SWALEH NAQVI INTERVIEW TRANSCRIPT
Interviewed by Adil
Ahmad some six years ago at the Infaq Foundation’s Head Office in Karachi
Pic caption - The late lamented Agha Hasan Abedi
One of the issues that caused concern regarded the
sustainability of the charitable trust. Infaq Foundation is a Not for Profit
organization meant exclusively for charity work. The word ‘Infaq’ appears in
the Quran and means to spend for the benefit of the people. Abedi Sahab
provided enough capital for this venture and the income from that endowment is
quite significant.
“At that time BCCI had three Branches in Pakistan , and
instead of transferring their profits to the BCCI Head Office in Luxemburg we
donated them to the Infaq Foundation. The endowment therefore became
considerable, and is all invested in risk-free Government securities. The
income from these is about Rs:300 million rupees per annum that goes into
funding Infaq’s various activities. GIK and FAST are beneficiaries of Infaq,
but they charge a fee from their students and accept donations from other
sources including the Government. The GIK has very kindly dedicated an
auditorium to Agha Sahab’s memory. However, Agha Sahab’s emphasis was always on
the quality of the activity being sponsored and not on self-projection.”
“Infaq is a donor organization focusing on health and
education, and the welfare of individuals. We encourage other institutions so
as to maximize outreach, and the Korangi
Academy
The Korangi
Academy
Agha Sahab had applied for 100 acres of land from the then
KDA, and did not want to go too far out of the city. Hence the present Korangi
location was found suitable. The indigent population is serviced with incomes
of 4000 to 5000 per month. One also has to keep in view the number of family
members that this income is supporting. “We feel that kids from these low
income localities also have potential, and should be given the same
opportunities as the affluent class. It is an expensive concept, but it is
worthwhile. Our aim is that these kids when they graduate should join good
professions and achieve respectable positions in society on merit.”
The student-teacher ratio at the Korangi Academy
The admission process is completely independent and follows
its set criteria, not accepting any recommendations or influence. “There are
Balochi, Sindhi, Punjabi, Seraiki, and Pathan families that send their kids to
us, and we have some 11 languages as mother tongues in our student body.” The
first year of school, pre-Kindergarten, is spent bringing the kids to a common
language. Korangi is a microcosm of Karachi , and
Karachi is a microcosm of Pakistan in terms of its
representation of the four Provinces.
The Korangi Academy presently goes up to Class 9, and the
students presently in Class 9 were admitted in pre-Kindergarten. It’s a long
drawn out process with no lateral admissions. Time is not an issue since there
is no profit motive involved. After the current batch of admissions the student
strength will be at 450, with 750 as the capacity. “We have 25 students per
class, and two sections in each class. Mass education is the mandate of the
Government, and there is no way that the private sector can fill that role.”
BCCI DEBACLE…. Down Memory
Lane
After the takeover of the BCCI by the UAE the HQ was moved
from London to Abu Dhabi , with the registration remaining in
Luxemburg. The majority shareholders of Abu Dhabi were given a full account of
the losses incurred, and Swaleh Naqvi offered to step down to make room for a
new CEO. They agreed, but wanted him to continue as an advisor to help with the
inquiries and investigations.
In July 1991 the Bank was suddenly closed and the situation
changed, and America brought
tremendous pressure on Abu Dhabi
to prosecute the former management. To the extent that Sheikh Nahyan was due to
visit the US for a medical
check-up and was told that while he was welcome in the US , there could be no guarantees
that he would not be served with a subpoena in connection with the BCCI cases. As
a result of this pressure Abu Dhabi
detained Swaleh Naqvi and a few of his colleagues and served them with an
indictment. Thereafter US authorities wanted to question Swaleh Naqvi. He told
them that he had no problems with that, except he would like legal counsel.
This legal counsel was provided and paid for by Abu Dhabi . However, the pressure was
maintained that after the case in Abu Dhabi was
over Swaleh Naqvi would be handed over to the US .
