Jack Blum, who suspected everyone's motivation save his own, was running John Kerry's investigation into Manuel Noriega's ties to the American government when he came across the Bank of Credit and Commerce International in early 1988, ten months before the indictments in Tampa. Jose Blandon, the former Panamanian diplomat turned ardent enemy of Noriega, told Blum that BCCI was the general's favorite bank. In pursuing that connection with inspired doggedness, Blum would confront overt and covert obstacles that made him leery of anyone not one hundred percent committed to his vision. For all intents and purposes, it was Blum's stubborn suspicion that fanned the dying embers and eventually fueled the firestorm that engulfed BCCI.

Re is a lawyer and a sometimes government official who does not really like working for government, an intense and intelligent man whose curiosity and instinct made him an excellent sleuth. Re is a big, jug-eared man, with a hearty appetite for food and conspiracy theories.

Soon after graduating from law school at Columbia in New York City in 1965, Blum had gone to work as an investigator for a Senate antitrust subcommittee. He stayed twelve years in government, moving on to the Senate Foreign Relations Committee and working on such big international investigations as the Lockheed foreign bribery scandal, oil-price fixing during the Arab embargo, ITT Corporation's efforts to rig elections in Chile, and the financial acrobatics of Robert Vesco.

It was on the Vesco investigation that Blum caught a glimpse of the intricacies of international finance. Vesco pillaged hundreds of millions of dollars from mutual fund investors and used front companies to funnel the cash through banks in the Bahamas and Luxembourg. Assisting him at every step of the way were accountants, attorneys, and bankers. Years after Vesco fled to asylum in Costa Rica, government lawyers were still trying to unscramble the labyrinth of transactions into which between $250 million and $450 million had vanished.

"What I learned was that there is a cynicism in banking circles," Blum explained later. "Bankers say, 'We just move money. We don't concern ourselves with the business of our clients.' But that begs the question. They are knowingly soliciting the proceeds of all sorts of crimes. Bankers the world over wink at what I call the 'legal illegal' money. Tax evaders, exchange-restriction avoiders, the Marcoses, the Baby Doc Duvaliers. The banking world makes a judgment that that's okay. But it then becomes easy for the banker to make the leap from that to drug money. And as long as the traffickers are treated like gentlemen in some corner of the world, they are going to continue to deal drugs."

Blum spent the late 1970s and early 1980s in private practice. Many of his clients had international business, particularly oil business. He made a good living and built a splendid house outside Annapolis, Maryland, overlooking a creek near the Chesapeake Bay. But every time a major financial scandal broke in the newspapers or a friend in law enforcement described an interesting case to him, Blum got itchy.

In early 1987, he received a telephone call from Senator John Kerry, the freshman Democrat from Massachusetts. Kerry was a member of the U.S. Senate Foreign Relations Committee and he wanted to take a look at the relationship between drug dealers, money laundering, and U.S. foreign policy. Someone had recommended Blum to him as a lead investigator.

Kerry himself was an interesting senator. A tall, handsome graduate of Yale University, he had won three Purple Hearts, a Silver Star, and a Bronze Star in two tours of duty with the Navy in Vietnam. He had returned home, graduated from Boston College Law School in 1976, and spent six years as a state prosecutor in Boston. After two years as lieutenant governor of Massachusetts, he was elected to the Senate in 1984 at the age of forty. He wanted to be liked by his colleagues, to join what was known as the most exclusive club in the world, but he was given to fits of speaking his mind, of rocking the boat in ways that caused his colleagues distress and upset the constant march toward consensus that characterizes the Senate. Some of his colleagues found Kerry to be a headline hunter, the paramount Senate brat, but the young senator retained a prosecutor's habit of following clues in any direction.

In early 1986, Kerry staff members began an investigation of allegations that the Nicaraguan Contras were getting some of their arms money by trafficking in drugs, possibly with the knowledge of the U.S. government. The inquiry raised questions in Kerry's mind about whether the Reagan administration was willing to overlook drug trafficking in favor of the administration's perceived national security interests. However, he did not have the staff resources to pursue the issue.

When Kerry got the chairmanship of a Foreign Relations subcommittee called Terrorism, Narcotics, and International Operations later in 1986, he wanted to use the panel as a vehicle to expand his Contra inquiry into a full-blown examination of U.S. foreign policy and drug dealers. To do so, he had to get permission from Senator Claiborne Pell, the Rhode Island Democrat whose patrician demeanor symbolized the Senate to many people. Pell granted the request, but he did not like the sound of it. Foreign Relations was a policy-making committee, a place where senior government officials and renowned academics testified on a grand scale. Not since former Senator Frank Church had gone after the CIA in the early 1970s had Foreign Relations been regarded as much of a watchdog. It was, in Pell's view, no place for hooded witnesses surrounded by armed U.S. marshals.

