The Bank of Credit and Commerce International, a privately-held institution based in Luxembourg for corporate purposes, publicly closed and indicted by numerous countries in the early 1990s, was in fact still operating from that dilapidated façade in Lahore for more than a decade after its closure. Well not exactly the bank, but its bankers – unofficially, of course.
In the annals of international banking, BCCI earned special dishonours for serving as a moneylaundering operation for everyone from the Medellin narco-terrorist cartel to the Abu Nidal terrorists – murderers of Jews and Arabs alike by the end – to the CIA’s funding of its operations in Afghanistan, including the training of anti-Soviet fighters by a 1980s favourite of the CIA, a fellow named Osama bin Laden.
The bank had been founded in 1972 by Agha Hasan Abedi, a Pakistani financier whose disciples would become friends of the Wahhabis and of Anwar’s inner circle. At its peak it operated in 78 countries, had over 400 branches, and assets of US $21 billion. It was, by the late 1980s, the seventh-biggest bank in the world.
The men who had established BCCI were some of the most talented bankers on the planet, and when BCCI met its nominal end in 1991, they had reached out to select patrons, determined to rebuild their operations in a more careful setting. The CIA, which had disavowed any involvement in BCCI as the institution came to what appeared to be its end, recognised the value of having a black-ops bank with worldwide offices, and so helped the men from BCCI swing back into work – unofficially, of course.
In a crushing double-irony, BCCI would both become Osama bin Laden’s bank of choice (after Al Baraka) and, even more perversely, through a handful of its surviving veteran bankers by now operating in a new clandestine network in 2011, also one of the funding arms through which Osama’s execution was effected.
Anwar, perhaps unwittingly, was introduced to some of the BCCI veterans in Pakistan by his former speechwriter, Munawar Anees, and his ghostwriter, Faiz Abdullah. The former, a Pakistani with long ties to both Pakistan’s ISI intelligence service and to some of the financiers who reconstituted BCCI, was instrumental in establishing Anwar’s financial network.
Anwar’s entry – not directly, but through others – into the network of BCCI veterans was vouched-for by Paul Wolfowitz, whose ties to BCCI went back to his days in the Reagan Administration, and to one Douglas Paal – of whom we will speak more shortly.
Anwar relied on a network of front companies anchored by deposits, transactions, and fund transfers through the remnants of the BCCI network, Israel Discount Bank, Al Baraka, Hong Leong, and a Hong Kong-based entity called Hong Kong Venture Ltd. Through his Saudi patrons, and through the network of bankers, tax lawyers, and financial specialists he employed, Anwar and his cronies established a network for financial transactions and investments through which money was washed again and again over time. It was a very big laundry machine.
In a curious choice, Anwar’s special-purpose investment vehicles were almost always named some variation on Black Rock. Those vehicles would invest and hold funds, sending them back into the main network as needed. In this way, around RM4.5 billion – not the mere RM3 billion Murad describes – sloshed its way around the globe up until the time of Anwar’s sacking in 1998. Since then, it appears that the mechanisms remain basically the same.
An example should suffice.
In early 1997, as a small part of the “sucking sound” of money being drawn back into Malaysia in advance of Anwar’s attempt to bring down Mahathir once and for all, US$15 million was wired from a surrogate used by the ex-BCCI team to Hong Leong accounts through Bank Negara. Those funds briefly passed through a nominal BNM account number and were never recorded by Bank Negara’s normal procedures. Two senior vice-presidents signed off on the transfer, which was immediately after burned to ash.
The US$15 million began life in four different places:
Some US$5 million came out of IIIT’s central, indirectly-held accounts in Washington, DC, after which it was diverted through a special-instructions account at a very well known US bank whose name it is better not to disclose. It was then sent to Black Rock Capital Advisors and Investment Partners, LLC, a special-purpose entity based in the Caymans that existed partially for investment purposes and partially for transfers. Black Rock never even knew from where the funds really came. Then some US$3 million went to a special private equity fund specialising in restaurants and food operations in North America. There, it accrued value for a year before being diverted to special accounts offshore; its earnings went back through the New York bank to IIIT’s holding accounts. The remaining US$2 million went to Banque Suisse, and then through a very private Swiss fund which operated a series of special-investment hedge funds for Saudi princes, Gulf emirs, Turkish politicians, and Anwar. One year later, the total earnings – roughly US$6 million – were passed on to other accounts in Islamabad.
