McCain’s 30-Years of Service to Saudi Bank Raiders

The Crimes And Cover-Ups Of John McCain
Part 2

McCain’s 30-Years of Service to Saudi Bank Raiders and Junk Bond Kings

By Mark G. Levey
Part 3, Part 1

From BCCI, to Milken’s Junk Bond Kings, to Jack Abramoff, Senator John McCain has long provided the clean All-American face to the dirty job of cleaning up after the looting of America.

Senator John McCain has made a career out of serving the Kingdom of Saudi Arabia and its army of lobbyists, bagmen, and corrupt bankers during the last three decades.

In the process, he has done his part to cover-up BCCI’s looting of American banks and S&Ls, helped Ahmed Chalabi sell phony Iraq WMD information to Senate colleagues and to his constituents (see, Part 1, Link ), and more than anyone else, limited the public’s awareness of Jack Abamoff’s wholesale foreign buyout of the GOP, activities that individually have killed the careers of other Washington luminaries. Yet, somehow, John McCain remains the last man standing. He even appears to keep his hands clean.

The Saudi-Manchurian Candidate

The Senator’s patented role as All-American influence peddler to the world now includes the latest flap over his national campaign finance co-chair’s lucrative deals as a Saudi lobbyist and revelations about possible violations of federal campaign laws.

Tom Loeffler, McCain’s finance co-chair received $15 million from Saudi clients since 2002, is just part of a long conduit in the petrodollar pipeline from Riyadh to the Senator from Arizona. The Loeffler Group, which he founded, has also represented the People’s Republic of China.

Under Loeffler, the campaign has brought in more than $50 million for McCain so far this year, far more than was raised during all of 2007 when the GOP candidate faced a weak field of primary competitors. OpenSecrets.com shows that Loeffler and his wife, Nancy, have made a total of fifteen $2,300 maximum personal contributions to McCain during the past year.

The latest revelation of McCain’s connection to Arab oil money, and corruption within his campaign, came after the May 17 issue of NEWSWEEK reported: Link
Loeffler last month told a reporter "at no time have I discussed my clients with John McCain." But lobbying disclosure records reviewed by NEWSWEEK show that on May 17, 2006, Loeffler listed meeting McCain along with the Saudi ambassador to "discuss US-Kingdom of Saudi Arabia relations."

Another potential problem: Loeffler's firm started paying $15,000 a month last summer to one of its lobbyists, Susan Nelson, after she left to become McCain's full-time finance director, said a source familiar with the arrangement (who asked not to be identified talking about sensitive matters). Campaign officials were told the payments were "severance" for Nelson and that they ended by November. But in "February or March," Loeffler rehired Nelson as a consultant to "help him with his clients" while she continued on the McCain payroll, according to a campaign official who asked not to be identified talking about personnel matters. Federal election law prohibits any outside entity from subsidizing the income of campaign workers. . Also last week, energy adviser Eric Burgeson was ousted.Burgeson reportedly represented the Gulf emirate state of Qatar, along with several major multinational energy companies. See, Link

McCain is, indeed, in good favor among the Saudi and Gulf elites. Bloomberg reports: Link

Saudis are privately rooting for the presumptive Republican nominee, discounting some of his rhetoric because he's the only candidate to promise to keep U.S. troops in Iraq and to deter Iran.

``The royal family and other elites would like to see McCain,'' Mai Yamani, a visiting scholar with the Carnegie Middle East Center in Beirut, said yesterday in a telephone interview from London.

``He would keep the troops in Iraq, and that is their main worry, that the U.S. may withdraw or minimize its presence,'' said Yamani, whose father, Sheikh Ahmed Zaki Yamani, was the kingdom's oil minister from 1962 to 1986.

When McCain belatedly ordered his campaign to sever Loeffler, Nelson and Burgeson he may have wished he could so easily jettison the rest of the crude oil covered skeletons from his closet.