It was Kerry's investigation that Blum was hired to head. The first hearings were held in the summer and fall of 1987 and focused on the Bahamas, Cuba, and Costa Rica. After that, Blum and his small staff had turned their attention to Panama and General Manuel Noriega. As he was preparing for hearings on Noriega in early 1988, Blum learned that Jose Blandon, Panama's ambassador to the United Nations, was ready to blow the whistle on the general's dealings with the Medellin cartel. Blum arranged immediately to interview Blandon and he got an earful. Blandon even described a trip he had taken with Noriega to Cuba, where Fidel Castro had mediated a dispute between Noriega and the cartel after Panamanian soldiers had raided a cocaine laboratory. Great material for a Senate hearing.

Blum's interest had also been piqued by the defecting diplomat's description of Noriega's relationship with BCCI. Blandon said that the bank was a favorite of Noriega's, and that the general moved his own money through it and referred associates to the bank. Soon after that initial session with Blandon, marijuana smuggler Leigh Ritch had mentioned BCCI to Blum in a similar pretestimony debriefing. Late that same month, Ritch's partner, Steven Kalish, had testified about the bank at a hearing before another Senate committee. It was an accumulation of information that Blum could not ignore.

Jack Blum was not unfamiliar with BCCI. While Blum was in private practice in 1985, one of his clients had wanted to do an oil deal with Attock Oil, the Pakistan-based company whose shareholders included Kamal Adham and Ghaith Pharaon. The client's primary bank was Mellon Bank in Philadelphia and it was asked to approve some financing arrangements on the deal that would be done through BCCI.

"We won't accept a BCCI letter of credit. We don't do business with them and we advise you not to," a Mellon officer had told Blum and his client.

Blum was astonished. Here was a major American bank refusing to do business with one of the largest international banks in the world. He was smart enough to know that big banks keep blacklists. He wondered to himself what BCCI had done to earn a spot on Mellon's list. He was not in the investigative business at the time, so he did nothing more than walk his client away from the transaction with Attock and BCCI, but the incident stuck with him. When Blandon, Ritch, and Kalish all mentioned BCCI, Blum set out on the trail of the mysterious bank.

Jose Blandon testified before Kerry's subcommittee in February of 1988 about Noriega and the cartel. Among the charts that he used to illustrate the general's dealings with the drug cartel was one that mentioned BCCI. After the hearing, Jack Blum put out feelers among his contacts in the banking and petroleum worlds. He wanted to learn more about the bank.

Blum's grapevine worked. Near the middle of March, he got a telephone call from a former client with ties to the U.S. intelligence community. The former client said that he had been in contact with a BCCI executive who was fed up and leaving the bank. Blum got the name, Amer Lodhi, and phone number in BCCI's agency office in New York.

"I'm on my way out the door," Lodhi, a lawyer who had worked years for the bank and for Ghaith Pharaon, told Blum. "I didn't know what I was getting into when I came here. This place is a cesspool."

Lodhi described the bank's enormous, worldwide network of branches as little more than a cover for handling hot money. He said the bank had strong relationships in China and extensive political ties in Pakistan and elsewhere. He said the bank often flew favored clients to London on its planes for medical treatment at hospitals there. Among the clients receiving special treatment, he said, were Third World dictators, arms dealers and terrorists, and Colombian drug traffickers.

"The real purpose of the branch system is to create the climate to attract large personal customers who want their money moved out of the country and want the funds managed discreetly and free from prying eyes," Lodhi explained to Blum.

Since Agha Hasan Abedi's heart surgery, he said, the bank's management had been in disarray and there had been a power struggle to replace the ailing founder.

Asked about Noriega, Lodhi identified several people within the bank who were aware of the general's secret accounts. The main banker on it, he said, was named Amj ad Awan and the records of Noriega's accounts and others were kept in Miami. But he advised Blum to hurry with a subpoena if he wanted to get the Noriega account records. The bank and Awan were hiding Noriega's assets within the mega-branch system in a scheme to "rewrite the history" of its relationship with the Panamanian leader since his February indictment.

Senate subpoenas must be authorized by a full committee. On March 25, a week after Blum '5 conversation with the BCCI executive, Senator Kerry asked the Foreign Relations Committee for subpoena power in the BCCI investigation. The committee authorized issuing subpoenas to BCCI and two officers demanding the records of its dealings with Noriega and other accounts in Panama. About the same time, Blum checked with federal prosecutors in Miami. The Noriega indictment there was less than two months old. Maybe they knew something about the bank. There was the danger that the subcommittee subpoenas would set off a document-destroying frenzy within the bank that could damage the criminal prosecution of Noriega.

Dick Gregorie was the Miami prosecutor who had assembled the case against Noriega there. He and Blum had clashed in late 1987 when the Senate subcommittee wanted testimony from some of the witnesses in the grand jury investigation of Noriega and Gregorie had refused. He was a professional prosecutor protecting his case, and Blum had understood. This time, Gregorie told Blum that Tampa was working on a big case involving BCCI. He advised him to call there.

In early April 1988, Blum spoke with Joseph Magri, the first assistant U.S. attorney in Tampa. Blum said that he was examining the relationship between Noriega and BCCI. He had received authority to subpoena bank records but wanted to check first with the prosecutors. Magri was alarmed, both by the investigation itself and at the prospect of a subpoena. He urged Blum to back off, telling him that a sensitive undercover investigation could be jeopardized if anything was done to spook the bank. Blum was reluctant at first. Too often, he had found, the Justice Department and other agencies tried to hide under the blanket of ongoing investigations.

