Sheikh Khalid Bin Mahfouz, the former chief operating officer of Saudi Arabia’s National Commercial Bank (NCB), is to pay $225 million in an agreement with the US authorities to drop all charges against him in connection with the closed Bank of Credit & Commerce International (BCCI). According to the deal, the New York county district attorney and the Federal Reserve Bank will drop all civil and criminal charges against Bin Mahfouz in the US. Prosecutors had charged that Bin Mahfouz had violated US law by buying 29 per cent of a BCCI subsidiary that controlled a US bank group without obtaining federal clearance.
The New York supreme court dismissed all the criminal charges against Bin Mahfouz on 23 December and the Federal Reserve has agreed to take no further action against Bin Mahfouz and NCB in relation to BCCI. Haroon Kahlon, a former bank executive, and Eastbrook, a New York financial firm, pleaded guilty to the misdemeanour of failing to register with the state as a broker.
The $225 million payment will be divided between government bodies and a settlement fund to compensate BCCI creditors. The US Treasury Department is to receive $35 million and the state and city governments of New York will receive $1 million each. The settlement fund is to get $188 million. According to a statement issued by Bin Mahfouz’ US representatives, the fund is ‘to be held by the Federal Reserve Bank of New York through which Mr Mahfouz, the National Commercial Bank and Mr Kahlon will be able to satisfy settlements or judgments, if any, of the civil pending claims against them.’ ‘The money will be paid out eventually to depositors and creditors of BCCI overseas who have been defrauded,’ the prosecutor in the case, assistant district attorney James Kindler, told Reuters.
The $225 million payment brings the money recovered by the district attorney’s office to $880 million. District attorney Robert Morgenthau estimates the losses associated with the BCCI closure at $12,000 million.
Bin Mahfouz said: ‘I have accepted these agreements, and their monetary costs, as a business decision and for peace of mind. I have maintained from the beginning that I was innocent of all these charges and I am pleased that the court has dismissed them.’