Like the Bush Family, McCain had his Hand in the BCCI and S&L Scandals

McCain claims that his involvement in the Keating S&L scandal wasn’t really much to worry ourselves about. He was all but exonerated by his Senate colleagues, he says, let off with the political equivalent of a warning at a traffic stop. In fact, the Senate Ethics Committee was rather lenient with all five caught up in the scandal. But, that says more about the nature of the Senate than it does about the actual damage done to the American public by the financial crimes that led to the S&L collapse, itself.

The S&L crisis was all about oil, junk bonds, and deregulation that allowed the two to mix. That volatile brew is still actively bubbling over, and taxpayers are still paying $30 billion annual installments toward the trillion dollar bailout.

Here's how you got stuck paying the bill, courtesy of the Bush family and John McCain.

In the mid-1980s, world oil prices plunged which set off a long series of bankruptcies and financial takeovers when overvalued Texas and southwestern land prices collapsed. The financial panic of 1988 also followed the “reform” of federal banking rules that had allowed bank managers to trade in risky new derivatives and junk bonds.

This tidal wave of bankruptcies in the oil patch created a huge buying opportunity for anyone with ready cash. The problem was, these were hard times on Wall Street after the sudden panic sell-off on October 1987. But, someone did step in once prices were sufficiently discounted. Huge bank holding companies scooped up looted banks and S&Ls (along with their land deeds and oil rights), bought out for pennies on the dollar after they went belly-up. The federal government even subsidized many of these purchases. The American taxpayer was left with an estimated $1 trillion bailout cost. The epicenters of this late 20th Century white collar crime wave were in Houston and Phoenix, home base for two highly ambitious GOP politicians. One was named George H. W. . Bush, and the other John McCain, III.

McCain and BCCI, the Bush Bank

Before he was selected to as Ronald Reagan’s 1980 running mate, George H.W. Bush had a short and little-known career as an international banker. That effectively started in 1976, while Bush was still CIA Director, a post he held for part of the Nixon and Ford Administration. In the final months of the Ford presidency, Bush made a deal with the newly-appointed head of Saudi General Intelligence Directorate, Prince Turki al-Faisal. The two spy chiefs agreed the CIA would look the other way while the Saudis ran their own global operations. In exchange, the Saudis financed the sort of black ops that had been banned by the Democratic Congress after Watergate and the Church Committee hearings. The arrangement was called “The Safari Club” , and the funding mechanism for this was the Bank of Credit and Commerce International, “BCCI”. See, Link ; Link

Newly-elected President Jimmy Carter fired the CIA Director. In early 1977, Houston banker Joe Allbritton appointed Bush to direct his First International Bancshares (dba, First Interbank) and its London and Luxembourg affiliates. According to Kevin Phillips, Bush’s bank was among the first outposts in America for BCCI. Link In the early 1980s, Allbritton followed G. H. W. . to Washington, purchasing Riggs Bank, installing brother Jonathan Bush as a Director.

Riggs closed in 2004 after being fined $25 million dollars for violation of federal money laundering and anti-terrorism laws. Riggs had catered to high-end foreign customers and the diplomatic trade in Washington, as well as having “a relationship” with the CIA. Link / After 9/11, the bank was found to have transferred money from Saudi Embassy accounts that ended up supporting two of the 9/11 hijackers, Flt. 77 leaders Nawaf al-Hazmi and Khaleed al-Midhar after their arrival in the U.S. See, Link

Know Your Banking Customer: Salem Bin Laden

Meanwhile, back in Texas, First Interbank merged with Jim Baker’s Republic Bank, in which the Saudis had taken a stake with the 1978 purchase of the bank’ headquarters building by members of the Bin-Laden and bin-Mahfouz families. The merger of these two Texas banks several years later created the largest regional financial institution in the U.S. Infused with capital from Saudi Arabia, First RepublicBank went on a massive bargain buying binge in the Southwest oil patch. Link

This Saudi-financed merger of the Bush bank with the Baker bank created the nation’s largest bank holding company, and soon the largest bank failure, resulting in a $1 billion tax-payer funded bailout in 1987. This was to become a pattern for the trillion dollar rip-off to come. See, Link

