EUROPE
EUROPE
CROWN AGENTS
David Green’s ownership and the Crown Agents 1970 – 1975
_“To much cash, to few ethics, to little sense” 4 December 1977 Sunday Times _
_Introduction: Crown Agent’s position in this matter _
FOUR MILBANK NOMINEES – U.S TREASURY BOND
In correspondence received from K.G White, Corporate Secretary for Crown Agents, I have been advised that they had met with Metropolitan Police Fraud Squad at their behest on an apparently related matter and nothing has come to light which could confirm to them that Crown Agents, or any related or subsidiary company has any real interest in this matter. I was further advised that this matter is being investigated by both Inland Revenue and the Metropolitan and City Police Company Fraud Department at 2 Richbell Place, Holborn. (Note the Justice Fay Commission Enquiry highlights the commercial malpractice’s which transpired during the period 1970 –1975)
History
The history of David Green’s interest in the B-Series Bonds 1975-1980 and, in his case, those issued May 15, 1975, maturing May 15, 2005, is derived from the period 1970 to 1975 when there was a large movement of funds internationally through Crown Agent activities, WhiteHall’s cover up.
The Crown Agents for Overseas Governments and Administrations , despite its name, was not answerable to either the Crown or the British Government. It had no constitution, enjoyed Crown exemption from taxation and represented a
self–perpetuating organisation by making no call on British public funds. The company (CA) in 1971 employed 2000 people in London, and in offices around the world. The Crown Agents began 168 years ago from the bureaucracy of the emerging Empire. Later as colonies became independent they retained their links with the Crown Agents and other Third World countries began to use them for the procurement of goods and services. The governments and organisations within these countries were known as the Crown Agents’ “principals”. Purchasing remained a major part of Crown Agents’ business, but they also began offering banking services to countries. The Union Bank of Switzerland working with the Crown Agents also managed and procured bonds and fixed interest securities for governments, agencies and as agents for individuals in the private sector. David Green worked for the Crown Agents between 1970 and 1975. This was confirmed by David Phillips, one of the Senior Crown Agents, whom I met in 1996 at the Cavalry and Guards Club, London.
An Arabian Santa Claus
Summary Status 1975
It took Kuwait about 20 years to go from a dusty, sun baked fishing village to a metropolis, but Kuwait was built when oil was $2 a barrel. Abu Dhabi was being built on $10 oil a barrel in less than half the time it took Kuwait 20 years to do.
The man who kept watch over those expenditures was John Butter, a veteran Colonial Civil Servant, as director general of Abu Dhabi’s Finance Department. Abu Dhabi is the largest of the seven Sheikhdoms that make up the United Arab Emirates, but Sheikh Zayed is so rich that as President of the U.A.E, bankrolled the entire Federal Budget ($700 million per year). The Sheikh took in $3.5 billion in 1974 and managed to spend $2 billion on infrastructure development. Another $1 billion went into various forms of foreign aid. In 1974 Butter split the surplus of $1.5 billion as follows: 40 % went into common stocks and real estate, with Morgan Guaranty handling the U.S. and Canadian portion; Robert Fleming & Co., The British portion; and the Banque de l’Indochine, the European portion. Another 40 % went into bonds, picked and managed by the Union Bank of Switzerland and Britain’s Crown Agents. The recycling meanwhile proceeded at a furious pace. In 1973, in anticipation of higher oil revenues, spending got ahead of income. In 1974 income got ahead of spending. In 1975, with spending soaring and income flat or down slightly, the two was in balance again. Butter said that demand for infrastructure capital was on the upslope. In 1975 they had to choose between projects and timing of projects. They did not have much of a surplus to invest in 1975. With 30 % of their oil money flowing out of the country to finance the Sheikh’s largesse, there was enough left over to transfer life for his subjects in addition to the highways, power plants and water systems it was building.
The Gulf States disliked being told by the rest of the world what to do with their riches. Hence their initial rebuff to the IMF’s second oil facility. But these countries are still very dependent on Western Bankers and Financiers. Kuwait led the field despite the countries reputation for financial expertise few Kuwaitis had any experience in investment banking. Kuwait had no co-ordinated investment mechanism. Decisions of any importance was taken by the Finance Minister, Mr Abdur-Rahman al-Atiqi, or the head of his ministry’s investment department,
Mr Khalid Abu Saud. The official instructions were (a) to give priority to the purchase of real assets; (b) to look for these first in the Arab world; and (c) to involve Kuwaitis in their management. In practise, probably no more than ten percent of Kuwait’s foreign holdings were in equities or direct investments – and only a fraction of these in the Arab world. (Note They Ayjan Doyuk Group of Companies, Inc., Texas Richmond Corporation, Canadian Occidental Petroleum Corp., West Petroleum Corporation, Charter Trading Corporation – Col. W. Comee, Ronald Reagan, Patrick V. Strong (att.), and George W. Bush – Baker Donaldson Law Firm).
