajhi Bank, Buraidah Branch, Jeddah, Saudi Arabia….”1186 Taken together, the information – the Al Qaeda Golden Chain document, the 2002 search of Al Rajhi-related entities in Virginia, the 2003 CIA report, the 2005 al Haramain Additional Measures to Combat Iranian WMD Proliferation Iranian Nuclear & Missile Firms Targeted,” Treasury press release, http://www.treasury.gov/press-center/press-releases/Pages/hp45.aspx. 1182 8/4/2006 FIG Report on Findings (Update) for Social Investment Bank Limited, OCC-PSI-00823818 at 12. ; 11/2003 FIG Report on Findings for Social Investment Bank, Ltd., OCC-PSI-00823818, at 18. See also In Re September 11th Litigation, C.A. 04-7280 (S.D.N.Y. 2010), at 371. 1183 See, e.g., 2007 CRS Report on Saudi Arabia Terrorist Financing Issues, at 9, footnote 35 (citing International Islamic News Agency (Jeddah), “IIRO Distributes Aid to Falluja War Victims,” (12/21/2004), http://www.saudiembassy.net/2003News/News/RelDetail.asp?cIndex=737). See also Lloyd’s lawsuit at 445, 447 (alleging IIRO advertised sending donations to its accounts at Al Rajhi Bank, Accounts No. 77700-77709, in its own publications, and Al Rajhi Bank advertised sending donations to IIRO accounts at the bank in the Al Igatha Journal in several countries). 1184 Lloyd’s lawsuit at 446-448 (alleging “Al Rajhi Bank collected charitable donations on behalf of Sanabel al Kheer (“Seeds of Charity”), the financial/investment arm of the IIRO, depositing the donations into Sanabel’s Al Rajhi Bank account no. 77707. … Under the guise of IIRO funds labeled and designated for purposes such as ‘war and disaster’ (Account number for Immigrants, Refugees, and Victims of Disasters: 77702) or ‘sponsor a child’ (IIRO Account Number of Deprived Children: 77704), charitable organizations such as the IIRO use banks like Al Rajhi Bank to gather donations that fund terrorism and terrorist activities. … Al Rajhi Bank also handled IIRO “charitable” contributions intended to benefit suicide bombers by directing Al Igatha Journal advertisements … in Somalia, Sri Lanka, India, and the Philippines under IIRO Account number 77709 .… On February 17, 1994, Al Rajhi Bank made a $533,333 donation to the Saudi High Commission (‘SHC’) in response to a call for donations for Bosnia and Somalia. In August 1995, Al Rajhi Bank contributed $400,000 to the SHC which was collecting donations for Bosnia during a 12-hour telethon. The donation was identified by the Arabic newspaper Asharq al Awsat.”). 1185 See, e.g., Lloyd’s lawsuit at 9. 1186 Lloyd’s lawsuit at 449. 202 Foundation indictment and trial, the 2007 media reports, the 2010 refusal to provide bank documents in a terrorist-financing trial, and the multiple links to suspect banks and accountholders – present an unusual array of troubling allegations about a particular financial institution. When asked about these matters, Al Rajhi Bank has repeatedly condemned terrorism and denied any role in financing extremists.1187 HSBC was fully aware of the suspicions that Al Rajhi Bank and its owners were associated with terrorist financing, describing many of the alleged links in the Al Rajhi Bank client profile. In addition, despite all the allegations, neither the bank nor its owners have ever been charged in any country with financing terrorism or providing material support to terrorists. 1188 On one occasion in 2008, the head of HSBC Global Banknotes Department told a colleague: “In case you don’t know, no other banknotes counterparty has received so much attention in the last 8 years than Alrajhi.”1189 Despite, in the words of the KYC client profile, a “multitude” of allegations, HSBC chose to provide Al Rajhi bank with banking services on a global basis. D. HSBC Relationship with Al Rajhi Bank In the United States, Al Rajhi Bank first became a client of Republic Bank of New York during the 1970s; after Republic Bank of New York was purchased by HSBC, Al Rajhi Bank became a client of HSBC Bank United States (HBUS).1190 HSBC also had longstanding relationships with Al Rajhi Bank and other Al Rajhi-related businesses in other parts of the world, including the Middle East, Europe, and the Far East, which HSBC had developed separately from the relationship it assumed from Republic Bank of New York in the United States.1191 HSBC provided Al Rajhi Bank with a wide range of banking services, including wire transfers, foreign exchange, trade financing, and asset management services.1192 In addition, in 1998, HSBC Group established “HSBC Amanah,” a “global Islamic financial services division” designed to “serve the particular needs of Muslim communities” in compliance with Islamic law, and provided those banking services to Al Rajhi Bank and other Al Rajhi-related businesses.1193 In the United States, a key service was supplying Al Rajhi Bank with large amounts of physical U.S. dollars, through the HBUS U.S. Banknotes Department. The physical delivery of U.S. dollars to Al Rajhi Bank was carried out primarily through the London branch of HBUS, often referred to internally as “London Banknotes.” HBUS records indicate that the London Banknotes office had been supplying U.S. dollars to Al 1187 See, e.g., “Al Rajhi Bank’s Statement on Journal’s Article,” Wall Street Journal, Abdullah Sulaiman Al Rajhi (10/19/2004), http://online.wsj.com/article/SB109813521879148492.html; “Al Rajhi Bank responds to Wall Street Journal report,” distributed by PR Newswire, (10/24/2003), http://www.thefreelibrary.com/Al+Rajhi+Bank+responds+to+Wall+Street+Journal+report.-a0109218136. 1188 See, e.g., 2010 HBUS KYC Profile of Al Rajhi Bank at 6, 11. 1189 5/2008 email from Christopher Lok to Gary C H Yeung, , “KYC Approval needed for: AL RAJHI BANKING & INVESTMENT CORP,” OCC-PSI-00155690. 1190 See 2010 HBUS KYC Profile of Al Rajhi Bank at 4. 1191 2010 HBUS KYC Profile of Al Rajhi Bank at 4. 1192 See, e.g., 2010 KYC Profile of Al Rajhi Bank at 8; 5/23/2005 document prepared by CIBM-Institutional Banking on Al Rajhi Banking and Investment Corporation, at HSBC OCC 0659988-997, at 8. 1193 See HSBC website, “About HSBC Amanah,” http://www.hsbcamanah.com/amanah/about-amanah. 203 Rajhi Bank for “25+ years.”1194 In addition to the London branch, HBUS headquarters in New York opened a banknotes account for Al Rajhi Bank in January 2001.1195 The U.S. dollars were physically delivered to Al Rajhi Bank in Saudi Arabia.1196 In January 2005, a little more than three years after the 9/11 terrorist attack on the United States, HBUS decided to end its relationship with Al Rajhi Bank due to terrorist financing concerns, as explained further below.1197 Nearly two years later, in December 2006, the relationship was reactivated and continued for another four years, until 2010, when it was ended once more due to a group-wide decision by HSBC to exit the U.S. banknotes business. HBUS closed its banknotes account with Al Rajhi Bank in October 2010.1198 From 2000 to 2010, HSBC assigned a series of Global Relationship Managers to the Al Rajhi Bank account. They include Shariq Siddiqi1199 and Shamzani Bin Md Hussain.1200 In 2005, the Relationship Manager for KYC approval purposes was Beth Fisher. From 2005 to 2010, the head of the HSBC Global Banknotes business was Christopher Lok, who was based in New York; the regional Banknotes head for the Americas was Gyanen Kumar, who was based in New York; and the regional Banknotes head in charge of the London Banknotes office was Stephen Allen.1201 HSBC classified Al Rajhi Bank as a “Special Category of Client” (SCC), its highest risk designation.1202 This designation was due in part to the bank’s location in Saudi Arabia, which HSBC classified as a high risk country. In addition, HSBC noted that the bank was owned in part by a Politically Exposed Person (PEP), Abdullah Abdul Al Rajhi, who was a major shareholder, a member of the bank’s board of directors, and a member of the Northern Borders Provincial Council in Saudi Arabia.1203 Al Rajhi Bank was one of only a handful of bank clients that HSBC had classified as SCC clients.1204 1194 2010 HBUS KYC Profile of Al Rajhi Bank at 3, 5. The London Banknotes office supplied U.S. dollars to both Al Rajhi Bank and, until its account closed in 2005, Al Rajhi Trading Establishment. Another HBUS branch office in Hong Kong also did banknotes business with Al Rajhi Bank beginning in 2009 . See HBUS “Know Your Customer Profile – Banknote Information,” for the Hong Kong office regarding Al Rajhi Bank (10/29/2010), HSBC-PSI-PROD-0102782-784, at 1. 1195 2010 HBUS KYC Profile of Al Rajhi Bank at 2, 3. 1196 2010 HBUS KYC Profile of Al Rajhi Bank at 2. 1197 2010 HBUS KYC Profile of Al Rajhi Bank at 2. 1198 2010 HBUS KYC Profile of Al Rajhi Bank at 1, 15. 1199 5/23/2005 document prepared by CIBM-Institutional Banking on Al Rajhi Banking and Investment Corporation, HSBC OCC 0659988-997, at 7. , 1200 2010 HBUS KYC Profile of Al Rajhi Bank at 4. 1201 11/2006 HBUS “Banknotes Trading A Global Reach Organizational Chart As of November 2006,” OCC-PSI- 00000501 at 5. 1202 2010 HBUS KYC Profile of Al Rajhi Bank at 1. 1203 Id. at 1, 3. 1204 Id. at 3. 1205 March 2002 email chain among HBUS personnel, “Al Rajhi Trading establishment,” OCC-PSI-00381727, at 3. 204 E. Al Rajhi Trading Establishment In addition to Al Rajhi Bank, HSBC provided accounts to Al Rajhi Trading Establishment, a money exchange business based in Saudi Arabia and owned by Rajhi family members. This account closed in 2005, when the business, along with seven others, merged into a new bank, Al Bilad Bank in Saudi Arabia. According to HSBC internal documents, Al Rajhi Trading Establishment opened two accounts in 1994, with Republic Bank of New York before its purchase by HSBC.1205 One account processed payments, such as from travelers cheques or money orders, while the other handled foreign currency exchange. According to HSBC documents, Republic Bank of New York had a policy of not dealing with money exchange businesses, but had made an exception for Al Rajhi Trading Establishment due a “long relationship with the bank, their knowledge of the stiff penalties (death) for drug trafficking and money laundering within the country and the general good reputation of exchange houses in Saudi Arabia.”1206 After HSBC purchased Republic Bank of New York, the Al Rajhi Trading Establishment accounts were handled by the HSBC International Private Banking Department.1207 In 2002, after the 9-11 attack on the United States, the International Private Banking Department asked to transfer the two accounts to HSBC’s Institutional Banking Department in Delaware which had superior ability to monitor account activity.1208 In connection with the transfer, HBUS banker Joseph Harpster wrote: “The most recent concern arose when three wire transfers for small amounts ($50k, $3k and $1.5k) were transferred through the account for names that closely resembled names, not exact matches, of the terrorists involved in the 9/11 World Trade Center attack. … The profile of the main account reflects a doubling of wire transfer volume since 9/01, a large number of travelers checks but with relatively low value and some check/cash deposits. According to the account officer, traffic increased because they have chosen to send us more business due to their relationship with Saudi British Bank1209 and the added strength of HBC versus Republic. … Maintaining our business with this name is strongly supported by David Hodghinson of [Saudi British Bank] and Andre Dixon, Deputy Chairman of [HSBC Bank Middle East]. Niall Booker and Alba Khoury [of HBUS] also support.”1210 Douglas Stolberg head of Commercial and Institutional Banking (CIB) at HBUS forwarded the email to Alexander Flockhart, then a senior executive in Retail and Commercial Banking at HBUS, noting: “As we discussed previously, Compliance has 1205 March 2002 email chain among HBUS personnel, “Al Rajhi Trading establishment,” OCC-PSI-00381727, at 3. 1206 Id. 1207 Id. 1208 Id. 1209 HSBC owned Saudi British Bank. See “Doing Business in Saudi Arabia,” an HSBC publication, http://www.hsbc.com/1/content/assets/business_banking/1100511_hsbc_doing_business_in_saudi.pdf. 1210 March 2002 email chain among HBUS personnel, “Al Rajhi Trading establishment,” OCC-PSI-00381727, at 3. 205 raised some concerns regarding the ongoing maintenance of operating/clearing accounts for Al Rajhi group.” He forwarded recommendations on how to handle the account: “Retain [International Private Banking] as the relationship manager domicile for continuity purposes, and as we understand there is interest in further developing private banking business with family members. … Domicile the actual accounts with Delaware where HBUS’s most robust account screening capabilities reside.” His email also stated: “[T]his has become a fairly high profile situation. Compliance’s concerns relate to the possibility that Al Rajhi’s account may have been used by terrorists. If true, this could potentially open HBUS up to public scrutiny and /or regulatory criticism. SABB [Saudi British Bank] are understandably keen to maintain the relationships. As this matter concerns primarily reputational and compliance risks, we felt it appropriate for SMC [Senior Management Committee] members to be briefed … so that they may opine on the acceptability of the plan. Please advise how you would prefer us to proceed.”1211 Mr. Harpster reported a week later that Mr. Flockhart had decided to transfer the accounts to HBUS in the Delaware office. Three years later, in 2005, eight Saudi money exchangers, including Al Rajhi Trading Establishment, were merged into a new Al Bilad Bank in Saudi Arabia.1212 The HSBC accounts for Al Rahji Trading Establishment closed in November 2005.1213 F. 2005 Decision to Sever Ties with Al Rajhi Bank In 2005, despite its longstanding relationship with Al Rajhi Bank, HSBC Group Compliance decided that its U.S.-based businesses should sever ties with Al Rajhi Bank due to terrorist financing concerns.1214 To carry out this decision, on January 28, 2005, Teresa Pesce, head of HBUS AML Compliance, sent an email to HBUS personnel entitled, “Al Rahji Trading/Al Rahji Banking”: “As some of you may know, the above named clients have been under evaluation by US and Group Compliance based, among other things, on relationships maintained with entities/countries on the OFAC list. Additionally, US law enforcement has placed these entities under scrutiny. After much consideration, Group Compliance has recommended that the US businesses sever ties with these clients based on the current regulatory environment and the interest of US law enforcement. Accordingly, I will 1211 Id. at 2-3. 1212 See April 2005 HBUS Financial Intelligence Group (FIG) Report of Findings (Update) on Al Rajhi Trading Establishment, HSBC OCC 2725168-169. Another Al Rajhi-related business, the Al Rajhi Commercial Foreign Exchange, was also one of the eight businesses that merged into Al Bilad Bank. See 7/13/2005 HBUS Financial Intelligence Group (FIG) Report of Findings (Update) on Al Rajhi Commercial Foreign Exchange, HSBC OCC 2725167-168. 1213 4/12/12 HSBC legal counsel response to Subcommittee inquiry. 1214 2010 HBUS KYC Profile of Al Rajhi Bank at 2 (“relationship exited and deactivated on 2 February 2005 due to TF issues”). 206 not approve customer profiles for or transactions with these entities. Please make appropriate arrangements. I am available to answer any questions you might have.”1215 At the time the email was issued, Al Rajhi Bank had not been indicted, designated as a terrorist financier, or sanctioned by any country, including the United States. HSBC Group Compliance based its decision on concerns that the bank had relationships “with entities/countries on the OFAC list,” the bank was of “interest” to U.S. law enforcement which had placed it “under scrutiny,” and severing the relationship was called for in light of the “current regulatory environment.”1216 The 2005 decision was made several years after the 9-11 terrorist attack, as U.S. law enforcement and bank regulators directed increasing scrutiny to terrorist financing issues. As discussed earlier, in 2004, the 9-11 Commission issued its report which included information on the role of Saudi Arabia in financing terrorism, described the “Golden Chain” of al Qaeda’s financial benefactors, and noted that one of the hijackers had an account at Al Rajhi Bank. Congress held hearings on that report. The media also disclosed in 2004, that Al Rajhi Bank’s most senior official was on the Golden Chain list.1217 In addition, 2004 saw the United States designate as terrorist organizations several Saudi-based nonprofit organizations that were also clients of Al Rajhi Bank, including the International Islamic Relief Organization and the al Haramain Foundation, adding them to the OFAC list of entities with which U.S. persons were prohibited from doing business.1218 U.S. prosecutors also intensified their investigation of al Haramain Foundation Inc., whose 2005 indictment would disclose that its senior officials had cashed $130,000 in U.S. travelers checks at Al Rajhi Bank in Saudi Arabia and used the money to support violent extremists in Chechnya.1219 On the regulatory front, in July 2004, this Subcommittee held hearings on how U.S. banks and U.S. bank regulators had failed to fully implement the tougher AML requirements enacted into law as part of the USA Patriot Act of 2001,1220 highlighting Riggs Bank as an example.1221 1215 1/28/2005 email from HBUS Teresa Pesce to numerous HSBC colleagues, “Al Ra[jh]I Trading/Al Ra[jh]I Banking,” HSBC OCC 1884218. Among other measures, the Patriot Act required U.S. financial institutions to establish AML programs, conduct special due diligence on correspondent accounts opened for 1216 When asked about this decision, David Bagley, the head of HSBC Group Compliance, told the Subcommittee that there was no single incident that led to the decision. Subcommittee interview of David Bagley (5/10/2012). 1217 See, e.g., “Tangled Paths: A Sprawling Probe Of Terror Funding Centers in Virginia,” Wall Street Journal, Glenn Simpson (6/21/2004). 1218 “Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten To Commit, or Support Terrorism,” 66 FR 49079 (9/23/2001) (see Annex). 1219 The U.S. Treasury Department was later quoted as saying Al Rajhi Bank maintained at least 24 accounts and handled unusual transactions for the al Haramain Foundation. “US Tracks Saudi Bank Favored by Extremists,” Wall Street Journal, Glenn Simpson (7/26/2007), http://online.wsj.com/article/SB118530038250476405.html. 1220 See Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA Patriot Act) Act of 2001, P.L. 107-56 (10/26/2001). 1221 “Money Laundering and Foreign Corruption: Enforcement and Effectiveness of the Patriot Act, Case Study Involving Riggs Bank,” S.Hrg. 108-633 (July 15 2004). 207 foreign banks, and verify the identity of accountholders.1222 The law also deemed money laundering through foreign banks and the laundering of terrorism proceeds as criminal offenses in the United States.1223 These new provisions had given rise to new bank regulations, new examination requirements, and a new emphasis on the importance of AML controls. HBUS’ primary U.S. regulator, the OCC, scheduled an AML examination of the HBUS banknotes business to take place in 2005.1224 In December 2004, in anticipation of that examination, the HBUS Global Banknotes Department had completed a review of its Know Your Customer (KYC) client profiles.1225 In October 2004, the HSBC Global Relationship Manager for Al Rajhi Bank, Shariq Siddiqi, visited the bank and reviewed its KYC/AML procedures in detail.1226 Mr. Siddiqi praised the procedures and noted: “The management appeared fully cognizant of the reputational risks associated with terrorism financing, and confirmed Al Rajhi Bank’s strong commitment to combat it.”1227 Despite that endorsement of the bank’s AML policies and procedures, HBUS AML Compliance did not approve the Al Rajhi Bank KYC profile, an action it took with respect to only a few clients out of more than 930 active client profiles reviewed.1228 The failure to approve the client profile meant that bank personnel were unable to do business with the client. HBUS AML Compliance Officer Alan Ketley circulated instructions on how to handle clients, including Al Rajhi Bank and Al Rajhi Trading Establishment, whose profiles had been “denied” by HBUS Compliance. He explained that such clients must be given “10 days notice of trading termination unless a dispensation is obtained from the AML Director and an updated profile is approved by the AML Director within that 10 day period. For current customers that 10 day clock will commence on December 7 (so December 17 will be the final day we will transact with them unless a dispensation is obtained.)”1229 On January 4, 2005, HBUS AML Compliance head Ms. Pesce sent an email to Daniel Jack, an HBUS AML Compliance Officer who often dealt with the London Banknotes office, instructing him to: “[p]lease communicate that Group Compliance will be recommending 1222 See USA Patriot Act, §§ 312, 326, 352. 1223 See USA Patriot Act, §§ 318, 376, 377. 1224 See 3/8/2005 email from Daniel Jack, HBUS, to Denise Reilly and Alan Ketley in HBUS, “Re: KYC Deactivation Report for Banknotes in Feb-05,” OCC-PSI-00169771 (“There has been a surge in KYC updates in the past few months due to clean-up/prep for OCC.”); 6/20/2005 OCC Supervisory Letter on Global Banknote AML examination, OCC-PSI-00107505-510 (containing six Matters Requiring Attention by the bank related to AML deficiencies) [sealed exhibit]. 1225 See 1/4/2005 email from Daniel Jack, HBUS Legal Compliance, to HBUS KYC Account Managers, HBUS KYC Banknote Traders, and others, “KYC Status of Profiles for Banknotes by Office: December 2004,” HSBC OCC 2405588-589. 1226 5/23/2005 document prepared by CIBM-Institutional Banking on Al Rajhi Banking and Investment Corporation, HSBC OCC 0659988-997, at 3. 1227 Id. at HSBC OCC 0659991. 1228 1/4/2005 email from Daniel Jack, HBUS Legal Compliance, to HBUS KYC Account Managers, HBUS KYC Banknote Traders, and others, “KYC Status of Profiles for Banknotes by Office: December 2004,” at HSBC OCC 2405588-589. See also 3/7/2005 email from Daniel Jack to Alan Ketley and others, “Re: KYC Deactivation Report for Banknotes in Feb-05,” OCC-PSI-00169771 (noting that Al Rajhi Bank was one of only two client profiles “deactivated for AML/KYC/Compliance Reasons”). 1229 12/6/004 email from HBUS Alan Ketley to HSBC Christopher Lok, HBUS Stephen Allen, and others, “KYC Profiles – Impact of CO Denial,” HSBC OCC 3185023-025. 208 terminating the Al Rahji relationship.”1230 Mr. Jack inquired as to when that recommendation would be made. She responded: “I expect to see an email from Susan Wright today. She tells me that HBME [HSBC Bank Middle East] does not agree with Compliance and will not be terminating the relationship from the Middle East, but she/David B[agley] recommend that in light of US scrutiny, climate, and interest by law enforcement, we in the US sever the relationship from here.”1231 Susan Wright was then the Chief Money Laundering Control Officer for the entire HSBC Group. She reported to David Bagley, head of the HSBC Group’s overall Compliance Department. The documents do not explain why HSBC Middle East disagreed with the decision or why it was allowed to continue its relationship with Al Rajhi Bank, when HSBC’s Group Compliance had decided to sever the relationship between the bank and other HSBC affiliates due to terrorist financing concerns. The decision to sever ties with Al Rajhi Bank was announced internally within HSBC on January 28, 2005. The decision clearly affected some HSBC affiliates, such as HBUS and its London Banknotes office which discontinued transactions with Al Rajhi Bank, but not others, such as HSBC Bank Middle East which continued doing business with Al Rajhi Bank and other Al Rajhi entities.1232 The Subcommittee asked but has received no explanation as to why the decision bound HSBC affiliates in the United States and Europe, but appeared to not apply to the Middle East. Soon after the decision was announced in January 2005, HSBC Group Compliance began to narrow its scope. On February 22, 2005, Paul Plesser, head of the HBUS Global Foreign Exchange Department, sent an email to a colleague asking whether, despite the HSBC Group Compliance decision, his office could continue to engage in foreign exchange trades with Al Rajhi Trading Establishment.1233 He was told by a trader from the Banknotes department: “For us is business as usual.”1234 Mr. Plesser double-checked with HBUS AML Compliance officer Alan Ketley, asking in an email: “so I guess we are ok to continue trading?”1235 1230 1/4/2005 email from Teresa Pesce to Daniel Jack, “KYC Status of Profiles for Banknotes by Office: December 2004,” HSBC OCC 2405588. On March 16, 2005, Mr. Ketley affirmed that the trades could continue, forwarding an email from Ms. Pesce, 1231 Id. 1232 See, e.g., 1/4/2005 email from Teresa Pesce to Daniel Jack, “KYC Status of Profiles for Banknotes by Office: December 2004,” HSBC OCC 2405588. See also, e.g., 11/17/2006 email from Salman Hussain to David Illing, Gordon Brown, Stephen Allen and others, “Al Rajhi Bank KYC & AML Policy,” HSBC OCC 3280496-497; 11/17/2006 email from HBUS Stephen Allen to HBUS Beth Fisher and Alan Ketley, “Al Rajhi Banking,” HSBC OCC 3280505 (both emails indicating that, in late 2006, HSBC business with Al Rajhi Bank was “substantial,” including through the “HSBC Amanah business”). 1233 2/22/2005 email from Paul Plesser to Georges Atallah, “Al Ra[jh]i Trading/Al Ra[jh]i Banking,” HSBC OCC 3111888. 1234 2/22/2005 email from Georges Atallah to Paul Plesser and others, “Al Ra[jh]i Trading/Al Ra[jh]i Banking,” HSBC OCC 3111888. 1235 2/22/2005 email from Paul Plesser to Alan Ketley, “Al Ra[jh]i Trading/Al Ra[jh]i Banking,” HSBC OCC 3111888. 209 head of HBUS AML Compliance, stating that the earlier HSBC Group decision no longer applied to Al Rajhi Trading: “Group has clarified the Al Ra[jh]i guidance issued last month. They have evaluated Al Ra[jh]i Banking and Al Ra[jh]i Trading and now believe that the two are separated enough that relationships may be maintained with the latter but not with the former. To be clear, recommendation is to sever with Banking only at this time.”1236 Mr. Ketley commented: “Looks like you’re fine to continue dealing with Al Rajhi. You’d better be making lots of money!”1237 In May 2005, four months after announcing the decision to sever ties with Al Rajhi Bank, HSBC Group Compliance backed down still further. It announced that HSBC affiliates could reestablish business ties with Al Rajhi Bank, though subtly suggested that HBUS might not. David Bagley, head of HSBC Group Compliance, announced the decision in a May 23 email sent to HSBC personnel: “Having now received the updated KYC from Shariq Siddiqi and reviewed the previous information received from Group Securities I am pleased to confirm that we have revised our recommendation in relation to the above. Accordingly we have lifted our recommendation against the commence or expansion of relationships with the above with immediate effect.1238 We will communicate this decision to HBEU [HSBC Europe] where I believe there are a number of pending applications. Whilst we will advise HBUS CMP [Compliance] of the revised view within GHQ CMP [Group Headquarters Compliance] nevertheless I believe it will remain appropriate for HBUS CMP in conjunction with HBUS senior management to reach their own determination with regard to the expansion of business with Al Rajhi within the US. Although the revised view from GHQ CMP ought to be a material matter causing them to reconsider their position nonetheless, and particularly in the current US environment, I do not believe it is appropriate for us to seek to influence their determination one way or the other.”1239 1236 3/16/2005 email from Alan Ketley to Paul Plesser, “Fw: Al Ra[jh]I Guidance Clarified,” HSBC OCC 3114022. 1237 Id. 1238 The new decision lifted the ban on relationships with both Al Rajhi Bank and Al Rajhi Commercial Foreign Exchange, another money exchange business owned by Abdullah Abdul Al Rajhi. The decision on Al Rahhi Commercial Foreign Exchange was in addition to the earlier decision allowing relationships with Al Rajhi Trading Establishment. 1239 5/23/2005 email from HSBC David Bagley to HSBC colleagues, “Al Rajhi Bank,” OCC-PSI-00144350 at 2. 210 The effect of this decision was to allow HSBC affiliates to do business with Al Rajhi Bank if they chose, which meant HBUS Compliance had to determine for itself whether or not to re-establish ties with Al Rajhi.1240
LIBOR Timeline Guardian   back
Barclays chief executive Bob Diamond has stepped down following the Libor scandal. What will he tell MPs tomorrow?.... Photograph: Carl Court/AFP/Getty Images 11.43pm: We are going to wrap up the blog for now, but Graeme Wearden will be back at the helm tomorrow morning ahead of Bob Diamond's appearance before the Treasury select committee.

Before we go though, here is another summary of developments over the course of the day:

• Bob Diamond has quit Barclays as the Libor rate fixing scandal escalated to new heights. He blamed the 'external pressure' that has build up on Barclays in recent days -- after MPs called for his resignation, and the government announced an inquiry into the affair.

• Diamond's resignation was followed by that of Jerry del Missier. Here's the official statement. One of Diamond's key allies, del Missier has quit because he was the official responsible for telling Barclays staff they could submit lower Libor quotes back in 2008.

• Diamond is expected to come out fighting for his reputation on Wednesday when he appears before a powerful committee of MPs. The banker is expected to unleash a wave of explosive revelations about the role of City watchdogs and senior Whitehall figures in the manipulation of crucial interest rates that landed the bank with a record £290m fine last week.

• Ahead of that hearing, Barclays released an email from 2008, which appears to implicate both the Bank of England and the government in the scandal. It states that Diamond spoke to Paul Tucker of the BoE, who said that senior officials in Whitehall were concerned that Barclays was reporting excessively high daily borrowing rates in the weeks after the collapse of Lehman Brothers, and that it didn't need to always do so.

• Barclays refused to comment on reports today that the Bank of England played a role in Diamond's departure. Marcus Agius, who is now temporary full-time chairman just a day after resigning, also declined to say how large a payoff Diamond will receive. There are reports that the bank wants to claw back £20m of bonuses from previous years.

• Marcus Agius, who is now temporary full-time chairman at Barclays just a day after resigning, has said that he had known about libor rate fixing at his bank for 'more than two years'. He insisted that the bank acted to remove "those who took the decisions a number of years ago".

11.16pm: The Guardian's City editor, Jill Treanor, has been in touch with some final thoughts on the focus of coverage tonight:

Much of it has related to whether Paul Tucker of the Bank of England gave the impression that during the 2008 crisis it was ok for Barclays to reduce its submission to the Libor rate to avoid any idea that Barclays was in financial crisis.

The higher the rate Barclays submitted, the more financial difficulty it might be in.

But none of this explains the behaviour before the crisis - 2005 according to regulators - where the regulators produced those emails about "this is for you big boy".

10.42pm: The shadow business secretary, Chuka Umunna, is one of BBC's Newsnight's guests and says he would be "very very surprised" if anyone at the Treasury or the Bank of England had been involved in encouraging Barclays to misreport its Libor rates.

He adds that the suggestions have "a whiff of mudslinging."

Nigel Lawson, chancellor of the exchequer between June 1983 and October 1989, is one of the other guests.

Mounting a defence of the City of London, he says: "The standard of ethics on Wall Street is probably even lower than it is in the City of London."

10.37pm: The Barclays scandal has underlined the City's unmuzzled power, writes the Guardian's Seumas Milne:

Political and business powerbrokers insist it's all a problem of leadership, bad apples and a culture that has gone awry. But such cultures are generated by structures and systems – and in the case of the City, deregulated short-term profit maximisation has as good as required them.

It's certainly necessary to have a clearout of City bosses, prosecutions and wide-ranging inquiries, but only far-reaching change will clear this cesspit.

The financial system has already failed at huge economic and social cost. It has been shown to be corrupt, incompetent, rapacious and economically destructive. The City's claims to be an indispensable jobs and tax engine for the British economy are nonsense: the bailout costs of 2008-9 dwarfed the financial tax revenues of the boom years, which were below those of manufacturing even at their peak.

In fact, the banks are pumped up with state subsidies and liquidity that they are still failing to pass on in productive lending five years into the crisis.

A crucial part of the explanation is the unmuzzled political and economic power of the City: its colonisation of Whitehall and public life, effective grip on its own regulation, revolving-door pull on politicians and civil servants, and purchase of political parties. Finance has usurped democracy.

10.34pm: The Times splashes with "Barclays adrift as scandal sucks in Bank of England"

10.30pm: The Daily Mail splashes with 'Revenge of a Fallen Titan'

10.14pm: 'Diamond Let's Loose over Libor' is the FT's front page headline:

10.10pm: Diamond is expected to come out fighting for his reputation on Wednesday when he appears before a powerful committee of MPs, according to the lead story in Wednesday morning's Guardian.

The high-profile and outspoken banker is expected to unleash a wave of explosive revelations about the role of City watchdogs and senior Whitehall figures in the manipulation of crucial interest rates that landed the bank with a record £290m fine last week.

The chancellor, George Osborne, who had been putting the banker under intense pressure to quit, said his sudden resignation was "the right decision for Barclays – and for the country". "I think Bob Diamond's resignation is the first step towards the new age of responsibility we need to see."

After an extraordinary 24 hours during which the bank's chairman, Marcus Agius, quit only to be temporarily reinstated once Diamond had departed, the role of Bank of England officials in the rate-rigging scandal is likely to take centre stage in the hearing with MPs.

With Barclays in turmoil, Diamond is fighting for his own reputation, which politicians have used to symbolise the culture of greed in City banking.

Diamond, under pressure from the banking regulator and the governor of the Bank of England, Sir Mervyn King, quit after he decided he would be the lightning rod for the scandal at the hearing.

10.06pm: 'Diamond Cuts Up Rough' is tomorrow's Guardian front page splash headline.

9.52pm: 9.49pm: 'The Bank of England told us to do it, claims Barclays' is the headline over the lead story in tomorrow's Daily Telegraph (via Nick Sutton)

9.32pm: Jill Treanor, the Guardian's City Editor, has filed a fascinating piece on the late exchanges that led to Bob Diamond's demise. Here's a snippet:

On Monday afternoon Bob Diamond rehearsed for his planned appearance before the Commons Treasury select committee.

As his public relations team ran him through question after question that the MPs were likely to fire at him, the American born banker saw that he – and his brash personality – was the main problem facing Barclays bank.

Diamond, 16 years at the bank, but only 18 months into his dream job as chief executive, spoke to a few close colleagues before setting off for home, knowing that David Cameron had used the revelations about Barclays' attempts to manipulate the London interbank offered rate (Libor) to call an inquiry into the wider banking industry.

Though regulators admit that Barclays is only one of up to 20 banks caught up in the scandal, Diamond epitomised it.

Diamond rang Barclays chairman Marcus Agius and told him it was time for him to go. It was a stunning change in stance from the defiant email to staff he had sent a few hours earlier, telling them he "loved Barclays" and was committed to putting right the wrongs exposed by regulators.

Behind the scenes bigger forces were at work. The regulators had watched the political temperature rising during the day and the Bank of England governor, Sir Mervyn King, and Lord Turner of the Financial Services Authority secretly met Agius, who had himself resigned only hours before, in the late afternoon.

You can read Jill's piece in full here.