McCain's Role in Covering Up the the Trillion Dollar Bank Heist
It’s been said that the American people didn’t become very angry about the S&L crisis because the explanations given for what caused it were too complicated for many to comprehend. That seems to have set a pattern for financial scandals to follow. Nobody dared tell the American public – although the 1992 Kerry Commission report came close -- that their financial system was being looted by a well-funded, highly-organized global criminal organization with ties to half a dozen of the world’s most powerful intelligence services, including elements of the U.S. Central Intelligence Agency. They didn't name CIA Headquarters, "The George H.W. Bush Intelligence Center" for nothing. See, Link

Buried in all this muck is the thread running through all these financial scandals – from Keating to Silverado to First RepublicBank to BCCI to Enron -- has been corrupt management, corrupt officials, corrupt intelligence operatives, and corrupt auditors. See, Link

As the group’s scams became more sophisticated and wide-ranging, the price tag for bail-outs escalated. The federal rescue of Neil Bush’ Silverado S&L cost the taxpayer $1.3 billion. The price tag for Charles Keating’s Lincoln Savings & Loan bailout eventually reached $2.6 billion. Link BCCI was termed “the $20-billion-plus heist.” (Beatty, Jonathan; S.C. Gwynne. The Outlaw Bank: A Wild Ride Into the Secret Heart of BCCI Beard Books (1993)). Finally, the Federal Energy Regulatory Commission (FERC) estimated that Enron fleeced ratepayers of $30 billion, creating the 2001 California energy crisis. On November 15, 2005, FERC settled with Enron’s receivers for a mere $1.5 billion. Link

The Keating S&L scandal was part of a now-familiar pattern of transnational commodities price-fixing, land grabs, stock-price rigging, fraudulent audits, financial panic, and public bailouts, all carried out by an overlapping cast of characters with ties to foreign and domestic intelligence agencies. Amidst the financial panic of 1986-88 that followed the drop of a barrel of oil from $39 to $13, many of these banks and S&Ls (and their land deeds and oil rights) were bought out for pennies on the dollar. More than a thousand deregulated financial institutions went belly up and were looted. Deregulation allowed crooked bank managers to cash in on the junk bond craze that was sweeping Wall Street. Banks and S&Ls issued unsecured notes and plots of land and traded them in circles with other institutions to ring up the notional value to support cash-out loans for themselves and their partners.

This is precisely the sort of round-robin games that Neil Bush, Director of Silverado S&L played with Charles Keating and his partners, Saudi European Investment Corp’s board and officers – Roger Tamraz, Tolat Othman, Abdullah Taha Bakhsh, Abbas Gokal -- along with other BCCI players. All told, the S&L scandal left the American taxpayer holding the tab for an estimated $1 trillion bailout. See, Steven Wilmsen: Silverado: Neil Bush and the Savings & Loan Scandal, p. 81; Link ; Link ; Link

It was during this period that the Saudis and Gulf states leveraged their earnings from American bank acquisitions through junk-bond mills, and then moved on to the 1996 Chemical-Chase and Citi banks consolidations in New York. Link Today, Prince Alaweed’s Kingdom Holdings owns a substantial and growing share of Citicorp, the largest bank in America, along with a portfolio of the nation’s largest financial, technology and media corporations. A similar process of slash and burn acquisition of the U.S. financial industry is now going on with the collapse of the U.S. mortgage and derivatives markets. Link; Link

A major figure in the Keating S&L case was Carl Linder, known as the “father figure” to junk bond king Michael Milken, and the single largest purchaser of Milken’s junk bonds. Link

“Lindner, a wealthy businessman from Cincinnati, Ohio owned the American Financial Corporation (AFC). In 1976, Keating bought a subsidiary of AFC called American Continental Homes from Lindner, which Keating later renamed American Continental Corporation (ACC). ACC embarked on several ambitious real estate development projects, mostly in Arizona and Colorado. To finance its activities, ACC set up its own in-house mortgage company and was a pioneer in creating the type of financial package and instrument known as the ‘mortgage-backed security.’” See, Link