Obsidian Investment Partners, an Israeli private equity fund that specialised in opaque transactions for opaque clientele, wired US$3 million to Israel Discount Bank LTD, perhaps the oldest such institution in Israel – and the most discreet. As with all of these transfers, the wire did not have Obsidian’s name on it. IDB held the funds in its Special Investor Accounts, which are largely dedicated to financing Tel Aviv’s booming development – nightclubs, fledgling casinos, restaurants, office towers, residential building – for two years before sending, indirectly, what was then US$5 million to Lahore. As far as IDB was concerned, their client could have been Jewish. Little did they know.
Pitch Marble Holdings, an umbrella group based out of the Caymans with a completely Malaysian board of directors, released US$2 million from its reserves directly to a Pakistani company just two days before the greater total amount was delivered through BNM. Pitch Marble was folded by its nominee administrators shortly thereafter, and disappeared forever.
Just over US$2 million went from Anwar’s special account at Al Baraka (an unnamed account, so not even the bank’s insiders could know with certainty whose money this was) to yet another special account at a prominent bank in Geneva, and from there to a Hong-Kong-based private fund called, unbelievably, Granite Holdings, for a ‘capital contribution.’ Granite released an identical amount to a special subsidiary of a Hong Kong private equity fund, which in turn had been set up five years before to evade Beijing’s scrutiny in advance of the handover of Hong Kong. That special subsidiary served only a select clientele – politicians, the super-wealthy, and other banks.
Once all of the funds for this transaction were present, the entire amount was wired to Bank Negara. From there, it made its way out to some of the people identified in Murad’s affidavit. Anwar was never mentioned by name in any of the wires. Many of the institutions shut their doors not long after making a transaction.
If one opened and closed a company in an offshore paradise fast enough, it wouldn’t even make it into any online listing, especially if the activities took place before the invention of Google. Most of those countries prided themselves on eliminating their paper records as well.
This is but one example of many over the years, and it is hardly the largest such transaction. In advance of Anwar’s silent coup attempt on Mahathir, over RM240 million made its way back into Malaysia, a larger figure back in 1997 than it would be today. Indeed, Bank Al Taqwa, which had ties to Petronas through Anwar’s cronies there and which acted as a financier for all sorts of strange organisations, directed the transfer of over £40 million through multiple branches of the network into Malaysia in advance of the 1998 Umno General Assembly. Al Taqwa specialised in even more exotic transactions than most – at least part of the £40 million traveled through Oando Group Holdings in Nigeria and Absa (later purchased by Barclay’s) in South Africa before arriving.
However, it is a mistake to believe that Anwar used his money only for direct political gain in Malaysia; he had other fires to tend, as well.
From: Wire Desk 9AA1F Sent: 2 February 1998
To: NEW YORK WIRE
Subject: INCOMING WIRE/OUTBOUND WIRE AEDPA ALERT
Attached is a wire instruction to receive and deliver off-shore $1 million from an account in Virginia to an account in Grand Cayman. Instruction received at 13:02 this date. The size and turnaround both qualify for enhanced scrutiny and reporting to the New York Fed and FBI under AEDPA wire alert provisions.
Supervisor has signed off on the wire and explained that it is a special instructions wire and not to be impeded. I am directing this up the chain for further decision-making.
“Did you never wonder why?” Phillip asked the fund manager. He got a wry smile in return.
Phillip was both giddy and uncomfortable to be back in the States, and the sudden ubiquity of a chain called Starbucks selling sweet and frothy — he refused to call it ‘coffee’ — drinks seemed to make matters worse – he’d seen the one in KL, but had managed to avoid it. Nevertheless, he’d gamely ordered some horrible latte concoction and nursed it as he delicately asked his old friend why he’d been part of a global money-laundering operation.
