-Caveat Lector-
from:
http://www.consortiumnews.com/092399b.html
<A HREF="http://www.consortiumnews.com/092399b.html">The Consortium</A>
-----
September 23, 1999
US Tie to Russian Money Scam
By Robert Parry
Better late than never, the major U.S. news media has discovered that a
major financial scandal has been brewing in the former Soviet Union.
To its credit, The New York Times picked up on earlier work by
journalist Robert Friedman and reported on massive Russian money
transfers into the Bank of New York.
But what has been missing from the coverage is a coherent history of the
long-standing relationship between one of the bank's principals and U.S.
intelligence activities.
On Aug. 22, the Times even published a lengthy profile on Bruce
Rappaport, a Swiss-Israeli businessman behind the Bank of New York, but
left out Rappaport's role in U.S. covert operations during the Reagan
administration.
The Times profile began promisingly enough. "At the intersection of
illicit Russian money and the Bank of New York is Bruce Rappaport, a
Swiss banker who has had brushes with governmental investigators in the
past and who has long had an important connection to the bank," the
article stated.
"Together with the Bank of New York, Mr. Rappaport owns a bank in
Switzerland that helped provide the American bank with important
business contacts in Russia, according to Western bankers familiar with
the operation."
The Times then wondered "why the Bank of New York, a conservative
institution that is one of the nation's oldest banks, worked closely
with a man who has frequently drawn the attention of government
regulators and law-enforcement officials worldwide."
In an apparent effort to answer that question, the article sketched
Rappaport's biography from his birth in Haifa, now part of Israel,
through his founding of Inter-Maritime Bank in Geneva to his acquisition
of the Bank of New York.
But left out was an important piece of the mystery: Rappaport's close
relationship to Israel's Labor Party, the Reagan administration and U.S.
intelligence.
That history makes for an interesting story in its own right, but also
helps explain the network of powerful connections that Rappaport used to
build his international financial empire and position his bank to profit
off Russia's billions of dollars.
In the 1980s, Rappaport emerged as an important financial conduit for
both Tel Aviv and Washington. Some of Rappaport's influence apparently
stemmed from his personal relationship with CIA director William J.
Casey. The two were frequent golfing partners.
By the end of the decade, Rappaport had been linked to some of the
Reagan administration's most controversial actions.
These included: the Iran-contra affair; an Israeli bribery case that
involved a U.S.-backed oil pipeline in Iraq; the scandal over the Bank
of Credit and Commerce International; a curious shipment of weapons
through a melon farm in Antigua to Colombian cocaine kingpins; and the
October Surprise mystery, the allegations that the 1980 Reagan campaign
sabotaged Carter's negotiations to free 52 American hostages held in
Iran.
In BCCI-related testimony in 1991, President Carter's former budget
director Bert Lance described a peculiar overture from Rappaport in the
early 1980s.
Out of the blue, Rappaport sought Lance out and arranged a series of
meetings. Rappaport left the impression that he "was interested in if I
or anyone around Carter was pursing the October Surprise," Lance told a
Senate investigation. [AP, Oct. 23, 1991]
In the late 1980s, as suspicions about the October Surprise caper grew,
Rappaport entered the picture again. His Bank of New York cooperated
with a politically sensitive Customs sting that entrapped and
discredited several individuals familiar with Casey's activities during
the 1980 presidential campaign.
The sting rounded up a small band of international businessmen on
charges of plotting to sell 1,000 pistols to Chile, which was then on
the U.S. embargo list because of human rights concerns.
The defendants argued that they were targeted because of past business
dealings with Casey's close friend, John Shaheen, who had known Casey
since World War II when both men served in the OSS, the forerunner of
the CIA. After he died in 1985, Shaheen was identified as a key
middleman for Republican overtures to the Iranian government in 1980.
Barry Brokaw, a Shaheen associate arrested in the Customs sting, said he
was struck by the investigators' strong interest in what he and his
wife, who had been Shaheen's secretary, "knew about Iran-contra or
October Surprise."
Kenneth Walker, a Canadian nabbed in the sting, complained that he was
arrested unfairly as part of a Bush administration effort to assess
where Reagan-Bush insiders might be vulnerable from the October Surprise
case.
In 1992, Walker filed suit in Canada naming the U.S. government and the
Bank of New York as defendants. Walker charged that the Bank of New York
supplied him with false information that convinced him the proposed gun
sale was legitimate. [The Financial Post, Toronto, Feb. 6, 1993]
Rappaport also has been linked to secret money transfers through
Switzerland during the Iran-contra affair. Special prosecutor Lawrence
Walsh reported that his investigators received information in 1989 that
the mysterious $10 million payment from the sultan of Brunei to Oliver
North's Nicaraguan contra operation ended up in Swiss accounts
controlled by Rappaport.
Also in 1989, retired Maj. Gen. John Singlaub told me that he had
discovered from well-placed contacts in Switzerland that the $10 million
had gone to Rappaport-controlled accounts and that -- after the money
became a public issue -- the banker resisted demands that he return it.
"This was no accident," Singlaub said about the delivery of the $10
million.
In October 1990, however, Rappaport testified under a grant of immunity
and denied any knowledge of the deposit. Rappaport also produced a
letter from Credit Suisse denying that the money had gone to a
Rappaport-controlled account.
But Swiss authorities never divulged the recipient's identity and the
mystery of the $10 million recipient has never been resolved. [See Final
Report of the Independent Counsel for Iran/Contra Matters, Aug. 4,
1993.]
While North's Iran-contra operations were in full swing in the
mid-1980s, Rappaport also was handling covert payments to the Israeli
Labor Party as part of a strange plan to secure Israeli guarantees not
to attack an Iraqi oil pipeline that the Reagan administration wanted
built near the Israeli border.
>From 1984 to early 1986, Rappaport met about the plan with senior Reagan
administration officials, including Casey. But the pipeline ultimately
was not built.
Rappaport came in for some more bad publicity in 1989 when Israeli arms
merchants shipped 500 assault rifles and 200,000 rounds of ammunition
from Israel to Antigua. The arsenal went to a military training base
located on Rappaport’s property.
>From there, the guns were picked up by the Medellin drug cartel and
transported to Colombia. Later, after a gun battle that killed cartel
kingpin Gonzalo Rodriguez Gacha, Colombian authorities confiscated 178
of the Galil assault rifles. [For details, see Dangerous Liaison by
Andrew and Leslie Cockburn.]
Despite the incident, Rappaport retains close ties to Antigua, known as
a money-laundering haven. At age 76, he is Antigua's ambassador to
Russia.
Rappaport's name popped up, too, in the Senate's 1992 report on BCCI. A
titled section on Rappaport described his connections to operatives from
the corrupt Middle East bank.
"According to a former CIA agent, … Rappaport had a business
relationship with Abbas Gokal, whose shipping empire was financed by
BCCI, and whose family acted as fronts for BCCI attempts to acquire
banks in the United States," the report stated. [See The BCCI Affair, by
Sens. John Kerry, D-Ma., and Hank Brown, R-Colo., Dec. 1992]
This history doesn't answer every question about the Bank of New York's
descent into the murky world of international money-laundering.
But Rappaport's experience operating in that realm -- with the political
protection of the CIA and the Reagan administration -- might explain why
some bank officials thought they had a good chance of getting away with
it.
-----
Aloha, He'Ping,
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Omnia Bona Bonis,
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Adieu, Adios, Aloha.
Amen.
Roads End
Kris
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