To recap, the context of the Keating S&L scandal was manipulation of world oil prices following the 1979 Iranian revolution and a loosening of regulatory oversight that set off a wave of bank failures across the American oil patch. Into this mix enters BCCI’s global raiders and junk bond traders, who cash cow the giant bank holding companies and leverage their assets into a play to take over the American banking industry. Finally, to top it off, the Bush presidency and elements of U.S. intelligence engage in a massive cover up of these global financial mechanizations in an effort to protect their international partners. It’s in this context that one needs to re-examine the role of John McCain in the Keating S&L scandal. McCain has always been a conciliator and clean-up specialist – in the case of the Keating S&L, the purpose was to protect a group of junk bond salesmen and Arab bank raiders, but, most of all to shield the Bush wing of the CIA and corrupt lawmakers – and put an attractive, all-American face of “reform” on cleaning up the mess afterwards. This is precisely the cover-up routine McCain repeated twenty years later in the Abramoff case.

McCain and Enron

Throughout his career, McCain has been an enthusiastic champion of financial industry deregulation as a member of the Senate Commerce Committee from 1997-2001 and 2003-2005. McCain voted, according to a Washington Post financial columnist, with his “campaign's general co-chairman and domestic policy adviser, former Texas senator Phil Gramm. The Politico's Lisa Lerer reports that not only did Gramm author the 1999 legislation that repealed Glass-Steagall, the New Deal law restricting the speculative activities of banks, but after Gramm left the Senate, he lobbied Congress on behalf of the Swiss bank UBS when the banking lobby wanted Congress to overturn state laws restricting predatory lending and the issuance of mortgages to prospective home owners who could not afford them.” Link McCain, like Gramm, has been a supporter of the “Enron Loophole” that allowed Amaranth Advisors hedge fund, a commodities futures trading company, to attempt in 2006 to corner the natural gas market, a criminal violation for which the fund was recently handed a $300 million fine. Link

McCain also has a direct connection with Enron, having received money in campaign contributions from Ken Lay’s Death Star. "We're all tainted by the millions and millions of dollars that were contributed by Enron executives," John McCain told CBS' "Face the Nation" Sunday. McCain then acknowledged receiving $9,500 from Enron in two campaigns. Link Gramm’s wife, Wendy, was on the Enron Board of Directors, and Gramm was the architect of much of the “reform” while he chaired the Senate Banking Committee, including a move to exempt electronic trading of electricity from regulatory oversight. According to Time Magazine, Gramm and his wife were at the forefront of many of the illicit practices that led to the firm’s massive rip-offs and ultimate collapse:

On Jan. 14, 1993, in the final days of the first Bush administration, Wendy Gramm – as chairwoman of the Commodity Futures Trading Commission – pushed through a key regulatory exemption removing energy derivatives contracts and interest-rate swaps from federal oversight.

That was a major financial boon to Enron, where Wendy Gramm landed five weeks later as a member of the board of directors. She also became a member of the audit committee that signed off on another one of Enron’s fraudulent schemes, partnerships that hid the company’s growing debt.

McCain claims that his role in Keating was merely to help out a local constituent in dealing with Washington bank regulators. McCain, his current wife, and father-in-law were, in fact, Charles Keating’s business partners in a Phoenix shopping mall, received in excess of one hundred thousand dollars in campaign contributions from Keating, and accompanied Keating on his private jet to his private resort in the Bahamas on multiple occasions, gifts which McCain did not report until they were discovered. Yet, McCain, hand-picked as Barry Goldwater’s successor, got a slap on the wrist from the Senate Ethics Committee when this came out in the Keating-Five inquiry.

A second Senate panel wasn’t so sanguine. The 1992 Kerry Commission report concluded that the Keating affair was far more serious than a mere domestic banking scandal: “the financial dealings of BCCI directors with Charles Keating and several Keating affiliates and front-companies, include the possibility that BCCI related entities may have laundered funds for Keating to move them outside the United States.” Link Out of the five Senators accused, only McCain and Glenn ever ran again for office, with McCain the sole survivor.

2008. Mark G. Levey.
Reprinted with the permission of the author.

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