Swaleh Naqvi was detained at the Abu Dhabi Police Club. One
morning he was sent to the airport and handed over to the US FBI officials who
ushered him into an executive jet. They wanted Swaleh Naqvi to divulge some
sensational bit of information about the Abu
Dhabi rulers. This was information that he did not
have, and nor did he intend to cook up any stories. Throughout the flight they
kept sitting in front of Swaleh Naqvi, gesturing to him to talk. But Swaleh Naqvi
had nothing to say. The theatrical aspect was fully in place with Swaleh Naqvi
kept handcuffed and chained, even when he went to the toilet. It was
psychological warfare aimed at breaking Swaleh Naqvi down. They refused to
believe that there was no mystery associated with this case, and the more Swaleh
Naqvi maintained his silence the more they were convinced that he was hiding
something.
In retrospect it has been ascertained beyond doubt that the
problem lies with the Western mindset that is anti-Arab, anti-Muslin, and
anti-Pakistani. Swaleh Naqvi’s motives in penning his thoughts at this juncture
are two-fold: firstly, to put in perspective the stature of Agha Hasan Abedi
which he feels may not have been properly done in the past; and secondly; to
reiterate that the BCCI did not fail as a bank, but was made to close down due
to reasons other than those of financial solvency. There are no institutions,
financial or otherwise, that have not had a few black sheep who have
subsequently been sorted out. The history of banking shows that every bank has
experienced a major crisis at some time or the other in its growth.
During the Third World Debt crisis all the major banks went
insolvent, and had to be bailed out by the Governments. If there was a crisis
at BCCI then it did not involve fraud. BCCI never asked for any help from the
Government or Central Bank, and did not require the taxpayers’ money to bail it
out. BCCI resolved its problems by itself. There was a delay caused by Mr.
Abedi’s ill-health and the actions against BCCI taken in the US , but finally the Bank was saved.
The shareholders made good the deficit that the BCCI was running due to losses,
and provided a large amount of capital for its future operations. All of this
was done in consultation with the regulators. Changes were also being made in
the management and the structure. Then why was the BCCI closed?
The motive behind this grand drama against the BCCI and
individuals associated with it was something else. The US Central Bank and the
Bank of England coordinated their worldwide strike against BCCI after the
shareholders bailout monies had been received by the BCCI, although Abu Dhabi withheld $700
million of the promised amount upon seeing the malafide intent of the Western
banking establishment. The Western banking establishment did not look kindly
upon the BCCI’s role as the broker of the Middle East
oil wealth, considering the Bank of America had to enter into a partnership
with the BCCI to access the petrodollar market. The BCCI was hugely resented by
the Western banking establishment.
Agha Hasan Abedi’s other achievements like the Third World
Foundation, Third World Prize, Third World Bank, and other such projects that
would unify and empower the emerging economies of Asia and Africa
did not go unnoticed by the entrenched powers of the time.
The thing that tends to put BCCI functionaries on the
back-foot was Swaleh Naqvi’s admission of guilt on all charges. The Tampa case was a sting
operation. A bank survives on public confidence. The sting’s objective was to
create such a hype that the Bank would collapse right there and then. 200
correspondents were gathered at the Tampa
hotel. It was a very vicious attack. “Fortunately we survived. Even though it
took up 18 months or so, had we prolonged the legal battle for another two
years or more which it would have taken, then the effect upon our business
would have been extremely adverse.”
“Moreover, our lawyers Clark Clifford and Robert Altman
advised this course of action. It was not an admission of guilt on the BCCI’s
part. But since some of its employees were guilty there was vicarious liability,
and hence I was guilty. With regard to the charges brought subsequently, only
my case was tried in the USA .
They wanted to catch hold of someone very prominent so they could claim to have
netted a big fish. They cut off all resources. The BCCI was shut. We were not
rich people, nor did we get bonuses or any such thing. Even my last salary was
blocked. There was no money for legal defense. Initially Abu Dhabi was paying so I had a good lawyer.
As soon as I was transferred to the USA ,
Abu Dhabi
stopped paying for the lawyer. So the US court system appointed a pro
bono lawyer. I had no choice in the matter. However, his attitude towards me
was good.”