9.12pm: Gary Hoffman (former Northern Rock CEO) is now the favourite to become the next chief executive of Barclays, if the latest odds being offered by Ladbrokes are anything to go by.

Providing us with an update - asked for by readers - a Ladbrookes source says the gamble on Hoffman has continued in the shops and on the phones all day.

He's now the 2/1 favourite there with 97% of all bets for him.

It's a a dramatic turnaround from this morning, when the pack was headed by Antony Jenkins, the current chief executive of Barclays retail and business banking.

The odds were cut on Hoffman after Ladbrokes ttok a "decent bet" on him this afternoon at its Charing Cross branch in London.

8.47pm: The directors of Barclays are now under pressure to ensure Bob Diamond does not walk away with a multimillion-pound payoff following his forced exit from the bank, writes the Guardian's Simon Bowers. He sets the scene:

The departing Barclays boss, who has been paid a total of £98m since he joined the Barclays' board in 2006, could be in line for up to £22m if all his contractual entitlements, free shares and outstanding bonuses are honoured.

His deputy, Jerry del Missier, who also quit on Tuesday, could also be entitled to a golden goodbye running into many millions.

But Diamond is likely to have to fight long and hard if he wants to walk away with such a vast cash pile. Shareholders – who registered a 31.5% protest vote against his pay earlier this year before the rate-rigging scandal blew up – are likely to object to any large payments.

They may also demand that some of his big bonus payments from previous years – when Barclays' traders were inflating the bank's profits by attempting to manipulate the Libor rate – are also repaid.

They will be relying on Alison Carnwath, the Barclays' director who oversees directors' pay.

She is understood to have attempted to halt some of the payments made to Diamond earlier this year but her failure to do so angered shareholders.

8.39pm: The memo from Bob Diamond to his boss, chief executive John Varley, on 29 October 2008, will dominate Wednesday's session of the Treasury select committee, writes the Guardian's Nils Pratley.

It records Diamond's account of his conversation that day with Paul Tucker, a deputy governor of the Bank of England.

Nils identifies five key questions that MPs will want to ponder:

1. Was Diamond's account of his conversation with Tucker accurate?

2. Was the memo discussed further between John Varley (then Barclays chief executive), Diamond and del Missier (Diamond's closest associate at Barclays Capital)?

3. Why wasn't del Missier sacked when the board discovered his grave mistake in issuing the instruction to lower Libor submissions?

4. Did Tucker and the Bank believe the Libor market in the autumn of 2008 was riddled with false submissions? And did the Bank, explicitly or implicitly, encourage this situation?

8.18pm: Bob Diamond had been facing a "coup" which was being organised by Barclays Capital employees, according to a report from CNBC's John Carney.

In a scenario that wouldn't look out of place in a Hollywood script, the traders are said to have been former employees of Lehman Brothers, the failed investment bank taken over by Barclays Capital during the financial crisis.

Carney, who runs CNBC's NetNet blog, says that senior investment bankers in New York began to organize a coup on Monday and that several met in offices, which were formerly those of Lehman, to figure out a strategy.

He quotes one:

We were like, 'What world is he living in?'" one trader said. "How could he not see the writing on the wall?"

He was like a guy trying desperately to keep his girlfriend from breaking up with him. I was literally cringing reading [the letter]," an investment banker said.

8.09pm: Another graph to add to the mix now, courtesy of James MacIntosh, Investment Editor at the Financial Times and writer of that newspapers's 'Short View'.

The context is the 2008 telephone conversation between Paul Tucker, then deputy governor of the Bank of England, and Bob Diamond, who has claiemd that Tucker told him that "a number of senior officials in Whitehall" had expressed concern over Barclays's Libor numbers.

James Mackintosh@jmackin2 The Barclays chart you need to see @felixsalmon This is Barclays' submission premium to 3 month Sterling Libor in 2008 pic.twitter.com/mPgbWYfP

3 Jul 12 ReplyRetweetFavorite 7.46pm: Alistair Darling, Chancellor of the Exchequer between June 2007 and May 2010, has been talking to Channel 4 News.

He said that he was not one of the "senior figures" at Whitehall who were alleged to have expressed concern back in 2008 that Barclays was reporting excessively high daily borrowing rates in the weeks after the collapse of Lehman Brothers.

"I'd find it astonishing that bank or Treasury would ever suggest this," said Darling, referring the suggestion that Paul Tucker of the Bank of England had passed on the supposed concerns of the Whitehall officials.

But while Darling was strong on manipulation of Libor rates, describing it as "indefensible and reprehensible", it was his distinctive pronounciation of Libor as "Lee-bor" that seems to have intrigued more than a few people who saw the interview. Here's a tweet from broadcaster James Max:

James Max@thejamesmax Oh goodness. Alistair Darling can't even pronounce LIBOR correctly. No wonder things were and are a mess. 3 Jul 12 ReplyRetweetFavorite 7.34pm: The House of Lords' rejection this evening of Labour's call for a judge-led inquiry into the bank rate-rigging scandal is a setback for Ed Miliband, although MPs will get another chance to wield influence on Thursday when they vote on Prime Minister David Cameron's proposal for a cross-party inquiry by MPs and peers.

It would led by the chairman of the House of Commons Treasury Committee, Tory MP Andrew Tyrie.

In the meantime though, former City minister Lord Myners has been telling peers that the rigging of the Libor interest rate is only just a symptom of a much wider cancer in the UK's financial services industry.

He said that since last year he has asked ministers repeatedly about the manipulation of the interest rate but has received "backhanded" responses from the Government.

Lord Myners, who was City minister under Gordon Brown between 2008 and the last general election said the terms of reference for Andrew Tyrie's joint parliamentary committee were too narrow and did not address a wider cultural shift in the banking industry.

He added: "This is not just simply a question of Libor. I first raised a written question with the minister (Lord Sassoon) about the manipulation of Libor in March of last year and got a very backhanded response from the minister on this issue. I have raised the issue several times subsequently."

But Treasury Commercial Secretary Lord Sassoon said told peers that Tyrie's investigation had been given a "very wide remit" and argued a judicial inquiry would cause delay and be very expensive.

7.22pm: Marcus Agius, who is now temporary full-time chairman at Barclays just a day after resigning, has given an interview to Sky's Jeff Randal, which has just been broadcast.

Agius said that he had known about libor rate fixing at his bank for 'more than two years' and came under pressure from Randall to explain why he did not act decisively to get rid all of those involved, including Bob Diamond.

"A number of people have gone. I am talking about those who took the decisions a number of years ago," he said.

Questioned about what the impetus had been for Diamond's eventual departure, Agius said that he had thought that his own announcement of his intention to leave "would take some of the steam out of the situation".

But the opposite occurred, he added, "and people were calling for Bob's head more than ever before".

"I think Bob concluded that it was not going to get any better and the right thing to do was to resign."

Randall concluded the interview by asking if Barclays was either "incompetent or immoral".

Unsurprisingly, Agius chose not to pick any of those options, reiterating instead that the bank was going to institute a review of its business practice and culture, aided by a "leading figure" yet to be identified.

7.00pm: Good evening. This is Ben Quinn taking over the blog for the evening.

We start off with some political developments, tweeted by Patrick Wintour, from parliament:

Patrick Wintour@patrickwintour Peers rejected an independent judicial inquiry into banking sought by Labour by a margin of 251 to 197 3 Jul 12 ReplyRetweetFavorite 6.40pm: Here's a summary of the main events on a dramatic day.

• Bob Diamond has quit Barclays as the Libor rate fixing scandal escalated to new heights. The news broke at 7.30am this morning, when Barclays announced that its chief executive was leaving with immediate effect. Diamond blamed the 'external pressure' that has build up on Barclays in recent days -- after MPs called for his resignation, and the government announced an inquiry into the affair.

MPs from across the political spectrum welcomed his departure.

• Diamond's resignation was followed by that of Jerry del Missier. Here's the official statement. One of Diamond's key allies, del Missier has quit because he was the official responsible for telling Barclays staff they could submit lower Libor quotes back in 2008.

• Diamond will still appear before the Treasury Committee hearing into Libor tomorrow. He could now speak more openly about relations between Barclays and the Bank of England, and the government.....

• Ahead of that hearing, Barclays released an email from 2008, which appears to implicate both the Bank of England and the government in the scandal. It states that Diamond spoke to Paul Tucker of the BoE, who said that senior officials in Whitehall were concerned that Barclays was reporting excessively high daily borrowing rates in the weeks after the collapse of Lehman Brothers, and that it didn't need to always do so.

• Barclays refused to comment on reports today that the Bank of England played a role in Diamond's departure. Marcus Agius, who is now temporary full-time chairman just a day after resigning, also declined to say how large a payoff Diamond will receive. There are reports that the bank wants to claw back £20m of bonuses from previous years.

I'm handing this blog over to my colleague Ben Quinn, who will watch developments for the next few hours. Many thanks for reading, and your comments and help today.

5.41pm: My colleagues on our Datablog have created a superb interactive which lets you see the Libor rates which 16 banks submitted between 2005 and 2008 - the period when Barclays staff were attempting to manipulate it.

The graphic lets you look at the daily borrowing costs submitted by each bank, against the average 'daily fix' (calculated from all their submissions).

The interactive is online here.

As my colleague Simon Rogers explains:

Thomson Reuters have given us the data for each bank from 2005 to 2008 - you can explore what happened to the US dollar Libor in this interactive here.

It does show how each bank made their submission to Libor each day.

Set the chart to late 2008 and you can see the huge impact of the financial crisis - banks which had previously lined up with each other start diverging wildly as chaos gripped the markets. Barclays is not the highest - in fact RBS consistently submitted for higher rates from July to December 2008, followed by German commercial bank WestLB.

More from Simon here.

5.17pm: The Bank of England is declining to comment on the memo released by Barclays this afternoon, which implicated its deputy governor Paul Tucker in the Libor scandal.

The email can be read in full here at 4.32pm.

5.00pm: Ladbrokes has cut its odds on Gary Hoffman (former Northern Rock CEO) becoming the next chief executive of Barclays, after taking a "decent bet" on him this afternoon at its Charing Cross branch in London.

Hoffman is now priced at 10/1, from 16/1 originally. A Ladbrokes source says he is the only candidate who has seen significant interest today.

Hoffman has been running NBNK, the venture that hoped to become a new player in the UK banking sector. It's now being wound up, though, after missing out on the Lloyds bank branch sale.

4.56pm: After a day of heavy drama, Barclays shares closed down 1.35p, or 0.8%, at 168.4p. That doesn't begin to reflect today's turmoil.

4.49pm: Over in Westminster, there is fevered speculation about the identity of the "senior figures within Whitehall" who apparently told Bob Diamond, via Paul Tucker of the Bank of England, that it should manipulate its Libor submissions (see 4.32pm for the killer email released this afternoon).

Ed Balls has been pointing out that he was Children's Minister at the time, so not involved with the financial crisis.

Another name doing the rounds is Baroness Shriti Vadera, who worked in the Cabinet office and the Business department in October 2008.

Patrick Wintour@patrickwintour Pressure on Paul Tucker to identify "the number of senior figures in Whitehall" in 2008 concerned by Barclays LIBOR rate. Target is Vadera 3 Jul 12 ReplyRetweetFavorite 4.39pm: It appears that Bob Diamond's daughter Nell has offered public support for her father on Twitter, following his resignation this morning.

Tweeting as @nelliediamond, she said blamed the scandal on the mistakes of "a few":

Nell Diamond@nelliediamond No one in the world I admire more than my dad. 16yrs building Barclays. Shame to see the mistakes of few tarnish the hard work of so many. 3 Jul 12 ReplyRetweetFavorite A second tweet has now been deleted. It said George Osborne and Ed Milliband could "go ahead and #HMD" (an American youthful insult, standing for 'hold my....')

We're trying to get official confirmation from Barclays that the account's really hers, so do take with caution. but it appears to be genuine. There are even tweets expressing support for Chelsea football club (also her dad's team).

UPDATE: Barclays has confirmed to us that the account is genuine.

4.32pm: Barclays has dragged the Bank of England, and the last Labour government, deeper into the Libor scandal.

Its submission to the Treasury Select Committee includes an email apparently written by Bob Diamond on 29 October 2008 (when the crisis was raging), following a telephone call with Paul Tucker of the Bank of England. In the message, Diamond writes that Tucker told him that "a number of senior officials in Whitehall" had expressed concern over the Libor numbers that Barclays had been reported (the rate at which other banks would lend to it).

The email goes on to show that Diamond implied that other banks have been submitting rates that did not reflect their true cost of borrowing, and concludes by suggesting that Tucker had suggested that Barclays Libor submissions did not need to be so high.

Here is a full transcript of the message, which was sent to then chief executive John Varley, along with Jerry del Missier:

Further to our last call, Mr Tucker reiterated that he had received calls from a number of senior figures within Whitehall to question why Barclays was always toward the top end of the Libor pricing. His response was "you have to pay what you have to pay". I asked if he could relay the reality, that not all banks were providing quotes at the levels that represented real transactions, his response "oh, that would be worse".

I explained again our market rate driven policy and that it had recently meant that we appeared in the top quartile and on occasion the top decile of the pricing. Equally I noted that we continued to see others in the market posting rates at levels that were not representative of where they would actually undertake business. This latter point has on occasion pushed us higher than would otherwise appear to be the case. In fact, we are not having to "pay up" for money at all.

Mr Tucker stated the levels of calls he was receiving from Whitehall were 'senior' and that while he was certain we did not need advice, that it did not always need to be the case that we appeared as high as we have recently. RED*

This is dynamite, although I must caution that the Bank of England has not had a chance to respond.

*: RED, incidentally, stands for "Robert E Diamond", and is the nickname used by Barclays staff.

4.15pm: Marcus Agius's appearance before the Treasury Select Committee, scheduled for this Thursday, has been postponed.

The TSC has just announced that the evidence session has been postponed until next week.

4.03pm: A quick summary of the Barclays media call (click down to 3.25pm onwards for the highlights). In short, it wasn't the most illuminating press briefing ever.

Marcus Agius's explanation that Jerry del Messier had been the man ultimately responsible for Barclays staff manipulating the Libor rate is significant, and chimes with other reports today.

However, Agius's refusal to discuss the Bank of England's involvement in Barclay's Libor submissions, or the claims that Sir Mervyn King played a role in Bob Diamond's departure, won't stop these questions being asked again, and again....

3.51pm: The Barclays conference call ends somewhat shambolically. Newsnight's Paul Mason gets the last question, and starts to challenge Marcus Agius over his refusal to discuss the Bank of England's role in Barclays manipulation of Libor rates. But mid-question, Mason is suddenly cut off (it did sound like he was on his mobile)

Agius does have a stab at answering the question, by reiterating that this issue is not for today. In other words, Bob Diamond will reveal more to the Treasury Select Committee tomorrow.

3.45pm: Simon Nixon of the Wall Street Journal asks why Barclays decided last Thursday that it was appropriate for four executives to simply hand back some of their bonuses because of the Libor scandal, but had now moved on to an attempt to "shake down" the Bank of England by implicating it.

Marcus Agius won't be drawn on the Bank of England issue, but does suggest that some junior staff will eventually face the music over the issue. Diamond and del Messier surrendered their bonuses because they were the officers in charge. As he puts it:

Anyone who has culpibility will be punished in an appropriate manner. Anyone who has responsibility will be treated differently.

3.40pm: Sky's Mark Kleinman asks Marcus Agius how Barclays stakeholders can have confidence that he is the best man to run Barclays as fulltime chairman (given he resigned yesterday morning).

Agius explains that his deep knowledge of Barclays means he is the best person to take short-term control, and the best person to oversee the recruitment of a new CEO.

He also declines to elaborate on plans to claw back Bob Diamond's bonuses, pleading for patience from the media:

We're only a few hours into this....give us a chance.

3.37pm: Next question -- will Barclays (as has been reported) attempt to claw back tens millions of pounds worth of bonuses from Bob Diamond? (Sky News has reported a figure of £20m).

Marcus Agius won't give a clear answer to this question either, saying:

It's going to be a board decision...there's nothing useful I can say on this today.

3.35pm: Next question for Barclays chairman Marcus Agius – how will he go about replacing Bob Diamond?

Agius acknowledges that it will be difficult to find someone with the necessary skills to run Barclays, and pledges that the process will be thorough. "We will not compromise on quality", he adds.

3.34pm: Why did Jerry Del Messier resign today?

Marcus Agius says that the Barclays COO chose to step down because he was the most senior person to instruct Barclays staff that Libor rates to be lowered.

3.31pm: Reuters' Steve Slater has the second question - and again asks Agius about the key question. What impact has the Bank of England had?

Again, Agius refuses to elaborate, saying that it is a matter for Bob Diamond to discuss tomorrow (at the Treasury Select committee).

What about remuneration? How much will Bob Diamond walk away with?

Agius says that it's been "a very busy day", and the issue hasn't been decided yet.

3.29pm: Jill Treanor starts the media Q&A with Barclays by asking Marcus Agius what changed between yesterday morning (when he resigned), and this morning. She also asks what involvement the Bank of England has had.

Agius explains that he "hoped to lower the temperature" by stepping down as chairman. However, this clearly hadn't worked.

By the end of the day, the two individuals felt the situation would not go away anytime soon.

Agius then declines to discuss the Bank of England question.

3.28pm: Marcus Agius: our management changes today are "important steps" in the bank moving forwards.

3.25pm: The Barclays media press conference has just begun.

Chairman Marcus Agius begins by telling the press that he had received resignation offers from both Bob Diamond and Jerry del Missier last night.

It is a measure of these two leaders that they took these decisions... putting the future of the bank ahead of their careers.

He credits both men with making a very big contribution to Barclays' growth and success in recent years, but admits that the bank has a lot of work to do to rebuild its reputation with all its stakeholders.

3.22pm: This is really important - Barclays has just published its submission to the Treasury Select Committee ahead of tomorrow's hearing with Bob Diamond.

It's online here.

It includes an explanation of how the Libor manipulation happened, and does indeed involve Paul Tucker of the Bank of England.

Here are the details:

On 29 October 2008, Bob Diamond received a call from Paul Tucker, the Deputy Governor of the Bank of England. The substance of that call was captured by Bob Diamond via a note prepared at the time. A copy of that note is appended to this document; it was circulated to John Varley, then Barclays Chief Executive, and Jerry del Missier, then President of Barclays Capital.

Subsequent to the call, Bob Diamond relayed the contents of the conversation to Jerry del Missier. Bob Diamond did not believe he received an instruction from Paul Tucker or that he gave an instruction to Jerry del Missier. However Jerry del Missier concluded that an instruction had been passed down from the Bank of England not to keep LIBORs so high and he therefore passed down a direction to that effect to the submitters.

There was no allegation by the Authorities that this instruction was intended to manipulate the ultimate rate. The bank's submissions had consistently been excluded from the LIBOR calculation. Moreover the instruction became redundant in a matter of days as market conditions improved.

The FSA investigated Jerry del Missier personally in relation to these events and closed the investigation without taking any enforcement action.

3.20pm: Barclays chairman Marcus Agius is about to hold a media conference call to discuss today's news. I'm dialled in, so should be able to liveblog the highlights here. The call has actually been delayed by 10 minutes - guess there's an awful lot of journalists trying to dial in.....

3.01pm: Sky are reporting that the Barclays board plans to ask Bob Diamond to hand back "almost £20m of bonuses" paid out in prior years.

2.46pm: Here's the official statement from Barclays, confirming that chief operating officer, Jerry del Missier, has quit with immediate effect, seven hours after Bob Diamond.

Management changes

Barclays today announces the resignation of its Chief Operating Officer, Jerry del Missier with immediate effect.

Commenting, Mr del Missier said: "My 15 years at Barclays have been a time of great accomplishment, both for me personally and for the bank. I am grateful for the opportunities that were provided to me and proud of what we achieved. We built one of the premier global investment banks from scratch – something that we are all very proud of. The firm is as strong today as it ever has been and is incredibly well placed to succeed within the post financial reform competitive landscape.

"I have every confidence that the Board and Executive Management of Barclays will be successful in executing their plans, and I wish them the best of luck in doing so."

Commenting, Barclays Chairman, Marcus Agius said: "Jerry played a pivotal role in many of Barclays standout successes during the last 15 years, including his extraordinary contributions as part of the leadership team that built the investment bank. His many contributions to the firm were critical to why Barclays was able to weather the extreme market turbulence of the credit crisis as well as we did. His colleagues, clients and other stakeholders hold him in the highest regard."

2.45pm: Breaking news: Jerry del Missier, chief operating officer of Barclays, has just confirmed that he is quitting the bank.

We'd reported this morning that Del Missier was considering his position -- it appears that he's been blamed for Barclays manipulation of the Libor rate.

2.39pm: Reuters has pulled together a very decent graph showing the rise and fall in Barclays share price since Bob Diamond joined the bank (so, including the years he was building Barclays Capital up). It shows how Barclays consistently beat the sector in the boom years before the credit crunch, but has steadily underperformed since.

Reuters Top News ✔ @Reuters Graph: Barclays share price under Bob Diamond pic.twitter.com/K3uf39bB

3 Jul 12 ReplyRetweetFavorite Barclays shares had been trading as high as 176p today, a rise of 4%, but are now up just 1.4% on the day. City analysts reckon the bank is undervalued, partly because its so hard to work out the full downside of the Libor scandal.

2.20pm: The Labour Party continues to push for a full judicial inquiry into Britain's banking sector, with Ed Balls arguing against the government's plan for a parliamentary probe.

Balls told Sky News that:

I think to be honest a Parliamentary inquiry is substantially third best and the way the government has handled this since yesterday in a totally partisan way is, to be honest, undermining trust.

We need as politicians to say look we all got this wrong, there needs to be big change and we can only do that in the open scrutiny of proper hearings with proper disclosure from the politicians and the bankers, everybody there, so the public can see it is being done properly. Not just a Parliamentary inquiry, we have had those before.

Several commentators have pointed out that Labour was in power during the years when Libor was being misreported, with some speculating that a full inquity could be very uncomfortable for the party. Yet, Balls and Ed Miliband are still pushing for a Leveson-style investigation (and could even sink the government's proposal by opposing it in a vote in the House of Lords later today).

Why? Patrick Wintour, our political editor, argues that the wider the inquiry, the less likely it will simply pin the blame on the last government. He writes here:

Tuesday's Daily Mail has a good but politically inspired leak of a document suggesting Lady Vadera, a former Labour Treasury minister close to Gordon Brown, wanted to keep the Libor rate down at the height of the banking crisis.

Who benefits from this leak? The current occupants of the Treasury. The truth may be more subtle, but that is not how Labour views the leak.

Osborne is a brilliant political animal but sometimes he resembles the Pompidou Centre in Paris: all the normally concealed inner architecture is on display to the observer.

His demeanour makes it appear as if he sees a parliamentary inquiry as a one-dimensional attempt to blame Balls for the banking crisis.

Balls, of course, was City minister in the run-up to the crisis. His position is that he may well have been too soft on the sector, but the Tories would have been even more accomodating....

1.49pm: The ripples of the Libor scandal have already touched the US presidential election. It emerged overnight that Bob Diamond has pulled out of hosting a fund-raising event for Republican candidate Mitt Romney.

Romney spokeswoman Andrea Sau told the FT that:

Mr Diamond decided to step aside as a co-host for the upcoming London reception to focus all his attention on Barclays. We respect his decision.

Now he's resigned, though, Bob could always turn his attention back to supporting Mr Romney...

1.46pm: Here's a video round-up of politicians welcoming Bob Diamond's resignation.

Conservative George Osborne, Liberal Democrats Danny Alexander and Lord Oakeshott, and Labour's John Mann all believe that the Barclays CEO was right to quit. A rare issue that unites parliament.

1.26pm: Diamond's resignation, and the subsequent revelations over Mervyn King's involvement, have certainly turned up the heat on the Bank of England.

Ismail Ertürk, senior lecturer in banking at Manchester Business School, comments:

Following the FSA report, the BoE must now respond authoritatively to allegations that it encouraged banks to post low Libor rates.

Since the financial crisis the BoE has acquired huge powers through quantitative easing and liquidity provision schemes and there is no proper democratic control of such powers.

The Bank of England has a long reputation for resisting outside scrutiny and criticism (one official famously told JM Keynes that criticism of its actions was akin to questioning a lady's virtue). But there is concern in Westminster that we've never had a proper inquiry into the Bank's role.

Last November, Andrew Tyrie (head of the Treasury Committee who will question Diamond), said BoE governance was "too weak".

1.18pm: Is the famous apathy among bank customers about dumping their accounts beginning to crack amid the revelations over Libor, as well as service meltdown at RBS/NatWest?

Patrick Collinson, Guardian Money editor, reports:

Nationwide building society this morning reported it had seen an 85% week-on-week leap in the number of new customers opening accounts online.

At the end of last week Co-operative Bank said it had seen a 25% increase in on-line applications week on week, while new entrant Metro Bank said today that personal account openings are up 10% and business account openings up 50%. John Crossley, Nationwide's head of current accounts, said: "Customers are clearly unhappy with recent events and are opting to vote with their feet. Nationwide is seeing a sharp increase in the number of customers switching their account to the Society."

Barclays isn't the only bank to have angered its customers in recent days, of course. The Royal Bank of Scotland IT debacle continues, with reports this morning that some RBS customers have been billed twice for their monthly mortgage payment:

Joel Hills@joelhillssky RBS says possible that "small proportion" of customers have made double mortage payments as a result of computer problem last month. 3 Jul 12 ReplyRetweetFavorite 1.12pm: Here are a few more interesting reader comments (and there are LOTS more in the comments section below).


Up until 5 years ago, I had been a customer of Barclays for almost 30 years. Lethargy not loyalty kept me with them all that time. However, I never felt at any time that they had my interests at heart and I developed the view that they always tried to cut corners to improve the bottom line. Outsourcing customer contact was a disaster. Anyway, a minor final straw made me change to the Cooperative Bank. I couldn't believe the difference - this was a bank that had ethical principles at its heart and was friendly and professional at the same time. My point is - don't condemn all banks, but vote with your feet away from the banking bad apples.


I have been a customer of Barclays Bank since 1965 having become a customer as a student.

I have always found their service to be of an exemplary standard, at least as far as the retail side is concerned.

Bob Diamond founded the investment banking division and I would like to see a full investigation into the dealings of the bank before I make a change. Is trading between banks outside of the Libor rate a fraud? I don't think so. I await an investigation by the Serious Fraud Squad before condemning Barclays out-of-hand.

This issue has been circulating for 4-5 years in the City of London and was also known about on Wall Street. Why has it just come to prominence so late now that the FSA has fined the bank?

What surprises me is how so many are prepared to make a judgement before all the facts, evidence and even the extent has been considered. In may ways this issue is showing up the Regulator and the government ministers who had responsibility for financial services over this whole period.

12.51pm: Here are the best quotes on the Libor/Barclays scandal from the Financial Service Authorities Annual Meeting today (via my colleague Juliette Garside, who is there):

Adair Turner, on Bob Diamond's resignation:

I think it was in the process of becoming inevitable given the [public] comment and the challenges that they face in changing the culture of the organisation.

On the issue of whether the FSA was involved:

There were major challenges for Barclays in making sure they could convince people there had been fundamental cultural change and we simply communicated to the board that these were the issues they needed to think about it was for them to agree whether they could achieve that degree of change under the current leadership.

Andrew Bailey, the head of the FSA Prudential Business Unit, was asked whether it would have conducted a 'fit and proper test' on Diamond had he stayed. He replied:

The board had to decide who the best person was to lead cultural change. If the answer had come back that 'it's Bob Diamond', which it could have done, then yes we would have had to have taken a view on that.

On the issue of criminal prosecutions, Bailey said:

As the law has developed, the process of submitting Libor quotes is not a regulated activity in a way that could enable us to bring a criminal case. Clearly there is a set of issues here about whether the existing rules are appropriate.

12.35pm: It now appears that Sir Mervyn King, governor of the Bank of England, did indeed play a part in Bob Diamond's exit (although the precise timings and details remain vague).

Robert Peston's latest scoopette is that "The message that the Bank of England governor wanted Bob Diamond to go was delivered personally to Barclays' chairman Marcus Agius in a telephone conversation between the two of them yesterday."

My colleague Jill Treanor has the latest details:

Peston seems to be on to be something with this idea there was some sort of meeting between Sir Mervyn King, governor of the Bank of England, and Marcus Agius, the chairman (or not, at the time), of Barclays yesterday although it is not clear if this was before after Diamond went. I'm assured though the decision to go was Diamond's. Lord Turner, the boss of the FSA, currently holding a press conference after the regulator's public meeting, is also saying that it is a matter for the board. And in the midst of this, Barclays won't say anything other than its statement this morning.

Also Jerry Del Missier's resignation is coming (we first reported at 9.58am that Barclays' COO was considering his position). Jill explains:

It is important to remember he was a key lieutenant of Diamond's at Barclays Capital during the period when the attempts to manipulate Libor took place. It is looks as if Del Missier is the person who is carrying the can for "miscommunication" of the controversial conversation between Diamond and Paul Tucker of the Bank of England that is likely to be aired at tomorrow's select committee meeting.

12.09pm: Here's another potential candidate to replace Bob Diamond -- David Roberts, the current deputy chairman of Lloyds Banking Group.

FT Alphaville reckon he's the perfect choice, because:

He spent roughly his whole career at Barclays, joining in 1983 and working his way up to be first chief executive of Personal Financial Services at the bank and then head of Business Banking. He lost out to Bob Diamond in the race to be group ceo when the previous incumbent, John Varley, opted for early retirement.

Bank of England governor Mervyn King Photograph: Jonathan Brady/EPA Since 2006 he's spent a couple of years during The Crunch trying to sort out Austrian retail bank BAWAG PSK and is currently taking things relatively easily, serving as Sir Win Bischoff's deputy at Lloyds.

He's 50. He's smart and professional and knows Barc backwards. And he's not an investment banker.

Marcus Agius could save his bank a lot of time and head hunting fees here*.

* - just a bottle of champagne to Paul Murphy, 1 Southwark Bridge London SE1 9HL....

11.58am: Speaking at the Financial Services Authority's annual meeting today, Lord Adair Turner (who chairs the FSA) said he "respects and understands" Bob Diamond's resignation, and that it was a decision between Diamond and the board.

And with delicious timing, Robert Peston tweets that Turner, and Sir Mervyn King, had helped to bundle Diamond out of office:

Robert Peston ✔ @Peston I have learned govermor of Bank of Eng & FSA chair made clear to Barclays they'd be happy for Diamond to go. See bbc.co.uk/robertpeston soon 3 Jul 12 ReplyRetweetFavorite If the Governor of the Bank of England really helped to force out the boss of Barclays, this crisis just entered a whole new level. What is Diamond going to tell MPs tomorrow?.....

11.49am: Here are the latest odds from Ladbrokes on potential replacements for Bob Diamond. They make Antony Jenkins, the current chief executive of Barclays retail and business banking, the favourite.

Antony Jenkins 2/1 Bill Winters 5/2 Naguib Kheraj 4/1 Christopher Lucas 6/1 Rich Ricci 6/1 Jerry del Missier 16/1 [unless he resigns first...] Gordon Brown 100/1 Harry Redknapp 1000/1

And here are their odds for what Bob Diamond will do next:

Work for another bank 1/3 Announce retirement 4/1 Work for a listed company (non financial) 5/1 Chair a listed company (non financial) 6/1 Work for the FSA or other regulatory body 14/1

11.39am: Thanks for all the great comments below. My colleague Hannah Waldram has kindly rounded up some of the best:


Good riddance! He's American, so perhaps there were going to be problems with his visa anyway. Still, as someone else has noted, he's pocketed over £100 million in bonuses & pay since 2006, so there is no real punishment involved here beyond wounded pride & his ego. No doubt he'll pick up a few lucrative directorships now.

I wonder how many of the traders who actually manipulated interest rates will be prosecuted?


Am I being stupid? Marcus Agius is to oversee the selection of a new chief executive. I thought he had resigned?


My reading of the statement is not that Agius is permanently reinstated, just that he is going full time pending his own departure? Or is there another source?

Our understanding is that Agius still intents to leave Barclays, but in the short term he is reinstated as full-time temporary chairman. So a permanent replacement will still be found.

Here's some more comments:


I'm a Barclays pensioner who retired twenty years ago and it was clear to anyone with eyes, even at that time, that the bank was heading in the direction that led to the crash of 2008 and this latest LIBOR incident.

All of this happened on Diamond's watch and, as he is a hands on man, it's inconceivable that he was unaware of what was going on.

The problem is that the arrogance and sense of entitlement in Barclays is not only replicated in other banks it is the driving force, the raison d'être, of the whole Neo Liberal Capitalist system that controls commerce and industry across the modern world and which subverts democratically elected governments.

I believe that a balanced economy, making full use of entrepreneurial skills with due reward is probably the best, or least harmful, way to run an economy. Capitalism has boundless energy but like nuclear fission it has to be carefully controlled to stop it killing us all and that's where we've failed.

I hold no brief for Barclays but don't think Diamond's exit solves the problem. So far it's tantamount to picking a small pimple on a body riddled with cancer.


I have 2 sons who work in the industry. I asked both of them at the weekend if they came across unscrupulous, dishonest, bolly drinking people in their work. Their answer was something like that but very, very rarely. Their take on the culture was that it was highly competitive, testosterone driven and the the same intensity would be given to an egg and spoon race for dad's at the local primary school. Money was not the main driver.

11.22am: Bob Diamond will appear before the Treasury Committee at 2pm BST on Wednesday, we've just heard.

It will take place in The Wilson Room, at Portcullis House in Westminster. It is billed as "an evidence session with the former Chief Executive of Barclays, Bob Diamond, to question him about the penalties levied against Barclays by authorities in the UK and the US following an investigation into the submission of various interbank offered rates."

The committee says seats will go on a 'first come, first served' basis, so there'll be an almighty scrum I fear. Luckily it will also be streamed live over the internet on Parliament TV and probably on the TV news channels. We'll have live coverage online too, of course.

11.05am: Investec analyst Ian Gordon agrees that Bob Diamond now has the freedom to 'speak freely' at tomorrow's Treasury Committee meeting (where he could drag the Bank of England deeper into the crisis - see 9.37am for more details)

Gordon claims that politicians and the media were guilty of "persistent misrepresentation of Barclays' position" in the Libor scandal, adding:

With Bob gone, expect increased recognition that the Libor investigation is a multi-bank issue rather than Barclays-specific.

If there is 'new news' to share - whether embarrassing to UK regulators or otherwise - Bob can now speak more freely at the Select Committee show-trial tomorrow.