His friend – a Californian who had come to New York City to make his name in banking and, by accident, left banking to run a fund with one billion dollars under management – took a gulp of the café-caramel-cream-concoction as if he had been drinking it his whole life. “When a customer instructs us to route money, and he has one of the biggest law firms in the country – the bank’s law firm too – papering it right, why wouldn’t I? When we draw our two per cent every time, and that two per cent rapidly adds into the seven and eight figures, and neither the SEC nor the FDIC nor the FBI nor the Fed is going to make my life miserable?”
Phillip tried not to grimace as he drank the sweet liquid in his cup. “Do you understand where that money was coming from? The same people who tried to bring down the Trade Center in ’93 – you were there! – they’re the ones behind that money.” It was the summer of 2000, the world’s economy was roaring, and no one in his right mind imagined that those same people would succeed a year later. “And what they didn’t put in, the customer skimmed ten per cent off of every, single public listing and government contract in Malaysia for seven years! You moved money that was either from terrorists – or from massive government corruption – or because of who the customer was, or all of the above!”
It was a Starbucks in Midtown Manhattan during the lunch hour rush, so even yelling didn’t penetrate the din.
His old high school chum just gave him a world-weary, slightly condescending smile. Phillip managed not to punch him in the nose.
“We just held and moved money,” he said. “Everything went to different, legitimate, private funds and not-for-profits, every last one registered with the right authorities. I never sent a dime to Hamas, or Hezbollah, or Islamic Jihad, or anything like that! Besides,” he said, “everyone knows that Mahathir had Anwar set up. And Anwar was supposed to be our buddy, isn’t that what the Wolfowitz Directive said?”
Phillip was bothered enough that he missed that question at the time. Sensing that this line of inquiry was getting him nowhere, Phillip changed gears. “Tell me about the money you sent to the Asia-Pacific Policy Center.”
The Asia-Pacific Policy Center features prominently in Murad’s statutory declaration. Again, the substance of Murad’s SD is essentially correct. The particulars are wrong in some of the more salient details. Murad spends an inordinate amount of time on the APPC, so it is perhaps incumbent to point out what Murad got wrong.
Firstly, there is simply no way that Anwar ever suggested that Douglas Paal, the director of APPC (and former CIA analyst), would control Bank Negara’s deposits. Paal is a savvy fellow, and in his line of work, he is one of the tops, from the intelligence world to national security policy to banking to the think tank world. But Anwar would never jeopardise Bank Negara’s utility by putting Paal in charge. Anyone who has met Doug Paal will tell you that this is a man who may have a superb CV, but he would not have – could not have – managed tens of billions of ringgits of deposit reserves. His value in Anwar’s eyes would have been more about image-building with the Washington establishment than about money, and as a former spook who was now respectable.
Murad was also wrong about how APPC and Paal were financed – and not merely because the amounts he claims were directed to them were far too low. As I discussed above, Anwar kept very little in BNM accounts. Rather, he used BNM as a clearing-house through which his funds occasionally travelled, in and out of Malaysia, and even then, the funds did not go via BNM, they merely were eased in and out of the country with the help of some of Anwar’s friends at BNM.
Beyond that, Murad was basically correct. Paal and APPC were, as he alleged, a part of Anwar’s relations with the West in that they supported Anwar – in testimony before Congress, it came out that APPC referred to Anwar as a “client.” Along with IIIT and APPC, Anwar used ISIS to bring Westerners, especially Americans, to Malaysia. (As Murad notes, these events were always in Malaysia, because that is where Anwar was – and Anwar was their funder.) ISIS came with Noordin Sopiee (the creator of the Vision 2020 idea) a useful, if unwitting pawn, the brilliant, Western-educated Malaysian who, in conjunction with Anwar, could give sparkling dinners to Congressmen who had never left the United States in their lives.