Major western banking institutions were still handling the bulk of the state’s foreign holdings. Outside of Britain in 1975 Kuwait relied on banks such as Chase Manhattan, First National City Bank, Dresdner Bank, Deutsche Bank, Union Bank of Switzerland, Credit Suisse and the Swiss Bank Corporation. They handled short-term money deposits and managed portfolios on limited discretion. (The bonds are Discretely callable, 120 days from issuer – Distinct in nature.)
The other advisors to the Kuwait government were Hambros, Morgan Grenfell and the Bank of England. Fears of a hostile reaction to the opening of offices in continental Europe or the USA largely accounted for Kuwait’s decision to continue with its existing portfolio managers in those markets. The trio of indigenous institutions are Kuwait Investment Company (K.I.C) – 50 % government stake, Kuwait Foreign Trading, Contracting and Investment Company (KFTCIC) – 80 % government stake, and Kuwait International Investment Company (KIIC) that is wholly privately owned. The Kuwait government originally wanted these institutions to develop as showcases for direct investment abroad. Instead, they drew the bulk of their income from interest on securities and loans. The government permitted no more such institutions after licensing KIIC in 1973.
Access to government funds gave the trio other leverage to establish Kuwait as a leading underwriter in the international bond market. KIIC, one of the most sophisticated of the Arab institutions, concentrated on little else since it began operations in March 1974. It managed or co-managed some $130 million worth of issues.
All three had foreign advisers, and KIIC also had a technical assistance agreement with Credit Suisse White Weld. (Note Millbank Technical Services). KIC had the widest spread of interest, with substantial holdings in shipping and real estate (Hilton). The private sector in Kuwait is dominated by a cluster of merchant families, closely linked with each other and to the government. (See CA file)
SAUDI ARABIA IS THE RICHEST
The bulk of Saudi Arabia’s investments are managed by Saudi Arabian Monetary Agency (SAMA). This is both the central bank and the state investment institution. The anomaly arose because the former governor of the central bank, Mr Anwar Ali (a Pakistani and ex IMF man), was also King Faisal’s personal economic adviser. The two jobs were thus conveniently rolled into one. As Saudi Arabia’s surplus grew, two problems grew with it. Some major banks like Chase Manhattan and Bank of America, began warding of the flood of deposits by bringing down interest rates on large sums of short-term money. Before Mr Anwar Ali’s death in November 1974, there was speculation that an investment institution would be established, separate from SAMA.
Three advisors from White Weld & Company, The New York Investment Bank (Note: was acquired, 15 April 1978, by Merrill Lynch, Pierce, Fenner & Smith Inc – See White Weld . ) and two from Barring Brothers and Company the London Merchant Bank had been seconded under technical assistance agreements to strengthen SAMA’s financial department. They were overruled by the new governor Mr Abdul Aziz Quraishi (self-confessed non-financier) who in turn was responsible for the Ministry of Finance. Overall guidelines where set up by an informal committee, which included the principal luminaries of the Kingdom. SAMA moved from Jeddah to Riyadh, the seat of government (Bechtel and the $140 billion construction contract beginning 1975 – 1980 / B-Series bonds i.e. 912810 BU1 is 1975 – 1980).
The main trends of Saudi Investment policies where:
1. Purchases of long term marketable debt
SAMA built up its American Holdings mostly through its existing financial contacts in the United States. The United States made every effort to institutionalise the special relationship. Two organisations exist through which Saudi Arabia are guarded. The US – Saudi Joint Commission on Economic Co - operation , administered by the US Treasury Department ($140 billion industrialisation program), and the Arabian American Oil Company (ARAMCO). Principal US banks involved where First National City Bank, Chase Manhattan Bank, Morgan Guaranty Trust Company and Chemical Bank.
SAMA had authorised the United States to be aggressive in handling their Portfolio!
It also authorised them to go into long term market corporate bonds.
A Shift into Corporate Bonds
The decision to make the value of the Saudi Riyal independent of the US dollar is understood to have required the approval of two other government departments. The Saudi’s where only prepared to look at companies with the equivalent of a
Triple-A rating. (PEFCO!) They tried unsuccessfully to get European governments to guarantee repayments, even of these. In the absence of details from official sources Jeddha was rife with speculation about how SAMA assets in 1975 where deployed. By some accounts they consisted of:
1. $1.2 billion lent to the IMF in 1974 and a further $750 million reportedly lent to the IMF in 1975
2. More than $1 billion lent to the World Bank
3. Perhaps $90 billion in US Government bonds and securities of the Federal National Mortgage Association and other organisations that are Federally guaranteed US financial intermediaries
4. An estimated $1 billion in United States stocks and corporate bonds
5. Approximately $1 billion in loans for Canada and Spain each
6. $4 billion in loans to other foreign countries
7. $6 billion in gold and silver and in foreign exchange held in Saudi Arabia and in banks in New York, Britain and elsewhere.