11.03am: Barclays says Bob Diamond's severance package is "still under discussion".... (that's via the Press Association)

10.51am: CBI director-general John Cridland has laid out three ways to clean up British banking, and restore confidence in the sector:

Libor should be set on real market data and independently regulated, banks' internal controls must be strengthened to underpin a necessary change in culture, and individuals need to be held to account where appropriate.

10.34am: Bob Diamond's fall from grace comes just 16 months after he became Barclays CEO, after building Barclays Capital into a major force in investment banking.

As Reuters columnist George Hay argues this morning, the decision to promote Diamond back in 2010 now looks like a major blunder by the board. John Varley, his predecessor, must be delighted he got on when he did.

George Hay@gfhay John Varley/Bob Diamond now looks like Blair/Brown: a long reign with rival breathing down neck; then a short, disastrous succession. 3 Jul 12 ReplyRetweetFavorite 10.22am: An update on Jill Treanor's scoop that Barclays chief operating officer Jerry del Missier could resign (see 9.59am). The WSJ is now reporting that he is "likely to step down, sources say."

Still nothing official from Barclays yet.

10.16am: Lord Adair Turner, head of the Financial Services Authority (on whose watch the Libor rate-rigging took place), has just condemned the scandal - and admitted that the true scale of City wrongdoing is much greater.

Turner told the FSA's public meeting this morning that the full investigation into what went wrong will take years.

Here's the key quotes:

The LIBOR scandal has caused a huge blow to the reputation of the banking industry. The cynical greed of traders asking their colleagues to falsify their LIBOR submissions so that they could make bigger profits – has justifiably shocked and angered people, in particular when we are facing hard economic times provoked by the financial crisis.

But sadly it is clear that the behaviours evidenced in the LIBOR case were not, in the years before the crisis, confined to this specific area of financial activity.

10.02am: FairPensions has demanded that Barclays comes clean about how much money Bob Diamond walks away with. It also insists that the departed CEO must also continue to surrender the bonuses he was awarded during the years when the Libor scandal was taking place.

Louise Rouse, Director of Engagement at FairPensions (which campaigns for the ethical investment of UK pension funds) said:

Now that Barclays has confirmed the resignation of Bob Diamond as CEO, details must be provided of any severance payments proposed to be made to him. Remuneration at Barclays has been a source of controversy for the last few years and shareholders would likely regard it as unacceptable if a CEO departing in such circumstances was to receive severance payments.

Indeed Mr Diamond's resignation should not mean that Barclays does not seek to claw back his bonuses received during the years when Libor was being manipulated.

We're still hoping to get more details on Diamond's exit package later today (see also 9.06am)

9.59am: Breaking news: one of Bob Diamond's top lieutenants is considering his position and could potentially also resign soon.

Our banking expert Jill Treanor has learned that Jerry del Missier, one of Diamond's deputies, could quit. She tweets that Barclays won't comment on the rumour:

Jill Treanor@jilltreanor Jerry del Missier is apparently considering his position and could follow Bob Diamond out the door. Barclays won't comment #business 3 Jul 12 ReplyRetweetFavorite Just last month, del Missier was promoted to a new position "focused on operations and regulatory compliance". But, like other senior executives, his reputation has also been dented by the Libor scandal.

Jill tells me:

Only a fortnight ago Jerry del Missier was appointed chief operating officer of Barclays. Today, he looks likely to follow Bob Diamond out of the door in a clean out of the executive committee of the bank.

Del Missier, a Canadian was in the process of relocating from New York to London to take up the new job, but was a key player at the Barclays Capital operation during the time of Libor rigging. Barclays won't comment.

9.50am: More reaction to Diamond's departure.

The Unite union has welcomed his departure, and argued that his sucessor must protect Barclays staff:

There is no doubt that Diamond accepted the rapacious greed of a number of traders and key operators in the Barclays investment arm.

Their behaviour was allowed to flourish unchecked to the detriment of the business and individual customers that trusted the integrity of British banking. It would add further offence if he was granted a golden goodbye for on departure.

Whoever succeeds Bob Diamond must put the livelihoods of the workforce, the thousands of innocent workers who deal with customers every day, at the heart of rebuilding trust in Barclays. Lets not forget that these workers must now pick up the pieces of this latest banking scandal tend to be low paid and working under intense pressure.

9.37am: Bob Diamond's appearance tomorrow at the Treasury Committee will now be even more explosive, and could drag the Bank of England deeper into the Libor crisis.

This is because a phone call apparently took place between Bob Diamond (when he was running Barclays investment banking arm) and Paul Tucker (deputy governor of the Bank of England) in late 2008 over the Libor figures which Barclays was submitting each day. We don't know what was said on the call, but it emerged over the weekend that certain unnamed Barclays insiders (and we're not going to speculate about who) had told the BBC's Robert Peston that managers somehow thought they had permission from the Bank of England to make "false submissions about their borrowing costs".

Peston wrote about this on Sunday (HERE). The implication that the Libor scandal could somehow have been condoned, or even approved, by the Bank of England, plunged the crisis into a new level.

Last night, someone told the Financial Times that Diamond would "fight back" if he were criticised too harshly by MPs, by revealing 'potentially embarrassing details about Barclays' dealings with regulators'.

Nils Pratley, our financial editor, believes this morning's resignation gives Diamond much more leeway to reveal exactly what happened. He writes:

A chief executive of Barclays could not declare war on the Bank of England. A former chief executive can.

Note: Bob's resignation is with immediate effect and he seems to be relishing the opportunity to have his say at the Treasury Committee tomorrow. Get your tickets now.

Paul Murphy of FT Alphaville even argues that Bob Diamond's resignation was triggered by the Bank of England. He writes:

First, a tip for Bob Diamond's successor as chief executive at Barclays: Don't threaten the Bank of England. It will get you deported.

...You just don't threaten the Bank. The City of London is not some sort of financial democracy. It is a hierarchy. It is not Capitol Hill; political brawling is prohibited.

9.14am: David Jones of IG Index says there is a sense of relief in the City that Bob Diamond has gone this morning (thus explaining the small rise in Barclays share price). Jones told Sky News that:

From an investor's point of view, it [Diamond's resignation] was expected. We've seen that business leaders, like politicians, try to hang on in these circumstances but eventually they do go.

9.06am: One question that we can't answer yet, I'm afraid, is how much compensation Bob Diamond will receive as he leaves Barclays.

Typically, chief executives are contractually entitled to 12 months basic pay if they leave, but it is the various share options and 'long term incentive plans' that really generate the massive pay awards at the top of UK corporate life. What kind of deal will be agreed over them? We may find out later today....

Paul Waugh@paulwaugh Bob Diamond has fallen on his wallet. We should get clue to his severance package later today. Will staff have a whip-round? 3 Jul 12 ReplyRetweetFavorite 8.54am: Bob Diamond does still have at least one powerful supporter this morning – London mayor Boris Johnson.

Hugh Muir, our diary editor, reports:

A bad day for Bob Diamond then, and as the coverage continues, it will only get worse. But there is one ray of sunshine on a cloudy gloomy day. Diamond is out at Barclays, but still he has an ally in the London Mayor Boris Johnson, who - in the face of some controversy appointed him in 2008 to the charitable Mayor's Fund for London.

The body, comprising handpicked members of the capital's great and good, works to alleviate poverty and disadvantage in the capital. This morning, as others deserted the ex Barclay's chief executive, Johnson said: "Bob Diamond has provided enormous time, energy and philanthropic effort to the cause of helping young Londoners through the Mayor's Fund. As far as I'm concerned, that work is set to continue."

You gotta have friends.

8.48am: The Barclays share price has now reversed its early falls (see 8.02am), and is up almost 1% at 170p.

Some small relief for investors, who have seen the share price drop 37% over the last year and 29% in the last three months alone.

8.40am: Ed Miliband has also welcomed Bob Diamond's resignation, calling it a "necessary and right" decision. The Labour leader continues to demand a judicial inquiry into the banking sector – putting him at odds with the government, which yesterday announced a parliamentary probe.

Miliband said:

It was clear Bob Diamond was not the man to lead the change that Barclays needed.

But this is about more than one man.

This is about the culture and practices of the entire banking system which is why we need an independent, open, judge-led, public inquiry.

There are concerns within Westminster that the lack of agreement over the inquiry could scupper it altogether. Andrew Tyrie, the well-respected chair of the Treasury Committee who has been asked to run it, may not be prepared to preside over a farce:

Faisal Islam@faisalislam Tyrie's remarks "that he could pull out" of chairing bank inquiry if no cross party support is v significant... HT @BBC 3 Jul 12 ReplyRetweetFavorite 8.29am: It appears that the political pressure on Bob Diamond may have proved too great.

Boris Johnson, who doesn't believe that Diamond has been tarnished Robert Peston, the BBC's well-connected business editor, just reported that Diamond feels "hounded out" of his job at the top of Barclays, after just 16 months.

That fits with one particular line in the official statement released an hour ago, in which Diamond said that:

"The external pressure placed on Barclays has reached a level that risks damaging the franchise - I cannot let that happen."

8.18am: Chancellor George Osborne has welcomed the news that Bob Diamond has quit.

Osborne told the Radio 4 Today Programme that:

I think Bob Diamond's resignation is the first step towards the new age of responsibility we need to see.

Just one step towards cleaning up the Augean Stables of the UK banking sector, in other words.

Osborne was informed of the decision last night, it seems, via a phonecall from Marcus Agius.

Osborne was also quizzed about whether he had played a part in Diamond's exit. He denied it, saying he was not his job to decide who runs Britain's banks – he just wants them to be up to the job.

The chancellor also condemned the City's "corrupt practices", suggesting that criminal cases will follow over the Libor scandal -- even though no-one responsible has yet been charged of any offence.

8.15am: Political reaction to Diamond's resignation is flooding in.

Chuka Umunna, the Shadow Business Secretary, has welcomed the news:

Chuka Umunna@ChukaUmunna Bob Diamond deserves credit for doing the decent and honourable thing 3 Jul 12 ReplyRetweetFavorite While former deputy prime minister John Prescott is stunned that Marcus Agius is back as chairman, just a day after stating that the buck stopped with him.

John Prescott ✔ @johnprescott I thought 'the buck stopped' with Marcus Agius? Now he's unresigned and Bob Diamond's gone. Did Agius pass the buck to Bob? 3 Jul 12 ReplyRetweetFavorite 8.12am: Bob Diamond's resignation comes in the face of relentless political pressure for his resignation (Labour leader Ed Miliband called for him to step down, while prime minister David Cameron declined to back Diamond last Friday).

Our City editor Jill Treanor:

An attempt by the board to save his position by accepting the resignation of chairman Marcus Agius on Monday has failed. Instead Agius will now become full-time chairman and will lead the search for a new chief executive.

In a stunning turnaround - only on Monday the 60-year old chief executive was pledging to stay - Diamond is to go immediately after 15 year career with the bank and only 18 months as chief executive.

The former investment banker Bill Winters, who sat the independent commission on banking, will be regarded as a candidate to suceed Diamond whose attempts to focus on the bank's commitment to "citizenship" have speculatorly backfired.

Her full story is now online here.

8.08am: Liberal Democrat peer Lord Oakeshott has swiftly welcomed the news of Bob Diamond's resignation, and again called for prosecutions against those responsible for the Libor scandal.

Oakeshott told Sky News:

This is a great day. Bob Diamond was the greedy gambler, personified.

What really matters now is that the criminals inside Barclays, that they are charged and they are convicted and the full force of the law is brought to bare.

Stealing money as a banker is the same thing as stealing from a house.

8.02am: Barclays shares have fallen in early trading -- dropping around 3% to 163p. They are likely to be volatile this morning, as investors digest the implications of Bob Diamond's resignation.

7.57am: While Bob Diamond has resigned, chairman Marcus Agius has made a spectacular return to corporate life. Having resigned yesterday, Agius is now reinstated as fulltime chairman of the bank, and must now find a replacement for Diamond.

7.47am: Bob Diamond's shock resignation comes six days after Barclays was fined £59.5m for attempting to manipulate the Libor rate -- the rate at which London banks lend to each other.

It follows the government's decision to organise a parliamentary investigation into the Libor scandal, which is thought to also involve a string of over banks in the City, and beyond.

The news that the Serious Fraud Office was also investigating whether any Barclays staff should be charged -- a development welcomed by chancellor George Osborne yesterday -- also piled the pressure on the bank.

This timeline shows how the crisis has developed since last Wednesday.

7.41am: Bob Diamond, the chief executive of Barclays, has resigned, following the Libor scandal that has rocked the bank in the last few days.

The shock news was announced in the last few minutes. Here's Barclays formal statement to shareholders

Barclays PLC and Barclays Bank PLC (Barclays)

Board changes

Barclays today announces the resignation of Bob Diamond as Chief Executive and a Director of Barclays with immediate effect. Marcus Agius will become full-time Chairman and will lead the search for a new Chief Executive. Marcus will chair the Barclays Executive Committee pending the appointment of a new Chief Executive and he will be supported in discharging these responsibilities by Sir Michael Rake, Deputy Chairman.

The search for a new Chief Executive will commence immediately and will consider both internal and external candidates. The businesses will continue to be managed by the existing leadership teams.

Photograph: Suzanne Plunkett/Reuters Bob Diamond said "I joined Barclays 16 years ago because I saw an opportunity to build a world class investment banking business. Since then, I have had the privilege of working with some of the most talented, client-focused and diligent people that I have ever come across. We built world class businesses together and added our own distinctive chapter to the long and proud history of Barclays. My motivation has always been to do what I believed to be in the best interests of Barclays. No decision over that period was as hard as the one that I make now to stand down as Chief Executive. The external pressure placed on Barclays has reached a level that risks damaging the franchise - I cannot let that happen.

I am deeply disappointed that the impression created by the events announced last week about what Barclays and its people stand for could not be further from the truth. I know that each and every one of the people at Barclays works hard every day to serve our customers and clients. That is how we support economic growth and the communities in which we live and work. I look forward to fulfilling my obligation to contribute to the Treasury Committee's enquiries related to the settlements that Barclays announced last week without my leadership in question.

I leave behind an extraordinarily talented management team that I know is well placed to help the business emerge from this difficult period as one of the leaders in the global banking industry."

Commenting, Marcus Agius said, "Bob Diamond has made an enormous contribution to Barclays over the last 16 years of distinguished service to the Group, building Barclays Investment Bank into one of the leading global investment banks in the world. As Chief Executive he has led the bank superbly. I look forward to working closely with the Chief Executives of our businesses and the other members of the executive Committee in leading Barclays world class businesses in serving our customers and clients and delivering value for our shareholders."

More to follow!


Kauilapele, Benjamin Fulford  excerpt
Benjamin Fulford 7-17-12…”It is time to look at the big picture again”… “The money making machine at the Federal Reserve Board has been closed down so collapse is inevitable” Posted on 2012/07/16 The only thing I will add here, is that I have always felt, in many ways, that I was a Global citizen, even though my birthing and residence was in the United States. Ben makes this point at the end, “The big blockage remains on Asians and other countries being allowed to spend their money in Europe and the US without impediment. If that becomes possible, Europeans and Americans will be hired in large quantities to engage is a massive campaign to end poverty, stop environmental destruction and start a new age.” And to me, this means allowing all to work together AS a Global Community is where we would do well to go. This will undoubtedly be touted by a few as meaning, “China wants to buy out the US”, and presented as a fear-based interpretation.

But I would say to those who stand and say that “Only my country is the best”, and so on, are missing the point of Global Community. That is who we are.


When historical events are taking place, the daily rush of news event can fog the vision. We have entered such a time of fog now The vast majority of the world’s money is now controlled by non-Westerners who have a very different agenda from that of the people who have been ruling the West and most of the world since at least 300 years ago. Right now in the West, the regime change against bankster controlled criminal government has started with Iceland but it will end with the United States and the Vatican. What happened to make the fall of the Soviet Union inevitable… was the theft of the Soviet Union’s foreign exchange reserves that made the collapse a matter of time…. What we are seeing in the West is the same. The money making machine at the Federal Reserve Board has been closed down so collapse is inevitable. For the past 30 years the United States and Europe (as a whole) have been running a trade deficit with the rest of the world. What is now happening is that the creditor nations have stopped issuing new credit… That is why there is now a 147 nation alliance, led by Brazil, Russia, India, China and Africa that is telling the Western nations they will not buy their bonds or other “financial products.” …time is on the side of the 147 nation alliance. The big problem for the West is that the Western nations have “out-sourced” most of their industrial infrastructure. …the money being earned at Chinese or ASEAN export factories is not being spent on Western IOUs… [but] on “real” things like real-estate, commodities and factories. What this means is that both the EU as a whole and the United States are bankrupt but are refusing to admit it. …Chinese are perceived by the rest of the world as arriving with bags of money and business plans while Western nations arrive with guns and plans for mayhem. Guess who is losing and who is making friends…? The big blockage remains on Asians and other countries being allowed to spend their money in Europe and the US without impediment. If that becomes possible, Europeans and Americans will be hired in large quantities to engage is a massive campaign to end poverty, stop environmental destruction and start a new age.

[A subscription to Ben's full articles is only $8 per month ("Payments can... be made with a ‘PayPal’ [account]“), but Ben will allow anyone who can not pay this to subscribe for less (or free). On one page of his site he says, “All subscribers will agree to pay whatever monthly subscription price they can afford. Those who are really poor can get it for free.” In my mind, if you like the articles, and want to support Ben and his work, consider subscribing to his blog.


Wikipedia Ali Abdul Saoud Mohamed --- Ali Mohamed
Ali Abdul Saoud Mohamed, (علي محمد) (born June 3, 1952) is a double agent[1] who worked for both the CIA and Egyptian Islamic Jihad simultaneously, reporting on the workings of each for the benefit of the other. He came to the United States working as a translator for Ayman al-Zawahiri, who toured California mosques to raise money to fight the Soviet invasion of Afghanistan. While there, Zawahiri encouraged him to infiltrate the United States, to whom he later presented himself as defecting. Since he simply walked into the CIA office in Cairo and asked to speak to the station chief and offered his services, the Americans assumed he was an Egyptian spy, but nevertheless recruited him to be a junior intelligence officer.[2] When tasked to infiltrate a mosque with ties to Hezbollah, he simply informed the leadership he was an American spy intending to collect information; since a loyal American spy was also in the congregation, he reported Mohamed's bizarre behaviour to the CIA, who dismissed him and sought to ban him from entering the United States.[2] Ironically however, he was simply picked up by the Special Forces in the American army, who sent him to the Special Warfare school and encouraged him to pursue a doctorate in Islamic Studies and teach courses on the Middle East.[2] In the 1980s Mohamed trained anti-Soviet fighters en route to Afghanistan. FBI special agent Jack Cloonan called him "bin Laden's first trainer".[3] Mohamed was charged with the August 7, 1998 bombings of the United States embassies in Nairobi, Kenya and in Dar es Salaam, Tanzania. In October 2000, he pleaded guilty to five counts of conspiracy to kill nationals of the United States and to destroy U.S. property. Mohamed has been described as "Six-foot one, 200 pounds, and exceptionally fit, ... a martial artist and skilled linguist who spoke fluent English, French, and Hebrew in addition to his native Arabic. He was disciplined, clever, and gregarious, with a marked facility for making friends."[4] Mohamed was a major in the Egyptian army's military intelligence unit, until being discharged for suspected fundamentalism in 1984. He enlisted in the U.S. Army and used U.S. military information to train al-Qaeda and other Muslim militants, and write al-Qaeda's multivolume terrorist training guide. [4] Contents [hide] 1 In the United States 2 Arrest 3 Speculated cooperation with US Intelligence 4 See also 5 References 6 Bibliography [edit]In the United States

In 1984 Mohamed offered his services to the CIA in Cairo station and was stationed in Hamburg, Germany. There he "entered a mosque associated with Hezbollah and immediately told the Iranian cleric in charge that he was an American spy assigned to infiltrate the community." The mosque had already been penetrated and his announcement was passed on to the CIA, which, according to Lawrence Wright, "terminated Mohamed" and "sent out cables labeling him highly untrustworthy." By this "time, however, Mohamed was already in California on a visa-waiver program that was sponsored by the agency itself, one designed to shield valuable assets or those who have performed important services for the country." [4] In America he married an American woman from Santa Clara, California after a 6 week courtship and became a U.S. citizen.[5] He enlisted in the U.S. Army and managed to get stationed at the John F. Kennedy Special Warfare Center and School at Fort Bragg, North Carolina until 1989.[1] "His awed superiors found him 'beyond reproach' and 'consistently accomplished'." [4] According to Cooperative Research, Mohamed was a Drill sergeant at Fort Bragg, and was hired to teach courses on Arabic culture at the John F. Kennedy Special Warfare Center and School. In 1988 Mohamed informed his superior officers in the U.S. Army that he was taking some leave time to fight Soviets in Afghanistan. "A month later, he returned, boasting that he had killed two Soviet soldiers and giving away as souvenirs what he claimed were their uniform belts." Mohamed's commanding officer, Lt. Col. Robert Anderson, said he wrote detailed reports aimed at getting Army intelligence to investigate Mohamed — and have him court-martialed — but the reports were ignored. "I think you or I would have a better chance of winning Powerball, than an Egyptian major in the unit that assassinated Sadat would have getting a visa, getting to California ... getting into the Army and getting assigned to a Special Forces unit," he said. "That just doesn't happen." It was equally unthinkable that an ordinary American GI would go unpunished after fighting in a foreign war, he said. Anderson said all this convinced him that Mohamed was "sponsored" by a U.S. intelligence service. "I assumed the CIA," he said.[6] Mohamed also took maps and training manuals off base to downsize and copy at Kinko's and used them to write al-Qaeda's multivolume terrorist training guide that became playbook.[4] Mohamed also conducted clandestine military and demolition training through the Al Kifah Refugee Center. While in the United States, he helped train a number of jihadis, like El Sayyid Nosair and Mahmud Abouhalima, who assisted Ramzi Yousef in his 1993 attack on the World Trade Center.[7] In the early 1990s Mohamed returned to Afghanistan, where "he trained the first al-Qaeda volunteers in techniques of unconventional warfare including kidnappings, assassinations, and hijacking planes, which he had learned from the American Special Forces." According to FBI special agent Jack Cloonan, in one of Mohamed's first classes were Osama bin Laden, Ayman al-Zawahiri, and other al-Qaeda leaders.[3][8] In 1993 Mohamed also traveled to Africa to survey embassies in Africa such as the Nairobi, (Kenya) embassy which Al-Qaeda later bombed.[9] He became an FBI informant.[citation needed] In 1994, al-Qaeda operative Mohammed Atef refused to allow Mohamed to know which name and passport he would be traveling under, expressing concerns that Mohamed could be working with the American authorities.[10] In a televised interview Mohamed explained his rationale for his efforts: "Islam without political dominance cannot survive."[11] [edit]Arrest

While he was subpoenaed in "Blind Sheik" Omar Abdel-Rahman's trial, Ali Mohamed was not arrested until years later — on 10 September 1998, when he attempted to flee to Egypt after being subpoenaed in the aftermath of the embassy bombings in Nairobi and Tanzania. After eight months of imprisonment, Ali Mohamed entered a guilty plea in May 1999. What happened after that is unclear. The trial proceeded, but there is no record of any sentencing or even a conviction. As late as February 20, 2002, CBS News reported that "Mohammad pleaded guilty and is awaiting sentencing."[2] He has now been arrested again by the Pakistani Army in Karachi. [edit]Speculated cooperation with US Intelligence

In October 2001, the Raleigh News & Observer noted that Ali Mohamed may be cooperating with the US government. "Defense lawyers and many other observers believe that Mohamed, who has not yet been sentenced, is now cooperating with the United States, though the government has never confirmed this. When he is sentenced he could receive as little as 25 years under his plea agreement."[12] In his book "The Mission, The Men, and Me: Lessons from a Former Delta Force Commander", former Delta Force commander Pete Blaber indicates he met Ali Mohamed who gave him information on how to infiltrate Afghanistan, find Al Qaeda commanders, and operate in country undetected in late 2001.[13] Further news sources in 2001 seem to suggest that Ali Mohamed is providing information on Bin Laden and al-Qaeda in an attempt to reduce his sentence,[14] and that his sentencing "has been postponed indefinitely.".[15] In 2006, Mohamed's wife, Linda Sanchez, was reported in 2006 as saying, "He's still not sentenced yet, and without him being sentenced I really can't say much. He can't talk to anybody. Nobody can get to him. They have Ali pretty secretive...it's like he just kinda vanished into thin air."[16]


US uses al-Qaeda to foment crisis in Muslim world .   By Wayne Madsen
It is clear, once again, that the West is using al-Qaeda as a proxy force to destabilize the Sahel in the interest of a later full-scale military intervention on the terms of NATO and the [Persian]Gulf Cooperation Council. The casualties will be the people of the region, not the billionaire potentates who direct such activities from their luxurious palaces in Riyadh, Jeddah, Doha, Abu Dhabi, and Dubai."

In what has become a self-fulfilling prophecy by the US Africa Command (AFRICOM) and various neo-conservative think tanks, the Pan-Sahel region of North Africa is rapidly falling under the control of extremist forces, most notably Ansar Dine in Mali, Boko Haram in northern Nigeria, and “al Qaeda” in the Maghreb (AQIM). However, it has become apparent that the funding for these groups originates in the Wahhabist-ruled potentates of Saudi Arabia, Qatar, and the United Arab Emirates.

When the Libyan rebellion against Muammar Qaddafi first began in Benghazi, the capital of Wahhabist-influenced Cyrenaica, the Libyan leader was ridiculed for claiming that “al-Qaeda” rebels were involved with the uprising. However, it has become quite clear that the core group of the Libyan rebels in Benghazi and surrounding towns, were, in fact, composed of Libyan and other mujaheddin guerrillas from Afghanistan, many of whom fought for Osama Bin Laden and the Taliban.

French intelligence and exiled Saudi democratic opposition leaders in London pinpointed the current Saudi Crown Prince, Salman bin Abdulaziz al Saud, as the major nexus for mujaheddin traveling to Pakistan and Taliban-controlled Afghanistan to fight on behalf of bin Laden and the Taliban in the years prior to the 9/11 attack on the United States. Salman, as Governor of Riyadh, allegedly provided air tickets, hotel rooms, and cash to mujaheddin transiting through Riyadh on their way to Peshawar and across the border into Taliban Afghanistan. Later, a few of the veterans of Afghanistan traveled to Iraq, where they engaged US and allied forces after the ouster of Saddam Hussein. After Iraq, some of the mujaheddin ended up in Benghazi as the vanguard in the rebellion against Qaddafi.

Libyan rebel commander Abdel-Hakim al-Hasidi admitted in an interview with the Italian newspaper, Il Sole 24 Ore, said they had fought in Iraq and were al-Qaeda veterans. Al-Hasidi told the paper that the al-Qaeda veterans, who fought with the Libyan Islamic Fighting Group, were “good Muslims and are fighting against the invader.” Al-Hasidi was captured in 2002 in Peshawar, Pakistan and handed over to the United States. The US released Al-Hasidi in 2008 and he eventually showed up in Libya to lead the uprising against Qaddafi. Al-Hasidi’s connections to Al Qaeda and the NATO-backed uprising in Libya provide yet more evidence of collusion between the United States, Al Qaeda, Saudi Arabia, and, considering the support for the rebels offered by leading French Zionist, Bernard-Henri Levy, Israel. The Libyan Fighting Group and al-Qaeda veterans are known to have received the financial backing, as well as arms, from Saudi Arabia, Qatar, and the UAE.

The al-Qaeda connection with the NATO-backed Libyan rebels means that Qaddafi was spot on when he stated that al-Qaeda was a major participant in the Libyan uprising. Many of the al-Qaeda guerrillas later traveled from Libya to Syria to participate in the Syrian uprising against President Bashar al-Assad.

Currently, the same mujaheddin forces that have gained a firm footing in Libya, are providing support to like-minded extremists in Nigeria, Mali, Niger, Mauritania, and other states in the Sahel.

From new bases in Libya, these mujaheddin, who continue to receive support from the Wahhabist regimes in the Persian Gulf, are taking part in operations in support of Boko Haram in Nigeria and Ansar Dine and AQIM in Mali.

The Tuareg-led and secularist Movement for the National Liberation of Azawad (MNLA), which has declared the independence of northern Mali as a Tuareg state, has appealed to the West to help it defeat Ansar Dine, AQIM, and Boko Haram forces who have been busy destroying Islamic sites honoring Muslim saints in Timbuktu (known as the City of 333 Saints), Gao, and Kidan that are protected as World Heritage sites by the U.N. Educational, Scientific, and Cultural Organization (UNESCO). The pillaging is reminiscent of the Wahabbist destruction of Islamist shrines of saints and grave sites in Medina following the Saudi takeover of Hejaz after the fall of the Ottoman Empire.

However, the United Nations has shown no interest in authorizing intervention in northern Mali by the Economic Community of West African States (ECOWAS), AFRICOM, or anyone else. The United States and NATO, which have found themselves not only allied with, but supporting Al Qaeda in Libya and Syria, are content to allow the Wahhabist-backed extremists destroy ancient Muslim shrines, just as they took no action against the Saudi and Emirati-backed Taliban’s destruction of the ancient Buddha statues in Bamiyan, Afghanistan in March 2001, six months before the 9/11 attack.

It is clear, once again, that the West is using Al Qaeda as a proxy force to destabilize the Sahel in the interest of a later full-scale military intervention on the terms of NATO and the [Persian]Gulf Cooperation Council. The casualties will be the people of the region, not the billionaire potentates who direct such activities from their luxurious palaces in Riyadh, Jeddah, Doha, Abu Dhabi, and Dubai.

WMR  -- Soros's constantly-changing NGO color revolution support network     July 26-27, 2012
A source who has worked on the inside of George Soros-sponsored color-themed revolutions in Iran, Ukraine, and Russia has told WMR that the multi-billionaire hedge fund tycoon is now backing non-governmental groups that hide their intentions behind micro-loan financing schemes, like the one President Obama's mother advocated for in Asia, and human spiritual development programs.

However, our source reports the actual goals of these reconstituted "New Age" groups include bringing about a new world order through nation-state destruction and the placement of leaders subservient to Western financial interests in power, especially in Africa, the Middle East, Asia, eastern Europe, and Latin America.

Our source reports that two groups, in particular, are connected to the Soros, and, by default, the Rothschild family's plans to capture control of the world's gold and other precious metal supplies. Another silent partner in the Soros NGO movement is, according to our source, Saudi tycoon Prince Al Waleed bin Talal, who is said to be the financial liaison between Soros and the Rothschilds and the Muslim Brotherhood, which, through partially Soros-directed themed revolutions in Tunisia and Egypt, ushered Muslim Brotherhood-dominated governments into power. The same scenario is now being played out in Syria. Bin Talal's agenda also includes pushing Wahhabi Salafist Muslim radicals into the top hierarchy of "Arab Spring" movements.

The first group is Sanghata Global, a group that pushes small business capitalism along with spiritual development among the poor. The group started in the slums of Mumbai in 2009 as a sort of real-life "Slum Dog Millionaire" to entice poor students from Mumbai's slums into the world of capitalism. A "Slum University" was created in Mumbai and Sanghata soon linked up with the Monterey Institute of International Studies. In fact, our source reports that Sanghata is ultimately supported by even more influential organizations than the Monterey Institute: the International Crisis Group, the Council on Foreign Relations, and, more interestingly, the Panetta Public Policy Institute in Monterey, California, founded by current Defense Secretary and past CIA director Leon Panetta.

Sanghata has set up a corps of "Frontier Market Scouts," a sort of Boy and Girl Scouts organization that sponsors students at America's top universities, including Harvard and Yale, to teach micro-financing capitalism in countries that also happen to be on Soros's radar screen: Brazil, China, Ecuador, Egypt, India, Kenya, Lebanon, Mexico, Nicaragua, Nigeria, Peru, Philippines, South Africa, Tanzania, Turkey, and Vietnam. Sanghata was co-founded by Sabiha Malik and Harper's journalist/Columbia Law School professor emeritus/founder of American University of Central Asia/and color revolution promoter Scott Horton. Sanghata also sponsors the New Age-sounding Singularity University, an academic center that is drawing the sons of daughters of the wealthy to its student body ranks.

WMR has been told that the program is actually targeting countries rich in gold, other precious metals, as well as gems and oil. As is Soros's modus operandi, the goals appear, in the surface, to be humanitarian, however, under the surface, where the Rothschilds have their agenda, the Soros operation is about controlling the world's gold and other strategic minerals.

On September 28, 2011, WMR reported the following: "There is a coordinated effort by the U.S. Department of Defense, State Department, and CIA, spurred on by Goldman Sachs elements in the Obama administration, to destabilize certain major gold-producing nations in order to bring them firmly into the U.S. orbit. With gold becoming the new strategic commodity, overtaking oil, Indonesia, which ranks seventh in gold production after China, the United States, Australia, South Africa, Russia, and Peru, and the world's most populous Muslim nation, has become the latest target for American destabilization, according to intelligence sources in Asia."

The major partner of Sanghata is the Lifeboat Foundation, which states its mission is to nonprofit nongovernmental organization dedicated to encouraging scientific advancements while helping humanity survive existential risks and possible misuse of increasingly powerful technologies, including genetic engineering, nanotechnology, and robotics/AI, as we move towards the Singularity. Sanghata also partly founded an investment arm, Village Capital. The following is how Village Capital describes the Frontier Market Scouts: "The Frontier Market Scouts Program selects and trains aspiring professionals who desire a career in social venture and impact investing. Jointly developed and managed by the Monterey Institute, Sanghata Global, and Village Capital, the Frontier Market Scouts (FMS) program turns compassionate and capable young professionals into talent scouts and investment managers serving local entrepreneurs and social-minded investors in low-income and weak-capital regions of the world."

Lifeboat has groups to deal with issues that seem to be from the pages of a science fiction novel: it wants to create a nano-shield of the Earth to protect it against self-replicating nano-robots. There are groups that deal with creating an Earth-orbital asteroid shield, search for extraterrestrial intelligence, a shield against artificial general intelligences (yes, they are referring to malevolent "Terminators"), biological warfare shields, underground bunkers, and space habitats.

As far as U.S. presidential politics are concerned, the international activities of Soros are not tied to any U.S. political party. In fact, our source reports that Soros is perfectly content with Mitt Romney because Bain Capital's activities mirror and overlap with many of Soros' Quantum Fund investment schemes, with Israel being a major base of operations for both.