Those men and women would be ferried the next day to special talks given by APPC, who had ties to both parties in Washington, about how Malaysia (under Anwar) was open to the West, and how Malaysia (through Anwar) could be a force for democracy and free markets. By the time they left, they often took with them the belief that if only Anwar were in charge in Malaysia, here at last could be a perfect Muslim democracy.
American liberals – amusingly, overwhelmingly Jews – accepted Anwar’s projection at face value. To them, he was their tabula rasa: A Muslim who cared about the environment, about global peace and nuclear disarmament, about social justice – basically, about all of their core beliefs, yet never with any specific detail – Anwar was the noble savage for these men and women who likely believed Malaysia a tropical rainforest where the natives went around naked most of the time.
Those men and women believed they had the perfect Muslim to help democratise the Islamic world; I don’t believe a single one understood that they were, and are, being played for fools. Doug Paal was a part of this operation, whether he knew it or not. He was introduced to Anwar by Paul Wolfowitz, and he brought a long list of credentials Anwar would find useful in all of his operations. To the West, the former CIA man and member of the American National Security Council was a vital endorser of Anwar’s seriousness and credibility. To Malaysians, he was a sign of the seriousness with which the West took Anwar, and his official-sounding NGO added even more legitimacy.
June 24, 1999
STAFF EYES ONLY
PAAL testified before SFRC about APPC. Questioned about donations by ANWAR IBRAHIM and GOVERNMENT MALAYSIA. Denied GOVERNMENT MALAYSIA funding, admitted that ANWAR IBRAHIM funding amounted to significant revenues for APPC. Denied that full amount stated in Malaysian court affidavit was true. Unable to answer questions about 501(c)(3) and so-called “client list” for APPC. PAAL reminded that SFRC subpoena remains in effect and can be recalled. SFRC adjourned and to resume. PAAL likely not to be called again.
But Anwar’s ties to the West – on which he would rely so keenly later – are only one of the many reasons Anwar was building his war chest. Unlike Mahathir, who came of age when a poison pen letter could bring down a sitting Prime Minister, Anwar understood that to thrive and survive in Umno politics by taking the top seat and holding it, he must be perceived as a hero from any angle. He cultivated favourable ties with journalists and politicians abroad to build international support; at home, he made the conquest of all of Malaysia’s journalism outlets his next stop.
Anwar had learned from his Saudi patrons that the key to political control is control over appearance and image. His frequent outbursts of anti-Semitism at home were ignored in the West because he had so completely convinced opinion-makers that he would never engage in such a thing (a useful effort after he accused the United States and Malaysia of being run by a cabal of Jews in 2010). In Malaysia, he needed to lock down the establishment Malaysian press.
The campaign against Ghafar had been brutal, and well financed. The old man, an Umno stalwart of decades and DPM for nearly a decade, was destroyed back in 1993. Anwar’s rise to the top continued, with only Mahathir now standing between him and the pinnacle, and the wreckage he left behind was not inconsiderable.
We were good, and we had sources everywhere, but despite what one may read in cheap fiction or even John Le Carré, we were hardly omniscient. We nevertheless estimated that a total of roughly 58 million pounds had worked its way through dummy corporations, fronts nominally created for Islamic revivalism, and of course, for Anwar proxies as the Finance Minister booted aside the long-serving and faithful Ghafar. (This, of course, is an area where Murad’s estimate of the amount that went to ABIM was so dreadfully low.)
Not that we had ignored him before – Mr Ten Per Cent made it impossible to do business in Malaysia and ignore him – but Anwar Ibrahim was very much on all of our radar screens at that point. In just over a decade he’d gone from hardbitten, eternal Islamist rebel to the ultimate Umno insider, scaling the political ladder at a speed unseen since Malaysia’s independence.
Even Mahathir’s impressive climb was not so rapid, or so improbable.