A longer-term threat to SAMA’s monopoly came from pressure by the Saudi business community and members of the Saudi Royal family against being excluded from a lucrative niche in the management of surplus funds. A number of Western institutions negotiated with their Saudi partners to set up investment banks or companies specialising in corporate finance within Saudi Arabia. The unstated hope was that this would give them a foothold in placing government funds. Amongst the joint ventures where:
Chase Manhattan, Industrial Bank of Japan and Schroders were involved in a consortium with the two Saudi commercial banks and various state institutions.
1. Williams and Glyn’s (Chairman, Sir John Hogg), Credit Commercial de France and Japanese interests in a joint venture investment company with the Saudi Arabian Investment Company.
2. First Boston Corporation (declined technical assistance agreement with SAMA), maintained a presence in Saudi Arabia by running the investment department for the National Commercial Bank.
3. First National City Bank and Abdul Aziz al Suleiman and Company.
4. Merrill Lynch and Mr Hishman Ali Reza (Xenel Industries)
5. Banque de Paris et des Pays-Bas joint investment bank with Mr Gaith Pharaon (BCCI – Bank of Credit and Commerce International)
6. Portfolio managers Robert Fleming , Banque de l’Indochine and Morgan Guaranty.
7. Union Bank of Switzerland and the Crown Agents handled bonds and fixed interest securities.
The Investment Board was wound up and future surplus funds where channelled through one of the three intermediaries:
1. The Abu Dhabi investment Company – Mr Jean Bataillard formerly with Morgan Stanley as MD.
2. Credit Suisse White Weld and Robert Flemming and the Ministry of Finance existing portfolio managers
The financial activities of the Crown Agents between 1967 and 1974 resulted in a huge loss of money. Insider trading within the company was paramount during this period. Subsidiaries of Crown Agents internationally were utilised for the movement of funds. The shareholdings of those companies were privately held by the directors of Crown Agents. David Green flew three flags – MI5, CIA, Private Sector – comment by Pessera. (See Pessera offer).
The American Banks that burnt their fingers in the Fringe banking crisis time where:
1. Continental Illinois Ltd.
2. Bankers Trust International
3. Texas Commerce Bank (owned by Burston Group / Crown Agents)
4. Israeli-British Bank
5. Franklin National New York
NOTE: August 1974
1. Nixon resigns
2. Crown Agents collapse
3. Texas Commerce Bank collapse
4. Israeli-British Bank collapse
5. Franklin National collapse (Sindona Empire etc.)
The Crown Agents also contravened exchange control in two ways during this period, both by accepting and placing foreign currency deposits and by building up portfolios of foreign currency securities through the Joint Consolidated Funds. The Crown Agents did this as principals, despite the Bank of England’s stipulation in 1970 that such transactions must be done only as agents.
Through Four Millbank Investments and the Joint Consolidated Fund (both subsidiaries of the Crown Agents), long-term bonds were purchased on behalf of their principals in OPEC, using Eurodollars. David Green purchased the same long-term bonds on behalf of Four Milbank Nominees , a nominee company acting on behalf of individuals in the private sector . He states “’Four Milbank Nominees’ is the name used by me in connection with my sole beneficial ownership of the Bonds and that Four Millbank Nominees has no legal status or personality independent of me.” At the time of the issue of the Bonds, Four Millbank Nominees was a dormant nominee company which had been replaced by Four Millbank Investments for Crown Agents’ activities, and in terms of its Memorandum of Articles could not hold assets. This allowed David Green to use the company name for the purchase of Bonds for himself and on behalf of others outside the jurisdiction of the UK. It has been confirmed unofficially that David Green fronted for covert ops for agencies in the US and UK, which included individuals in the commercial sector, and as such was involved in huge movements of funds taking place at this time. DG for Alliance Dollar Reserve by verbal confirmation was a successful bidder at the original auction. (Confidential fiscal information on file – example account specifics / IRS tax code etc.) The physical record R11 / FNB (11th entry in the Red Book of 1975). The question of fraud being perpetuated has been raised by the Bureau of Public Debt, but it must be noted that in order for any US Treasury bonds to be purchased the designated foreign national (David Green) must have received official sanctioning in 1975. It is quite obvious therefore that David Green’s purchase had prior approval of US Treasury, because the entire matter was scripted by the US Treasury and the OMB (Office Management and Budget) in the first place. (Note: Confirmed by Passera)
This would entail the darkest covert ops for their own account in the seventies – drugs for arms (Nugan & Hand – see files). There was a triangular link between financial institutions purportedly working under the Crown Agents’ umbrella, Continental Illinois of Chicago and the Franklin National Bank, for the period 1969-1975.