Kingdom Holding Company
Kingdom Holding Company November 2, 2009 in Corporations

Largest company in Saudi Arabia 95% owned by Prince Alwaleed Bin Talal Bin Abdulaziz Alsaud Ownership stakes in a number of U.S. companies including Apple, Hewlett-Packard, Kodak, News Corporation, Pepsi, Procter & Gamble, SAKS Inc., Time Warner, and the Walt Disney Company Kingdom Holding Company (شركة المملكة القابضة‎) is the largest company in Saudi Arabia.1 While the company is technically a public holding company listed on the Saudi Stock Exchange, 95% of the company’s shares are owned by Prince Alwaleed Bin Talal Bin Abdulaziz Alsaud.2 Kingdom Holding Company owns portions of a number of companies around the world, including many U.S. companies. They are also the owners of Kingdom Centre, the largest skyscraper in Saudi Arabia and the 45th largest building in the world.3

Business Actions of Kingdom Holding Company Saudi Arabian Investments4 In 1988, the purchase of a 30% stake in United Saudi Commercial Bank (USCB). The market value increased twenty-fold. HRH merged USCB and Saudi Cairo Bank into United Saudi Bank (USB), which was merged into Saudi American Bank creating the Middle East’s largest market capitalization and most profitable bank. In 1993, the year marked the takeover of Panda supermarkets and subsequent merger with Al-Azizia into Al-Azizia-Panda United (APU) for which one billion Riyal ($267 million) capital was raised. APU invested in Herfy, the local fast food chain which dominates the Saudi market with 60 restaurants. In 1998, APU merged with Savola forming the region’s largest food production and services conglomerate. In 1995, Prince Alwaleed Bin Talal Bin Abdulaziz Alsaud acquired a majority in National Industrialization Company (NIC), a Saudi joint stock company with 45 subsidiaries in industrial projects. A new board was appointed and a major restructuring program was implemented. 1996: Investment of 500 million Saudi Riyals (US$133 million) to establish Al-Azizia Commercial Investment Company, with primary objectives to invest in the Saudi real estate and stock markets. Between 1995 and 2000, the Prince and Kingdom Holding Company have commissioned four projects: Kingdom Centre (1.7 billion SR): 300-m skyscraper with exclusive shopping, hotel, offices, and function hall. Kingdom Hospital (400 million SR): a 120-bed state-of-the-art medical facility. In Oct. 2002, Kingdom Hospital merged with Consulting Clinics to provide comprehensive medical services. Kingdom City (400 million SR): a unique, furnished, 350-unit, self-contained housing community. Kingdom Schools (330 million SR): a 4,000 boys and girls, K-12 institution. In 2002, Kingdom Hotel Investment Group (KHI) was established to consolidate Middle Eastern hotel assets into a single investment entity. Capitalized at $211 million, KHI owns 14 properties across the Middle East and controls over $1 billion worth of assets. International Investments5 In 1991, the Prince invested $590 million in Citicorp, which merged with Travelers Group in April 1998 forming the world’s largest financial institution, Citigroup, with over $1 trillion of assets and around $100 billion of equity. In 1993, invested $100 million in Saks Incorporated which operates Saks Fifth Avenue department stores, New York’s upscale fashion retailer, buying approximately a 10% stake. In 1994, acquired a 50% stake in Fairmont hotel chain. A share swap in 2003 has lead to a 4.9% stake in the parent company of Fairmont Hotels & Resorts. In 1994, invested around $345 million acquiring 24% of Disneyland Paris, located outside the French capital. Current stake stands at 17.3% of the company. In 1994, invested $120 million to acquire 22% of the Four Seasons Hotels Inc., a Canadian luxury hotel chain. In 2007, the Board of Directors of Four Seasons jointly agreed to the US$ 3.8 billion acquisition deal by Prince Alwaleed and Bill Gates with Isadore Sharp. In 1995, acquired a 42% stake in the landmark New York Plaza Hotel for $300 million. In 2001, the stake increased to 50%. 1995: Jointly control with a group of international investors of Canary Wharf, the largest European real estate development project valued then at $1.2 billion. In 1996, the purchase of the George V hotel in Paris for $185 million and renovating it for $120 million. After restoring its elegance and prestige, the hotel reopened in December 1999. In 1997, premier investment in the technology industry acquiring a 5% stake in Apple Computers Inc. for $115 million. In 1997, invested $10 million in Palestine Development & Investment Ltd. Company (PADICO), engaged in construction and development projects in the West Bank and Gaza Strip. In 1997, acquisition of a 27% stake in Mövenpick Hotels & Resorts. In addition to Europe, the Swiss hotel chain is managing and developing hotels in Saudi Arabia, Lebanon, Jordan, Egypt, Qatar, Morocco, Tunisia, and Libya. In 2003 the stake was raised to 33.3%. In 1997, invested $400 million acquiring 5% of the preferred shares of News Corp., which encompasses Harper Collins, The Sunday Times-UK, Fox News, Sky, Star TV and many more. In 1999, the investment was raised to $600 million. In 1997, invested $146 million for 5% of Netscape, later acquired by America Online (AOL) which merged with TIME/Warner creating the world’s largest media company, AOL Time Warner. Investment was raised to more than $1 billion in 2001 and 2002. In 1997, invested $300 million in Motorola which specializes in wireless communications, semiconductors and electronic systems, components, and services. In 1998, the purchase of 100,000 acres in Tushka, Egypt, for agricultural development through Kingdom Agricultural Development Company (KADCO). Upon completion, total investment will reach $500 million. In 2000, invested $400 million in Compaq Computer Corp., the world’s second largest computer company. In 2002 Compaq merged with HP creating the world’s leading consumer technology company. In 2000, invested $100 million in Kodak, maker of photographic films and papers for a wide range of consumer, entertainment, professional, business, and health-related uses. In 2000, invested $50 million in eBay Inc., a person-to-person trading community on the Internet. Sellers use the company’s service to exchange personal items. In 2000, invested $50 million. The stake was raised to $100 million. In September 2001, the shareholding was increased to 5.4%. In 2000, invested $50 million in Procter & Gamble (P&G), a world-wide manufacturer of wide ranging products. In 2000, invested $50 million in PepsiCo, Inc. In 2000, invested $50 million in Walt Disney, operator of media networks, studio entertainment, theme parks and resorts, consumer products, Internet and direct marketing ventures. In 2003, acquired nearly 5% of International Financial Advisors Company (IFA), a leading Kuwaiti investment company. In 2004, acquired nearly 5% of Kuwait Invest Holding Company. In 2004, HRH Prince Alwaleed signs agreement with Dr. Mustafa Ghandoor allowing KHC to acquire a 40% stake in Consulting Clinics Beirut. In 2004, Kingdom Zephyr is the manager of parallel Pan-African private equity funds, Pan African investment Partners Limited (“PIAP,a Mauritius company) and Pan-Commonwealth African Partners Limited (“PAIP/PCAP”), with total capital commitments of US $122.5 million. In 2005, the venture between Kingdom Hotels International, Fairmont Hotels & Resorts Inc., and Bank of Scotland Corporate, has completed the purchase of the Monte Carlo Grand hotel in Monaco and the property is to be flagged “The Fairmont Monte Carlo” in March 2005. In 2005, acquisition of a 96% interest in the 251-room Royal Palm Hotel in Dar Es Salaam, Tanzania, one of East Africa’s most vibrant economic hubs. The hotel, which first opened in 1995, is located in the business district of Dar Es-Salaam and overlooks the Gymkhana Gulf Club with views onto the sea. In 2005, the Kingdom Hotels International, Fairmont Hotels & Resorts Inc., and Bank of Scotland Corporate venture, has completed the purchase of the Savoy Hotel in London for $400 million. The property is to be flagged “The Fairmont Savoy Hotel London.” In 2006, Kingdom Hotels International and Colony Capital entered a US$5.5 billion acquisition agreement of Fairmont Hotels & Resorts combining it with Raffles Hotels & Resorts of Singapore. In 2007, acquisition of 29.9% if the Saudi Research and Marketing Group (SRMG). The publications that fall under SRMG include Asharg Al Awsat, Al Eqtisadiah,Arab News,Hia magazine, Al Majalla magazine, Arrajol magazine and Sayidati magazine. Furthermore, other entities that fall under SRMG are Al khaleejiya for Publicity Advertising and Public Relations and Al Madina Printing and Publishing Company. In 2007, Kingdom Holding Company acquired 12% of the National Air Services Company Limited (“NAS”),a private Saudi airline company for $100 million. The ownership percentage increased to 37% in 2008. List of Kingdom Holding Company Investments6 • Azizia Commercial Investment Company, 51% • Apple, less than 1% • Canary Wharf, London, 21% • Citigroup, 3.4% • Consulting Clinics Beirut, 51% • Disneyland-Paris, 10% • eBay.com, less than 0.1% • Fairmont Raffles Hotels International, 58.3% • Four Seasons Hotels & Resorts, 45% • George V Hotel, Paris 75% • Hewlett-Packard (HP), less than 1% • International Financial Advisors (IFA), 5% • Kingdom Agriculture & Development Co. (KADCO), 100% • Kingdom Centre, 36.2% • Kingdom City, 38.9% • Kingdom Hospital, 80+% • Kingdom Hotel Investments, 54% • Kingdom Schools, 47% • Kingdom Zephyr Africa Management Company (KZAM), 75% • Kodak Corporation, less than 1% • Kuwait Invest Holding, 5% • Motorola, less than 1% • Mövenpick Hotels and Resorts, 33.3% • National Industrialization Company (Tasnee), 6.18% • News Corporation, 5.7% (voting shares) • Palestine Development& Investment Company (PADICO), 6% • Pepsi Co., less than 1% • Priceline.com, 2% • Procter & Gamble, less than 1% • SAKS Inc., 1% • Samba Financial Group, 5% • Savola Group Company, 10.16% • The Walt Disney Company, less than 1% • The Saudi Research and Marketing Group (SRMG), 29.9% • The National Air Services Company Limited (“NAS”), 37% • Time Warner, approximately 1%

Libor indictment Scribd

Plaintiffs Metzler Investment GmbH, FTC Futures Fund SICAV, FTC Futures Fund PCC Ltd., Atlantic Trading USA, LLC, 303030 Trading LLC, Gary Francis, and Nathanial Haynes (“Plaintiffs”), by their undersigned attorneys, bring this action against defendants identified below (collectively, “Defendants”) pursuant to the Commodity Exchange Act, as amended, 7 U.S.C. §§ 1, et seq. (the “CEA”), the Sherman Act, 15 U.S.C. § 1, and common law on behalf of itself and all others who transacted in Eurodollar futures contracts and options on futures contracts on the Chicago Mercantile Exchange (“CME”) between August 2007 and May2010 (the “Class Period”). 1


LIBOR is a reference interest rate used as the basis for the pricing of fixed income futures, options, swaps and other derivative products traded on the CME and the Chicago Board of Trade (“CBOT”). This action arises from Defendants’ unlawful and intentional misreporting and manipulation of – as well as their combination, agreement and conspiracy to fix – LIBOR rates and to restrain trade in the market for LIBOR-based derivatives during the respective Class 1 Plaintiffs have delineated the Class Period based on currently available information, including the independent analysis performed by consulting experts Plaintiffs have retained, as well as analyses undertaken by experts retained by other plaintiffs in these coordinated proceedings. As detailed later in the Complaint, those analyses indicate Defendants manipulated LIBOR as of at least August 8, 2007 and continued their manipulation through at least May 17, 2010

2Period in violation of Sections 2(a)(1)(B), 4s(h), 9(a)(2) and 22(a) of the CEA, the Sherman Act,15 U.S.C. § 1, and common law.3.

Plaintiffs’ claims are made on information and belief (except as to allegations specifically pertaining to Plaintiffs and their counsel, which are made on personal knowledge) based on the investigation conducted by and under the supervision of Plaintiffs’ counsel. That investigation included reviewing and analyzing information concerning Defendants and LIBOR, which Plaintiffs (through their counsel) obtained from, among other sources: (i) analyses by consulting experts engaged by Plaintiffs and other plaintiffs in these coordinated proceedings; (ii) publicly available press releases, news articles, and other media reports (whether disseminated in print or by electronic media); (iii) filings Defendants made to the United States Securities and Exchange Commission (“SEC”); (iv) court documents submitted in LIBOR-related proceedings in Canada, Singapore, and Japan; and (v) scholarly literature concerning the potential manipulation of LIBOR during the Class Period. These sources collectively support Plaintiffs’ allegations that Defendants collusively and systematically manipulated LIBOR rates and restrained trade in the market for LIBOR-based derivatives during the Class Period.4.

Except as alleged in this Complaint, neither Plaintiffs nor other members of the public have access to the underlying facts relating to Defendants’ improper activities. Rather, that information lies exclusively within the possession and control of Defendants and other insiders, which prevents Plaintiffs from further detailing Defendants’ misconduct. Moreover, numerous pending government investigations—both domestically and abroad, including by the DOJ, the Commodity Futures Trading Commission (“CFTC”), and the SEC—concerning potential LIBOR manipulation could yield information from Defendants’ internal records or personnel that bears significantly on Plaintiffs’ claims. Indeed, as one news report observed in detailing U.S. regulators’ ongoing investigation, “[i]nternal bank emails may prove to be key evidence . . . because of the difficulty in proving that banks reported borrowing costs for LIBOR

3at one rate and obtained funding at another.” 2 Plaintiffs thus believe further evidentiary support for their allegations will come to light after a reasonable opportunity for discovery. NATURE OF THE ACTION 5.

This case arises from the manipulation of LIBOR for the U.S. dollar (“USD-LIBOR” or simply “LIBOR”) 3 - the reference point for determining interest rates for trillions of dollars in financial instruments - by a cadre of prominent financial institutions. Defendant s perpetrated a scheme to depress LIBOR for two primary reasons. First, well aware that the interest rate a bank pays (or expects to pay) on its debt is widely, if not universally, viewed as embodying the market’s assessment of the risk associated with the bank, Defendants understated their borrowing costs to the British Bankers’ Association (“BBA”) (thereby suppressing LIBOR) to portray themselves as economically healthier than they actually were—of particular importance given investors’ trepidation in light of the widespread market turmoil of the past few years. Indeed, in an April 10, 2008 report, analysts at Defendant Citigroup Global Markets Inc. posited the “liquidity crisis” had “created a situation where LIBOR at times no longer represents the level at which banks extend loans to others”; specifically, the analysts concluded LIBOR“ may understate actual interbank lending costs by 20-30bp [basis points].” 4 Second, artificially suppressing LIBOR allowed Defendants to pay lower interest rates on LIBOR-based financialinstruments that Defendants sold to investors, and otherwise affect the price for LIBOR-based derivatives like Eurodollar futures.6.

Each business day, Thomson Reuters calculates LIBOR—a set of reference or benchmark interest rates priced to different ranges of maturity, from overnight to one year—on 2 David Enrich, Carrick Mollenkamp & Jean Eaglesham, “U.S. Libor Probe Includes BofA, Citi, UBS,” MarketWatch , March 17, 2011. 3 While the term “LIBOR” generally encompasses rates with respect to numerous currencies (which are separately referred to as, for example, USD-LIBOR or Yen-LIBOR), for convenience Plaintiffs use the term “LIBOR” to reference USD-LIBOR. 4 Scott Peng, Chintan (Monty) Gandhi, & Alexander Tyo, “Special Topic: Is LIBOR Broken?”,April 10, 2008 (published by Citigroup Global Markets Inc.

currency via the foreign exchange markets. •

The rates must be submitted by members of staff at a bank with primaryresponsibility for management of a bank’s cash, rather than a bank’s derivative book. •

The definition of “funds” is: unsecured interbank cash or cash raised throughprimary issuance of interbank Certificates of Deposit.8.

The BBA describes itself on its website as “the leading trade association for the UK banking and financial services sector”, claiming that it “speak[s] for over 200 member banks from 60 countries on the full range of UK and international banking issues.” 6 The Defendants are among the member banks of the BBA. As the BBA itself concedes, it is not a regulatory body and has no regulatory function. 7 Its activities are not overseen by any U.K. or foreign regulatory agency. It is governed by a board of member banks that meets four times each year. The board is composed of senior executives from twelve banks, including Barclays Bank plc, Citibank NA, Credit Suisse, Deutsche Bank AG, HSBC Bank plc, J.P. Morgan Europe Ltd., and the Royal Bank of Scotland plc. 8 9.

No regulatory agency oversees the setting of LIBOR rates by the BBA and its members. The resultant rates are not filed with, or subject to the approval of, any regulatory agency. As the BBA has been quoted as saying it “calculates and produces BBA Libor at the request of our members for the good of the market.” 9 10.

LIBOR is set by the BBA and its member banks. Each of the ten currencies (namely U.S. Dollars, Japanese Yen, pound sterling, the Australian dollar, the Canadian dollar, the New Zealand dollar, the Danish krone, the Euro, the Swiss Franc and the Swedish krone) isoverseen by a separate LIBOR panel created by the BBA. During the Class Period, designated 6 http://www.bba.org.uk/about-us, last accessed on April 30, 2012. 7 http://www.bba.org.uk/blog/article/bba-repeats-commitment-to-bba-libor, last accessed on April 30, 2012 8 http://www.bba.org.uk/about-us, last accessed on April 30, 2012. 9

See http://www.businessweek.com/news/2012-03-06/libor-links-deleted-as-bank-group-backs-away-from-tarnished-rate, last accessed on April 30, 201

contributing panels ranged in size from eight banks for Australian dollar, Swedish krona, Danishkrone, and New Zealand dollar panels to sixteen banks for U.S. dollar, pound sterling, Euro, and Japanese yen panels. There is substantial overlap in membership among the panels. For example, during the Class Period, nine of the sixteen banks that served on the U.S. dollar also served on the Japanese yen, Swiss franc and Euro LIBOR panels. 10 Similarly, thirteen banks participated on both the dollar and yen LIBOR panels 11 and eleven banks participated on both the U.S. dollar and Swiss franc LIBOR panels. 12 It is a requirement of membership of a LIBOR contributor panel that the bank is regulated and authorized to trade on the London money market. As the BBA recently told Bloomberg: “As all contributor banks are regulated, they are responsible to their regulators, rather than us.” 13 11.

As “the primary benchmark for short term interest rates globally,” 14 LIBOR has occupied (and continues to occupy) a crucial role in the operation of financial markets. For example, market participants commonly set the interest rate on floating-rate notes as a spread against LIBOR ( e.g. , “LIBOR + [X] bps”) 15 and use LIBOR as a basis to determine the correct rate of return on short-term fixed-rate notes (by comparing the offered rate to LIBOR). Additionally, the pricing and settlement of Eurodollar futures and options—the most actively traded interest-rate futures contracts on the Chicago Mercantile Exchange—are based on the three-month LIBOR. LIBOR thus affects the pricing of trillions of dollars’ worth of financial 10 Those banks are Bank of Tokyo, Barclays, Citibank, Deutsche Bank, HSBC, JP Morgan Chase, Lloyds, Rabobank, RBS, and UBS 11 Those banks are Bank of America, Bank of Tokyo, Barclays, Citibank, Deutsche Bank, HSBC, JP Morgan Chase, Lloyds, Rabobank, RBS, Société Générale (beginning in 2009), UBS, and West LB. 12 Those banks are Bank of Tokyo, Barclays, Citibank, Credit Suisse, Deutsche Bank, HSBC, JPMorgan Chase, Lloyds, Rabobank, RBS, and UBS. 13 http://www.bba.org.uk/blog/article/bba-repeats-commitment-to-bba-libor, last accessed onApril 30, 2012. 14

See http://www.bbalibor.com/bbalibor-explained/the-basics, last accessed on April 19, 2012. 15 The term “bps” stands for basis points. 100 basis points equal 1

transactions, rendering it, in the BBA’s own words, “the world’s most important number.” 16 12.

Accordingly, it is well-established among market participants that, as The WallStreet Journal has observed, confidence in LIBOR “matters, because the rate system plays a vital role in the economy.” 17 Moreover, given the vast universe of financial instruments LIBOR impacts, “even a small manipulation” of the rate “could potentially distort capital allocations all over the world.” 18 13.

Throughout the Class Period, Defendants betrayed investors’ confidence in LIBOR, as these financial institutions conspired to, and did, manipulate LIBOR by underreporting to the BBA the actual interest rates at which the Defendant banks expected they could borrow unsecured funds in the London interbank market – i.e. , their true costs of borrowing – on a daily basis. The BBA then relied on the false information Defendants providedto set LIBOR. By acting together and in concert to knowingly understate their true borrowing costs, Defendants caused LIBOR to be set artificially low. 14.

Defendants’ manipulation of LIBOR allowed them to pay unduly low interest rates to investors, on LIBOR-based financial instruments offered during the Class Period. Investors—who until recently had no reason to suspect Defendants’ knowing suppression of LIBOR—justifiably believed the financial instruments they were purchasing derived from a rate that was based on USD-LIBOR panel members’ honest and reasonable assessments of their borrowing costs. To the contrary, Defendants—in the debt-instrument context, the borrowers—surreptitiously bilked investors—the lenders—of their rightful rates of return on their 16 BBA press release, “BBA LIBOR: the world’s most important number now tweets daily,”May 21, 2009, available at http://www.bbalibor.com/news-releases/bba-libor-the-worlds-most-important-number-now-tweets-daily, last accessed on April 28, 2012. 17 Carrick Mollenkamp and Mark Whitehouse, “Study Casts Doubt on Key Rate --- WSJAnalysis Suggests Banks May Have Reported Flawed Interest Data for Libor,” The Wall Street Journal , May 29, 2008. 18 Rosa M. Abrantes-Metz and Albert D. Metz, “How Far Can Screens Go in Distinguishing Explicit from Tacit Collusion? New Evidence from the Libor Setting,” CPI Antitrust Chronicle ,March 201

Investments, reaping hundreds of millions, if not billions, of dollars in ill-gotten gains. They also affected the LIBOR-based derivative market – in products like Eurodollar futures. Defendants’affiliates actively traded in these markets, including and especially in the Eurodollar futures market on the CME. Moreover, by understating their true borrowing costs, Defendants provided a false or misleading impression of their financial strength to investors and the rest of the market.15.

Defendants’ manipulation depressed returns on various types of financial instruments, including notes Defendants issued to raise capital during the Class Period. Inaddition to floating-rate notes, whose interest rates are specifically set as a variable amount over LIBOR, market participants use LIBOR as the starting point for negotiating rates of return on short-term fixed-rate instruments, such as fixed-rate notes maturing in one year or less. Thus, by suppressing LIBOR, Defendants ensured that artificially low interest rates would attach to fixed-rate and variable notes.16.

Plaintiffs now seek relief for the damages they have suffered as a result of Defendants’ violations of federal and state law. JURISDICTION AND VENUE 17.

This action arises under Section 22 of the CEA, 7 U.S.C. § 25, Section 1 of theSherman Antitrust Act, 15 U.S.C. § 1, Sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15 and26, and common law, respectively.18.

This Court has jurisdiction over this action pursuant to Section 22 of the CEA, 7U.S.C. § 25, Sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15 and 26(a), and 28 U.S.C.§§ 1331 and 1337. This Court also has jurisdiction over the state law claims under 28 U.S.C. §1367 because those claims are so related to the federal claim that they form part of the same case or controversy, and under 28 U.S.C. § 1332 because the amount in controversy for the Classexceed $5,000,000 and there are members of the Class who are citizens of a different state thanDefendants.19.

Venue is proper in the Southern District of New York, pursuant to, among other statutes, Section 22 of the CEA, 7 U.S.C. § 25(c), 15 U.S.C. § 22 and 28 U.S.C. § 1391(b), (c

and (d). Each of the Defendants transacted business in the Southern District of New York and apart of the events or omissions giving rise to the claims occurred in the Southern District of NewYork. THE PARTIES Plaintiffs 20.

Plaintiff Metzler Investment GmbH (“Metzler”) is a fund company that launches and manages investment funds under German law. The range of funds includes various types of securities, money market, and derivative funds, as well as general and specialized investment funds. Metzler manages assets totaling approximately €47 billion and is based in Frankfurt, Germany. Its funds traded on-exchange based products tied to LIBOR such as Eurodollar futures and were harmed as a consequence of Defendants’ unlawful conduct.21.

Plaintiff FTC Futures Fund SICAV (“FTC SICAV”), a fund based in Luxembourg, traded on-exchange based products tied to LIBOR such as Eurodollar futures andwas harmed as a consequence of Defendants’ unlawful conduct.22.

Plaintiff FTC Futures Fund PCC Ltd. (“FTC PCC”), a fund of FTC Capital based in Gibraltar, traded on-exchange based products tied to LIBOR such as Eurodollar futures and was harmed as a consequence of Defendants’ unlawful conduct.23.

Plaintiff Atlantic Trading USA, LLC (“Atlantic”) is an Illinois limited liability company with its principal place of business in Chicago, Illinois. Atlantic Trading USA, LLCtraded on-exchange based products tied to LIBOR such as Eurodollar futures and was harmed asa consequence of Defendants’ unlawful conduct.24.

Plaintiff 303030 Trading LLC (“303030”) is an Illinois limited liability corporation with its principal place of business in Lake County, Illinois. 303030 traded on-exchange based products tied to LIBOR such as Eurodollar futures and were harmed as a consequence of Defendants’ unlawful conduct.25.

Plaintiff Gary Francis (“Francis”) is a resident of Chicago, Illinois. Plaintiff Francis traded on-exchange based products tied to LIBOR such as Eurodollar futures and was

harmed as a consequence of Defendants’ unlawful conduct.26.

Plaintiff Nathanial Haynes (“Haynes”) is a resident of Chicago, Illinois. Plaintiff Haynes traded on-exchange based products tied to LIBOR such as Eurodollar futuresand was harmed as a consequence of Defendants’ unlawful conduct. Defendants 27.


Defendant Bank of America Corporation is a Delaware corporation headquartered in Charlotte, North Carolina. Defendant Bank of America, N.A. is a federally chartered national banking association headquartered in Charlotte, North Carolina and an indirect, wholly owned subsidiary of Defendant Bank of America Corporation. Defendant Bank of America Corporation and Bank of America, N.A. are hereinafter referred to collectively as“BAC”)28.

Defendant Barclays Bank plc (“Barclays”) is a British public limited company headquartered in London, England.29.

Defendant Citibank, N.A. (“Citibank”) is federally chartered national banking association headquartered in New York, New York and a wholly owned subsidiary of Defendant Citigroup, Inc. (“Citigroup”). Defendant Citigroup is a Delaware corporation headquartered inNew York, New York.30.

Defendant Credit Suisse Group AG (“Credit Suisse”) is a Swiss company headquartered in Zurich, Switzerland.31.

Defendant J.P. Morgan Chase & Co. (“JPMorgan Chase”) is a Delaware financial holding company headquartered in New York, New York. Defendant J.P. Morgan Chase Bank, National Association, is a federally chartered national banking association headquartered in New York, New York and a wholly owned subsidiary of Defendant JPMorganChase.32.

Defendant HSBC Holdings plc (“HSBC”) is a British public limited company headquartered in London, England. Defendant HSBC Bank plc is a United Kingdom public limited company headquartered in London, England and a wholly owned subsidiary o

Defendant HSBC.33.

Defendant Lloyds Banking Group plc (“Lloyds”) is a British public limited company headquartered in London, England. Lloyds was formed in 2009 through the acquisition of Defendant HBOS plc (“HBOS”) by Lloyds TSB Bank plc.34.

Defendant West LB AG (“West LB”) is a German joint stock company headquartered in Dusseldorf, Germany. Defendant West deutsche Immobilien Bank AG is a German company headquartered in Mainz and wholly owned subsidiary of Defendant WestLB.35.

Defendant UBS AG (“UBS”) is a Swiss company based in Basel and Zurich,Switzerland.36.



Defendant Royal Bank of Scotland Group plc (“RBS”) is a British public limited company headquartered in Edinburgh, Scotland.37.

Defendant Deutsche Bank, AG (“Deutsche Bank”) is a German financial services company headquartered in Frankfurt, Germany.38.

Defendant Royal Bank of Canada (“RBC”) is a Canada company head quartered in Toronto, Canada.39.

Defendant The Bank of Tokyo-Mitsubishi UFJ, Ltd. (“Bank of Toyko” or“BTMU”) is a Japan company headquartered in Tokyo, Japan.40.

Defendant Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A.(“Rabobank”) is a financial services provider with its headquarters in Utrecht, the Netherlands.41.

Defendant The Norinchukin Bank (“Norinchukin” or “Norin”) is a Japanese cooperative bank headquartered in Tokyo, Japan.42.

During the Class Period, Defendants BAC, Credit Suisse, JPMorgan Chase, HSBC, Barclays, Lloyds, HBOS, WestLB, RBS, UBS, Deutsche Bank, Citibank, Royal Bank of Canada, Rabobank, BTMU and Norinchukin were members of the BBA’s USD-LIBOR panel. Additionally, Citigroup, which controlled Citibank and reaped significant financial benefit from the suppression of LIBOR, actively participated in the conspiracy


During the Class Period, the following subsidiaries or other affiliates of Defendants joined and furthered the conspiracy by trading LIBOR-based financial instruments such as Eurodollar futures contracts at manipulated prices not reflecting fundamental supply anddemand, to the direct benefit of Defendants: (i) Credit Suisse Securities (USA) LLC; (ii) Bank of America Securities LLC; (iii) J.P. Morgan Clearing Corp.; (iv) J.P. Morgan Futures, Inc.; (v) HSBC Securities (USA); (vi) Barclays Capital Inc.; (vii) UBS Securities LLC; (viii) RBS Securities Inc.; (ix) Deutsche Bank Securities; and (x) Citigroup Global Markets Inc.44.

In addition to the above entities’ participation in selling LIBOR-based financial instruments to Plaintiffs during the Class Period, investigations regarding Defendants ’manipulation of Yen-LIBOR (detailed below) have revealed that securities-dealer subsidiaries of Yen-LIBOR panel members, including Defendant UBS, participated in manipulating Yen-LIBOR during the Class Period. In light of those facts, Plaintiffs have reason to believe the dealer entities identified above materially aided or contributed to the manipulation of USD-LIBOR. DEFENDANTS SUPPRESSED LIBOR DURING THE CLASS PERIOD 45.

Throughout the Class Period, Defendants conspired to suppress LIBOR below the levels it would have been set had Defendants accurately reported their borrowing costs to theBBA. Plaintiffs’ allegations that Defendants suppressed LIBOR are supported by (i) Defendants’ powerful incentives to mask their true borrowing costs and to reap unjustified revenues by setting artificially low interest rates on LIBOR-based financial instruments that investors purchased; (ii) an independent analysis by other plaintiffs’ consulting experts, comparing LIBOR panel banks’ daily individual quotes with the banks’ probability of default, as measured by Kamakura Risk Information Services, as well as by Plaintiffs’ consulting experts conducting analyses of the spread between LIBOR as reported and the Federal Reserve Eurodollar Deposit Rate; (iii) publicly available economic analyses, by prominent academics and other commentators, of LIBOR’s behavior during the Class Period compared with other well

accepted measures of Defendants’ borrowing costs, as well as the notable tendency of Defendants’ daily submitted LIBOR quotes to “bunch” near the bottom quartile of the collection of reported rates used to determine LIBOR; and (iv) revelations in connection with the numerous domestic and foreign governmental investigations into potential manipulation of USD-LIBOR and LIBOR for other currencies, most prominently Yen-LIBOR and Euroyen TIBOR. A.

Defendants Possessed Strong Motives To Suppress LIBOR 46.

Defendants each had substantial financial incentives to suppress LIBOR. First, Defendants were motivated, particularly given investors’ serious concerns over the stability of the market in the wake of the financial crisis that emerged in 2007, to understate their borrowing costs—and thus the level of risk associated with the banks. Moreover, because no one bank would want to stand out as bearing a higher degree of risk than its fellow banks, each Defendant shared a powerful incentive to collude with its co-Defendants to ensure it was not the “odd man out.” Indeed, analysts at Citigroup Global Markets—a subsidiary of Defendant Citigroup—acknowledged in an April 10, 2008 report: [T]he most obvious explanation for LIBOR being set so low is the prevailing fear of being perceived as a weak hand in this fragile market environment. If a bank is not held to transact at its posted LIBOR level, there is little incentive for it to post a rate that is more reflective of real lending levels, let alone one higher than its competitors. Because all LIBOR postings are publicly disclosed, any bank posting a high LIBOR level runs the risk of being perceived as needing funding. With markets in such a fragile state, this kind of perception could have dangerous consequences. 19 Strategists at entities affiliated with other Defendants likewise confirmed that banks suppressed LIBOR. Echoing the sentiment of the above analysts, William Porter, credit strategist a Defendant Credit Suisse, said in April 2008 that he believed the three-month USD-LIBOR was 19 Scott Peng, Chintan (Monty) Gandhi, & Alexander Tyo, “Special Topic: Is LIBOR Broken?,”April 10, 2008

0.4 percentage points – or 40 basis points – below where it should be. 20 And the next month, Tim Bond, head of asset-allocation research of Barclays Capital—a subsidiary of Defendant Barclays—observed that banks routinely misstated borrowing costs to the BBA to avoid the perception that they faced difficulty raising funds as credit markets seized up. 21 47.

Second, by artificially suppressing LIBOR, Defendants paid lower interest rates on LIBOR-based financial instruments they sold to investors during the Class Period. Illustrating Defendants’ motive to artificially depress LIBOR, in 2009 Citibank reported it would make $936 million in net interest revenue if rates would fall by 25 bps per quarter over the next year and $1.935 billion if they fell 1% instantaneously. JPMorgan Chase likewise reported significant exposure to interest rates in 2009. The bank stated that if interest rates increased by1%, it would lose over $500 million. HSBC and Lloyds also estimated they would earn hundreds of millions of additional dollars in 2008-2009 in response to lower interest rates and would lose comparable amounts in response to higher rates. These banks collectively earned billions in net interest revenues during the Class Period.48.

Defendants thus possessed reputational and financial incentives to manipulate LIBOR—which, as detailed below, they did B.

Independent Analyses By Consulting Experts Engaged by Plaintiffs and Other Plaintiffs In These Proceedings Strongly Indicate Defendants Artificially Suppressed LIBOR During the Class Period 49.

Plaintiffs’ consulting experts, as well as consulting experts engaged by other plaintiffs in these coordinated proceedings, have measured LIBOR against other recognized benchmarks for determining banks’ borrowing costs. Employing well-reasoned methodologies, these experts have demonstrated Defendants artificially suppressed LIBOR during the Class Period. The experts’ common conclusion is clear: during the Class Period, LIBOR did not 20 Carrick Mollenkamp, “Libor Surges After Scrutiny Does, Too,” The Wall Street Journal , April18, 2008. 21 Gavin Finch and Elliott Gotkine, “Libor Banks Misstated Rates, Bond at Barclays Says,” Bloomberg , May 29, 2008

opriately correspond with other measures of Defendants’ borrowing costs, as indicated by:(i) the spread between LIBOR and Eurodollar Deposit rates, and (ii) the difference between Defendants’ respective LIBOR quotes and their probabilities of default.50.