“On the other side a senior office of the Justice Department
was appointed only to deal with this case. After discussions with him my lawyer
informed me that there was no way to take this case for trial because it could
be a long process during which I would remain incarcerated, and the trial could
culminate in a lengthy prison sentence. He said it was in my best interest to
agree to plea-bargain in lieu of cooperation. My lawyer wanted that all the
other charges in all the other jurisdictions should also be covered so that I
could not be tried elsewhere. So the plea-bargain covered a wide range of
charges, but nowhere in that list was a charge of personal dishonesty or
corruption against me. I never had a problem in cooperating because all I was
required to do was to state the facts and explain them. So this was the basis
of plea-bargain.”
Then there were charges framed against the BCCI, and the US
Justice Department insisted that these cases be first settled before the
liquidators could begin there job. So for a whole one year the liquidators
could not begin their work, and they were forced to sign a guilty plea on
behalf of the BCCI. There were wheels within wheels.
Life in the Barracks
Swaleh Naqvi’s total sentence was for 11 years. Of these the
3 years spent in Abu Dhabi
were adjusted. 2 years were further reduced in lieu of cooperation. In all SN
was there for about 5 years in a minimum security facility in Pennsylvania called Ellen Wood.
“We lived in Barracks which contained cubicles that housed 2
to 3 people. The barracks were locked. They were opened for breakfast. After
that some work or the other was assigned that we went out to do. After that we
were locked up in the barracks again, which were next opened at lunch time, and
after that at dinner time. After dinner we had another 2 to 3 hours of freedom.
It was fairly relaxed, being a minimum security facility. There was a library and
television. There were a fair number of black Muslims and arrangements were in
place for Namaaz. These were 8 years of the prime of my professional life
during which I should really have risen to the pinnacle of my career. They were
all gone. I was separated from my family, with just one daughter in the US who
visited me once a month.”
Then there was the time spent researching current affairs in
the library, and the writing of memos to his court appointed lawyer. “That
caused for considerable frustration and anguish. To see how other institutions
were being allowed to get away with committing huge crimes with no more than a
token slap on the wrist. I was perhaps too engrossed in my personal situation,
and not being able to step back and view the big picture. That the BCCI and its
staff were really prisoners of war, and not ordinary white collar criminals.”
Family
Four sons and five daughters. Eldest daughter Bilqis is a
doctor in Karachi .
Second daughter Birjis has an MSc in Microbiology and works for a pharmaceutical
company. Third daughter Nafees living in US with her son. Fourth daughter
Yasmin in California
married to a Chartered Accountant. Youngest daughter Parveen in Long Island . Eldest son in Canada
at the time, and the three younger sons were in Karachi with their mother. One son was
pursuing studies in Law at Buckingham University , and when he came to Karachi for a visit his visa was not renewed.
Later he went to Houston
and got a JD degree. Two granddaughters from youngest son live with SN in Karachi . Wife passed away
in 2005.
Former BCCI cadres doing well, both in Pakistan and overseas. Agha Sahab
instilled the family spirit, and this has stayed on, with a large number of
former BCCI officers meeting annually.
Abedi relished challenges
Khusru Karamat says that Abedi Sahab was aware that he was
entering a hostile environment in the US , and perhaps entered it too
early. Why was there a rush to get into America ? Mr. Abedi relished
challenges, and was not deterred by obstacles. He saw an opportunity when this
bank operating in 5 States came up for sale. At the time US banks were allowed
to operate in only one state. This was a very old bank that predated the
regulation, and it had branches in 5 states. The shareholders were bickering
amongst themselves, and while the potential of the bank was great, it was not
being managed properly. One of the shareholders came to BCCI to sell his shares
and brought a couple of other shareholders along as well. BCCI’s liquidity did
not permit such a transaction, so Mr. Abedi brought in BCCI shareholders like
the Rulers of Dubai and Abu Dhabi
to purchase the shares in their individual capacity. This was all very
legitimate. However, a group of people opposed the sale, and at that point Mr.
Clifford and Altman were brought into the picture.