When Magri talked with Mark Jackowski about Blum's call, he learned that Amjad Awan had mentioned the Senate investigation to Mazur in a conversation less than a month earlier. It seemed that BCCI had a source close to the committee who had learned a little about it. Awan had not seemed too worried, but the prosecutors agreed that they did not want Blum's probe to get higher profile with the bank.

So Magri arranged a conference call for Blum with the lead Customs supervisors on the undercover case, Bonni Tischler and Steve Cook. The idea was to impress upon him the need for backing away completely. By this time, Blum had decided not to issue the subpoenas. He did not want to endanger the lives of the undercover agents, but he did want to use the conference call to alert the Customs agents to the type of operation they were investigating.

The agents on the other end of the line were never identified to Blum. They listened and Magri did most of the talking as Blum explained that he had a source inside the bank who had identified Awan as the bank officer who handled the Noriega account. Blum described the outlines of the widespread corporate-instituted corruption relayed by the BCCI executive. Two of the unidentified Customs officials echoed Magri's deep concern that the Senate postpone its investigation. Without providing any details of the undercover operation, they pleaded, "Please don't serve your subpoenas." Blum told them that he had already decided to hold off, at least for the time being.

By July 1988, Kerry's hearings were over and the investigation was winding down. Jack Blum was busy writing the final report, but the Bank of Credit and Commerce International was still in the back of his mind as he waded through page after page of testimony and evidence to compile the voluminous report. What he really wanted was another crack at uncovering the institutional corruption at BCCI described by his source.

The chance came on July 26. Early that Thesday morning, a woman called Blum at his office on the fourth floor of the Senate's Dirksen Office Building. From the connection, Blum assumed it was an international call. From her voice, she seemed to be British.

"I understand you are investigating BCCI," the woman said.

"Who are you? Where are you calling from?" asked Blum.

"That doesn't really matter," she said. "There's someone in London you ought to talk to."

The woman then gave him the name and telephone number of Syed Z. A. Akbar at Capcom Financial Services. As soon as she hung up, Blum dialed the number in London and got Akbar on the telephone.

"I've just been told that you have information about BCCI and I'd like to talk to you," said Blum.

"Send me a letter inviting me to come over and talk to you and I'll come to your office," replied Akbar.

Sometimes it's better to be lucky than smart. This appeared to be a gift from heaven. In instances like this, investigators often stop to consider the motives of the person who is volunteering information, for it helps to understand the context of the material. Blum figured he was dealing with a disgruntled former employee, often an investigator's best source.

Blum, of course, had no way of knowing the depth of Akbar's grudge against BCCI or the complicated motives driving him. Akbar felt he had been mistreated when he had been forced to leave the bank. For Akbar, this was an opportunity to work through someone else to get back at BCCI. He might even hand over the computer disks that would blow the lid off the bank. Or he might threaten to do so and see what the bank offered in return.

On July 26, Blum telefaxed a letter to Akbar formally inviting him to meet with Blum and one of his colleagues on the investigation, Kathleen Smith. "We would prefer meeting you here in Washington, although we are prepared to meet you elsewhere in the United States or in London," it said.

Akbar was not certain when he would be able to meet with them. He wanted to do it in the United States, and he expected to have some business there soon. Spurred by the possibility of mining Akbar for information, Blum and Kathleen Smith decided to make another push for information about BCCI and Noriega. There was still time to get it in the final report, or even hold a new round of public hearings. The authority to issue subpoenas was still in effect.

Blum contacted the Department of Justice in Washington to see if it was okay to demand the bank's records. He was given the green light at main Justice. This would later turn out to be a bureaucratic mistake on the part of the Justice Department, since the C-Chase undercover operation was still going on. But on July 28, with the department's okay, four subpoenas were issued: one each for BCCI in Luxembourg and the Cayman Islands, one for S. M. Shafi, the manager of its Miami office, and one for Khalid A. Awan.

The two demands for the bank records were sent to the bank's lawyers, Clark Clifford and Bob Altman. Shafi's was served at the office on Brickell Avenue in Miami, but the Awan who got the last subpoena was an aerospace engineer with Rockwell International in Miami. Because the information about Awan was sketchy, Blum had relied on telephone records in Miami. Awan's subpoena had gone to the wrong guy. The deadline for complying with the subpoenas was August 11.

In early August, Syed Akbar walked through the door of Jack Blum's cramped office in the Dirksen Building. It was only days after Akbar had allegedly agreed to accept the $23 million from Noriega's accounts at BCCI. That information would have been of enormous value to Blum and the Senate investigation, but Akbar had no intention of giving it up, at least not yet. He was in Washington on a fishing expedition to find out how much Blum really knew about BCCI and his friend Awan.

To Blum, Akbar appeared to be someone off the pages of GQ, the men's magazine. He was handsome and trim, wearing an elegant suit and a wry grin.