Additional independent expert analysis performed in connection with these proceedings indicates Libor suppression. At one date during the Class Period, when the BBA announced it would investigate the reporting of LIBOR, members of the LIBOR panel increased their rates in unison despite the lack of any market reason. The most plausible explanation for this movement is Defendants’ collective fear of detection of their LIBOR suppression. Bolstering this point is that since October 2011, when the European Commission raided most or all of Defendants in connection with the LIBOR probe, reported LIBOR has returned to its historic norm compared with the overall Eurodollar deposit market.1.

The Discrepancy Between LIBOR and the Federal Reserve Eurodollar Deposit Rate During the Class Period Suggests Defendants Collusively Suppressed LIBOR 51.

As demonstrated by the work of independent consulting experts retained by counsel in these actions, analysis of the Eurodollar market strongly supports that Defendants suppressed their LIBOR quotes and colluded to suppress reported LIBOR rates. Moreover, this analysis further supports that Defendants colluded to control the amount of suppression over the Class Period.52.

The U.S. Federal Reserve prepares and publishes Eurodollar deposit rates for banks (the “Federal Reserve Eurodollar Deposit Rate”). These Eurodollar deposit rates are analogous to LIBOR in that they reflect the rates at which banks in the London Eurodollar money market lend U.S. dollars to one another, just as LIBOR is intended to reflect rates at which panel banks in the London interbank market lend U.S. dollars to one another. The Federal Reserve obtains its data from Bloomberg and the ICAP brokerage company. 22 Bloomberg Eurodollar deposit rate is similar to BBA’s LIBOR except that the sampling is not limited to the 22

See http://federalreserve.gov/releases/h15/data.htm, footnote 8. Last visited on April 23, 2012

16 banks chosen by BBA. ICAP is a large broker-dealer in London in Eurodollar deposits. 23 ICAP surveys its client banks and updates its Eurodollar deposit rates about 9:30 AM eachmorning.53.

While Defendants could have access to the ICAP Eurodollar deposit rates prior to submitting their individual LIBOR quotes at 11:00 each day, they would not — absent collusion— have access to other bank LIBOR quotes, which are confidential until submitted. Thus, even within the context of a suppressed LIBOR, absent collusion, individual panel banks would not know what quote other panel banks intended to submit relative to the Federal Reserve Eurodollar Deposit Rate.54.

The consulting experts determined that because of the nature of the relationship between the Federal Reserve Eurodollar Deposit Rate and LIBOR (detailed below), it would be unusual even for one bank to submit a LIBOR bid below the Federal Reserve’s Eurodollar Deposit Rate. For all Defendants to submit bids below the Federal Reserve Eurodollar Deposit Rate would be extremely unusual, and strongly supports evidence of collusion among the banks.55.

Economic and statistical analysis strongly supports the use of the Federal Reserve Eurodollar Deposit Rate as a benchmark for measuring the validity of LIBOR as reported by the panel banks. To measure how well the Federal Reserve Eurodollar Deposit Rate and LIBOR move together, for the purposes of this analysis, the difference between the two rates, the “Spread,” is calculated as follows: Spread = BBA LIBOR – Federal Reserve Eurodollar DepositRate.56.

Since both LIBOR and the Federal Reserve Eurodollar Deposit Rate measure the 23

“ICAP is the world’s premier voice and electronic interdealer broker and the source of global market information and commentary for professionals in the international financial markets. The Group is active in the wholesale markets in interest rates, credit, energy, foreign exchange and equity derivatives. ICAP has an average daily transaction volume in excess of $1.5 trillion, more than 60% of which is electronic. ICAP plc was added to the FTSE 100 Index on 30 June 2006.For more information go to www.icap.com.” See http://www.icapenergy.com/company/ (last accessed on April 30, 2012

lending cost to banks of Eurodollar deposits, important market and financial fundamentals, suchas day-to-day changes in monetary policy, market risk and interest rates, as well as risk factors facing the banks generally (collectively “Market Fundamentals”), should be reflected similarlyon both variables, and therefore should not affect the Spread. The BBA’s LIBOR panel isintended to reflect the Eurodollar deposit market in London. By focusing on the Spread, the model therefore should be able to factor out normal and expected co-movements in banks’ LIBOR quotes that arise from changes in Market Fundamentals.57.

To analyze how well the Federal Reserve Eurodollar Deposit Rate captures changes in Market Fundamentals and absorbs variations in LIBOR that are driven by such fundamentals, consulting experts used regression analysis to measure the day-to-day changes in the Spread against changes in the T-Bill rate and the commercial paper rate. The evidence from these regressions strongly supports that day-to-day changes in the Federal Reserve Eurodollar Deposit Rate effectively capture day-to-day movements in LIBOR caused by Market Fundamentals. Thus, once the Federal Reserve Eurodollar Deposit Rate is subtracted to arrive at the Spread, remaining movements in LIBOR reflected in the Spread would be unrelated to movements in Market Fundamentals.58.

Because Market Fundamentals are fully captured by the Spread, absent manipulation, the Spread should always be zero or close to zero. Thus, as more fully discussed below, negative Spreads provide a strong basis to conclude that Defendants suppressed and colluded to artificially suppress LIBOR. 24 59.

Figures 1 and 2 show the relationship between LIBOR, the Federal Reserve Eurodollar Deposit Rate, and the Spread beginning in 2000 and ending in mid 2012. As can be seen, between January 5, 2000 and around August 7, 2007, Federal Reserve’s Eurodollar Deposit 24 It is important to note that to the extent panel banks submitting LIBOR quotes submit suppressed rates to the BBA, and these suppressed rates are also considered by Bloomberg or ICAP, then the resultant Federal Reserve Eurodollar Deposit rate would also be understated by the same suppression. Consequently, the Spread computed above could even understate the true magnitude of the suppression

Rate tracked LIBOR very closely and the Spread remained positive and very close to zero. This finding indicates that the Spread effectively captures shared risks of the banks sampled by BBA and by Bloomberg and ICAP. The validity of this finding is bolstered by the fact that the Spread remained very close to zero in the face of multiple major financial dislocations, including the bursting of the dot-com bubble in 2000, the terrorist attacks of September 2001, and the 2001U.S. economic recession. Likewise, the unusual downward movements in the Spread starting in August 2007 strongly evidences that LIBOR was being manipulated and suppressed during this period

The Spread only became consistently positive around the end of October 2011, just after the European Commission raided banks in connection with LIBOR