Because of the rapid expansion of BCCI experienced bankers
were needed. Recruitments from Pakistan
met with objections from the State Bank of Pakistan who accused BCCI of
fuelling a brain-drain. So other sources were explored, and SN went to India
in 1978 and 1983 to recruit good bankers. One of them was a retired chairman of
the Central Bank of India ,
as well as the retired chairman of the Union Bank of India , and other senior bankers. “Because
they were competent and recruited on merit, we never discriminated amongst them
and the Pakistanis. Whether they were as loyal as my Pakistani colleagues in
the BCCI time of crisis, well, I don’t have to answer that!”
Swaleh Naqvi’s Early Years in East Pakistan
“I joined MCB in Karachi , and
after one year was transferred to then East Pakistan, and worked there for three
years as Manager of Khatoonganj branch, a wholesale market dominated by the
Memon community, in Chittagong .
That is when I met Mr. Abedi. I wanted a transfer back to Karachi where my family was, and Mr. Abedi
said he would do so after another year. That one year became 12 years with UBL
in East Pakistan !”
“From Branch Manager I became Regional Manager for the
Chittagong Region, and then I became Chief Manager for the entire East Pakistan branches numbering some 250. Between 1960
and 1970 UBL became the largest bank in East Pakistan ,
larger than Habib Bank. That was the reason for my coming to Mr. Abedi’s
attention. Mr. Abedi’s policies and approach generated our success. He gave a
lot of freedom to the Managers, and encouraged them to take the initiative.
Naturally there was responsibility and controls.”
“Also, there was a shortage of trained manpower in West Pakistan , and other banks were hesitant in
recruiting Bengalis. We had no such hesitation and recruited the locals, and
they provided a crucial bridge to local businessmen who had been empowered by
Ayub Khan’s economic policies, and whom the other banks were not willing to
service. UBL serviced the local Bengali businessmen, and helped them open
letters of credit and goods clearance. Perhaps the main reason for the rapid
proliferation of UBL branches in East Pakistan was a State Bank of Pakistan law that required the opening of 3
branches in East Pakistan for every one branch in West Pakistan, and UBL
urgently needed to expand in West Pakistan .”
“Ayub Khan opened tremendous business opportunities in East Pakistan . A Bengali could set up a jute mill worth
20 million rupees by investing half the amount and getting bank and other
institutional financing for the balance amount. The first steel mill of Pakistan was set up in Chittagong . The first oil refinery also came
up in East Pakistan . The East Pakistan
Industrial Development Corporation played a huge role in this regard.”
“Because UBL had a large cadre of Bengali officers and
managers we found ourselves very favorably positioned with regard to the
Bengali business clientele. Matters started deteriorating at the bureaucratic
level. Whenever I met the heads of local corporations I encountered great
resentment amongst them with regard to their West Pakistani counterparts. They
felt they were being exploited. Jute was being exported from East Pakistan and
the foreign exchange earned was invested in West Pakistan .
The problems came politically. The average Bengali felt that he could not
relate to the West Pakistani. His sentiments bordered on hate. Urdu as the
national language was never an issue because it was never enforced in East Pakistan .”
Advent of the International Bank
“One year before the fall of Dhaka I was transferred to the
UBL Head Office in Karachi .
I could see the split coming, and had even suggested to Agha Sahab that he
register a separate company in East Pakistan
to avoid any confusion should the Eastern Wing break away. For one year I
remained associated with the Controller of the East
Pakistan branches in resolving the various issues that were
arising. In 1971 Mr. Abedi introduced me to a representative of the Bank of
America. That was the first time I came to know of his plans to establish an
international bank.”
“I kept working with him on making projections. In 1972 he
transferred me to Abu Dhabi where at the time
there were a dozen branches of UBL in the Middle East ,
and I was made the head of them. I traveled with Mr. Abedi to the USA to
meet the Bank of America representatives, and was present at the MOU signing
there. In September 1972 the BCCI was registered in Luxemburg. When working
with Mr. Abedi things came to us naturally, and it never seemed that we were
embarking on some huge venture. He kept us in the loop, and we always felt that
what we were doing we would be successful in it. At that point I resigned from
UBL where I was the Executive Vice President, and joined BCCI. Mr. Abedi was
still President of UBL. Then followed nationalization. For one year Mr. Abedi
could not come out of Pakistan
to head BCCI, and it was run by a team of three General Managers of which I was
one.”
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