🚀 go-pugleaf

[ Article crossposted from alt.current-events.clinton.whitewater ]
[ Author was art swanson ]
[ Posted on Sat, 11 Feb 1995 00:26:13 LOCAL ]

Subject:    ADFA EXPOSE!        

To:                ALL                   Date:    02/10
From:   VJDB56A    KEN COOK              Time:     7:32 PM

As far as mainstream media is concerned, the New York Post  
has been on the cutting edge of Whitewater developments.    
They may be light-years behind us on this board, but one    
must give them credit for trying. In his latest article,    
John Crudele links for perhaps the first time in the        
mainstream media, ADFA with drug smuggling and money        
laundering.                                                 
                                                            
AUDITORS QUESTIONED LOANS BY ARK. AGENCY IN 1992 REVIEW     
by John Crudele                                             
                                                            
  Auditors for the Arkansas Development Finance Authority   
(ADFA) criticized the way the agency handed out loans in a  
1992 auditors statement that I received recently.           
  In a confidential review, dated Sept. 4, 1992 (in the     
heat of Bill Clinton's presidential campaign), Deloitte &   
Touche - one of the nation's most prestigous auditing firms 
- said ADFA "was not complying with its board approved      
policy regarding loan review."                              
  Specifically, Deloitte pointed to to the fact that ADFA   
had approved loans to four borrowers - which it did not     
identify - between 1990 and 1992 "despite the (ADFA)        
staff's recommendation that the borrowers not be approved.  
  "No documentation was in the loan file indicating why the 
loans were approved over the staff's recommendation," sa;ys 
the memo, which came from Deloitte's Little Rock office and 
was signed only "Deloitte & Touche."                        
  A call to Deloitte's Little Rock office yesterday went    
unanswered. The amount of the loans was also not disclosed. 
  The Post broke a story earlier this month that back in    
1986 ADFA borrowed $5,000,000 from a Japanese bank's        
Chicago branch so it could purchase stock in a Barbados     
reinsurance firm - Coral Reinsurance - that is managed by   
American International Group, one of the U.S.'s biggest     
insurance companies (of which Lloyd Bentson just joined).   
  ADFA says that transaction was put together by Goldman    
Sachs & Co,. which was one of the biggest contributors to   
Bill Clinton's 1992 run for the presidency and whose former 
head - Robert Rubin - is now Treasury secretary.            
  Meanwhile sources tell me that the Securities & Exchange  
Commission (SEC) is now asking questions about the Coral    
transaction.                                                
  Current ADFA officials admit that they neither have       
copies of a written legal opinion indicating that this      
public agency was permitted to purchase stock in a private  
placement of Coral stock nor a copy of the offering         
documents for that purchase.                                
  As I've written earlier, the Coral Reinsurance's          
business, and its relationship with American International  
are being investigated by insurance authorities in at least 
four states including New York.                             
  Regulators believe Coral was nothing more than a shell    
company. Depite that fact, nearly $450,000,000 in premiums  
showed up on the company's books within two weeks of its    
formation.                                                  
  The Coral situation is apparently attracting the          
attention of Manhatten District Attorney Robert Morgenthau, 
whose office has spent years investigating the antics of    
BCCI, which was embroiled in numerous bank scandals before  
it was shut down in 1991.                                   
  The connection between what Coral might have done and the 
BCCI investigation - if there is any connection - is        
unclear. Morgenthau's office refused to comment.            
  In his book "Compromised: Clinton, Bush and the CIA,"     
Terry Reed - who worked for the Central Intelligence Agency 
- says he was part of a CIA-sponsored group that set up     
operation in Mena, Ark. in the mid 1980s, that smuggled     
guns to the Contra rebels in Nicaragua.                     
                                                            
CONTINUED IN NEXT NOTE...                                   

NOTE TWO OF NY POST ARTICLE BY JOHN CRUDELE...              
                                                            
  (Terry) Reed has alleged that ADFA, either knowingly or   
unknowingly, was used to launder money generated from guns  
and drug operations that were conducted out of Arkansas.    
  Reed's book says BCCI was involved in Arkansas. He        
charges that the bank was investing heavily in Arkansas and 
that, after the bank was shut down by regulators, the CIA   
"was realizing the urgency in helping Arkansas find new     
investors to replace the BCCI money.                        
  Curiously, an Aug. 1986 article in the Arkansas Gazette   
mentioned a party thrown by Stephens Inc., an Arkansas      
investment firm, at which Contra leader Adolfo Calero was   
being introduced to Arkansas state leaders. The party took  
place in New Orleans during the Republican National         
Convention.                                                 
  At the time the operation was allegedly initiated,        
Republicans were in the White House and Clinton, a          
Democrat, was trying to improve the state's economic        
outlook and his own political fortunes.                     
  In return for the use of an airfield in Mena, Reed        
alleges that the CIA pumped money into the Arkansas economy 
through ADFA.                                               
  Reed is in hiding.                                        
  I've tried to reach Reed for the past few weeks, but      
intermediaries say his phone number has been changed. While 
his book has been criticized when it hasn't been ignored,   
some investigators are now beginning to believe that at     
least some information contained in it might be true.       
  What appears to be a separate investigation of corruption 
in Arkansas seems to be focusing on the subject of money    
laundering. Donald Smaltz, the special prosecutor looking   
into corruption charges against former Agriculture          
Secretary Mike Espy, recently added an expert in money      
laundering to his staff.                                    
  Reed says in the book that "ADFA, in effect a state       
investment bank, was being 'capitalized' by large cash      
infusions that the CIA was taking great pains to hide."     
  Once money got into ADFA's bank account, Reed claims it   
was used to stimulate business growth in Arkansas. But Reed 
also charges that at least some of ADFA's money ended up    
inappropriately loaned to Arkansas businessmen with good    
political connections.                                      
  The Deloitte memo indicates that even as late as 1992     
ADFA still did not have adequate controls over its lending  
practices.                                                  
  The report "which is intended solely for the information  
and use of the board of directors, management and others    
within the Authority," lists a number of observations and   
recommendation.                                             
  Listed under observation No. 4, Deloitte said: "loan file 
documentation is inconsistent."                             
  "For example, some files contained audited or reviewed    
finanacial statements, others contained internally prepared 
financial statements, while others contained no current     
financial information. A few files contained appraisals but 
most did not," the report said.                             
  The extent of the SEC's interest in the Coral deal isn't  
known. But a likely subject could be whether ADFA or any of 
the other investors actually incurred an risk in the        
investment and whether full disclosure of Coral's           
operations was made.                                        
                                                            
END OF NEW YORK POST ARTICLE BY JOHN CRUDELE                
                                                            
Reads a little dry at times, but the important thing is,    
ADFA; money laundering; and drug smuggling; were all linked 
together in the same article from a very reputable source.  
John Crudele is one of the most respected financial         
reporters in the business.                                  
  We've been talking about it here for months, and once     
again, we are about to be proven correct.