House of Commons Treasury Committee Fixing LIBOR: some preliminary findings Second Report of Session 2012–13 Volume I: Report
, together with formal minutes Volume II: Oral evidence Ordered by the House of Commons to be printed 9 August 2012 pursuant to Standing Order No. 137 The Treasury Committee The Treasury Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of HM Treasury, HM Revenue and Customs and associated public bodies. Current membership Mr Andrew Tyrie MP (Conservative, Chichester) (Chairman) Michael Fallon MP (Conservative, Sevenoaks) Mark Garnier MP (Conservative, Wyre Forest) Stewart Hosie MP (Scottish National Party, Dundee East) Andrea Leadsom MP (Conservative, South Northamptonshire) Mr Andy Love MP (Labour, Edmonton) John Mann MP (Labour, Bassetlaw) Rt Hon Pat Mcfadden MP (Labour, Wolverhampton South West) Mr George Mudie MP (Labour, Leeds East) Jesse Norman MP (Conservative, Hereford and South Herefordshire) Teresa Pearce MP (Labour, Erith and Thamesmead) David Ruffley MP, (Conservative, Bury St Edmunds) John Thurso MP (Liberal Democrat, Caithness, Sutherland, and Easter Ross) Powers The Committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the Internet via www.parliament.uk. Publication The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the Internet at www.parliament.uk/treascom. The Reports of the Committee, the formal minutes relating to that report, oral evidence taken and some or all written evidence are available in printed volume(s). Additional written evidence may be published on the internet only. Committee staff The current staff of the Committee are Chris Stanton (Clerk), Lydia Menzies (Second Clerk), Jay Sheth, Adam Wales (Committee Specialists), Alison Game (Senior Committee Assistant), Steven Price and Lisa Stead (Committee Assistants) and James Abbott (Media Officer). Contacts All correspondence should be addressed to the Clerk of the Treasury Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 5769; the Committee’s email address is treascom@parliament.uk Fixing LIBOR: some preliminary findings 1 Contents Report Page 1 Introduction 3 LIBOR and EURIBOR 3 FSA findings 5 Barclays’ co-operation with regulators and early settlement 7 Policy responses 10 Committee inquiry 12 2 Manipulation by individuals with the intention of personal benefit 14 The misconduct 14 Collusion with traders at other banks 16 The failure of internal controls 19 3 Manipulation during the financial crisis 23 Background 23 Media and academic concern about LIBOR setting 25 The role of the authorities 27 Concerns about LIBOR 27 The Sterling Money Markets Liaison Group 28 The US authorities 30 The British Bankers Association review 35 Barclays’ contact with the regulators 38 The role of the Barclays board 39 Conclusions on LIBOR submissions during the financial crisis 40 4 The Tucker-Diamond dialogue and the Diamond File Note 43 The conclusion of the regulatory investigations 43 Who was the senior Bank of England official? 44 Box A: The Diamond File note 44 The backdrop to the 29th October 2008 Diamond-Tucker discussion 45 Who were the senior figures in Whitehall and did they instruct? 47 The Whitehall-Tucker discussions 49 Barclays and the perceived instruction 50 The Diamond-Tucker discussion 50 The role of Jerry del Missier 52 Passing on the perceived instruction 54 5 Barclays and the FSA 59 Introduction 59 Appointment of Bob Diamond as Barclays chief executive 61 Conclusions on Mr Diamond’s appointment 67 Mr Diamond’s evidence on the FSA letter of February 2012 and subsequent communications between Lord Turner and Marcus Agius 68 Barclays board meeting, 9 February 2012 70 Lord Turner’s subsequent meeting with, and letter to, Marcus Agius 71 2 Fixing LIBOR: some preliminary findings Assessment of Bob Diamond’s evidence to the Committee 72 Conclusion on Bob Diamond’s evidence 78 Relations between Barclays and the FSA 79 The February board meeting 79 Exchanges with Lord Turner 81 A new approach by the FSA? 83 View of the Bank of England 84 FSA governance review 84 Appointment of Jerry del Missier as Chief Operating Officer 86 Conclusions on FSA relationship with Barclays 87 6 The resignations 88 Barclays’ initial reaction to the Final Notice 88 Resignation of Mr Agius 89 The resignation of Mr Diamond 91 The role of shareholders 97 Non-executive directors 97 Conclusions on resignations 98 7 Enforcement 101 The penalty levied by the FSA 101 Criminal enforcement 102 Legal lacunae 102 Power to prosecute 102 The FSA and the Serious Fraud Office 103 Conclusions and recommendations 105 Appendix: exchange of letters between Lord Turner, Chairman of the FSA, and Marcus Agius, Chairman of Barclays, 2012 116 Letter from Lord Turner to Marcus Agius, 10 April 2012 116 Letter from Marcus Agius to Lord Turner, 18 April 2012 118 Formal Minutes 120 Witnesses 121 List of Reports from the Committee during the current Parliament 122 Fixing LIBOR: some preliminary findings 3 1 Introduction 1. On 27 June 2012 the Financial Services Authority (FSA) issued a Final Notice fining Barclays Bank Plc (Barclays) £59.5 million for misconduct relating to the London Interbank Offered Rate (LIBOR) and the Euro Interbank Offered Rate (EURIBOR). This was the largest fine ever imposed by the FSA. It would have been £85 million had not Barclays been given the 30 per cent (stage 1) discount for its co-operation under the FSA’s Decision Procedures and Penalties Manual.1 The FSA investigation operated in cooperation with the US Commodity Futures Trading Commission (CTFC) and Department of Justice (DOJ), which imposed fines of $200 million and $160 million respectively. The misconduct to which the Notice relates lasted from 2005 to 2009.2 The findings deeply concerned the Treasury Committee, Parliamentary colleagues and constituents. 2. This assessment of LIBOR by the Committee is necessarily a preliminary one. Enforcement proceedings continue both in the UK, where seven firms are being investigated, and in other jurisdictions. The UK Government has requested that the FSA conduct a review into the framework for the setting of LIBOR led by Martin Wheatley, its managing director and Chief Executive-designate of the future Financial Conduct Authority. Parliament has created a cross-party Commission of both Houses to examine the implications of the LIBOR findings for corporate governance and standards in banking. Commissioner Barnier is undertaking regulatory action at a European level. Both the FSA and Barclays are conducting internal reviews. LIBOR and EURIBOR 3. The FSA has described both the significance of LIBOR and EURIBOR and the process by which it is set. On its significance: LIBOR and the EURIBOR are benchmark reference rates that indicate the interest rate that banks charge when lending to each other. They are fundamental to the operation of both UK and international financial markets, including markets in interest rate derivatives contracts. LIBOR and EURIBOR are used to determine payments made under both over the counter (OTC) interest rate derivatives contracts and exchange traded interest rate contracts by a wide range of counterparties including small businesses, large financial institutions and public authorities. Benchmark reference rates such as LIBOR and EURIBOR also affect payments made under a wide range of other contracts including loans and mortgages. The integrity of benchmark reference rates 1 See FSA, DEPP 6.7.3, http://fsahandbook.info/FSA/html/handbook/DEPP/6/7 2 Barclays fined £59.5 million for significant failings in relation to LIBOR and EURIBOR, FSA Press Notice, 27 June 2012 4 Fixing LIBOR: some preliminary findings such as LIBOR and EURIBOR is therefore of fundamental importance to both UK and international financial markets.3 Similarly, the British Bankers Association (BBA), the trade association for banks in the UK, on whose behalf LIBOR is published by Thomson Reuters, notes that “the [LIBOR] rates are also used as the basis for many types of lending, from syndicated and commercial lending, to residential mortgages”, and that “it touches everyone from large international conglomerates to small borrowers”.4 LIBOR is also embedded in numerous contracts. Its influence is therefore very significant. 4. LIBOR and EURIBOR are set as follows: LIBOR is published on behalf of the British Bankers’ Association (BBA) and EURIBOR is published on behalf of the European Banking Federation (EBF). LIBOR and EURIBOR are calculated as averages from submissions made by a number of banks selected by the BBA or EBF. There are different panels of banks that contribute submissions for each currency in which LIBOR is published, and for EURIBOR. LIBOR and EURIBOR are by far the most prevalent benchmark reference rates used in euro, US dollar and sterling OTC [over the counter] interest rate derivatives contracts and exchange traded interest rate contracts. The notional amount outstanding of OTC interest rate derivatives contracts in the first half of 2011 has been estimated at 554 trillion US dollars. The total value of volume of short term interest rate contracts traded on LIFFE in London in 2011 was 477 trillion euro including over 241 trillion euro relating to the three month EURIBOR futures contract (the fourth largest interest rate futures contract by volume in the world). Until February 2011 the US dollar LIBOR panel consisted of 16 banks and the rate calculation for each maturity excluded the highest four and lowest four submissions. An average of the remaining eight submissions was taken to produce the final published LIBOR. Throughout the Relevant Period [January 2005 to June 2010], the EURIBOR panel consisted of at least 40 banks and in each maturity the rate calculation excluded the highest 15% and lowest 15% of all the submissions collated. A rounded average of the remaining submissions was taken to produce the final published EURIBOR.5 The BBA told us that since 1 January 2010 LIBOR has been the responsibility of BBA LIBOR Ltd: BBA LIBOR Ltd undertakes the day-to-day running of the benchmark: liaising with Thomson Reuters, contributors, regulators and users as required. The company is 3 Barclays fined £59.5 million for significant failings in relation to LIBOR and EURIBOR, FSA Press Notice, 27 June 2012 4 BBA, LIBOR information, 2 July 2012 p 4 and p 16 5 Barclays fined £59.5 million for significant failings in relation to LIBOR and EURIBOR, FSA Press Notice, 27 June 2012 Fixing LIBOR: some preliminary findings 5 advised by the independent Foreign Exchange and Money Markets (FX&MM) Committee and the LIBOR Ltd. Board. The BBA LIBOR Ltd. Board is separate from that of the BBA. BBA LIBOR became a limited company (BBA LIBOR Ltd.) with a separate board from the BBA on 1 January 2010. Prior to that BBA LIBOR was part of BBA Enterprises Ltd., a subsidiary of the BBA. Pre-2010, all technical and rate-related issues were the responsibility of the FX&MM Committee; all contractual arrangements relating to licences were handled by BBA Enterprises Ltd; and the LIBOR Secretariat within the BBA managed relationships with contributing banks and public authorities, provided the Secretariat of the FX&MM Committee, and issued on behalf of the FX&MM Committee any statements and guidance relating to the rates as appropriate. The executive of the BBA brought regular updates on governance issues and related matters to the BBA Board. From 1 January 2010, following the incorporation of LIBOR as BBA LIBOR Ltd, responsibilities were clarified and codified across all areas. All contractual issues were transferred to BBA LIBOR Ltd. The processes and procedures followed by contributing banks when submitting to Thomson Reuters remained the same as they were before incorporation and regular reports continued to be taken to the Board of the BBA as appropriate.6 FSA findings 5. The FSA found that Barclays’ misconduct included: making submissions which formed part of the LIBOR and EURIBOR setting process that took into account requests from Barclays’ interest rate derivatives traders. These traders were motivated by profit and sought to benefit Barclays’ trading positions; seeking to influence the EURIBOR submissions of other banks contributing to the rate setting process; and reducing its LIBOR submissions during the financial crisis as a result of senior management’s concerns over negative media comment. In addition, the FSA found that “Barclays failed to have adequate systems and controls in place relating to its LIBOR and EURIBOR submissions processes until June 2010 and failed to review its systems and controls at a number of appropriate points. Barclays also failed to deal with issues relating to its LIBOR submissions when these were escalated to Barclays’ Investment Banking compliance function in 2007 and 2008”.7 6 Written evidence from the BBA 7 Barclays fined £59.5 million for significant failings in relation to LIBOR and EURIBOR, FSA Press Notice, 27 June 2012 6 Fixing LIBOR: some preliminary findings 6. The FSA found that Barclays had “breached Principles 2, 3 and 5 of the FSA’s Principles for Businesses through misconduct relating to its submission of rates which formed part of the LIBOR and EURIBOR setting processes. There was a risk that Barclays’ misconduct would threaten the integrity of those benchmark reference rates.” Principle 2 states that “a firm must conduct its business with due skill, care and diligence”. Principle 3 states that “a firm must take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems”. Principle 5 states that “a firm must observe proper standards of market conduct”.8 7. The FSA’s acting director of enforcement and financial crime, Tracey McDermott, said at the time of the announcement of its Final Notice: Barclays’ misconduct was serious, widespread and extended over a number of years. The integrity of benchmark reference rates such as LIBOR and EURIBOR is of fundamental importance to both UK and international financial markets. Firms making submissions must not use those submissions as tools to promote their own interests. Making submissions to try to benefit trading positions is wholly unacceptable. This was possible because Barclays failed to ensure it had proper controls in place. Barclays’ behaviour threatened the integrity of the rates with the risk of serious harm to other market participants.9 The Committee concurs with the FSA’s assessment of the importance of the damage done to the benchmark rates by the attempted manipulation that the regulators discovered. Attempted manipulation of these reference rates reduces trust and confidence in markets and carries costs for end users. The Committee is concerned that the FSA was two years behind the US regulatory authorities in initiating its formal LIBOR investigations and that this delay has contributed to the perceived weakness of London in regulating financial markets. 8. The FSA identified two distinct phases of wrongdoing, with different motivations: • Submissions from Barclays from 2005 to 2008 that took into account requests from Barclays’ interest rate derivatives traders. These submissions were motivated by profit; • During the financial crisis, from 2007 to 2009, Barclays lowered its LIBOR submissions in response to negative media comment about the bank (often referred to in our evidence as ‘low-balling’). These two phases are considered in detail below in sections 2 and 3 of this Report. Mr Bob Diamond, former Chief Executive of Barclays, attempted to subdivide the period of the false submissions during the financial crisis into two phases, one before 29 October 2008, the day Mr Diamond and Mr Paul Tucker, Deputy Governor of the Bank of England 8 FSA, Final Notice, 27 June 2012, paras 7, 186, 193 and 196. 9 Barclays fined £59.5 million for significant failings in relation to LIBOR and EURIBOR, FSA Press Notice, 27 June 2012 Fixing LIBOR: some preliminary findings 7 (Financial Stability) had a telephone conversation, and the period after that date.10 The Committee found Mr Diamond’s attempt to subdivide the later period of wrongdoing neither relevant nor convincing. It does not appear that the conversation between Mr Tucker and Mr Diamond made a fundamental difference to Barclays’ behaviour, given the repeated instances of ‘low-balling’ submissions to the LIBOR fixing process by Barclays set out in the FSA Final Notice covering the year running up to the phone call between Mr Tucker and Mr Diamond. 9. Barclays may well not be alone. Nor is it likely to be a London-based phenomenon. The FSA is continuing to investigate the conduct of seven other banks in relation to LIBOR— some of them non-UK based banks. The FSA’s regulatory counterparts in several other countries are also conducting their own investigations.11 Barclays is just one of many international banks under investigation for possible market manipulation. It is important that Barclays’ serious shortcomings should not be seen in isolation from the possible actions of other banks and we await the results of ongoing investigations. 10. In addition, the Serious Fraud Office (SFO) announced on 6 July 2012 that it had “decided formally to accept the LIBOR matter for investigation”.12 Mr Tucker told us that contingency planning was going on to examine whether “the class action suits [against banks] ... cause such financial damage to the firms that it could undermine stability ... [P]eople are starting to think about that too”.13 Barclays’ co-operation with regulators and early settlement 11. If it proves to be the case that other banks have been guilty of similar misconduct, then Barclays may well have suffered from ‘first mover disadvantage’. It has taken the initial brunt of criticism because it settled first and so has been the first bank to have been found guilty of misconduct. Barclays is to be commended for co-operating fully with the regulators’ inquiries. The FSA took this into account when determining the penalty: The FSA has also considered the nature and extent of the co-operation provided by Barclays during the course of its investigation. The FSA acknowledges that Barclays has provided extremely good co-operation, in particular in providing access to evidence and facilitating voluntary witness interviews which were conducted by the FSA together with overseas authorities. The FSA’s investigation would have taken much longer to conclude without Barclays’ co-operative approach.14 Tracey McDermott told us that Barclays had “bent over backwards to try to move this forward” and had been “extremely co-operative”.15 The US CFTC, similarly, recognised 10 Q 21 11 Qq 1167–8; HC Deb, 28 June 2012, col 463 12 LIBOR: SFO to investigate, SFO press release, 6 July 2012 13 Q 495 14 FSA Final Notice, 27 June 20112, para 208 15 Q 1113 8 Fixing LIBOR: some preliminary findings Barclays’ “significant co-operation during the Division of Enforcement’s investigation of this matter, which included providing important information and analysis to the Division that helped the Division efficiently and effectively undertake its investigation”.16 12. Barclays’ former Chief Executive, Bob Diamond, told us: Clearly there was behaviour that was reprehensible; but as soon as this was recognised Barclays put all forces—if there’s a mistake, if there’s a problem, how do we handle it? What do we do about it? At Barclays it has been three years with three of the most important regulatory agencies in the world looking at millions of files; and all three regulatory agencies applauding Barclays for its co-operation, analysis and proactivity. We hired two external firms to work with two members of senior management, reporting to the chairman of the board and the chairman of the audit committee. The attitude of Barclays three years ago when this was recognised was, “Let’s get to the bottom of it. Let’s identify the problem; take the actions necessary; learn our lessons and, if any of our customers and clients got hurt, let’s make them good.” That attitude is recognised by the three regulatory agencies in what they wrote, but it is not coming out in the court of public opinion over the past week.17 Mr Agius, Barclays’ Chairman, told us: What happened, as we all are in complete common agreement on, was abhorrent and should not have happened. Barclays, when it was first told about the inquiries, co-operated with them. As the inquiries evidently became more serious, our degree of co-operation increased. No one could have co-operated more. We spent as a bank more than £100 million in checking emails and translating Japanese, and so on and so forth. We could not have done more, and that is acknowledged in the submissions of the agencies. Once we got to the point of settlement, we also recognised that we would have first-mover disadvantage. We could have dragged our heels; that would not have been right. We feel we did the right thing.18 Mr Agius also made clear that Mr Diamond was not involved in any consideration by Barclays of the regulators’ inquiries into LIBOR: “Because he was a potential witness, he was excluded from all considerations of these matters [...] he was simply aware that there was an inquiry into LIBOR”.19 13. However, despite these statements from Mr Diamond and Mr Agius it is important to state that Barclays’ internal compliance department was told three times about concerns over LIBOR fixing during the period under consideration and it appears that these warnings were not passed to senior management within the bank. Statements that 16 CFTC Order, page 4 17 Q 1 18 Q 653 19 Qq 788–9 Fixing LIBOR: some preliminary findings 9 everything possible was done after the information came to light must be considered against a background of serious failures of the compliance function within the bank. In other words, the senior management should have known earlier and acted earlier. 14. It is noteworthy that the identification of this first period of wrongdoing—the manipulation of submissions in order to benefit traders—came from Barclays’ own investigation into the later period of LIBOR fixing during the crisis for Barclays’ own benefit. Mr Agius told us that: The LIBOR inquiry was into the low-balling, to use the expression that seems to be current in this Committee. The CFTC started that inquiry into low-balling. We cooperated with that. As we searched through our records, as we searched through our emails and searched through our voice recordings, we discovered the criminality, to use your expression. Instead of sitting on that, we naturally disclosed that, and we in fact then turned up the volume, or whatever the expression is, on the low-ball activity we did to see just how much we could uncover, and we left no stone unturned.20 15. Asked whether Barclays had been unfairly hit by first-mover disadvantage, Lord Turner, Chairman of the FSA, responded: I think what has happened is entirely fair, in the sense that a process has gone through that has led to this final notice, and that has recorded the fact that it was attempting to manipulate in two different ways in the two different periods, and it accepted that and agreed to it. I do not think that is unfair. In fairness, it is important [...] to record as a balance to that that it was very co-operative with us.21 16. Barclays received a reduction in its fine because of its high degree of co-operation with the FSA in its investigation. Barclays also disclosed wrongdoing that it had itself found to the regulators. Any such disclosure is likely to have carried serious risk of reputational damage. Co-operation with inquiries needs to be encouraged by regulators, who need to take into account first mover disadvantage, but it does not excuse or diminish wrongdoing. Nor does the fact that others may have been engaged in similar practices. The FSA and its successors should consider greater flexibility in fine levels, levying much heavier penalties on firms which fail fully to co-operate with them. The FSA needs to give high priority to its investigations into other banks, including those largely owned by the taxpayer. 17. Firms must be encouraged also to report to the regulator instances they find of their own misconduct. While such a firm should still be required to pay compensation to any other party who has been disadvantaged by the misconduct, in cases where a firm makes a complete admission of its own culpability the FSA should retain flexibility in setting the fine payable. The FSA should have regard to the desirability of encouraging other firms to confess their misdemeanours in a similar way. The FSA may also need to re-examine its treatment of whistleblowers, both corporate and individual, in order to provide the appropriate incentives for the reporting of wrongdoing. 20 Q 786 21 Q 1115 10 Fixing LIBOR: some preliminary findings 18. The findings of the regulators have been a reputational disaster for Barclays. They have led directly to the loss of its Chief Executive and its Chief Operating Officer. These resignations were preceded by the announcement of the resignation of its Chairman, who subsequently decided to stay in post until he had overseen the appointment of a new Chief Executive. The resignations at Barclays are considered in section 6 of this Report. 19. The findings have focussed pre-existing public anger with banks. Barclays is one of many instititutions that have contributed to the state of banking’s reputation. LIBOR has followed the vast public bailouts of banks during the financial crisis, the liquidity support and guarantees given to all banks and the apparent lack of penalties for those who contributed to that crisis, most of whom retained very high levels of remuneration even after 2008. More recently there has been the scandal of payment protection insurance (PPI) mis-selling, criticism of banks’ perceived reluctance to lend, complaints about the sale of unsuitable and complex interest rate swap products to businesses (which are under investigation by the FSA), and serious IT failures at RBS Group. The economy needs wellfunctioning banks. They will have a crucial role in any economic recovery through their lending to businesses and households. An end to crude ‘banker bashing’ would be highly desirable, but bankers must recognise that they have brought much of this upon themselves through actions which have seriously damaged public confidence. While banks continue to provide evidence that wrongdoing persists the popular mood is likely to remain hostile. Policy responses 20. On 2 July 2012 the Chancellor of the Exchequer announced a review (‘the Wheatley review’) by the FSA of LIBOR: I have today asked Martin Wheatley, the chief executive designate of the Financial Conduct Authority, to review what reforms are required to the current framework for setting and governing LIBOR. This will include looking at whether participation in the setting of LIBOR should become a regulated activity, at the feasibility of using actual trade data to set the benchmark, and at making initial recommendations on the transparency of the processes surrounding the setting and governance of LIBOR. The review will also look at the adequacy of the UK’s current civil and criminal sanctioning powers, with respect to financial misconduct and market abuse with regard to LIBOR. It will also assess whether those considerations apply to other price-setting mechanisms in financial markets, to ensure that these kinds of abuses cannot occur elsewhere in our financial system. We need to get on with this, and not spend years navel-gazing when we know what has gone wrong. I am therefore pleased to tell the House that Mr Wheatley has agreed to report this summer so that the Financial Services Bill currently before Parliament—or, if necessary, the future legislation on banking reform—can be amended to give our regulators the powers they clearly need. The review is essential to ensuring that we mend the broken regulatory system— introduced by the last Government—that allowed these abuses to happen, but the Fixing LIBOR: some preliminary findings 11 manipulation of the most used benchmark interest rate reveals the broader issue of the professional standards and of the culture in some parts of the financial services industry that was allowed to grow up in the years before the crisis and which still needs to change.22 On 30 July 2012 the Treasury announced the detailed terms of reference of the Wheatley review: The Wheatley review will formulate policy recommendations with a view to: 1. Reforming the current framework for setting and governing LIBOR. This work should, inter alia, consider: whether participation in the setting of LIBOR should be brought into the regulatory perimeter under the Financial Services and Markets Act 2000 as a regulated activity; How LIBOR is constructed, including the feasibility of using of actual trade data to set the benchmark; The appropriate governance structure for LIBOR; The potential for alternative rate-setting processes; The financial stability consequences of a move to a new regime and how a transition could be appropriately managed. Determining the adequacy and scope of sanctions to appropriately tackle LIBOR abuse. This work should consider: 2. The scope of the UK authorities’ civil and criminal sanctioning powers with respect to financial misconduct, particularly market abuse and abuse relating to the setting of LIBOR and equivalent rate-setting processes; and the FSA’s approved persons regime and investigations into market misconduct. 3. Whether similar considerations apply with respect to other price-setting mechanisms in financial markets, and provide provisional policy recommendations in this area. The review will report by the end of the summer to enable the Government to consider recommendations with a view to taking legislative changes forward through the Financial Services Bill, which is currently being scrutinised in the House of Lords. The review will aim to publish its conclusions by the end of September.23 21. Parliament has also instigated a review. On 16 July, the House of Commons created a Parliamentary Commission on Banking Standards to consider and report on: 22 HC Deb, 2 July 2012, cols 612–3 23 HM Treasury press release, The Wheatley Review, 30 July 2012 12 Fixing LIBOR: some preliminary findings Professional standards and culture of the UK banking sector, taking account of regulatory and competition investigations into the LIBOR rate-setting process; Lessons to be learned about corporate governance, transparency and conflicts of interest, and their implications for regulation and for Government policy.24 In response to the request from the House of Commons, the House of Lords appointed its five members to the Commission on 17 July 2012.25 22. On 25 July 2012 the European Commission put forward amendments to proposals for a Regulation and a Directive on insider dealing and market manipulation. The Commission intends that these will “clearly prohibit the manipulation of benchmarks, including LIBOR and EURIBOR, and make such manipulation a criminal offence”. Internal Market and Services Commissioner Michel Barnier said: The international investigations underway into the manipulation of LIBOR have revealed yet another example of scandalous behaviour by the banks. I wanted to make sure that our legislative proposals on market abuse fully prohibit such outrages. That is why I have discussed this with the European Parliament and acted quickly to amend our proposals, to ensure that manipulation of benchmarks is clearly illegal and is subject to criminal sanctions in all countries. 26 Committee inquiry 23. In our inquiry we have taken evidence from senior figures in Barclays: Mr Bob Diamond, former Chief Executive, Mr Marcus Agius, Chairman, and Mr Jerry del Missier, former Chief Operating Officer. We held an evidence session with FSA representatives: Lord Turner of Ecchinswell, Executive Chairman, Mr Andrew Bailey, head of the Prudential Business Unit of the FSA, and Tracey McDermott, acting director of Enforcement and Financial Crime. We also heard evidence from Sir Mervyn King, Governor of the Bank of England, and Mr Paul Tucker, Deputy Governor. We thank all the witnesses for making themselves available to give evidence at short notice. The Committee has taken extensive written evidence from many of these witnesses, and from other people and organisations. We are also very grateful for the assistance of our specialist advisers Bill Allen, Jonathan Fisher QC, John Willman and Professor Geoffrey Wood.27 24 Votes and Proceedings, 16 July 2012 25 HL Deb, 17 July 2012,col 109. The membership of the Commission is: Mr Andrew Tyrie MP (Chairman; Con), Mark Garnier MP (Con), Andrew Love MP (Lab/Co-operative), Rt Hon Pat McFadden MP (Lab), John Thurso MP (Lib Dem), The Lord Bishop of Durham (Non-Affiliated), Baroness Kramer (Lib Dem), Rt Hon Lord Lawson of Blaby (Con), Rt Hon Lord McFall of Alcluith (Lab/Co-op), Lord Turnbull KCB CVO (Crossbench) 26 European Commission press release, 25 July 2012, Libor scandal: Commission proposes EU-wide action to fight ratefixing 27 William Allen declared the following interests: I am a financial and economic consultant, and also undertake academic work related to the recent financial crisis and bank regulation. I have two current consultancy contracts. One is with a company called Ad Satis Ltd (their internet site is http://www.adsatis.com/). Ad Satis itself provides consultancy services to banks, and the contract is to provide them with pieces of research on bank regulation. The other is with British Empire and General Securities Trust, is an investment trust. I also undertake occasional consultancy work for the International Monetary Fund. I do occasional lecturing and course-organising work, mainly for Cass Business School (where I am a visiting fellow), for which I get paid. I write occasional articles for publication for which I may get paid. Fixing LIBOR: some preliminary findings 13 24. This Report draws conclusions from the evidence that we have heard and highlight issues for further consideration by Parliament, Government and regulators. Jonathan Fisher QC declared the following interests: Practising barrister (Devereux Chambers, Temple, London) specialising in financial crime cases, Visiting Professor of Law, London School of Economics, teaching Corporate and Financial Crime, Honorary Visiting Professor, City Law School (City University London), teaching in Fraud and Financial Crime, General Editor, Lloyds Law Reports: Financial Crime, Committee member, IBA Anti-Money Laundering Forum, Honorary Steering Group Member, London Fraud Forum, Member, Commercial Fraud Lawyers Association, Member, Fraud Advisory Panel, Trustee Director, Fraud Advisory Panel, 2006–2010, Member, Criminal Bar Association, Member, Financial Services Lawyers Association, Member, Proceeds of Crime Lawyers Association. John Willman declared the following interests: Pearson Pension Scheme beneficiary, PCS Pension Scheme beneficiary; shareholdings in: Pearson Group PLC, and Vitesse Media PLC; Editorial consultancy clients since leaving the FT in 2009: Foreign & Commonwealth Office, HM Treasury, Zurich Financial Services, The Boston Consulting Group, Financial Times Conferences, Policy Exchange, TheCityUK, CBI, PricewaterhouseCoopers, Pictet & Cie, BakerPlatt (Jersey legal and financial services firm), Rhone Trust & Fiduciary Services SA, TIMES Group, Winkreative, The Corporation of London, International Finance Corporation, Government Office for Science, London Business School; Speaking engagements since 2008: Blackrock, Bank of New York, Mellon, Experian, QAS, Cinven, Business & Politics, Trade Association Forum, Centaur Conferences, Atradius, AM Conferences, VWM, Glasgow, Man + Machine, WPA, Money Marketing Investment Alliance, North of England Education Conference, NE International Networking Club, Baker & MacKenzie; Political affiliations: Member of the Fabian Society Professor Geoffrey Wood declared the following interests: Director, Hansa Trust, Member, Investment Advisory Panel, Strathclyde Pension Fund, Member and Adviser, PI Capital (private equity group), and Adviser, Elliot Advisers. 14 Fixing LIBOR: some preliminary findings 2 Manipulation by individuals with the intention of personal benefit The misconduct 25. The FSA found that between January 2005 and July 2008 Barclays was in breach of the FSA’s principle 5 “by making US dollar LIBOR and EURIBOR submissions which took into account requests made by its interest rate derivatives traders”.28 This phase of LIBOR manipulation differed from that discussed later in this Report, as it centred on a group of traders attempting “to benefit their own trading positions”, rather than acting in the immediate financial interests of Barclays overall.29 26. Barclays’ traders were aware of how even small movements in LIBOR or EURIBOR would be of benefit to them, with the FSA noting that “Barclays’ Derivatives Traders knew on any particular day what their books’ exposure to a one basis point (0.01%) movement in LIBOR or EURIBOR was”.30 Because of the central role LIBOR and EURIBOR played in how derivatives contracts were drawn up, the attempted manipulation of these reference rates “could have made the Derivatives Traders profit or reduced a loss”.31 27. To alter the Barclays’ LIBOR submission, and thus try and alter the overall LIBOR rate, the traders had to collude with those in Barclays who submitted the LIBOR figures (the submitters) to submit figures that were to the traders’ benefit. In its investigation, the FSA identified that: between January 2005 and May 2009, at least 173 requests for US dollar LIBOR submissions were made to Barclays’ Submitters (including 11 requests based on communications from traders at other banks); between September 2005 and May 2009, at least 58 requests for EURIBOR submissions were made to Barclays’ Submitters (including 20 requests based on communications from traders at other banks); and between August 2006 and June 2009, at least 26 requests for yen LIBOR submissions were made to Barclays’ Submitters.32 As we have seen, the traders knew that small changes in LIBOR could have large effects. The FSA noted that: 28 Financial Services Authority, Final Notice, 27 June 2012, para 8 29 Financial Services Authority, Final Notice, 27 June 2012, para 81 30 Financial Services Authority, Final Notice, 27 June 2012, para 48 31 Financial Services Authority, Final Notice, 27 June 2012, para 49. For a more detailed description of how Barclays’ traders could have benefitted, please see Financial Services Authority, Final Notice, 27 June 2012, paras 49–51 32 Financial Services Authority, Final Notice, 27 June 2012, para 56 Fixing LIBOR: some preliminary findings 15 For example in a telephone call on 12 September 2007, the Submitter indicated that Barclays’ Derivatives Traders had an interest in high three month LIBOR submissions ‘for about a couple of million dollars a basis point. Ah, but I don’t know how much longer I’m gonna be able to keep it up at seventy seven’. 33 The Governor of the Bank of England noted that: I was very struck and surprised, when reading these three reports [from the regulatory authorities], to discover that changing LIBOR by one basis point was the kind of rigging that people were interested in. You would never have noticed that from market activity. We were worried about tens of basis points.34 The Committee was surprised and disappointed by the Governor’s remarks, given the scale of the value of a single basis point, notwithstanding that the Bank of England did not have statutory regulatory powers. 28. Barclays as a whole, though, would not necessarily have benefited from the actions of its traders. Mr Diamond denied that the traders acted on behalf of Barclays. He told us that: “They [the traders] were acting on behalf of themselves. It is unclear whether it benefited Barclays but I don’t think they had any interest in benefiting Barclays, they were benefiting themselves”.35 Jerry del Missier, former Chief Operating Officer of Barclays, when asked how a trader would benefit their own bonus by asking submitters to falsify the LIBOR submissions, noted the complexity of what the traders were trying to achieve, and how the outcome might not be to Barclays’ benefit: It is very complex, and it is not entirely obvious that you are actually benefiting your own profitability, but the theory would be that if you got a certain rate submitted, the book that you were trading would benefit from that submission. It is important to understand that it is not even the whole bank—it is one particular book. On any given day, the bank does not know whether it benefits from high rates or low rates but, again, because of the complexity of the averaging process, it is extremely difficult to see how one rate would have an impact, and then how that would necessarily flow through to compensation is very convoluted.36 Lord Turner, Chairman of the FSA, emphasised the difficulty of proving how far the traders had benefitted individually. While he said it wasn’t impossible, he noted that “That would be a very complicated thing to do, because you would have to work out what they would have put in when they did not put this in, and then you have to work out what that would have done to the average”.37 When asked whether the traders had been successful, Lord Turner told us that: 33 Financial Services Authority, Final Notice, 27 June 2012, para 164 34 HC (2012-13) 535, Q 78 35 Q 122 36 Q 1024 37 Qq 1110–1111 16 Fixing LIBOR: some preliminary findings The fact is that although it is very difficult to work out exactly what would have changed with the LIBOR rate if they had not been manipulating, you have to assume [...] that if someone had been induced to put in a higher figure than they otherwise would, LIBOR must have been at least some small bit higher, and you have to assume, as you say, that these traders were not entirely irrational, or that they believed that they were having an influence. Of course, the crucial issue here is that we are dealing in the derivatives market, with an environment in which minute movements in the LIBOR rate might have a very significant impact on very specific positions that they were holding at that time. That is somewhat different from, for instance, the consumer market, where single basis point movements would be unlikely to have a really material effect on, say, the cost of a mortgage.38 29. Other commentators believed that the actions of single submitting institutions could influence the overall rate. On 16 July 2012 Bloomberg carried a report showing how individual traders sought to do this. The Bloomberg report said, “By making a submission too high to be included in the average, a single lender can push a previously excluded rate back into the pack to send the average higher. By submitting a rate that falls too low to be included, the average can be nudged down as a previously excluded rate re-enters the pack.”39 Collusion with traders at other banks 30. More worryingly, the FSA found that this misconduct, on occasion, was not limited to Barclays and extended to other banks. The Final Notice emphasised the benefits of such collusion with other banks. It stated that: Where Barclays made submissions which took into account the requests of its own Derivatives Traders, or sought to influence the submissions of other banks, there was a risk that the published LIBOR and EURIBOR rates would be manipulated. Barclays could have benefited from this misconduct to the detriment of other market participants. Where Barclays acted in concert with other banks, the risk of manipulation increased materially.40 31. Since the enforcement procedures on other banks continue, it is difficult to assess how far there was collusion between banks, but in its Final Notice, the FSA indicated that: At least 12 of the US dollar LIBOR requests made to Barclays’ Submitters were made on behalf of external traders that had previously worked at Barclays and were now working at other banks (although those banks did not contribute US dollar LIBOR submissions).41 And that: 38 Q 1112 39 Bloomberg, Libor flaws allowed banks to rig rates without conspiracy, 16 July 2012 40 Financial Services Authority, Final Notice, 27 June 2012, para 11 41 Financial Services Authority, Final Notice, 27 June 2012, para 82 Fixing LIBOR: some preliminary findings 17 At least 20 of the EURIBOR requests made by the Derivatives Traders were made on behalf of traders at other banks that contributed EURIBOR rates. Barclays’ Derivatives Traders passed on the requests of these other traders to Barclays’ Submitters, even blind copying in the external traders to their emails in order to demonstrate they had done so. 42 The FSA also found that: Barclays’ Derivatives Traders attempted to influence the EURIBOR (and to a much lesser extent, US dollar LIBOR) submissions of other banks by making requests to external traders. One of the Derivatives Traders also embarked on co-ordinated strategies to align Barclays’ positions with traders at other banks and to influence the EURIBOR rates published by the EBF. Between February 2006 and October 2007, Barclays’ Derivatives Traders made at least 63 requests to external traders with the aim that those traders would pass on the requests for EURIBOR and US dollar LIBOR submissions to their banks’ submitters. 56 of those requests related to EURIBOR submissions. Five Derivatives Traders made the requests to external traders. 43 32. We asked witnesses what this behaviour meant about the culture of Barclays, and of the banking industry more widely. The Final Notice by the FSA paints a picture of a close-knit group of people collude to try to manipulate LIBOR. For instance, the following conversations are noted: Trader C requested low one month and three month US dollar LIBOR submissions at 10:52 am on 7 April 2006 (shortly before the submissions were due to be made); “If it’s not too late low 1m and 3m would be nice, but please feel free to say “no”... Coffees will be coming your way either way, just to say thank you for your help in the past few weeks”. A Submitter responded “Done…for you big boy”.44 on 26 October 2006, an external trader made a request for a lower three month US dollar LIBOR submission. The external trader stated in an email to Trader G at Barclays “If it comes in unchanged I’m a dead man”. Trader G responded that he would “have a chat”. Barclays’ submission on that day for three month US dollar LIBOR was half a basis point lower than the day before, rather than being unchanged. The external trader thanked Trader G for Barclays’ LIBOR submission later that day: “Dude. I owe you big time! Come over one day after work and I’m opening a bottle of Bollinger”. 45 Lord Turner said that actions over this period indicated a cultural weakness within Barclays. Referring to the period in which the rogue traders operated, he noted that: 42 Financial Services Authority, Final Notice, 27 June 2012, para 84 43 Financial Services Authority, Final Notice, 27 June 2012, paras 88–89 44 Financial Services Authority, Final Notice, 27 June 2012, para 65 45 Financial Services Authority, Final Notice, 27 June 2012, para 83 18 Fixing LIBOR: some preliminary findings Nevertheless, there does seem to have been a culture that allowed this to occur. One of the shocking things about this is that on some occasions, the derivatives trader is not asking the submitter to change his submission on the basis of a hidden phone call or a note that he believes is hidden, but by shouting it across the trading floor. That suggests something is deeply wrong with the culture that could possibly have allowed that to occur.46 33. Mr Diamond though was keen to emphasise that this phase of wrong-doing was limited to a small set of Barclays’ employees. He said that “It was 14 traders [...]. We have a couple of thousand traders.”47 A similar view was also expressed by Mr Agius, who when asked whether Barclays was in denial over the scale of the problem, replied: No, not in denial of the scale of it, because although it went on for a long period of time, it was undetected. It should have been detected and should never have happened in the first place—all of that is absolutely clear—but it was not endemic across the whole bank. It was isolated in one area that was under-monitored [...]