Tracking the web of connections that made this rocket-like ascent a reality became every intelligence station’s foremost goal. Dimwitted ambassadors and reporters could afford the luxury of illusions. Intelligence services are supposed to be the first – and to hear them tell it – most vital line of defence for their nations. A man who’d called for a universal Caliphate modeled on the 14th Century was extraordinarily close to controlling Malaysia’s booming economy and energy reserves, in a part of the world where violent Islam had never taken root.
I’d opened a private consultancy a few years before, and saw which way the wind was blowing. I began a private project called Operation Next, designed to aid intelligence agencies and private firms as they prepared for the next Prime Minister’s ascension before the end of the decade. I never could have imagined that Anwar would royally foul up the entire operation because of his hubris.
I confess that I have never been a great consumer of local news, relying on my own sources for in-country developments and otherwise sticking to the BBC, the Financial Times, the Wall Street Journal, and bits from The Times of London. So it was that the stories of Anwar’s attempt to take control of the New Straits Times Press and TV3 were beneath my radar for another few years yet.
Others, however, were sensitive to the changes, and over time, my collaborators and I developed the back story.
If 1992-1993 could be considered the culmination of Anwar’s drive for the DPM slot, 1993-1994 should be considered the beginning of his next push to be Prime Minister. Not only did he begin building an extraordinary global network of offshore corporations, front companies, proxies, and money handlers, but Anwar also marshalled his political and economic resources to make certain that the English and Bahasa press would bring the public round to seeing him for the saviour he was.
In early 1993, Realmild Sdn Bhd, a private company owned by Malaysian Resources Corporation Bhd, in turn controlled by four of Anwar’s cronies, took control of the media conglomerate that owned the major Bahasa dailies, the New Straits Times, the Malay Mail, and TV3. That coup was accomplished entirely with Anwar’s funds and direction, making him the de facto controller of the largest concentration of media power in Malaysia.
This was yet another thing Murad got right and wrong in his statutory declaration – Anwar did indeed use Bank Negara and Hong Leong to take control of those entities. However, that money originated not in a BNM account, but rather in the little known Familienstiftung Jakob Schmidt in Liechtenstein.
Anwar began by placing senior editors in key spots at TV3 and in the print press, determined to micromanage his image to the country. Johan Jaafar, Nazri Abdullah, Yunus Said, others littered throughout the media became his proxies in his covert war for the Prime Minister’s spot. Reporters who failed to provide sufficiently favourable coverage were warned, and then if needed, sacked and blacklisted.
(Amusingly, some of these same men and women would later join the Opposition press, totally unaware that they were writing hagiographies of the man who’d had them terminated.)
The extent of Anwar’s complete control of the media is hard to express to someone who today might view the BBC, CNN, or any of the plethora of media channels broadly available online and off. Google now makes some of the old press clippings available, and there are certainly archives about, but the number of above-the-fold headlines and opening broadcasts that began with ‘Anwar Ibrahim Rescues…’ or ‘Deputy Prime Minister Anwar Ibrahim Accomplishes…’ or the equivalent is simply remarkable.
Anwar’s control of the media was very close to complete, a situation he would naturally decry and of which he would pretend total ignorance a decade later. But then, Anwar has always had a talent for righteous hypocrisy.
Neutralising Anwar meant neutralising his press operation, something Mahathir finally realised when he finally acknowledged the extent to which he had clutched a dangerous snake to his bosom. Just before Anwar was sacked, the editors of Utusan Malaysia and Berita Harian were forced to resign, with the director of operations of TV3 close behind. All three men were, by Anwar’s own admission, his confederates.
But that is once again getting ahead of the story. Before we resume the tale of Anwar’s rise and fall, it will be necessary to journey far away, to distant Turkey, and in Turkey we can understand more about Anwar than his money or his Malaysian power base. Anwar’s Turkish connection is a very significant part of the I-Files. There is a reason he went running to the Turkish embassy in KL some years ago. Anwar, and his ties to the AKP of Turkey, Turkish politicians, their money, and political cooperation is worthy of a whole chapter on its own. The next chapter will be the full and unvarnished story of Anwar’s Turkish connection.