"All BCCI does is launder money and Noriega is only the beginning," said Akbar. "The bank is extremely nervous about your investigation. I know you are trying to talk to Awan. He is being advised to leave the country by the bank's lawyers. But he would like to cooperate with you if he can do so."

Akbar hinted that he had documents that could be helpful to Blum, but he was not interested in giving them up just yet. It seemed to Blum that Akbar was sniffing around to see how much Blum knew about BCCI. When Akbar volunteered to talk to Awan about cooperating, Blum accepted happily and crossed his fingers.

A few days later, Blum flew to New York and met Akbar at the Inter-Continental hotel, where he bought the Pakistani an expensive lunch. The tab was too much for his Senate per diem, so he had to put it on his own credit card. It was a small price to pay. Akbar told him that Awan had agreed to talk and would be in touch the next time he was in Washington. Akbar then got on a plane to return to London in plenty of time to accept Noriega's $23 million into an account at Capcom, as a later indictment charged.

After Akbar's promise to deliver Awan, Blum had spoken confidentially about the pending interview with some of his friends in law enforcement. Several of them warned him not to talk with Awan at his house. The bank's clients were a rough bunch and who knew what Awan might pull.

"You're taking a great risk," one of the agents warned Blum.

The bank's friends also were a smooth bunch. In early August, Clark Clifford had contacted his old friend Claiborne Pell, the chairman of the Senate Foreign Relations Committee. Clifford told the senator that the bank was having difficulty complying with the subpoenas. The records were spread around the world and there were lots of them. Pell had suggested that Clifford contact the staff director of the full committee, Geryld Christianson. When Clifford explained his case to Christianson, the staff director agreed that there were valid reasons for extending the deadline. Christianson telephoned Dick McCall, Kerry's senior foreign policy aide, who agreed that the deadline would be pushed back a month since Congress was in recess and Blum was out of town for several days.

It was a frantic time for BCCI officials. Clifford, Altman, and bank employees were making repeated trips back and forth between London and Washington in an effort to decide what to do about the Senate investigation. Awan was deeply involved in these discussions and was spending a considerable amount of time in Washington.

For his part, Blum was angry about the delay in getting the documents demanded by the subpoenas. Anger turned to outrage when Blum heard allegations that BCCI documents were being destroyed instead of turned over to the subcommittee. Former employees of First American and BCCI, he said, had provided him with reports that the Noriega documents had been flown to Washington from Miami and were being shredded at the First American offices. The reports claimed that Swaleh Naqvi, the acting head of the bank, had supervised the destruction of documents. Blum had confronted Altman with the allegations, but the lawyer denied that any material was being destroyed. And Blum never received any proof of the claims.

These concerns, however, convinced Blum that he had to interview Awan as soon as possible. He was willing to ignore the advice of his friends in law enforcement.

 Monday, September 5, 1988, was Labor Day. As they sat in Blum's living room in front of a wall of glass, Amjad Awan and Jack Blum watched sheets of rain sweep across the creek and woods outside.

On the day of the meeting, it was Awan who seemed nervous and guarded. He described his background briefly, his father's role in Pakistan's intelligence service, his own years as an international banker. He explained that he had been introduced to Noriega by one of his superiors in London several years earlier and had cultivated Noriega when he was transferred to Panama. He talked about the loan to Ricardo Bilonick and his dealings with other Noriega associates, such as Enrique Pretelt and Cesar Rodriguez.

Surprising details were revealed about the Noriega account. Awan told of how it had been opened with a cash deposit of about $200,000 and how checks and cash had raised the balance into the millions over the years. He described handing out money to politicians on Noriega's orders.

"Have you ever been approached to launder drug money?" asked Blum.

"Never," Awan assured him. "BCCI had a conscious policy of avoiding drug money."

Blum sensed that he was not getting the full story from Awan. It certainly did not fit with the information he had received from Blandon and others, but he also had the feeling that Awan was there to cut some sort of deal. Clearly, here was someone who was intelligent and sophisticated. Perhaps the banker thought that he could give Blum a little and avoid having to testify in public.

Blum decided to scare him. Not with what the Senate could do, but with what Noriega might do if he thought Awan was better off unable to spill his secrets. The logic was to persuade Awan to tell everything at a public hearing and thus eliminate the reason for Noriega to harm him. So Blum had showed him testimony from Floyd Carlton Caceres, Blandon, and others who described Noriega's violent streak and made allegations that the general was involved in voodoo and homosexuality. Blum told him of uncorroborated evidence that Noriega brutalized women and had ordered Hugo Spadafora tortured and beheaded.

"Listen," Awan interrupted, trying to control his agitation. "I've known him now for about ten years. I've been with him on occasion for two weeks traveling with him, been with him in Panama and, you know, day and night. And if there was anything of this sort, I would have known something about it. But listen, he's like you and me, you know."

When Awan said that the bank's lawyers did not want him to testify before the subcommittee, Blum suggested that he hire his own lawyer. Awan's interests and the bank's were not necessarily the same in this matter, he said, writing down the names of three law firms that specialized in representing witnesses before Congress. He also promised Awan the full protection of the subcommittee.

