Standard Procedure?

Could the West's condemnation of B.C.C.I. as a criminal bank be attributed at least in part to a profound clash of cultures? That is precisely the case, say experts familiar with banking in the Middle East and Asia. They insist that many B.C.C.I. practices that the U.S. and the rest of the developed world call reprehensible are merely traditional operating procedure in the eyes of Muslims.

Even cases of apparent fraud can fall into a gray area. Among the most serious charges Western countries have leveled at B.C.C.I. are accusations that it fraudulently concealed huge off-the-books loans to wealthy Middle East investors. But sources in the Persian Gulf note that Arab bankers have traditionally made large loans to the region's royal families and wealthy merchants without demanding the documentation Westerners would require.

The Arabs often see no need for such records, financial experts say, because they trust leaders such as Sheik Zayed bin Sultan al-Nahayan, the ruler of Abu Dhabi who controls 77% of B.C.C.I., to stand behind their debts and those of their subjects. And they see no need to keep records for the taxman, since the six Arab states in the gulf collect no taxes.

Islamic bankers see a touch of hypocrisy in the West's condemnation of B.C.C.I. bookkeeping. They point out that British banks routinely did business with prominent Arabs without documentation after British lenders flocked to the Middle East in the 1950s and '60s. The region's experts also see little wrong in using front men to hide the real movers and shakers behind financial transactions. That could help explain why Middle Eastern investors allowed B.C.C.I. to use them as nominal owners -- or nominees -- when the bank secretly acquired control of Washington's First American Bankshares. Royal family members often use fronts to conceal the fact that they are donning the hats of businessmen.

Even Arab experts consider that many of the financial practices of B.C.C.I., including its attempts to cover up its losses, may have been beyond the pale. But they view such legerdemain as a crude attempt to comply with Western regulators' demands for acceptable profit and loss statements. U.S. and British authorities would naturally scoff at that explanation. They contend that B.C.C.I. flourished as a criminal enterprise largely because it was carefully constructed to take advantage of such tax havens as Luxembourg and the Cayman Islands, which provide virtually no regulation.