Questions for Mr. Mueller (BCCI / Bank of Credit and Commerce International Corruption Scandal)

From the original article on June 26, 2001. Author: The Wall Street Journal.

The Republic has just seen why the Director of the FBI is appointed to a 10-year term. Louis Freeh's era at the bureau had its share of mishaps and errors; no director since J. Edgar Hoover has succeeded in establishing full control of the proud and secretive institution. But Mr. Freeh was farsighted in the world-wide fight against terrorism and courageous in withstanding constant pressure from the Clinton White House and Justice Department on Whitewater, the campaign finance scandal and so on. Whatever else, Mr. Freeh has been a stand-up guy.

These qualities came to mind last week as we watched trial balloons floating over Washington with the names of Robert S. Mueller and George Terwilliger as Mr. Freeh's possible successor. These names set us to perusing the books on one of our long-lasting preoccupations, the Bank of Credit & Commerce International.

The BCCI scandal was the most important corruption story of the 20th century. Crooked international bankers cast a world-wide web of influence. They bought and sold politicians around the globe, ripped off depositors for some $10 billion, laundered drug money, worked with assorted spooks and trafficked with terrorists.

In the U.S., they illegally bought a major Washington bank, First American, and installed Democratic Party icon Clark Clifford as its head. George H.W. Bush headed the CIA during BCCI's early days and was President when its wrongdoing first began to surface. Even George W. Bush bumped up against the outer fringes of the BCCI crowd during his tenure with Harken Energy and in his friendship with Texas entrepreneur James Bath.

BCCI holds important lessons for the future. Our dawning century is one of international criminal gangs operating with increasing sophistication in a shadowy world beyond the control of fragmented national authorities. The banking and political systems are particularly vulnerable to this sort of corruption. BCCI is a prototype for this new form of global crime. As FBI Director, Mr. Freeh got a foothold on these problems; his successor will find them a major preoccupation.

Both Mr. Terwilliger and Mr. Mueller were senior Justice Department officials when BCCI got away. Mr. Terwilliger was Deputy Attorney General; and Mr. Mueller ran the Criminal Division at Main Justice from 1990 to 1993. When it came to making decisions about investigations and prosecutions in the BCCI affair they were the men at the switches. Only the Attorney General and the President had higher federal authority. Mr. Terwilliger apparently is off the short list because confirmation would be complicated by his legal work for Mr. Bush in the Florida election dispute.

This means the presumed front-runner is Mr. Mueller, who took personal charge of the BCCI probe. If he is nominated, a number of questions need to be asked. How did BCCI manage to gain entry into the U.S. banking system and acquire First American? Did the U.S. intelligence community grease the skids for BCCI at critical junctures? Was the Justice Department part of the solution to the BCCI mess, or part of the problem?

When Mr. Mueller took over the Criminal Division, critics in Congress and the media were already raising questions about Justice and BCCI. He stepped into this breach, telling the Washington Post in July 1991 that maybe indeed there was an "appearance of, one, foot-dragging; two, perhaps a coverup." He denied the coverup claims, specifically rejecting a Time magazine report that the U.S. government was seeking to obscure its role in the scandal partly because the CIA may have collaborated with the bank's operatives. Perhaps Justice should have been more enthusiastic and aggressive about the case, he told the Post, but "nobody has ever accused me of lacking aggression."

Still, the problems with Justice persisted. And the timing of some of Mr. Mueller's moves raised eyebrows. In September 1991, Justice indicted six BCCI figures and a reputed Colombian drug lord on racketeering charges. The indictment was unveiled just minutes after then-Congressman Charles Schumer issued a report sharply critical of Justice Department handling of the case. As Peter Truell and Larry Gurwin noted in their authoritative book, "False Profits: Inside BCCI," the indictment was merely "warmed-over information from an investigation that had ended nearly two years before."

Mr. Mueller also engaged in a running series of battles with the Manhattan District Attorney, Robert Morgenthau. According to news reports over the years, Justice prosecutors were instructed not to cooperate with Mr. Morgenthau's office, documents were withheld, and attempts were made to block other federal agencies from cooperating. In July 1992, both Mr. Mueller and Mr. Morgenthau simultaneously but separately indicted Mr. Clifford and his top aide Robert Altman in the BCCI scandal, with Mr. Morgenthau finally winning the right to try the men. Mr. Clifford was later dropped from the case due to infirmity and Mr. Altman was eventually acquitted. The curious and distracting fight over jurisdiction stands to be revisited.

Janet Reno named Mr. Mueller interim U.S. Attorney for the Northern District of California in 1998; he was confirmed for the position in 1999. He was sent to reform an office marked by trouble, and his success or lack of it should be closely examined. His position as FBI front-runner, we read, was won by showing the ropes to new Attorney General John Ashcroft when he was home alone at Justice without a confirmed staff.

With Mr. Mueller's splendid paper credentials, we initially thought he must be a top-flight professional, whatever his misfortunes with BCCI. When we sought out some former Justice officials and others whose views we trust, we were surprised by negative returns, BCCI aside. While we hesitate to traffic in anonymous slams, let it be said that informed doubt exists about not only his independence, but his managerial competence.

On general principles, our view is that it would be a mistake to appoint as FBI head anyone who had any role in the failed BCCI probe. Too many important questions remain unanswered, and we clearly need another stand-up guy after the Clinton depredations at Justice. On the evidence we can see, Mr. Mueller would be a peculiar choice indeed.

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