After six hours of mixing truth with lies and omissions, Awan left Blum's house. His hope was indeed that he could avoid a formal appearance before the subcommittee. His fear was that what Blum had told him about Manuel Noriega was true. So, as he told Bob Mazur a few days later back in Miami, he had cleaned out his office and dropped out of touch with the bank until he could figure out what to do. In the meantime, he hired a lawyer.

Blum wanted Awan at the witness table in front of the committee before the end of September. And he wanted to do so without letting Clark Clifford and Robert Altman know any further in advance than necessary. He felt they were stonewalling the subcommittee on its request for documents. Awan's allegations about being instructed not to testify increased his suspicions.

But Blum could not get a hearing date. The congressional session was coming to a close, there was the usual crush of last-minute business, and everyone's eyes were on the presidential and congressional elections in November. Members wanted to get home. So he had to settle for a formal deposition. At least that would put Awan on the record.

After getting Awan's address in Coral Gables, Blum had a new subpoena served on him. Awan was to appear before the subcommittee counsel and staff for a sworn statement on September 30. A few days before the appearance was scheduled, Blum wrote a memo to the staff files about his earlier conversation with Awan. Across the top, he wrote:

"Warning. The contents of this memo are committee sensitive. Disclosure of the contents or the fact of Mr. Awan's cooperation with the committee could endanger his life."

At one point in this period, Blum had asked Altman about the prospects for questioning Awan. "Maybe you can see him if you travel to Paris," said Altman. While Blum interpreted this remark as confirmation of Awan's story that Altman and the bank's other lawyers were trying to keep the banker from testifying, Altman told a different story.

Much of Awan's story to the bank's lawyers had been the same as the version he had told Blum. He maintained that he knew nothing about any money laundering at the bank, that Noriega's accounts had been handled legally, if secretly. For that reason, Altman would say later that he was eager for Awan to testify before the Kerry committee. The hang-up, he said, was Amjad Awan's own fear that Noriega would have him killed.

In Altman's version, the bank management had suggested transferring Awan to Paris in hopes he could assume a lower profile within the bank, but only after Awan had cooperated with the Senate investigators. "There was no effort to prevent Mr. Awan from testifying," Altman would say in sworn testimony before the House Banking Committee in September 1991.

But Awan had conveyed a different interpretation to both Mazur and Blum. He saw the transfer as part of a scheme to silence him.

Clark Clifford had made his first appearance in Senator John Kerry's office near the end of September in 1988. The two men sat in armchairs in the office, which was far smaller than Clifford's expansive office downtown. In his deep voice, Clifford had promised politely that the bank wanted to cooperate in any way possible with the subcommittee's inquiry.

"I want you to understand," he told Ker?y. "We are prepared to cooperate. We want to be helpful."

His hands folded in trademark steeple-fashion in front of him, the lawyer assured Kerry that he knew of no documents regarding General Noriega that were in the possession or under the control of BCCI, apart from a small number already turned over, but if any such documents were uncovered, they would be turned over to the subcommittee in accordance with the subpoena.

Kerry wanted to believe this. He did not want to buck Clark Clifford and all that he symbolized. So far, however, the bank had been less than cooperative. Some documents had been provided, but they were of little relevance. Some travel records for Shafi and Awan had been turned over, but Blum and the other key staffers on the investigation, David McKean and Jonathan Winer, were telling Kerry that critical records were being withheld and possibly destroyed. The senator did not challenge Clifford. Nor did he ask about Amjad Awan's claim that First American was owned by BCC I. Here was a man who deserved the benefit of the doubt. Instead, he assured the lawyer that he was happy that the bank was cooperating.

Why did John Kerry not confront Clark Clifford? After all, it was Kerry who was insisting on keeping the investigation of BCCI going. One explanation lies in Kerry's own character. He tends to operate in bursts, pushing relentlessly on a subject and then seeming to lose interest in it. Also, Kerry was learning the Washington game and beginning to think of himself as possible presidential timber down the road. That meant that certain people were not attacked, at least not until all the evidence was in.

By this time, Kerry had become chairman of the Democratic Senatorial Campaign Committee. Known by the shorthand DSCC, the committee was one of the key fund-raising mechanisms for the party's senators and a big step on the path to power in Washington.

Political campaigns cost millions of dollars these days, mainly because they rely on expensive television advertising. As a result, members of the House and Senate spend a great deal of their time raising the campaign money necessary to keep them in office. And they succeed, with more than nine out of ten congressmen winning reelection. To raise the funds, most of these politicians tap the special interest groups affected by the legislation they handle. The clearest example of the dangers of this system was the savings and loan disaster, in which campaign contributions by thrift owners gained them access to the highest levels of U.S. government.

In addition to personal contributions, the special interests contribute millions of dollars through political action committees, or PACs. Much of both the individual donations and PAC money is channeled through the DSCC and its counterpart organizations for Republicans and House members. So Kerry's new job put him at the center of power and meant that he would rub shoulders with the movers and shakers who were financing the Democratic Party.