. That does not excuse it.48 Lord Turner accepted that “I think it is probably the case that the total number of people identified in this investigation and others will end up as a relatively small number.”49 He did however also accept when questioned that some traders may not have been caught: Stewart Hosie: [...] In terms of the traders who have been caught, it was because they left an electronic trail. If they speak informally orally in the pub, outwith the recorded net, there could be many more. Is this the tip of an iceberg? Lord Turner: Almost by definition, I don’t know, because I only know what we are capable of finding out. I would be amazed if it is everything, precisely for the reasons you suggest. If people are acting in a way that leaves a legally identifiable trail, it would be very surprising if there are not other activities without a legally identifiable trail. We know in general that market abuse or manipulation of any category is incredibly difficult to spot, because often people are clever enough to do it in a verbal, off-the-record, off-the-legal-trail basis.50 On 2 July 2012, Barclays announced that it would undertake a review of its business practices.51 On 24 July 2012, following our hearings, Barclays announced the terms of reference of a review to be led by Anthony Salz, Executive Vice Chairman of Rothschild:52 46 Q 1094 47 Q 137 48 Q 668 49 Q 1094 50 Q 1095 51 Barclays PLC, Anthony Salz to lead independent business practices review, 24 July 2012 52 Barclays PLC, Anthony Salz to lead independent business practices review, 24 July 2012 Fixing LIBOR: some preliminary findings 19 The global review will assess the bank’s current values, principles and standards of operation and determine to what extent those need to change; test how well current decision-making processes incorporate the bank’s values, standards and principles and outline any changes required; and determine whether or not the appropriate training, development, incentives and disciplinary processes are in place.53 The opening words of the terms of reference of this are: “The culture of the banking industry overall, and that of Barclays within it, needs to evolve.54 Not only Barclays has recognised the need for a change in culture. Stephen Hester, Chief Executive of RBS, stated that “At RBS we have our share of problems to correct from the past and just as we are working hard at putting our financial weaknesses behind us, so too must we cement cultural change.”55 34. The actions that have so far been discovered of Barclays and other traders were disgraceful. As the FSA’s Final Notice states, the attempted manipulation of LIBOR “created the risk that the integrity of LIBOR and EURIBOR would be called into question and that confidence in or the stability of the UK financial system would be threatened”. This attempted manipulation of LIBOR should not be dismissed as being only the behaviour of a small group of rogue traders. There was something deeply wrong with the culture of Barclays. Such behaviour would only be possible if the management of the bank turned a blind eye to the culture of the trading floor. The incentives and control systems of Barclays were so defective that they incentivised traders to benefit their own book irrespective of the impact on shareholders and the bank’s overall performance. Now exposed, their actions are to the detriment of Barclays’ reputation and the reputation of the industry. The standards and culture of Barclays, and banking more widely, are in a poor state. Urgent reform, by both regulators and banks, is needed to prevent such misconduct flourishing. The failure of internal controls 35. We asked why this wrong-doing by traders had not been caught earlier. Although the Final Notice included references by traders to the need to keep their actions secret,56 other, more blatant, behaviour was also detected. For instance, the FSA report noted, and Lord Turner referred in oral evidence to, the fact that “At least one Derivatives Trader at Barclays would shout across the euro Swaps Desk to confirm that other traders had no conflicting preference prior to making a request to the Submitters”.57 36. Mr Diamond confirmed that desk supervisors would have known that this type of behaviour was wrong.58 He also confirmed that it was their responsibility to report such 53 Barclays PLC, Anthony Salz to lead independent business practices review, 24 July 2012 54 Barclays PLC, The Salz Review of Barclays Business Practices – Terms of Reference, 24 July 2012 55 Daily Mirror, 'You are right to be angry with banks, but none of us can afford to give up on them': Stephen Hester's message to readers on banking crisis, 3 July 2012 56 For example, Financial Services Authority, Final Notice, 27 June 2012, Para 93 57 Q 1094; Financial Services Authority, Final Notice, 27 June 2012, Para 54 58 Q 154 20 Fixing LIBOR: some preliminary findings behaviour to their supervisors and compliance, but that this had not happened.59 Mr Agius provided the following detail on the compliance function at Barclays following his appearance: • Compliance functions in the investment bank and across Barclays have dual reporting lines, both within the business and to the Group Head of Compliance. • The Group Head of Compliance reports to our Group General Counsel, who in turn reports directly to the Chief Executive. • The Chief Executive and Finance Director are the two executive directors on the Board. • The Group Head of Compliance provides regular Compliance reports to the Group Governance and Control Committee, the Board Audit Committee and the Executive Committee. • There was a failure within the Investment Bank Compliance team to escalate information about the LIBOR-related issues either within the business or to the Group Head of Compliance.60 Having needed “notice” for some of our questions when he appeared before us,61 and therefore having checked the facts, Mr Agius told us that Barclays had added a compliance presence on the trading floor during mid-2009.62 Mr Agius provided the following explanation as to why Barclays had not thought of LIBOR as a risk prior to the investigation: In any bank, as well as the people who do the business, you have people who control and manage what is called the compliance function. The compliance function is there to ensure that the bank acts at all times within the regulatory constraints under which it is due to operate. It is not a practical proposition that every single individual is monitored at every single minute of his or her working day. That is simply not practical. What happens is that compliance is constructed around areas where risk is perceived to lie, and the riskier the area of the bank or the activity, the greater the levels of compliance and oversight. For many years, the activities of the LIBOR market were seen to be low-risk because the passage of the LIBOR rate was very constant, the spreads were very narrow and very little happened. Separately, because of the way the LIBOR rate is struck—with 16 banks submitting, the top four taken off, the bottom four taken off and an average taken—the chances of anybody manipulating the rate successfully were deemed to be very low. As we heard yesterday from other testimony, as the credit crisis occurred, 59 Q 158 60 Letter from Marcus Agius to the Chairman of the Treasury Committee, 20 July 2012 61 Qq 799, 801–802 62 Letter from Marcus Agius to the Chairman of the Treasury Committee, 20 July 2012 Fixing LIBOR: some preliminary findings 21 the behaviour of LIBOR departed from its historic patterns and, evidently, that led to an opportunity for risk and for people to take advantage of that. We should have changed our compliance in recognition of that. We were behind the curve and that is most unfortunate, but it explains why these things were allowed to happen, why they were not detected and why more attention was not brought to our level at an earlier stage. It does not excuse any of it, but I seek to give an explanation as to what happened.63 37. However, in its Final Notice, the FSA noted that on 12 September 2007 an email from a manager raised questions with Barclays’ Compliance in relation to Barclays’ obligations and LIBOR setting.64 That email specifically referred to interest rate derivative contracts, and the Barclays’ manager stated that “Although there are contracts that reset everyday, Monday is particularly important as all of the 3 month futures contracts fix”.65 Despite this email, Compliance at Barclays failed to take any action. The FSA Final Notice recorded that: Compliance agreed to draft a policy and some procedures which would ensure that Barclays’ Submitters were not aware of the firm’s overall exposure to LIBOR. After considering the issue further, Compliance concluded there was no risk of the Submitters becoming aware of the firm’s overall exposure to LIBOR. Compliance considered at that time whether any information barriers between Barclays’ Submitters and any other area of the bank were required. Compliance concluded that no such information barriers were necessary, even though there was a potential conflict of interest between Barclays’ Submitters and its Derivatives Traders. However, Compliance did not query the reference to derivatives contracts in Manager E’s email on 12 September 2007. No questions were asked of Manager E or the Submitters in relation to this issue, no action was taken by Compliance and no systems and controls were put in place to deal with the potential conflict.66 38. The attempted manipulation of Barclays’ LIBOR submissions with the intention of personal gain continued for four years. It is shocking that it flourished for so long. Any system may fail for a short period, but compliance at Barclays was persistently ineffective. Even when Barclays’ compliance had indications that something was awry, it failed to take the opportunity to strengthen the bank’s controls. Nor was there any pressure from senior executives within Barclays to ensure that effective LIBOR controls were in place, as it was considered low-risk, in particular where LIBOR setters sat, with no presence of the compliance function. These are serious failures of governance within Barclays, for which the board is responsible. The compliance function within a bank is 63 Q 648 64 Financial Services Authority, Final Notice, 27 June 2012, Para 165 65 Financial Services Authority, Final Notice, 27 June 2012, Para 165 66 Financial Services Authority, Final Notice, 27 June 2012, Paras 166–167 22 Fixing LIBOR: some preliminary findings very important. If it is weak or ignored in the practices of the bank that is reflective of a poor culture which does not take seriously enough abiding by the rules essential to proper functioning of the bank and the wider financial system. The serious failings of the compliance function during the period under examination suggest there was this kind of culture at Barclays. 39. During this period of extremely weak compliance at Barclays, it was nonetheless subject to extensive regulatory oversight by the FSA. Despite the numerous ARROW visits that were conducted by the FSA during this period, we have seen no evidence that this weakness in compliance elaborated in the Final Notice was identified by the FSA in a timely manner, still less, dealt with. The FSA must report to this Committee on how it will alter its supervisory efforts to counter such weak compliance in future. Fixing LIBOR: some preliminary findings 23 3 Manipulation during the financial crisis Background 40. In 2007, significant strains began to appear within the inter-bank funding markets. Table 1, adapted from the March 2009 Turner Review, highlights the key issues faced by banks during this period. Table 1: Stages of the Crisis: 2006-2009 2006 – Summer 2007 Localised credit concerns Rising defaults in US subprime loans. Expectations of property prices fall. Summer – Autumn 2007 Initial crack in confidence and collapse of liquidity Failure of 2 large hedge funds. Spreads in inter-bank funding and other credit products rise sharply. Inter-bank funding for second tier banks dries up. Northern Rock faces retail run. Autumn 2007 – early Summer 2008 Accumulation of losses and continuation of liquidity strains Severe mark-to-market losses in trading books. Collapse of commercial paper markets. Funding strains in the secured financing market. Worries about liquidity of major institutions. Government-assisted rescue of Bear Stearns. Summer 2008 Intensification of losses and liquidity strains Mark-to-market losses and liquidity strains continue to escalate. Housing market problems recognised as widespread in UK, US and other countries, as house prices fall and supply of credit dries up. Funding problems of UK mortgage banks intensify. September 2008 Massive loss of confidence Bankruptcy of Lehmans breaks confidence that major institutions are too big to fail. Credit downgrade of AIG triggers rising collateral calls, requiring government rescue. Mix of credit problems, wholesale deposit runs and incipient retail deposit runs lead to collapse of Washington Mutual, Bradford & Bingley, and Icelandic banks. Almost total seizure of interbank money markets; major banks significantly reliant on central bank support. October 2008 Government recapitalisation, funding guarantees and central bank support Exceptional government measures to prevent collapse of major banks; explicit commitments that systemically important banks will not be allowed to fail. November 2008 ➔ Feedback loops between banking system and economy. Further government measures to offset feedback loop risk. Impaired bank ability to extend credit to real economy produces major globally synchronised economic downturn. Recession threatens further credit losses which might further impair bank capital. Asset Protection Scheme. Source: Adapted from Financial Services Authority, The Turner Review, March 2009, Box 1B, p27 41. In the face of these pressures in the inter-bank lending markets, Mr Tucker, emphasised the importance of LIBOR to the authorities. He explained that: [...] what is important from quite early in the crisis, from the summer of 2007 onwards, is that LIBOR became increasingly used as a summary statistic of what was going on in the market. I think there are two reasons. First of all, LIBOR diverged 24 Fixing LIBOR: some preliminary findings from the safe rate of interest in a material way for the first time in living memory. Secondly, we became aware as the weeks and months passed that less money market activity was going via the brokers, more was being done bilaterally. Those are circumstances where everybody has less information about what is going on, and in those circumstances you place greater weight on the indicator that is available every day, which was LIBOR. I think everybody rather slipped into the habit of using LIBOR as a kind of portmanteau term for money market conditions, bank funding conditions, actual submissions, the actual LIBOR fix, and actually I think that is going on today.67 42. The individual LIBOR submissions of the banks, rather than the aggregated headline LIBOR figure, were also becoming important markers of the health of individual banks. On 3 September 2007, Bloomberg published an article entitled “Barclays Takes a Money Market Beating”.68 This article highlighted Barclays’ high LIBOR fixing relative to other banks in the LIBOR panel, and posed the question “So what the hell is happening at Barclays and its Barclays Capital securities unit that is prompting its peers to charge it premium interest rates in the money market?”.69 43. This article would mark the start of a second phase of LIBOR manipulation by Barclays. In this phase, Barclays attempted to manipulate its LIBOR submissions to prevent it being singled out when compared to other banks in the LIBOR panel. The FSA’s Final Notice stated that “Senior management’s concerns in turn resulted in instructions being given by less senior managers to Barclays’ Submitters to reduce LIBOR submissions in order to avoid further negative media comment”.70 Mr Diamond confirmed that these senior management were from Barclays’ Group Treasury.71 The FSA’s Final Notice said that: Concerns about the media perception of high LIBOR submissions continued at intervals for the remainder of 2007 and throughout 2008. At times of particular market stress this resulted in instructions being given to Barclays’ LIBOR Submitters to reduce Barclays’ submissions such that they did not stand out too far from the submissions of other contributing banks. This was expressed by Manager D (in Barclays’ Group Treasury) as an instruction that Barclays should not “stick its head above the parapet” in terms of its LIBOR submissions.72 It should be noted Barclays is not alone. FSA investigations continue against seven other banks, including some non-British banks.73 67 Q 354 68 Bloomberg, Barclays Takes a Money-Market Beating: Mark Gilbert (Update1), 3 September 2007 69 Bloomberg, Barclays Takes a Money-Market Beating: Mark Gilbert (Update1), 3 September 2007 70 Financial Services Authority, Final Notice, 27 June 2012, Para 112 71 Qq 127, 129 72 Financial Services Authority, Final Notice, 27 June 2012, Para 115 73 Qq 1167–1168 Fixing LIBOR: some preliminary findings 25 Media and academic concern about LIBOR setting 44. Barclays’ continuing manipulation of its own LIBOR setting took place against a background of media concern about the LIBOR setting process during the crisis. On 25 September 2007, an article by Gillian Tett in the Financial Times entitled “Libor’s value called into question” noted the complaint of the Treasurer of one of the largest City banks that “The Libor rates are a bit of a fiction. The number on the screen doesn’t always match what we see now”.74 45. On 16 April 2008, the Wall Street Journal published an article called “Bankers cast doubt on Key Rate amid crisis” by Carrick Mollenkamp. This noted that: The concern: Some banks don’t want to report the high rates they’re paying for short-term loans because they don’t want to tip off the market that they’re desperate for cash. The Libor system depends on banks to tell the truth about their borrowing rates.75 However, the article also noted that there was no specific evidence to suggest false submissions were occurring.76 On 29 May 2008, another Wall Street Journal article, “Study casts doubt on key rate”, compared LIBOR submissions with the market for credit default swaps.77 It provided the following analysis: In order to assess the borrowing rates reported by the 16 banks, the Journal crunched numbers from another market that provides a window into the financial health of banks: the default-insurance market. Until recently, the cost of insuring against banks defaulting on their debts moved largely in tandem with Libor—both rose when the market thought banks were in trouble. But beginning in late January [2008], as fears grew about possible bank failures, the two measures began to diverge, with reported Libor rates failing to reflect rising default-insurance costs, the Journal analysis shows. The gap between the two measures was wider for Citigroup, Germany’s WestLB, the United Kingdom’s HBOS, J.P. Morgan Chase & Co. and Switzerland’s UBS than for the other 11 banks. One possible explanation for the gap is that banks understated their borrowing rates.78 74 Financial Times, Libor’s value is called into question, by Gillian Tett, 25 September 2007 75 Wall Street Journal, Bankers Cast Doubt On Key Rate Amid Crisis by Carrick Mollenkamp, 16 April 2008 76 Wall Street Journal, Bankers Cast Doubt On Key Rate Amid Crisis by Carrick Mollenkamp, 16 April 2008 77 Wall Street Journal, Study Casts Doubt on Key Rate, By CARRICK MOLLENKAMP and MARK WHITEHOUSE, 29 May 2008 78 Wall Street Journal, Study Casts Doubt on Key Rate, By CARRICK MOLLENKAMP and MARK WHITEHOUSE, 29 May 2008 26 Fixing LIBOR: some preliminary findings The article noted though that “The Journal’s analysis doesn’t prove that banks are lying or manipulating Libor”.79 On the same day, Bloomberg published an article, “Libor Banks Misstated Rates, Bond at Barclays Says”, which started as follows: Banks routinely misstated borrowing costs to the British Bankers’ Association to avoid the perception they faced difficulty raising funds as credit markets seized up, said Tim Bond, a strategist at Barclays Capital. “The rates the banks were posting to the BBA became a little bit divorced from reality,” Bond, head of asset-allocation research in London, said in a Bloomberg Television interview. “We had one week in September where our treasurer, who takes his responsibilities pretty seriously, said: ‘right, I’ve had enough of this, I’m going to quote the right rates.’ All we got for our pains was a series of media articles saying that we were having difficulty financing.”80 46. It was not only in the media where discussion of the potential for manipulation of LIBOR was occurring, as academics and international authorities also explored the weakness in the LIBOR setting process. A paper by Jacob Gyntelberg and Philip Wooldridge at the Bank for International Settlements (BIS) in the March 2008 BIS Quarterly Review noted that banks had a reason to misquote during funding crises: However, transparency raises questions about the information signalled by contributing banks through their quotes. There may be circumstances in which contributing banks deliberately choose to disclose biased quotes. If there is uncertainty about the liquidity position of a contributing bank, the bank will be wary of revealing any information that might add to this uncertainty for fear of increasing its borrowing costs.81 However, the BIS paper played down the possibility that there was fixing of the LIBOR submissions at work: In the US dollar market, the widening of Sibor and H.15 spreads over Libor is consistent with signalling by Libor contributor banks. However, many of the banks on the US dollar Libor panel are also on the euro Libor panel, and there are no signs that signalling distorted the latter fixing.82 Meanwhile, a working paper entitled “LIBOR Manipulation?” from August 2008, and referencing the Wall Street Journal articles, noted that: 79 Wall Street Journal, Study Casts Doubt on Key Rate, By CARRICK MOLLENKAMP and MARK WHITEHOUSE, 29 May 2008 80 Bloomberg, Libor Banks Misstated Rates, Bond at Barclays Says (Update2), By Gavin Finch and Elliott Gotkine ,May 29, 2008 81 Bank for International Settlements, Interbank rate fixings during the recent turmoil , Jacob Gyntelberg and Philip Wooldridge , March 2008 BIS Quarterly Review ,p 65 82 Bank for International Settlements, Interbank rate fixings during the recent turmoil , Jacob Gyntelberg and Philip Wooldridge , March 2008 BIS Quarterly Review ,p 70 Fixing LIBOR: some preliminary findings 27 While statistical methods alone do not prove that manipulation has occurred in a particular market, some questionable patterns do exist with respect to the banks’ daily Libor quotes. Our analyses of these apparent anomalies within the individual quotes suggest that the evidence is inconsistent with an effective manipulation of Libor. Nevertheless, the analyses presented in this study demonstrate that distinct non-random patterns of reported borrowing costs did exist during distinct periods of time, patterns that go beyond the findings that were originally reported by the Journal. In particular, for the period ending on August 8, 2009, the intraday variance of individual quotes is not statistically different from zero, and the banks deciding group for the Libor includes almost the entirety of the sixteen banks for a period of over seven months.83 In other words, the statistics did not show that manipulation of LIBOR was successful. But they did show that in several episodes LIBOR submissions were not behaving as they had when the market was functioning—they were very steady from day to day, and the quotes from different banks were very close together. This could readily be interpreted as the consequence of an attempt to make up a number that had to be available but could not be observed. The role of the authorities Concerns about LIBOR 47. Given the existence of the concerns over the LIBOR setting process, both in the media and academe, we asked why the regulators had not spotted the manipulation of submissions by Barclays earlier. The Governor of the Bank of England made the following observations: I did not say that fraud was restricted just to the rogue traders. It was also true that there was deliberate misrepresentation by Barclays in the submissions. On that, we had no evidence of wrongdoing. None was supplied to us. The evidence you cite— there were plenty of academic articles that looked in it and said that they could not see in the data any evidence of manipulation. I say again, if you go back to the inquiries that the regulators made, it took them three years to work out and find the evidence of wrongdoing. If it was so obvious and all in the newspapers and everyone was talking about it, one might ask why everybody did not say, “This is wrong.” The reason was that it wasn’t wrongdoing. It was a market that was dysfunctional and was not operating in any effective way.84 Paul Tucker noted that: 83 Abrantes-Metz, Rosa M., Kraten, Michael, Metz, Albert D. and Seow, Gim, LIBOR Manipulation? (August 4, 2008). Available at SSRN: http://ssrn.com/abstract=1201389 or http://dx.doi.org/10.2139/ssrn.1201389 84 HC (2012-13) 535, Q 112 28 Fixing LIBOR: some preliminary findings We didn’t see it. I think there were other studies, including one by the BIS, although I think I am aware of this after the fact, that didn’t conclude that it was a problem. Maybe we were just too focused on the financial crisis.85 The Sterling Money Markets Liaison Group 48. On 15 November 2007, the Bank of England hosted a meeting of the Sterling Money Markets Liaison Group. Present at the meeting were Paul Tucker as Chairman, several other representatives of the Bank of England, Douglas Hull from the FSA, as well as various representatives of banks, including Simon Chatterton as an alternate for Barclays. The minutes of that meeting record that: Several group members thought that Libor fixings had been lower than actual traded interbank rates through the period of stress. Libor indices needed to be of the highest quality given their important role as a benchmark for corporate lending and hedging, and as a reference rate for derivatives contracts. John Ewan (BBA) outlined the quality control and safeguard measures used by the BBA to ensure the quality of Libor. Dispersion between panel banks’ submissions had increased during August but had since fallen back, in part reflecting clarification from the BBA on Libor definitions.86 49. In his evidence to us, Mr Tucker claimed that he had not taken the concerns expressed at the November 2007 Sterling Money Markets Liaison Group meeting as signs of dishonesty, but rather as a signal of dysfunction in the market. He explained that: [...] less [inter-bank lending] was going through the brokers, more was being done bilaterally, people did not know anything very much about each other’s transactions at all, and so I heard this as, “They don’t know what each other are doing.” It was questioning the judgments that the different parties were making, or that they were relying on bilateral private transactions—I did not read this as cheating. And when John Ewan responded there was not then a great outcry in the room. People did not get in touch afterwards and say, “You’ve missed the point here.”87 In Mr Tucker’s supplementary evidence to the Committee, he provided more explanation as to why he did not believe the discussions noted in the minutes from the 15 November 2007 meeting indicated dishonesty: The BBA’s rules do not require LIBOR submissions to be based on actual transactions, but require panel banks to answer the following question: “At what rate could you borrow funds, were you to do so by asking for and then accepting interbank offers in a reasonable market size just prior to 11am.” 85 Q 460 86 Bank of England, BANK OF ENGLAND STERLING MONEY MARKETS LIAISON GROUP, Thursday 15 November 2007 Bank of England, MINUTES, Paras 2.1–2.2 87 Q 433 Fixing LIBOR: some preliminary findings 29 The BBA provisions go on: “Therefore, submissions are based upon the lowest perceived rate at which it could go into the London interbank market and obtain funding in reasonable market size, for a given maturity and currency. BBA LIBOR is not necessarily based on actual transactions ...”. Bearing in mind the definition of LIBOR and the illiquid, volatile and sometimes dysfunctional conditions generally prevailing in the money markets after August 2007, there might legitimately be a difference between actual transactions in the market and an individual bank’s LIBOR submission because: (i) There was uncertainty as to what constituted “reasonable size” and increased scope for different panel banks legitimately to make different judgements on this point; (ii) Given the sporadic nature of market liquidity in this period, there might be a significant difference between the rate at which a bank could borrow at reasonable size at 11.00 am. and the rate at which it could borrow at other times of the day, or its average borrowing costs over the course of the day; (iii) Banks entered into fewer, more sporadic and on average smaller interbank transactions, particularly at longer maturities. They therefore had to rely more on judgement in formulating their LIBOR submissions than pre-crisis, and market conditions made the exercise of that judgement increasingly difficult; (iv) There was less transparency of the interbank market, in all likelihood because of reduced activity at longer maturities and more bilateral as opposed to brokered transactions.88 The Governor of the Bank of England also emphasised that: If you go back to the money markets liaison group meeting, the regulator and the BBA were present at the meeting. The minutes were published on the website. No journalist interpreted those remarks as, “Gosh, we have a smoking gun of wrongdoing.” The regulator did not look at it and say, “This is wrongdoing.” There was enormous concern at the time about what the submissions of LIBOR actually meant in circumstances when the market was dysfunctional, and indeed I discussed it with this very Committee.89 Following our hearing, Lord Turner wrote to the Chairman of the Treasury Committee, and noted the preliminary findings of the FSA that: In relation to any information which flowed to us from the Bank of England, we are aware that a member of our staff attended the Bank's Sterling Money Markets Liaison Group on November 15th 2007. We are investigating whether there was any 88 Supplementary memorandum to the Treasury Committee by Paul Tucker, 16 July 2012 89 HC (2012–2013) 535, Q 57 30 Fixing LIBOR: some preliminary findings report of that meeting circulated within the FSA which might have raised concerns, but we are not currently aware that that is the case.90 The US authorities 50. On 13 July 2012, the Federal Reserve Bank of New York released copies of transcripts of calls its analysts had had with Barclays staff, as part of a release to Congress.91 One of those transcripts, of a call between a Barclays staff member, and Fabiola Ravazzolo (FR), an analyst in the markets group of the Federal Reserve Bank of New York on 11 April 2008 contained a seeming admission of dishonesty at Barclays: [Unknown Barclays staff member]: We were putting in where we really thought we would be able to borrow cash in the interbank market and it was FR: Mm hmm. [Unknown Barclays staff member]: Above where everyone else was publishing rates. FR: Mm hmm. [Unknown Barclays staff member]: And the next thing we knew, there was um, an article in the Financial Times, charting our LIBOR contributions and comparing it with other banks and inferring that this meant that we had a problem raising cash in the interbank market. FR: Yeah. [Unknown Barclays staff member]: And um, our share price went down. FR: Yes. [Unknown Barclays staff member]: So it’s never supposed to be the prerogative of a, a money market dealer to affect their company share value. FR: Okay. [Unknown Barclays staff member]: And so we just fit in with the rest of the crowd, if you like. FR: Okay. [Unknown Barclays staff member]: So, we know that we’re not posting um, an honest LIBOR. FR: Okay. 90 Letter from Lord Turner to the Chairman of the Treasury Select Committee, 24 July 2012 91 Federal Reserve Bank of New York, New York Fed Responds to Congressional Request for Information on Barclays - LIBOR Matter, July 13, 2012 Fixing LIBOR: some preliminary findings 31 [Unknown Barclays staff member]: And yet and yet we are doing it, because, um, if we didn’t do it FR: Mm hmm. [Unknown Barclays staff member]: It draws, um, unwanted attention on ourselves.92 The release by the Federal Reserve Bank of New York recorded that “Immediately following this call [noted above], the analyst notified senior management in the Markets Group that a contact at Barclays had stated that underreporting of LIBOR was prevalent in the market, and had occurred at Barclays”.93 Between the 4–5 May 2008, the Governor of the Bank of England and Timothy Geithner, at the time President of the Federal Reserve Bank of New York, had a conversation at Basel about the operation of LIBOR.94 Following discussions with the BBA, on 1 June 2008 Timothy Geithner sent an email to the Governor of the Bank of England.95 The email contained a memorandum entitled “Recommendations for Enhancing the Credibility of LIBOR”.96 The memorandum contained the following recommendations: 1. Strengthen governance and establish a credible reporting procedure To improve the integrity and transparency of the rate-setting process, we recommend the BBA work with LIBOR panel banks to establish and publish best practices for calculating and reporting rates, including procedures designed to prevent accidental or deliberate misreporting. The BBA could require that a reporting bank’s internal and external auditors confirm adherence to these best practices and attest to the accuracy of banks’ LIBOR rates. To further enhance perceptions of the BBA as an objective intermediary in the ratesetting process, we recommend greater transparency with respect to the financial relationships between the BBA and the panel banks, and around the BBA's financial interests in LIBOR. [...] 6. Eliminate incentive to misreport If the combination of best practices and audit recommendations in (1) above seems unlikely to be sufficiently effective in ensuring accurate reporting, a complimentary approach might be to adopt the following process for collecting, calculating, and 92 Federal Reserve Bank of New York, New York Fed Responds to Congressional Request for Information on Barclays - LIBOR Matter, July 13, 2012 93 Federal Reserve Bank of New York, New York Fed Responds to Congressional Request for Information on Barclays - LIBOR Matter, July 13, 2012 94 Bank of England, Timeline of Bank/Federal Reserve/BBA communications about BBA Libor Review in 2008, 20 July 2012 95 Federal Reserve Bank of New York, New York Fed Responds to Congressional Request for Information on Barclays - LIBOR Matter, July 13, 2012 96 Federal Reserve Bank of New York, New York Fed Responds to Congressional Request for Information on Barclays - LIBOR Matter, July 13, 2012 32 Fixing LIBOR: some preliminary findings publishing LIBOR rates. The BBA could collect quotes from all members of the expanded panel, and then randomly select a subset of 16 banks from which the trimmed mean would be calculated. The names and quotes for the 8 banks whose rates are averaged to calculate the LIBOR fixing would be published. The banks whose reports fall above or below the midrange would not be publicly identified, nor would the level of their outlying rates. This random sampling from an expanded panel would lessen the likelihood that the market would draw a negative inference regarding a particular bank's continued absence from the list of published quotes.97 The Governor was keen to emphasise that: I solicited it [the note described above], which is the first part. I spoke to Tim Geithner in Basel a few weeks before. After that, I think it was on 19 May, his deputy, Bill Dudley, telephoned Paul Tucker and said that Tim Geithner wanted some advice on feeding views to the BBA, who are responsible for LIBOR. Should he write to the BBA, copied to me? Or should he write to me, copied to the BBA? Whatever. I sent a message back through Paul saying, “Write to me. We will look at your letter, and if we agree with it, we will endorse it and send it on to the BBA.” So we solicited that e-mail, which arrived late one evening when I was in Frankfurt. I sent a message back saying that staff should give a view on it. I got that the next evening when I was back from Frankfurt, and the next day we wrote to the BBA, forwarding the e-mail memo from the New York Fed, saying that we wanted them to take account of this in their forthcoming consultation.98 51. We discussed this memorandum, and the Bank of England’s response, with both the Governor of the Bank of England and Paul Tucker. We also requested further information on any Bank of England staff briefing about this note. The Governor of the Bank of England strongly denied that the Bank had received evidence of wrong-doing from the Federal Reserve Bank of New York via the memorandum. He noted that: [...] we have been through all our records. There is no evidence of wrongdoing or reporting of wrongdoing to the Bank. The memo from Mr Geithner that you referred to was, if you like, a constitution for how LIBOR should operate. It already had a set of operations. This was a self-reporting scheme. Any self-reporting scheme has to have a provision about deliberate misreporting. That is not the same as saying that they believe that there was deliberate misreporting.99 52. Since Mr Tucker had had conversations with the New York Federal Reserve, we questioned him about whether these contacts, and the paper from the Federal Reserve Bank of New York, had elicited any evidence of wrong-doing. He strongly denied that it had: 97 FRBNY Markets and Research and Statistics Groups, Recommendations for Enhancing the Credibility of LIBOR, May 27, 2008. Part of Federal Reserve Bank of New York, New York Fed Responds to Congressional Request for Information on Barclays - LIBOR Matter, July 13, 2012 98 HC (2012–13) 535, Q 42 99 HC (2012–13) 535, Q 55 Fixing LIBOR: some preliminary findings 33 Michael Fallon: Mr Tucker, last week when we asked you specifically about LIBOR integrity, you said, “We thought the underlying markets were dysfunctional, sporadically illiquid, much less reliable than normal, but we did not have suspicions of dishonesty”. Yet the paper from the New York Fed recommends work with LIBOR banks to establish procedures designed to prevent deliberate misreporting. There is a whole section in this note on the need to “eliminate incentives to misreport”. They were clearly concerned about misreporting. Did you really not have any suspicion of dishonesty? Paul Tucker: In my discussions with Bill Dudley of the New York Fed, it was not framed in that way; it was framed as eroding confidence and credibility, particularly in dollar LIBOR, which was being set lower during London hours than it was subsequently trading in New York. We were very concerned about this piece of global infrastructure losing credibility. As the Governor said, we urged the BBA to review everything, particularly its governance, and to do so on a global basis. No, the note did not set off dishonesty alarm bells. Michael Fallon: The penny didn’t drop that the phrase “deliberate misreporting” might imply some degree of dishonesty? Paul Tucker: No, it didn’t. Michael Fallon: Why not? What did you think “deliberate misreporting” was? Paul Tucker: I am not sure I addressed my mind to it. Michael Fallon: You didn’t address your mind to the note from the New York Fed that we are discussing? Paul Tucker: We were very focused on ensuring that there was a completely openended review of the way that LIBOR was run and constructed, and of some technical issues, as well. We were less interested in the technical issues than in the overall governance of the process. I think that we acted pretty firmly to ensure that that review occurred. The annual review that the BBA published was on which banks would be on the LIBOR panel, and we had made it clear to the BBA that that regular review of the LIBOR panel would not be enough. Michael Fallon: This is not about credibility. Is “deliberate misreporting” dishonest? Paul Tucker: Well, it turns out with hindsight that, yes, it was, but it did not set alarm bells ringing at the time, I am afraid. Michael Fallon: But how could “deliberate misreporting” be honest? Paul Tucker: I understand the question, Mr Fallon, but all I can say is that it did not set alarm bells ringing. We were very concerned about the credibility of LIBOR as a piece of global infrastructure and we acted. 34 Fixing LIBOR: some preliminary findings Michael Fallon: But you must have realised at the time that there were considerable incentives for banks to underreport and to protect their positions, given what was happening to Barclays. Paul Tucker: As I said last week, LIBOR seemed to move in a broadly sensible direction, given the strains in the market. The period that we are discussing now is one where sterling LIBOR and the LIBOR spread were rising. There were rumours about HBOS and about it approaching us for funds. We were very much focused on sterling LIBOR because we are the sterling lender of last resort. There was then this emerging concern in particular about dollar LIBOR. We were very concerned about the loss of credibility, but we did not seize on it in terms of dishonesty.100 The release of further information from the Bank of England following our oral evidence hearings contained a Bank of England staff note sent to Mr Tucker on 22 May 2008. That note contained the following passages: Fixing process, perception problem 5 The Libor problem has two fundamental sources: the nature of the fixing process (a survey not a traded rate), and its transformation from a measure of London money market conditions to the basis of a global derivatives market. 6 There is a long standing perception that Libor by virtue of the manner in which it is set is open to distortion: panel banks have no obligation to trade or to have traded at the rates that they submit, so it is at least plausible that these are influenced by commercial incentives. In normal times these might only have had a marginal effect, and could bias Libor different ways at different times. But this perception does mean that confidence in Libor is fragile. And in the extreme conditions of the last eight months banks have been subject to the more powerful incentive of avoiding stigma from being seen to submit high rates reflective of what they are actually paying. 7 If stigma does influence submitted rates, it would tend to bias Libor downwards and/or narrow the dispersion of individual, submissions. But it is not clear why the effect would be bigger in dollars, so this does not seem to be a good explanation for the alleged downward bias in $ Libor. The release to this Committee by the Bank of England included an email chain between the (unknown) author of the note above, and Mr Tucker. Following further questions from Mr Tucker, the author made the following comments: We’re saying that the fact there is a fuss is a problem, because of (a) the effect on confidence and (b) feedback from the fuss into real volatility in the fixing (after the April 16 BBA warning). But it is poor governance that allows there to be a fuss, hence governance needs fixing. We also say that the difference between Libor and other empirical measures (H15, swaps) is _not_ itself evidence that Libor is distorted. (The 100 HC (2012–13) 535 , Qq 45–51 Fixing LIBOR: some preliminary findings 35 Fed will know this - our argument is just a small extension of that in the JPM piece.) So the empirical evidence does not as yet justify reforming the _definition_ of Libor.101 Lord Turner, in a letter to the Chairman of the Treasury Committee in July 2012, made the following comments about contacts between the FSA and the Federal Reserve Bank of New York: In addition it might be helpful to outline our current state of knowledge in relation to any information that passed from the Federal Reserve to the FSA. In his testimony to Congress on 17 July 2012, when referring to a conversation between a Barclays employee and a Federal Reserve employee on 11 April 2008, Chairman Bernanke stated: ‘The Fed, after receiving this information...informed all the relevant authorities in the UK and the US. The NY Fed also communicated with the FSA and the Bank of England in the UK.’ We have since been in touch with the Federal Reserve to clarify whether they did indeed send this information to us. They have now confirmed that they do not have any evidence to suggest that the communication took place. Nor do we currently have any evidence of such communication in FSA records. We have also asked the Federal Reserve to let us know whether they have any evidence to suggest that the email from Tim Geithner to Mervyn King on 1st June 2008 was copied to the FSA. They have confirmed that they have no indication that it was. It remains of course possible that our Internal Audit Review will subsequently find examples of communications between the Federal Reserve and the FSA of which both we and the Federal Reserve are currently unaware.102 The British Bankers Association review 53. Much of the contact between the Federal Reserve Bank of New York and the Bank of England centred on the memorandum described above, and then the British Bankers Association (BBA) review of LIBOR setting. This review provided an opportunity for the BBA, and the authorities, to reform the LIBOR setting process. The information received by the Treasury Committee after our oral evidence hearings with the Bank of England provides an insight into how the authorities acted on their concerns over LIBOR setting. The British Bankers Association has also provided the Committee with additional information. The Bank of England’s correspondence contains the following short timeline of its efforts, alongside those of the Federal Reserve Bank of New York (FRBNY): 101 Bank of England, News Release, Further information and correspondence in relation to the BBA Libor Review in 2008, 20 July 2012 102 Letter from Lord Turner to the Chairman of the Treasury Select Committee, 24 July 2012 36 Fixing LIBOR: some preliminary findings • From May 2008, the Bank of England encourages the BBA to conduct a global review of Libor and banks to engage with the review at a sufficiently senior level. It also begins to discuss these issues with the FRBNY. • The Bank considers the points in the Geithner memorandum and ensures that those points are taken on by the BBA. • The Bank and the Federal Reserve work closely together behind the scenes to influence the consultation paper issued by the BBA on 10 June 2008. • The Bank also continues to work on influencing the outcomes after the consultation paper is published until the BBA publishes its final report on 18 December 2008.103 54. The additional evidence from the Bank of England provided a picture of an institution that took a keen interest in what the BBA review might achieve. An early BBA announcement on 30 May 2008 was met by the following comment from the Governor to Bank staff: “This seems wholly inadequate. What should we do?”104 After the Bank had passed on Mr Geithner’s memorandum to the BBA, the Bank engaged with the BBA on various drafts of the BBA consultation documents. 55. As the consultation continued, another concern developed at the authorities. They were keen to ensure that they did not appear to endorse the BBA’s proposals and appeared to wish to maintain their distance. For example, on 5 June 2008, an email from Michael Cross at the Bank of England to Alex Merriman at the BBA contained the following comment: On the Bank’s name, we have a clear line that it should not be used. I understand that the FSA and the Federal Reserve have the same position. Neither can we accept “relevant central banks...etc”. That will obviously be taken as implying our endorsement of the proposals you make. Hence our suggestion that you refer to “all interested parties”, as we and I am sure the far wider community with an interest in Libor would of course be happy to discuss your ideas on the basis of this paper.105 A paper on LIBOR by Michael Cross on 26 June 2008 noted that: We do not think that central banks should be formally involved in the LIBOR panels and processes, but we do think we should maintain a watching brief. We know the Federal Reserve and the Swiss National Bank wish, like us, to engage with the BBA on its review.106 103 Bank of England, News Release, Further information and correspondence in relation to the BBA Libor Review in 2008, 20 July 2012 104 Bank of England, News Release, Further information and correspondence in relation to the BBA Libor Review in 2008, 20 July 2012 105 Bank of England, News Release, Further information and correspondence in relation to the BBA Libor Review in 2008, 20 July 2012 106 Bank of England, News Release, Further information and correspondence in relation to the BBA Libor Review in 2008, 20 July 2012 Fixing LIBOR: some preliminary findings 37 The documents show that the Governor of the Bank of England responded on 2 July 2008 that he was “broadly content with the approach” described in the 26 June 2008 note above.107 He also said though that he “would like Mr Tucker to meet with Angela Knight to impress on her the need for greater energy in [the] BBA’s response and to make clear that [the Bank] would not stand in the way of alternative market initiatives to provide alternatives to LIBOR”.108 A letter from the Bank to the Treasury Committee, sent on 23 July 2012, summarised the position as follows: With regard to the Bank’s involvement in the work undertaken by the BBA in 2008 on the scrutiny and governance of the Libor fixing process, the Bank’s preferred approach was (and is) for there to be a gradual move away from systems based on self-reporting. And the Bank, having no regulatory authority, was not prepared to lend its imprimatur to a system that it was not able to control or enforce. As can be seen from this note and the papers disclosed on Friday, the BBA did want to use the Bank’s name to bolster confidence in Libor.109 When asked whether he thought that the BBA had done a “good job”, the Governor of the Bank of England told us that “I think they had to be nudged to get into the right direction, but, once they had been nudged in May 2008, they did work very hard to make a success of the consultation.”110 56. In a letter to the Chairman of the Treasury Committee following our evidence hearings, Lord Turner outlined the FSA staff’s knowledge at the time of the BBA review: We have identified, however, that some of our Markets Division staff most directly involved in inputting to the BBA LIBOR Review during May/June 2008 were sufficiently aware of market concerns of possible divergence between some LIBOR submissions and the actual cost of available funding that they identified this as a crucial issue which needed to be addressed by the Review. There is for instance, in the documents released last week by the Bank of England, an email from one of our staff to the BBA noting that the BBA should examine the ‘Scrutiny of Submissions’ since ‘the rates submitted must represent the levels the panellists actually can fund.’ This point was also made by the relevant staff in a memo to the FSA’s then Managing Director, Wholesale, which described the key points we were inputting to the LIBOR review.111 57. It should be noted that on 25 April 2008, Angela Knight is quoted as telling a meeting of senior UK bankers, as well as representatives of the Bank of England (including the Deputy Governor at the time, Sir John Gieve) that “Longer term, [she] thought it would be 107 Bank of England, News Release, Further information and correspondence in relation to the BBA Libor Review in 2008, 20 July 2012 108 Bank of England, News Release, Further information and correspondence in relation to the BBA Libor Review in 2008, 20 July 2012 109 Letter from the assistant private secretary to the Governor of the Bank of England to the Clerk of the Treasury Committee, 23 July 2012 110 HC (2012–13) 535 , Q 90 111 Letter from Lord Turner to the Chairman of the Treasury Select Committee, 24 July 2012 38 Fixing LIBOR: some preliminary findings necessary to explore whether a trade association was best placed to continue to provide what represented a key piece of market infrastructure.”112 Barclays’ contact with the regulators 58. We have seen already that the New York Federal Reserve Bank received direct confirmation from a Barclays source that manipulation of its submissions was occurring. Barclays’ discussions with UK regulators appear to have been less clear. The FSA’s final notice concluded that: Barclays did raise concerns externally about the LIBOR submissions of other banks (which Barclays perceived to be understated) and on occasion referred to its own approach to submitting LIBOR. However, these comments did not fully explain Barclays’ approach and were inconsistent.113 Barclays provided this Committee with a timeline of contacts with the FSA, the BBA, the Bank of England and the US Federal Reserve.114 Lord Turner defended the FSA’s response to these contacts as follows: Well, as I said earlier, Barclays had very usefully identified the 13 instances between September ’07 and October 2008, where they feel that in some way they contacted the regulator—the FSA. The three of those which in the judgment of enforcement and, so far, in my judgment, looking at the file, were the clearest or closest to being clearest in suggesting that something was going on are described in the [FSA’s] final notice. They are described in paragraphs 128 to 130, 131 and 172 to 174. What two of those illustrate is that Barclays were actually sort of saying some elliptic things that implied that some other people might not be playing the game, but behind that they themselves were saying, “We’d better not tell the FSA about it”, and that is set out in the final notice. However, when I looked at one of them—paragraph 131—somebody said, “We’re being clean in principle, but we’re not being clean clean.” The question is why didn’t somebody put up a red flag? Well, the answer is this occurs as a comment among lots of comments in a large conversation about liquidity conditions in the marketplace. It occurs at a relatively junior level, and at that level somebody does not say, “This is a red flag that I should put up the management chain.” So within the FSA at that time, I can find no evidence that there were concerns noted at a senior management level or, for instance, discussed at the ExCo level. Now, in a perfect world, yes, those would have been spotted. But I return to the fact that there was simply a mindset that if there were problems here, it was for the BBA to solve them. Now, maybe that is a part of the way the world then was—the assumptions 112 Bank of England, BANK / BBA MEETING, 25 April 2008 113 Financial Services Authority, Final Notice, 27 June 2012, para 145 114 Barclays, Supplementary information regarding Barclays settlement with the Authorities in respect of their investigations into the submission of various interbank offered rates (Amended), 3 July 2012 Fixing LIBOR: some preliminary findings 39 people then had—but that was the assumption that people were making at that time.115 Lord Turner has informed us that the Internal Audit Department of the FSA is now undertaking a review of how the FSA dealt with the contacts about LIBOR.116 We discuss the Bank of England’s contact with Barclays over LIBOR, and particularly the conversation between Mr Diamond and Mr Tucker, in the next section of this Report. The role of the Barclays board 59. We have seen that the crisis in 2007 led to a close examination of the LIBOR submissions by the media, markets, and regulators. We questioned Barclays as to why, given both Barclays’ submissions to the authorities that LIBOR submissions were being manipulated, its own board did not question Barclays’ LIBOR submissions: Mr Love: [...] Mr Diamond, in his evidence to us, told us that he was continuously trying to alert others in important positions to the fact that other banks were manipulating LIBOR and that was the occasion for weakness on behalf of Barclays. Did it never occur to people at Barclays, particularly the board of directors, that if that were true—that banks were manipulating LIBOR—that would apply just as much, perhaps even more, to Barclays because it was an outlier in this regard? Did that never occur to the board? Were you being naïve in not thinking that that might be the case? Marcus Agius: The concern that we had was not so much about the actions of LIBOR as such, because that was indicative of the underlying situation. The concern we had was that, because our submissions were high, people might falsely or incorrectly conclude that we were having more trouble funding than we actually were. And again, to put this into context, anybody who was not on the bridge of a bank during the financial crisis—and many others besides—who says it was not terrifying was not there. These were very difficult times and we were very nervous that we may be misinterpreted by the market as to our financial strength. We monitored it—and I know I did not, because it is not my job—and I know from many conversations I had with John Varley, with Chris Lucas and other people inside the bank that we were watching the funding markets like a hawk, as we should have done. Mr Love: Let me just take those facts you have just said: you were watching the markets like a hawk, and you were terribly concerned about the level of turbulence— and we do understand that, as it was a significant part of the evidence that we received yesterday. Did it not occur to anyone that one of the ways in which you could ease the situation for Barclays in that particular context was by manipulating LIBOR submissions on— 115 Q 1129 116 Q 1087 40 Fixing LIBOR: some preliminary findings Marcus Agius: That was not a consideration. Mr Love: I am not suggesting for a moment that you thought this was true, but you may well have had a conversation that went, “This could be possible. Can we make sure that we are submitting accurate results to LIBOR and the BBA?” Marcus Agius: As I said, our greater concern was what was actually happening rather than the technicalities of LIBOR submissions.117 Conclusions on LIBOR submissions during the financial crisis 60. Barclays has suggested that there were numerous contacts between itself and the authorities over LIBOR during this period. The clearest message appears to have been given by Barclays to the Federal Reserve Bank of New York, rather than to the UK authorities. Lord Turner described some of Barclays’ contact with the FSA as “elliptic”. We have found little evidence that Barclays provided the UK authorities with a clear signal about dishonesty at other firms, or its own. We await the outcome of the other regulatory investigations to see whether other firms provided such a signal, were equally elliptical or even silent on this problem. The timeline of contacts between Barclays and regulators provided to the committee by Barclays is not, of itself, evidence of a proactive approach on trying to report irregularities in the setting of LIBOR rates. 