One of these men was David Paul, the owner of CenTrust Savings in Miami and a pal of Ghaith Pharaon. On July 20, 1988, Kerry hosted a reception honoring Paul, one of the largest contributors to the DSCC, and later the senator used Paul's private jet to fly to a DSCC leadership meeting. He was one of forty select guests at a $122,000 dinner thrown by Paul in Miami that December. Ghaith Pharaon was guest of honor. Later, Paul would boast that he had derailed Kerry's investigation. It was not true. But the senator's rising political profile grated on Jack Blum in the summer of 1988 because of some of the people it put Kerry next to.

Four days after Clifford's call on Kerry, Amjad Awan appeared for his deposition shortly after ten on the morning of September 30 in an office in the Capitol.

Awan was accompanied by his own lawyer, a former Senate legal counsel named John Grabow. Awan had hired him following his long session with Blum. Grabow had told Altman and Clifford that he was representing Awan, so the bank's lawyers were aware of the deposition. Attending with Blum were Jim Lucifer, the top Republican staffer on the Senate Foreign Relations Committee, and two of Blum's associates-Kathleen Smith and Jonathan Lichtman. Also present as testament to Awan's fears were two guards from the congressional security office, Alvin Romanowski and William Cochran.

There were no surprises. Awan's sworn testimony essentially tracked what he had told Blum three weeks earlier on that rainy day in Annapolis. He stuck steadfastly to his story that BCCI was not involved in any illegal money laundering, so far as he knew.

The deposition had been taken just in time. On the following Friday, October 7, Jack Blum learned of the impending climax of Operation C-Chase. The investigator was told that the arrests of Awan and several other BCCI bankers on money-laundering charges were expected to start the following day. Apart from informing Kerry, Blum was urged to keep the information secret.

He sat on the material until after the arrests, but then played a game the C-Chase agents would have trouble understanding when they learned about it months later. Whether on his own initiative or at the direction of Senator Kerry, he called Clark Clifford's law office on Monday and asked for an urgent meeting. On Thesday afternoon, after the Customs Service announced the arrests to the press, John F. Kovin, a partner at Clifford & Warnke, and Robert A. Altman himself met with Jack Blum at the Kerry subcommittee's office. Blum handed over the packet he had received from Customs the week before, without reading it: the packet included a draft press release that was never meant to go further than the Customs Service headquarters. Blum said that he sought the meeting to show the lawyers how deeply BCCI was implicated in the case. The packet later surfaced at the Tampa trial, in a filing by one of the defense lawyers. It may not have had any effect on the case, but the incident showed just how much access Clifford & Warnke still had to the Senate staffers attempting to investigate BCCI.

The arrests occurred on Saturday as planned. On Thesday, Customs boss William von Raab held his televised press conference on Operation C-Chase. He warned banks around the world that they had better know their customers or face the same sorts of charges.

BCCI responded with a press release asserting that it was the victim of "a malicious campaign" and had never been involved in laundering money from drug trafficking. "BCC has a strong belief in the legal processes of the United States of America and is confident of a satisfactory outcome," said the statement distributed to news organizations around the world.

The next day, the sting and the arrests were big news in newspapers around the world. But hard as he looked, Blum could find no mention of Manuel Noriega and the dictator's connection to the bank and Awan. He decided that Von Raab was playing politics with the case. Noriega had been left out because the bank's tie to him would reawaken questions about relations between the Panamanian and the CIA under George Bush. With a month to go before the presidential election, such questions could prove embarrassing for Bush.

So Blum went to Kerry and persuaded the senator that this was a connection that should not be swept under the rug until after the election. Kerry authorized the release of a transcript of Awan's deposition detailing some parts of his relationship with Noriega. It generated another round of news stories, more to Blum's satisfaction. And then the story died.

The only blip on the screen related to BCCI was a story in December in The Boston Globe. In a deposition to Kerry's subcommittee, Aziz Rehman, the one-time gofer at BCCI in Miami, had described dragging around bags full of cash. The story said that Rehman had gone to the IRS with his allegations and there had been no follow-up investigation.

The criminal case in Tampa put an effective lid on the subcommittee's efforts to obtain more bank documents from Clifford and Altman. The Justice Department had demanded the same records, and their request took precedence. Blum spent the remainder of the fall working with Dick McCall, David McKean, and Jonathan Winer of Kerry's staff to draft a massive report from the hearings in 1987 and 1988.

Blum kept after BCCI information, however, mining his network of sources for information and hoping that the subcommittee could hold hearings on the bank sometime in 1989. Kerry, too, remained interested in the bank. Blu m's contract as special chief counsel for the subcommittee expired in December, but Kerry had persuaded Senator Pell to authorize the additional money to keep Blum on a monthly basis until the subcommittee report was published. In March the Rhode Island senator said that the investigation had gone far enough and there would be no more money since the report on the investigation was done and scheduled to be published in April. Blum would be out of a job on March

31, 1989.

By the spring of 1989, Jack Blum was in too deep to let go of BCCI just because his job had ended.

In early March, Blum's old friend with the intelligence ties, the one who had put him in touch with Amer Lodhi a year earlier, sent him a memorandum in which a man identified as a BCCI executive boasted that the bank's lawyers had succeeded in quashing the Senate subcommittee's investigation of BCCI. Blum was angered by the allegation and fired off a memo of his own to Kerry complaining about it. He also decided to try to get the Operation C-Chase investigators to take a broader look at the bank.

A week after getting the boastful memo, Blum persuaded Amer Lodhi to meet him in Miami to talk about the bank's operations again. Since the C-Chase indictment, Blum had gotten to know Steve Cook, David Burns, and some of the other Customs and IRS agents assigned to the case. He contacted them with a promise of new information on the case and they arranged to record the meeting without Lodhi's knowledge.

The meeting was set for late March at the Embassy Suites hotel near Miami International Airport. The hotel had been selected because all of the rooms were suites, which meant that Blum and Lodhi could sit and talk comfortably in the living room. In a smaller room, Lodhi might have wanted to have the conversation in the hotel lobby or another more comfortable place.

Two suites were rented, side by side. The plan was for the Customs technicians to drill through the wall between the suites and insert a tiny microphone to pick up the conversation. Agents would sit in the next room and monitor the meeting. What they did not count on was that the hotel was built of poured concrete, a substance that does not take well to drilling. They did not want to alert hotel authorities, so the technicians could only drill when there was an airplane passing overhead to cover up the sound. Still, they could not get through the wall. Finally, in frustration, they ran the wire out the window of the listening room and into the other suite. They ran it under the carpet and stuck the microphone behind the couch.

For several hours over the course of three days, Blum pumped Amer Lodhi for specific information. Again, Lodhi described corruption on a global scale: insider loans to major shareholders, the use of front men to acquire banks in the United States, money laundering and capital flight, massive trading losses covered up with fake loans. A laundry list of accusations.

On the third day, Blum spent two hours persuading Lodhi to cooperate with Tampa prosecutors in the BCCI case. Lodhi protested that he feared for his life, that the bank would think nothing of having him murdered. In the end, with assurances of confidentiality, he agreed, and that day he and Blum were flown to Tampa to meet with the BCCI prosecutors.

By this time, Mark Jackowski had been joined on the case by Michael Rubinstein, another assistant U.S. attorney in the office. The Customs agents, who seemed interested in the allegations, wanted the prosecutors to hear firsthand what the witness had to say. The question in the agents' minds was whether the information was relevant to the pending case against the bank and its employees.

Armed Customs agents accompanied Blum and Lodhi on a USAir flight from Miami to Tampa. They were supposed to be met at the airport by other agents and taken to a hotel suite for a meeting with the prosecutors. For security reasons, they did not want to take Lodhi to the federal building downtown, but it turned out that all the suites in local hotels were booked. Blum, Lodhi, and their Customs guards wound up driving from hotel to hotel trying to find a suite large enough for their meeting. Finally, after the agents said they had no luck at a Howard Johnson's motel, Blum stomped out of the car and into the registration office. When he came back, he had rented a conference room for the session.

Lodhi was nervous and frightened. Before saying anything, he elicited a promise that his name would be kept confidential. He also was cagey as he began to repeat the highlights of his story for several Customs agents and Mark Jackowski.

Mike Rubinstein was late, but he arrived with a splash. Rubinstein is a voluble man, one whose loose talk sometimes caused Jackowski and others to wince or motion for him to keep quiet. Walking into the room, he asked, "Are you the guy we taped in Miami?" Lodhi did not quite hear what the prosecutor said and Rubinstein was hustled out of the room by one of the Customs agents. In the hall, the agent explained that Lodhi did not know he had been taped and was already plenty nervous.

Over a couple of hours, Lodhi provided a more cautious version of what he had told Blum. He told everyone that he did not want to be a witness, that he was providing this information only as leads, a road map for the investigators and prosecutors to follow. He said that he feared for himself and his family if he went public with what he knew about BCCI. Amer Lodhi did not want to appear in court, and he constructed his story and his answers to the questions from Jackowski and Rubinstein in a way that seemed designed to avoid having to testify.

Basically, only a witness with firsthand knowledge of criminal activity can testify in a trial. Rumors and information passed on by someone else fall into the category of hearsay and are rarely admissible in court. Lodhi was careful to couch his information in terms of secondhand knowledge or general rumor within the bank. For instance, when Jackowski asked him how he knew about huge insider loans to bank shareholders, Lodhi said, "Everybody knew that."

While Blum thought that Jackowski and Rubinstein seemed excited at the new information, the prosecutors really saw little that they could use. Their indictment, by its nature and the demands of law, was focused tightly on what had occurred during the undercover operation. The case would rest on the taped conversations and the testimony of Bob Mazur. It was a complicated piece of prosecution to begin with, since the jury would be asked to follow the money through the banking system. Plus, the entire team was devoted to complying with the barrage of motions being filed by defense attorneys. More than 2,000 taped conversations had to be transcribed and the top fifty or so selected for use at the trial.

The information from Lodhi was deemed too tangential to pursue as a new case. It was possible that Lodhi might be called as a witness in the case against BCCI to show that the bank was corrupt from top to bottom, but there were two problems from the point of view of the prosecutors. One was Amer Lodhi's obvious reluctance to testify in court. The other was Jack Blum.