61. We would have expected the FSA and the Bank of England to have made efforts to identify and provide to the Committee documents clearly and directly relevant to our inquiry, subject to statutory restraints. 62. The financial crisis, and the serious dysfunctionality of the interbank lending markets, meant that it was difficult during this period for firms to estimate their own funding costs. LIBOR submissions were being used by markets and regulators to assess the financial health of the institutions involved. The FSA and the Bank of England were engaged in crisis management, alert to the possibility of further bank failures, rather than LIBOR manipulation. This is understandable, given the circumstances of the financial crisis, but with the advantage of hindsight constitutes a failing by the authorities. 63. Given the importance of LIBOR submissions in assessing banks’ health, Bank of England staff were aware of the danger that banks might improperly manipulate their submissions. They noted that “banks have been subject to the more powerful incentive of avoiding stigma from being seen to submit high rates reflective of what they are actually paying”. However, they primarily saw this as a matter for the regulator rather than the Bank of England. Mr Tucker told us that possible clues to dishonesty “did not set alarm bells ringing at the time”. The evidence suggests that the Bank of England was aware of the incentive for banks to behave dishonestly, yet did not think that dishonesty was occurring. Nor did it appear to have asked the FSA to check to see if such dishonesty was occurring. With hindsight this suggests a naivety on the part of the Bank of England. They were certainly relatively inactive. This confirms evidence from 117 Qq 649–651 Fixing LIBOR: some preliminary findings 41 other Treasury Committee inquiries of the dysfunctional relationship between the Bank of England and the FSA which existed at that time to the detriment of the public interest. 64. Unlike the Bank of England, the Financial Services Authority was the prudential regulator. Its shortcomings at this time are therefore far more serious. The Committee is concerned about the FSA’s failure to appreciate the significance of market rumours relating to the artificial rigging of the LIBOR rate. We therefore look forward to the result of the FSA’s internal investigation, the existence of which was disclosed in evidence to us. The Committee will want the findings of that investigation to be published. 65. As we have noted, the US authorities had received direct notification from Barclays that their LIBOR submissions were dishonest. In response to this, evidence given to a parallel inquiry in the US congress by Timothy Geithner revealed a 2008 memorandum provided to the Bank of England by the Federal Reserve Bank of New York on LIBOR setting. We know that the Bank of England then forwarded that memorandum to the British Bankers Association by the Bank of England. The evidence we have received from the UK authorities claims that they received no direct information about the evidence the US authorities had received about Barclays’ dishonesty. The evidence we have received is that there was significant co-operation between the US and the UK authorities at the time of the 2008 BBA review. It is understandable that regulators, in response to the LIBOR crisis, may have placed information in the public domain to demonstrate their respective assiduity at the time. This release of information must complement cooperation between regulators. The Chancellor should stress to his counterparts the need for such co-operation at the next G20 meeting. 66. The BBA’s review of LIBOR in 2008, given that it focussed on the concerns of the market over the LIBOR setting process, appears to have been an opportunity missed to stop the attempted manipulation that was occurring. The Wheatley review should now look at the role of the BBA in LIBOR setting at that time in detail and publish its findings. This is essential if its recommendations for a more reliable LIBOR setting process are to carry credibility. The review should include how such systems work during times of financial crisis, when there may be little or no interbank lending taking place, and how the authorities should respond to signs of dysfunction. It should also consider whether a trade association is the appropriate body to perform that role. 67. We have seen no explanation for the failure, both of Barclays’ board and of senior executives, to question its own firm’s LIBOR submissions, when its staff were complaining about the submissions of other firms, and media and academic reports questioned the incentives present in LIBOR setting. There appears to have been enough doubt being spread about the LIBOR setting process to suggest that a closer examination by Barclays board of its own practices should have taken place. It stretches credibility to suggest that Barclays was trying to alert regulators to inconsistencies in the LIBOR submissions of other banks yet had no idea about the repeated ‘low-balling’ of its own submissions during the financial crisis set out in the FSA Final Notice. We have found no evidence that the board of Barclays sought to conduct an investigation. 42 Fixing LIBOR: some preliminary findings This was one of a number of failings on the part of Barclays’ board. Others can be found in Sections 5 and 6. Fixing LIBOR: some preliminary findings 43 4 The Tucker-Diamond dialogue and the Diamond File Note The conclusion of the regulatory investigations 68. Paragraph 176 of the FSA Final Notice documents “a telephone conversation between a senior individual at Barclays and the Bank of England during which the external perceptions of Barclays’ LIBOR submissions were discussed”. The FSA Final Notice went on to say that, following this telephone conversation, which took place on 29 October 2008, an “instruction to reduce [Barclays] LIBOR submissions” was “given by senior management” on the same day. The FSA Final Notice made clear that “no instruction for Barclays to lower its LIBOR submissions was given during this telephone conversation”, but went on to state that “as the substance of the telephone conversation was relayed down the chain of command at Barclays, a misunderstanding or miscommunication occurred”. This, the FSA Final Notice, concluded meant “that Barclays Submitters believed mistakenly that they were operating under an instruction from the Bank of England (as conveyed by senior management) to reduce Barclays’ LIBOR submissions”.118 69. The CFTC and Department of Justice investigations also examined the role of the Bank of England in the lowering of Barclays LIBOR submissions in late October 2008. The Department of Justice’s description mirrored that of the FSA Final Notice. They explained that “on October 29, 2008, a senior Bank of England official contacted a senior Barclays manager”. The Bank of England official “discussed the external perceptions of Barclays’s LIBOR submissions and questioned why Barclays’s submissions were high compared to other Contributor Panel banks”. The Department of Justice concluded that: As the substance of the conversation was passed to other Barclays employees, certain Barclays managers formed the understanding that they had been instructed by the Bank of England to lower Barclays’s LIBOR submissions, and instructed the Barclays Dollar and Sterling LIBOR submitters to do so – even though that was not the understanding of the senior Barclays individual who had the call with the Bank of England official. Beginning on November 6, 2008, as a result of increased liquidity in the market, Barclays no longer needed to take into account the perceived instruction from the Bank of England. 70. The CFTC outlined how in September and October 2008 “Barclays increasingly felt tremendous external pressures concerning how it was being perceived in the market and media, particularly due to its higher LIBOR submissions relative to the other panel banks. The CFTC went on to say that Barclays “continued to believe that the other panel banks LIBOR submissions were unrealistically low” and that “even though it [Barclays] maintained that its liquidity position was in fact strong, Barclays was increasingly worried about these market and media perceptions”. The CFTC report that “at this time, the Bank 118 FSA, Final Notice, 27 June 2012, p 36, para 176 44 Fixing LIBOR: some preliminary findings of England had a conversation with a senior individual in Barclays, in which it raised questions about Barclays liquidity position and its relatively high LIBOR submissions”. The outcome the CFTC concluded was that: In late October 2008, reacting to this pressure and the discussion with the Bank of England, Barclays believed it needed to lower its LIBOR submissions even further. As a result, a member of senior management conveyed an instruction to the LIBOR submitters, through their supervisor, that Barclays U.S. Dollar and Sterling LIBOR submissions needed to be lowered to be ‘within the pack,’ meaning Barclays LIBOR submissions were to be made at or around the same rate as the other panel banks.119 Who was the senior Bank of England official? 71. There was intense media speculation over the following days as to the identity of the “senior individual at Barclays and the Bank of England” who had participated in this 29 October 2008 telephone conversation. By the weekend of 30 June 2012 the media were reporting that the 29 October 2008 conversation had taken between Mr Bob Diamond, then President of Barclays plc and Chief Executive of Barclays Capital, and Mr Paul Tucker, then Executive Director of Markets, and now Deputy Governor of the Bank of England (financial stability).120 72. Subsequently, and ahead of Mr Diamond’s appearance before the Treasury Committee, Barclays published a File Note of the 29 October 2008 discussion, written by Mr Diamond following his conversation with Paul Tucker. This provided details of Mr Diamond’s recollection of the conversation (see Box A for the full text of the File Note). Box A: The Diamond File note From: Diamond, Bob: Barclays Capital Sent: 10/30/2008 14:19:54 To: Varley, John: Barclays PLC Cc: del Missier, Jerry: Barclays Capital (NYK) Subject: File note: Bank of England call Fyi File Note: Call to RED from Paul Tucker, Bank of England Date: 29th October 2008 Further to our last call, Mr Tucker reiterated that he had received calls from a number of senior figures within Whitehall to question why Barclays was always toward the top end of the Libor pricing. His response was “you have to pay what you have to pay”. I asked if he could relay the reality, that not all banks were providing quotes at the levels that represented real transactions, his response “oh, that would be worse”. 119 P 24 120 ‘What did Bank of England say to Barclays about Libor?’, by Robert Peston, BBC Newsonline, 1 July 2012 Fixing LIBOR: some preliminary findings 45 I explained again our market rate driven policy and that it had recently meant that we appeared in the top quartile and on occasion the top decile of the pricing. Equally I noted that we continued to see others in the market posting rates at levels that were not representative of where they would actually undertake business. This latter point has on occasion pushed us higher than would otherwise appear to be the case. In fact , we are not having to ‘pay up’ for money at all. Mr Tucker stated the level of calls he was received from Whitehall were ‘senior’ and that while he was certain we did not need advice, that it did not always need to be the case that we appeared as high as we have recently. RED 121 The backdrop to the 29th October 2008 Diamond-Tucker discussion 73. The 29 October 2008 discussion between Mr Diamond and Tucker took place against a rapidly deteriorating outlook for the global financial system. In the United States, Merrill Lynch had sought refuge by selling itself to Bank of America, and the insurance firm AIG had received emergency funding from the US authorities. On 15 September 2008, Lehman Brothers had filed for chapter 11 bankruptcy protection, triggering an intensification of financial instability and the interbank funding markets became even more dysfunctional. 74. The situation in the UK was also critical. On 8 October 2008, the UK Government had announced a large-scale package to stabilise the UK financial system. More specifically, the Government said it was “bringing forward specific and comprehensive measures to ensure the stability of the financial system and to protect ordinary savers, depositors, businesses and borrowers”.122 These measures were intended to address what the Government described as the three root causes of the current financial crisis: concerns about liquidity, capital and funding:123 • To address concerns about liquidity, at least £200 billion was to be made available to banks under the Bank of England’s Special Liquidity Scheme (SLS);124 • To address funding concerns, the Government established a Credit Guarantee Scheme. This made available to participating institutions a government guarantee to refinance maturing debt and was designed to unblock the interbank money market, and • To address concerns about solvency, the Government asked the UK banks to increase their ‘Tier 1’ capital ratios and established the Bank Recapitalisation Fund, which 121 Barclays, Supplementary information regarding Barclays settlement with the Authorities in respect of their investigations into the submission of various interbank offered rates (AMENDED), 3 July 2012 122 HM Treasury Press notice, Financial support to the banking industry, 8 October 2008 123 HM Treasury, Pre-Budget Report 2008, November 2008, pp54–55 124 The Special Liquidity Scheme was first introduced in April 2008 46 Fixing LIBOR: some preliminary findings provided support for those banks who wished to strengthen their capital ratios through the Government rather than the private sector.125 75. By mid-October 2008, two banks—RBS and HBOS—had been rescued with £37 billion of taxpayer support with the result that the Government now held a 57.9% stake in RBS and a 43% stake in Lloyds Banking Group (which emerged from the merger of Lloyds TSB and HBOS). Barclays at this stage had not made use of taxpayer monies for the purpose of recapitalisation, but it did benefit from other Government support mechanisms during the crisis such as the special liquidity scheme and the credit guarantee scheme. It was looking for a private-sector solution, but rumours were rife that it would also end up having to accept Government support.126 Both Mr Diamond and Mr Tucker stressed to us that October 2008 was a time of acute financial instability and that their discussion had taken place just weeks after the part-nationalisation of RBS and Lloyds/HBOS.127 76. Barclays sent us a supplementary memorandum immediately prior to Mr Diamond’s appearance before this Committee. This provided us with some Barclays-specific background context as to the tightening of liquidity conditions in October 2008 and Barclays LIBOR submissions during this period. Barclays told us that “during October 2008, in the wake of the collapse of Lehman Brothers, when liquidity conditions had tightened acutely, Barclays raised its US Dollar LIBOR submissions more significantly than other panel members”. Barclays went on to describe how “in the month of October 2008, in particular, Barclays US Dollar LIBOR submissions for the 3 month maturity were the highest or next highest of the panel on every single day of the month and therefore excluded from the calculation of LIBOR”. Barclays ended by stating that it: did not understand why other banks were consistently posting lower submissions; Barclays firmly believed that the other panel members were not, in fact, funding at a lower cost than Barclays.128 77. The discussion between Mr Diamond and Mr Tucker, which had taken place at the instigation of Paul Tucker,129 and the subsequent publication of Mr Diamond’s File note of his recollection of their discussion, had fuelled media speculation that either the Bank of England or the “senior” Whitehall figures referred to in the Diamond File note had encouraged or instructed Barclays to lower their LIBOR submissions. This was in large part because the end of the File note stated that: [...] while he [Mr Tucker] was certain we [Barclays] did not need advice, that it did not always need to be the case that we [Barclays] appeared as high as we [Barclays] have recently. 125 Eight banks participated in the recapitalisation scheme: Abbey, Barclays, HBOS, HSBC, Lloyds TSB, Nationwide Building Society, Royal Bank of Scotland and Standard Chartered 126 For example British banks set for 40 billion pound rescue: sources, Reuters, 12 October 2008 127 Qq 36, 337 128 Supplementary memorandum from Barclays, 3 July 2012 129 Supplementary memorandum from Barclays, 3 July 2012 Fixing LIBOR: some preliminary findings 47 The way Mr Diamond worded the last sentence meant that it was capable of being interpreted as an instruction, from either Whitehall or the Bank of England, to Barclays to reduce its LIBOR submissions. 78. However, Paul Tucker, when subsequently questioned on whether Mr Diamond’s File note was an accurate reflection of their 29th October 2008 conversation, replied “not completely”.130 Mr Tucker told us that “the last sentence gives the wrong impression”.131 When asked how the File note should have ended in order accurately to reflect their discussion, Mr Tucker replied that: It should have said something along the lines of, “Are you ensuring that you, the senior management of Barclays, are following the day-to-day operations of your money market desk, your treasury? Are you ensuring that they don’t march you over the cliff inadvertently by giving signals that you need to pay up for funds?”132 Who were the senior figures in Whitehall and did they instruct? 79. Mr Diamond appeared uncertain as to the identity of the “senior figures within Whitehall”. When asked “what you took to mean by the phrase Whitehall, he replied ‘officials in the Government’”.133 Later exchanges appeared to demonstrate that Mr Diamond had no idea who these “senior figures within Whitehall” were: Michael Fallon: Can we, Mr Diamond, go back to the file note of your call? You said in answer to the Chairman that you thought the senior figures referred to were—you said at one point—officials in the Government, and then later on you said members of the Government. Which do you believe? Who do you think they were? Bob Diamond: I would only be speculating if I told you who I thought they were, and I don’t think it’s appropriate to speculate. My recollection is Paul didn’t mention who he was referring to or I would have put it in the note. Michael Fallon: Right. But who do you think he could possibly have been referring to? Bob Diamond: I don’t want to speculate. Michael Fallon: A Department or— Bob Diamond: Senior people in the Government. 130 Q 330 131 Q 332 132 Q 333 133 Q 37 48 Fixing LIBOR: some preliminary findings 80. Paul Tucker, when he appeared before us the following week, confirmed that the “senior” Whitehall figures referred to in the File note were not Government Ministers, but civil servants: Sir Jeremy Heywood, Tom Scholar, Sir Nick Macpherson and Jon Cunliffe.134 81. Paul Tucker was questioned about the so-called instruction. He denied categorically that any Government Minister or civil servant had asked him to get Barclays to lower their LIBOR submissions: Mr McFadden: Can I ask you, did Jeremy Heywood or any other Government official that you mentioned in your opening answer to the Chairman ever encourage you to lean on Barclays or any other bank to lower their LIBOR submissions? Paul Tucker: Absolutely not. Mr McFadden: Did any Government Minister from the last Government ever encourage you to lean on Barclays or any other bank to lower their LIBOR submissions? Paul Tucker: Absolutely not. Mr McFadden: Specifically, did Shriti Vadera ever ask you to lean on Barclays or any bank to lower their LIBOR submissions? Paul Tucker: Absolutely not. If I may just add one thing there, what is more I don’t think that I spoke to Shriti Vadera throughout this whole period at all. Mr McFadden: Thank you. Did Ed Balls ever ask you to lean on Barclays or any other bank? Paul Tucker: No. No. Mr McFadden: Or any other Government Minister? Paul Tucker: No. 82. Paul Tucker also denied the charge that he had personally issued an instruction: Chair: [...] would you categorically refute the suggestion that this conversation might reasonably have led someone to suppose you were inviting Barclays to join the pack and under-report LIBOR? Paul Tucker: Absolutely.135 134 Q 335 135 Qq 40, 336 Fixing LIBOR: some preliminary findings 49 The Whitehall-Tucker discussions 83. Mr Tucker went on to explain why he had received these telephone calls, referred to in the File note, from “senior” figures in Whitehall. He said that Whitehall had two key concerns: There were two parts to this, which come together I think. Is the package working? If it is, why isn’t it working more quickly? Secondly, should we be worried about Barclays? I don’t want to say that it was expressed as concretely as this, because I can’t remember, to be honest, but there was a sense of, including in the Bank, was the right decision taken in allowing Barclays not to take capital support from the Government?136 In other words, Mr Tucker said that the concerns in Whitehall were about the effectiveness of the many emergency measures which had been announced and the strength of Barclays as an institution, not about encouraging Barclays to manipulate its LIBOR submissions. With respect to the second concern, Mr Tucker said the source of this particular concern lay in the fact that “whereas some market participants felt that money-market conditions could ease because funding was being provided by the official sector, Barclays had continued to pay higher rates in the market, as reflected in their LIBOR submissions”. Mr Tucker told us that civil servants were asking whether: the right decision [had been] taken when Barclays didn’t take capital from the Government? If you remember, ... the Government’s, the authorities’ three-pronged package was announced on 8 October, I believe. On the 13th, when it was announced that RBS and HBOS Lloyds were taking capital from the Government, earlier that day Barclays announced that they would not be taking capital from the Government and would be taking various other measures. There was a degree of concern about that; there was a degree of anxiety about that.137 Mr Tucker went on to describe how some other banks “had been taken under the explicit wing of the Government”, whilst “HSBC and Abbey National Santander were seen, at that point, to be relatively safe”: That left Barclays. During that period, in the measure of credit risk indicated by the credit default swap market, Barclays was top. The way this crisis unrolled in more or less every financial centre was, as one domino went, “Who might the next one be?” We were not in the position of thinking Barclays is doomed. Had we thought that we, the Bank, would have given very strong advice to the Government that it was not safe for Barclays not to take capital from the Government, but it was a hard call and there was anxiety.138 136 Q 338 137 Q 337 138 Q 346 50 Fixing LIBOR: some preliminary findings Barclays and the perceived instruction 84. Barclays, in its supplementary memorandum to this Committee prior to Bob Diamond’s appearance before us, attempted to clarify the issue of whether an instruction had been issued and, if so, by whom. It told us that, subsequent to the 29 October 2008 discussion between Messrs Diamond and Tucker: Bob Diamond relayed the contents of the conversation to Jerry del Missier. Bob Diamond did not believe he received an instruction from Paul Tucker or that he gave an instruction to Jerry del Missier. We questioned Mr Diamond on this point. He was clear that he did not believe he had received an instruction, whether from the Bank of England or Whitehall: Chair: [...] The note from Mr Tucker says that he felt your LIBOR returns could be lower, doesn’t it? Bob Diamond: He felt that our LIBOR rates relative to the other 15 posters— Chair: Could be relative[ly] lower. Yes? Bob Diamond: Yes. Chair: Why then, on page 2 of the [Barclays] note to this Committee yesterday, did you say that you don’t believe you received an instruction? Bob Diamond: I did not believe it was an instruction.139 The Diamond-Tucker discussion 85. Paul Tucker told us that the key message he wished to convey to Mr Diamond was to make “sure that the senior management of Barclays was overseeing the day-to-day moneymarket operations and treasury operations and funding operations of Barclays so that Barclays’ money desk did not inadvertently send distress signals”. He went on to explain that: In actual paying up for money in terms of what you borrow, you do not need to be at the top of the market all of the time. It is very important not to come across as desperate.140 86. Mr Tucker was challenged about the section of the File note which stated that “I [Mr Diamond] asked if he [Paul Tucker] could relay the reality, that not all banks were providing quotes at the levels that represented real transactions”. More specifically, Mr Tucker was asked by the Committee whether he had considered the possibility that Mr Diamond was alerting him to the fact that other banks were falsely lowering their LIBOR submissions. Mr Tucker rejected this interpretation of Mr Diamond’s comments. Instead 139 Q 38–40 140 Q 358 Fixing LIBOR: some preliminary findings 51 he explained that market conditions over this time had worsened and that the markets “had dried up”, albeit “not completely”. As a result, “for months there had been periods where sometimes it [LIBOR submissions] was based on judgments as to where they [banks] would be able to borrow rather than actual transactions of where they were borrowing”. He went on to tell us that the banks were: having to make judgments about where they could borrow in the market, if they are not actually borrowing in the market. If they were not doing real transactions, then Bob Diamond was effectively saying, “Look, when they come to do real transactions they are going to be paying the same as us.”141 87. Mr Diamond told us that he believed Paul Tucker was trying to tell him was that there were “Ministers in Whitehall who are hearing that Barclays is always high. That could lead to the impression that you are not funding yourself.” He told us that his first reaction was: “John [Varley], you have to get to Whitehall. You have to make sure they know that we are funding fine. It’s not wonderfully, it is adequately, but we have an equity issue about to settle in two days. We’re raising £6.7 billion of capital when a number of British banks had just taken capital from the Government.” A key point which Mr Diamond appeared to have had in his mind at this time was the potential threat of nationalisation: If Whitehall was told, “Barclays is at the highest of LIBOR”, without knowing all that I just went through, they might say to themselves, “My goodness, they can’t fund. We need to nationalise them,” as they had nationalised other British banks.142 This may help explain why Mr Diamond, following the discussion with Paul Tucker, then wrote a File note to John Varley, then Barclays Chief Executive and Jerry del Missier, a senior lieutenant of Mr Diamond’s. Writing File notes, Mr Diamond told us, was something he did “not [do]frequently” at that stage.143 88. John Varley did not give oral evidence in this inquiry. However, he wrote to us on 16 July 2012 to provide an explanation of what action he took upon receiving Mr Diamond’s File note: On the day I received Mr Diamond's email, I spoke, or left voicemail, with Lord Myners, Sir John Gieve, and Mr Sants to inform them of the successful completion of Barclays capital raising, which alleviated concerns about our capital ratios and funding position. To the best of my recollection, those conversations did not refer to concerns about Barclays LIBOR submissions. I do not recall any subsequent discussions at that time with them or other members of the tripartite authorities specifically referring to concerns about Barclays LIBOR submissions. On 7th 141 Q 362 142 Q 47 143 Q 27 52 Fixing LIBOR: some preliminary findings November, I attended a meeting with the Chancellor of the Exchequer and other bank executives. There was reference to LIBOR during that meeting, but it related to growth in the economy, and what the banks could do to support that, particularly in the context of the cost of credit to small business.144 We subsequently wrote back to Mr Varley requesting further information about any discussions he may have had with Mr Diamond or del Missier about the conversation between Mr Diamond and Mr Tucker or the subsequent File note. He told us: As to whether I replied to Mr Diamond's file note or took any consequential action, I emailed Mr Diamond on 3 November 2008 in response to his file note of 30 October 2008 saying: "Bob, We should discuss." I believe this was in anticipation of a working dinner I was due to attend on 3 November with Lord Turner and Mr Sants, to which I referred in my letter to you of 16 July 2012. I do not recall receiving a reply from Mr Diamond or taking any specific action beyond what I described in that letter to you of 16 July. He went on to tell us that “other than responding to Mr Diamond in the way I describe in paragraph numbered 4 [reproduced above] , I do not recall speaking with him about his conversation with Mr Tucker or his subsequent file note”. Mr Varley ended by stating that “to the best of my recollection and belief, I did not discuss Mr Diamond's conversation with Mr Tucker or his file note with Mr del Missier”. Similarly, Mr Varley stated that he “did not discuss Mr Diamond's conversation with Mr Tucker or his file note with Mr Agius, or any other senior executive or non-executive director”.145 The role of Jerry del Missier 89. Following publication of the Diamond File note it emerged that Jerry del Missier, at that time Co-President of Barclays Capital, and copied into the File note along with Mr John Varley, had mistakenly assumed that Mr Diamond had instructed him to lower Barclays LIBOR submissions. 90. When questioned as to how Mr del Missier could have misconstrued the File note and concluded that it was an instruction to lower Barclays LIBOR submissions, Mr Diamond simply replied “Michael, with apologies, I can’t put myself in Jerry’s shoes”.146 We therefore asked Jerry del Missier how he had misconstrued Mr Diamond’s File note: Well, Mr Fallon, I know only what I clearly recall from my conversation with Mr Diamond. The investigators that have looked at this thoroughly have concluded that there was a miscommunication and misunderstanding, but I can only recall my recollection—I can only state what my recollection of the conversation is.147 144 Letter from Mr John Varley to the Chairman of the Treasury Committee, 16 July 2012 145 Letter from Mr John Varley to the Chairman of the Treasury Committee, 2 August 2012 146 Q 87 147 Q 890 Fixing LIBOR: some preliminary findings 53 91. Mr del Missier revealed that he had acted on the basis of a telephone conversation with Mr Diamond on the 29 October 2008, following Mr Diamond’s conversation with Mr Tucker, and not on the basis of the File note.148 When questioned about his conversation with Mr Diamond, Mr del Missier told us that Mr Diamond told him that: he had a conversation with Mr Tucker of the Bank of England, that the Bank of England was getting pressure from Whitehall around Barclays—the health of Barclays—as a result of LIBOR rates, that we should get our LIBOR rates down, and that we should not be outliers.149 When questioned further on this topic, Mr del Missier said that: What was communicated to me by Mr Diamond was ... about political pressure on the bank, regarding Barclays’s health and, as indicated by our LIBOR rates, that we should get our LIBOR rates down, and not be outliers; and there’s nothing in the note which is in conflict with that [Diamond-Tucker] conversation.150 92. We asked whether Mr Diamond had told Mr del Missier “effectively to invent a submission”, but Mr del Missier replied categorically “No, Sir; that is not what Mr Diamond said”.151 When asked whether he believed he was “acting on an instruction from the Bank of England or from other Whitehall sources”, Mr del Missier replied “yes”.152 He went on to say that he believed the so-called instruction to have come from Paul Tucker, adding that “Mr Diamond told me that Mr Tucker had given it[the instruction]”.153 He confirmed in response to repeated questioning that he viewed the instruction as coming from the Bank of England rather than the “public authorities” more generally.154 Mr del Missier was finally asked whether he would have issued the instruction in the absence of “cover from the tripartite”. He replied “no”.155 93. Jerry del Missier told us that he was in “regular communication” with Mr Diamond, albeit “not always daily”, and would communicate with him several times a week.156 However, he went on to tell us that he never discussed the 29 October instruction again with Mr Diamond.157 When questioned as to why this was the case, Mr del Missier told us that: there were many, many big events going on in this period, Mr Chairman. The entire financial system was hanging in the balance, and in the grand scheme of everything 148 Qq 823, 878 149 Q 825 150 Q 891 151 Q 829 152 Q 878 153 Q 882 154 Q 888 155 Qq 880–881 156 Qq 903–906 157 Q 839 54 Fixing LIBOR: some preliminary findings that was going on, it didn’t seem a significant event, given the number of significant events that were transpiring at that time.158 Passing on the perceived instruction 94. Mr del Missier said that he then “passed the instruction ... on to the head of the money markets desk” who he identified as Mr Mark Dearlove.159 Mr del Missier told us that he “relayed the contents of the conversation that I had with Mr Diamond, and fully expected that the Bank of England’s views would be incorporated in the LIBOR submissions”.160 In subsequent questioning Mr del Missier told us that, more specifically: I said, “I’ve spoken to Mr Diamond. He’s had a call from Mr Tucker.” I alluded to the pressure—the political pressure—around Barclays’s health, as demonstrated by our LIBOR rates, and that we should get our rates down and not be an outlier.161 When challenged on what exactly he expected to happen, Mr del Missier replied that “given that Barclays was high rates, I would have expected that taking that into account would have resulted in lower submissions”.162 When asked how Mr Dearlove reacted to the instruction, Mr del Missier told us he was unable to “recall the full specific of the conversation”.163 We pressed Mr del Missier further on what Mr Dearlove said in response to the instruction request. Andrea Leadsom: But would you expect Mr Dearlove to say, “Then I asked Mr del Missier, ‘Are you sure about this? This is not in the rules, at the very least, and this is breaking the law, at the very worst.’”? Would he tell us that that is what he said to you or not? Jerry del Missier: I don’t think that is what he would say. 95. Mr Dearlove then passed on the instruction to the submitter. Mr del Missier said that he then had “a follow-up conversation with the head of the desk, and several of the desk members, and gave them the context of the conversation that I had had with Mr Diamond about the conversation that he had had with Mr Tucker”.164 However, Mr del Missier then told us that he did not check to see what effect his instructions had on Barclay’s LIBOR submissions.165 96. Mr del Missier was unable to remember Mr Dearlove’s reaction to being issued with the instruction, but told us that through the course of the investigation, he learnt that 158 Q 839 159 Q 999 160 Qq 831–832 161 Q 1000 162 Q 834 163 Q 1003 164 Q 863 165 Q 864–868 Fixing LIBOR: some preliminary findings 55 “compliance was alerted of the nature of the request that had come in”, adding “but there was no follow-up from compliance”166 Mr del Missier confirmed that a Mr Stephen Morse, Head of Compliance was the person who was informed by the money market desk of the instruction.167 97. The FSA Final Notice noted that a submitter “emailed Manager F and others on 29 October 2008 in relation to this instruction, copying in compliance”. The email was sent to Mark Dearlove and Stephen Morse, the head of compliance was copied in. The email, which was subsequently supplied to the Committee by Barclays, shows that the submitter was uncomfortable with what he was being asked to do. The email stated: As per the telephonic communication today with Mark Dearlove. I have been requested to reduce the Sterling Libor rates to be more in line with the “Pack”. As I understand it this is an instruction by either senior management and/or the Bank of England. I voiced my views as below but as such will comply with the request and that it will take me a week to comply. But it should be noted that this will be breaking the BBA rules with regard to the setting of Sterling Libor rates IE (a reasonably [sic] amount offered in the market in the period concerned.) and as such the breaking of such rules will happen until the instruction demanded by senior management will be rescinded or the BBA rules are changed.168 The FSA Final Notice stated that “compliance did not consider appropriate for Barclays’ submitters to comply with the instruction”. On 3 November, Mr Morse wrote an email in response to the submitters 29 October email, and which he sent to, amongst others, Mr Dearlove. The email stated: Thanks for your note. In my view we should continue to quote Sterling Libor rates where we see it – we obviously need to make sure we follow the BBA’s rules and avoid potential action by the FX and MM Committee [of the BBA]. I’ve not been made aware of any suggestion by external sources that we should reduce rates to join the “pack”, but I’ll take that up with senior management this week [...].169 98. Notwithstanding the concerns expressed by Mr Morse in his 3 November 2008 email it is clear that no further action was taken by Group Compliance. The FSA Final Notice concluded: Compliance did not speak to Barclays’ Submitters. Compliance did not ensure that the Submitters did not follow the instruction. The relevant individual in Compliance 166 Qq 1005–1006 167 Q 1019 168 Barclays, email from money market desk to Compliance, 29 October 2008, received by Committee 23 July 2012 169 Barclays, email from Compliance to money market desk, 3 November 2008, received by Committee 23 July 2012 56 Fixing LIBOR: some preliminary findings thought his email would suffice to “nip it in the bud”. In addition, Compliance did not discuss the issue with senior management. An individual in senior management went on to reiterate the instruction at a meeting with Barclays’ Submitters on 6 November 2008.170 99. The FSA investigation has left a number of important questions unanswered. The first of these is whether “senior” Whitehall figures issued an instruction to Paul Tucker to get Barclays to lower their LIBOR submissions or, as Mr Tucker insists, Whitehall were simply trying to garner information about the health of Barclays, and the success or otherwise of the Government’s rescue package, at a time of acute financial instability. Paul Tucker told us that he did not receive an instruction from Whitehall (whether from Government Ministers or officials) to tell Barclays to lower their LIBOR submissions and we have not received any evidence to the contrary. The evidence we received suggests that Whitehall was prompted to contact the Bank of England because of its concerns about whether the October 2008 rescue package for the UK financial system was working, as well as concerns about the financial health of Barclays. This was understandable given the fragility of the UK and international financial system in October 2008. 100. Mr Tucker relayed Whitehall concerns about Barclays to Mr Diamond in a telephone discussion on 29 October 2008. There is no transcript or recording of the conversation between the two men. Nor did Mr Tucker, or his officials, make a contemporaneous note of the discussion. The only record of the discussion is therefore a File note written the following day by Mr Diamond. 101. Mr Tucker contests the accuracy of the final sentence of the 28 October 2008 File note. The final critical sentence reads—“while he [Mr Tucker] was certain we [Barclays] did not need advice, that it did not always need to be the case that we [Barclays] appeared as high as we [Barclays] have recently”. It is by no means clear that the final sentence of Mr Diamond’s record of the call was an instruction to lower Barclays LIBOR submissions, although it was interpreted in that way by Barclays. Mr Tucker disputes Mr Diamond’s recollection of their 29 October 2008 discussion as recorded in the File note and, in particular, objects to the final sentence. Mr Tucker told us that the last sentence “gives the wrong impression” and believes it should have said “Are you ensuring that you, the senior management of Barclays, are following the day-to-day operations of your money market desk, your treasury? Are you ensuring that they don’t march you over the cliff inadvertently by giving signals that you need to pay up for funds?” We will never know the details of the discussion between the Mr Tucker and Mr Diamond. What we do know is that Mr Tucker denied ever having issued an instruction to Barclays whilst Mr Diamond denied having received an instruction from Mr Tucker. 102. The File note is of secondary importance as far as the subsequent transmission of the instruction is concerned. This is because Mr del Missier told us that he acted, not on the basis of the File note, but on the basis of the 29 October 2008 discussion he had with Mr Diamond, following the conversation between Mr Diamond and Mr Tucker. Mr del Missier informed us that the File note correctly records the substance of the Tucker- Diamond discussion as relayed to him by Mr Diamond, but not the exact words. There 170 FSA Final Notice, 27 June 2012, p 37, Para 179 Fixing LIBOR: some preliminary findings 57 is no File note of the conversation between Mr Diamond and Mr del Missier and no recording was taken of their discussion. 103. It remains possible that the entire Tucker-Diamond dialogue may have been a smokescreen put up to distract our attention and that of outside commentators from the most serious issues underlying this scandal. 104. Mr Diamond denied that he himself issued an instruction to Mr del Missier. Mr del Missier, on the other hand, believed that he did receive an instruction, but one which emanated from the Bank of England. The FSA Final Notice concluded that Mr del Missier misunderstood what Mr Diamond was communicating to him. However, Mr del Missier in evidence to us was clear that he believed he was implementing an instruction from the Bank of England. 105. From Mr del Missier’s evidence it appeared that Mr Dearlove was comfortable with the instruction that was passed to him following his 29 October 2008 conversation with Mr Diamond. There was some resistance from the submitter, who emailed compliance with his concerns. However, he or she ultimately acted on the instruction. There appears to have been, once again, no real ‘push-back’ from the compliance function when they were informed by Group treasury of the instruction. This lack of ‘push back’ demonstrates the weakness of the compliance function in Barclays at that time. It may also reflect the fact that Group treasury had been submitting false rates since September 2007 and that, to this end, Mr del Missier’s instruction was not a departure from prevailing practice. It is unclear to the Committee why Barclays has attempted to place such weight on the Tucker-Diamond phone call given the pattern of repeated dishonesty in LIBOR submissions in the months running up to this phone call set out in the FSA Final Notice. Barclays did not need a nod, a wink or any signal from the Bank of England to lower artificially their LIBOR submissions. The bank was already well practised in doing this. Mr del Missier appears to have stressed the fact that what he saw as an instruction came from the Bank of England and that this may have muted resistance to it. Mr del Missier’s evidence, that he received such an extraordinary instruction from the Bank of England, yet subsequently queried it neither with Mr Diamond nor with those to whom he passed the instruction, is not convincing. He would have known that falsifying LIBOR submissions was not permitted. 106. Mr del Missier has sought to play down the significance of the 29 October 2008 instruction. He stressed that it was of relatively minor significance, which would fit with the pattern of behaviour from Barclays in the months running up to the phone call. Certainly, it appeared sufficiently unimportant to him that he never discussed the matter again with Mr Diamond. Indeed Mr Del Missier apparently did not even check whether his instruction had been acted on. However, Mr Diamond felt that the discussion with Mr Tucker was of sufficient importance to merit the writing of a File note, something Mr Diamond did not ordinarily do. 107. The Committee remains sceptical about the importance of the Tucker-Diamond phone call given the already established pattern of dishonest LIBOR submissions from Barclays set out in the FSA Final Notice. The lack of a record by the Bank of England of the conversation between Mr Tucker and Mr Diamond is of great concern. The fact that Mr Tucker failed to make a contemporaneous note of the conversation is explicable 58 Fixing LIBOR: some preliminary findings given that the UK was in the midst of the most serious financial crisis in modern times: there was unprecedented pressure on senior Bank of England staff at this time. Nonetheless, the Bank of England should have had adequate procedures in place for at least the making of a File note of such conversations. We recommend that the Bank undertake a review of its note keeping systems, especially those involving senior executives, and publicly report its conclusions. 108. If Mr Tucker, Mr Diamond and Mr del Missier are to be believed, an extraordinary, but conceivably plausible, series of misunderstandings and miscommunications occurred. The evidence that they separately gave describes a combination of circumstances which would excuse all the participants from the charge of deliberate wrongdoing. Fixing LIBOR: some preliminary findings 59 5 Barclays and the FSA Introduction 109. Barclays is subject to prudential and conduct regulation by the FSA. Under the terms of the Financial Services Bill it will in future be regulated by the new microprudential regulator, the Prudential Regulation Authority (PRA), which will be part of the Bank of England, and the new conduct regulator, the Financial Conduct Authority (FCA). 110. Barclays’ own guidance on corporate governance states that its directors must act in accordance with the principles issued by the FSA under the terms of the Financial Services and Markets Act 2000 and, in particular, must: 1. act with integrity; 2. act with due skill, care and attention; 3. observe proper standards of market conduct; 4. deal with the FSA and with other regulators in an open and co-operative way and must disclose appropriately any information of which the FSA would reasonably expect notice; 5. take reasonable steps to ensure that the business of the firm for which they are responsible is organised so that it can be controlled effectively; 6. exercise due skill, care and diligence in managing the business of the firm for which they are responsible, and 7. take reasonable steps to ensure that the business of the firm for which they are responsible complies with the relevant requirements and standards of the regulatory system.171 The fourth of these principles is particularly important in relation to the evidence we have heard about the relationship between the FSA and Barclays. 111. Mr Diamond raised the bar for the conduct of Barclays as a whole even higher in the Today Business Lecture he delivered in 2011. He said: [...] the single most important thing for banks and for businesses now is to focus on helping to create jobs and economic growth; and being able to do that requires us— banks in particular—to rebuild the trust that has been decimated by events of the past three years; and that rebuilding trust requires banks to be better citizens. I believe in this passionately. 171 Corporate Governance in Barclays, Barclays Corporate Secretariat, February 2012 60 Fixing LIBOR: some preliminary findings That is why since I became chief executive of Barclays, at the beginning of this year, the management team has focused on four strategic priorities—one of which is citizenship. [...] For me becoming a better citizen means three things: First, it’s about how we behave, especially with our customers and clients; second, it’s about what we do, and in particular how we help those customers and clients create jobs and economic growth; and third, it’s about how we contribute to the communities we serve in many other ways. I know how angry customers are about issues such as Payment Protection Insurance. That’s why we are working hard to clear claims as quickly as possible. We want to put things right. But we know it’s not enough just to apologise. We have to try to make sure that things like that don’t happen again. In part that comes down to culture. It’s a very personal thing, but throughout my career—from my time as a teacher, to my time as a banker—I have seen just how important culture is to successful organisations. Culture is difficult to define, I think it’s even more difficult to mandate—but for me the evidence of culture is how people behave when no-one is watching. Our culture must be one where the interests of customers and clients are at the very heart of every decision we make; where we all act with trust and integrity. But it’s not just about how we behave towards our customers and clients. It’s also about how we work together with our colleagues, because if you have to deliver for customers with 150,000 colleagues around the world, as we do, you better be able to work as a team. As far as I’m concerned, if you can’t work well with your colleagues, with trust and integrity, you can’t be on the team. Culture truly helps define an organisation. [...] To the question “can banks be good citizens?” the answer must be “yes”. But I'm mindful of what was said to me three years ago: “Bob, think about the fact that noone will believe you.” We’re in the early stages of working to restore trust. I’d like to be able to say we’re achieving that, but I know that for you, seeing is believing. Fixing LIBOR: some preliminary findings 61 You may not be able to see what’s different today, but over time I very much hope you will see that and more.172 Mr Diamond’s comments about culture echo the Group of Thirty report on corporate governance, which said that “Values and culture drive people to do the right thing even when no one is looking.”173 112. We endorse Mr Diamond’s view, which echoes that of the Group of Thirty, that the culture of an organisation is demonstrated by how people behave when no-one is watching. In this case, however, the culture of the Barclays allowed people to do the wrong thing quite openly over a long period, with the attempted manipulation being shouted about across the dealing room floor. Barclays was found to have fallen lamentably below the standards that the former Chief Executive suggested should be set for his own firm. Appointment of Bob Diamond as Barclays chief executive 113. In September 2010 the board of Barclays appointed Bob Diamond as chief executive of the company to succeed John Varley. The FSA is required to review such appointments under its Significant Influence Function (SIF) procedures. The purpose of the SIF regime is to assess the suitability of an individual’s competence to undertake a role, and to ensure that a robust and rigorous appointment process is undertaken by the firm concerned. The FSA approved the application from Barclays for Bob Diamond to become chief executive, and he took up the post in January 2011. 114. When informing the Chairman of Barclays of this approval in a letter of 15 September 2010, Hector Sants, then Chief Executive of the FSA, said that “an integral part of our approval process is to set out any appropriate issues that we expect the Board to address in its ongoing governance and oversight of Bob Diamond in his role as Group CEO”. These were as follows: l. The FSA expects Bob Diamond to continue to develop a close, open and transparent relationship with his