According to Jackowski and Rubinstein, at one point during the questioning of Lodhi, Blum had taken them aside. Explaining that his job with the Kerry subcommittee was ending that month, Blum offered to continue helping the criminal investigation. However, he wanted to be paid. He would not go on the payroll. Rather, he proposed that he be paid out of funds available to confidential informants.

In characteristically blunt language, Mark Jackowski later described the incident this way: "Blum wanted to become a paid snitch."

The request was rejected immediately by the two prosecutors and it changed their perception of Jack Blum. In their view, his motives were suddenly tainted. They decided that this was a guy who should be kept at arm's length. (Blum denies ever seeking money from the prosecutors, saying later: "It is absolutely untrue. I never brought up the subject of money.)

As the days passed after these two sessions, Jack Blum began to believe that the prosecutors and agents in Tampa were not following up on the information his sources had provided them. The sources had not been contacted by any government authorities. Other avenues for pursuing the information appeared to be untrodden. When Blum telephoned Steve Cook, the case agent on C-Chase, he often could not get through and his calls were rarely returned.

It is possible that the reaction of Jackowski and Rubinstein to Blum's supposed request for money had so colored their view of the information provided by his informants that it was not given proper consideration. Even if Blum never asked for money, there was another explanation for the apparent unwillingness of the prosecutors to pursue the broader allegations at that point in the case.

In the spring of 1989, the prosecutors were immersed in the legal complexities of preparing the BCCI case for trial. They were working on a new, broader indictment of the bank and its employees as well as responding to dozens of motions filed by a small army of top-notch defense attorneys. In addition, Jackowski and Rubinstein both had a full load of other cases. Another factor at play was the basic strategy of the prosecution, one that is followed in virtually every U.S. attorney's office around the country.

"Convict the people that are in your gunsights," explained Gregory Kehoe, who had replaced Joe Magri as the first assistant U.S. attorney. "You take the case you have and you win it. You get the bank and you get the employees. Then you get them to cooperate and you move ijp. That is the traditional way of operating at the Justice Department, and it is the strongest way of operating."

Mark Jackowski has a more colloquial way of explaining the process:

"It's like a dinner with a number of courses. Your mother tells you that you have to eat what's on each plate before you get the next course. So we ate all the food on all the plates. But we didn't forget about dessert."

Despite his years of investigating complex crimes and his righteous indignation over the apparent crimes of the Bank of Credit and Commerce, Jack Blum had never been a prosecutor. His experience said that he should charge ahead.

So, near the end of April, Jack Blum decided to take matters into his own hands. If the feds were not going to move fast enough on the BCCI trail, he would find someone who would do so.

By this time Blum was off the Senate payroll and Kerry's investigation into the bank was being handled chiefly by David McKean and Jonathan Winer. One afternoon, Blum took McKean aside and said that he planned to take the information that he and the subcommittee staff had learned about BCCI to Robert Morgenthau, the district attorney in New York City. If a state prosecutor started raising hell about BCCI, Blum explained, then the Feds would have to follow. He asked McKean to tell Kerry of his decision, and the senator later gave his blessing to the mission.

The U.S. attorney in Manhattan from 1961 to 1970 and the district attorney for New York County since 1975, Bob Morgenthau had a reputation for unstoppable integrity and enough sophistication to handle a major financial investigation. He also had preached that a critical step in fighting the drug problem was stopping the suppliers from getting their money out of the United States. Indeed, Morgenthau had been the very first witness at the same February 1988 subcommittee hearings at which Jose Blandon had mentioned BCCI. And he had railed against the billions of dollars in money taken out of the United States by the drug barons, calling it a "contemporary Marshall Plan."

Not only did Blum expect Morgenthau to be receptive to going after a money-laundering bank, he thought he might have a way for the district attorney to gain jurisdiction. First American Bankshares owned a New York bank. If Amjad Awan was right and BCCI controlled First American, it would be a way into the case for the New York district attorney's office.

In late April, Blum had three or four prospective law clients to see in New York, so he made an appointment for late one afternoon with Morgenthau and wound up sitting in the district attorney's memento-filled office in the south wing of the massive Criminal Courts Building in lower Manhattan.

"Look, this is why I'm here," said Blum. "I stumbled upon this problem. It's enormous. Maybe the biggest bank fraud ever. It was with the Feds in Tampa, but Tampa doesn't have the will or the resources to follow up on it. It may be a giant Ponzi scheme with drug money. The bank appears to be built on air. Loans to shareholders are counted as capital. Noriega is involved and who knows who else. The U.S. attorney's office in Tampa has reached the end of the road. Senator Kerry's mandate to hold hearings has expired. And we couldn't get the interviews we wanted."

Morgenthau nodded as Blum explained how his office might have jurisdiction through First American Bank of New York. The district attorney summoned John Moscow, the deputy chief of his fraud division, to the office and introduced him to Blum. Moscow then took Blum to his office one floor below, where Blum described what he knew about the BCCI network in far greater detail for Moscow and two financial crimes investigators who worked for him. He also said he would contact the two potential witnesses and help persuade them to cooperate with the new investigation.