B.C.C.I. Hits Home

All last year Americans heard of the labyrinthine lawlessness of the Pakistani Bank of Credit & Commerce International. But unlike depositors shut out in places like Britain and Hong Kong, they felt no real impact. That changed after a New York grand jury indicted Sheik Khalid bin Mahfouz, head of Saudi Arabia's National Commercial Bank, for fraud in connection with the scandal. Last week the Federal Reserve sought a $170 million fine from Mahfouz -- the largest ever from an individual -- for his alleged role in illegally buying a controlling interest in Washington's First American Bankshares from B.C.C.I., and the Comptroller of the Currency ordered the close of N.C.B.'s New York branch.

Earlier in the week Mahfouz resigned his post "to combat these false charges," and the same day silver plunged on European exchanges as his bank, Saudi Arabia's largest, dumped gargantuan amounts of the metal. The silver shock spilled into oil stocks, which helped fuel a 44-point slide in the Dow- Jones average on the New York Stock Exchange. Although silver and stocks recovered, the turmoil in those markets was the first close-to-home repercussion of the B.C.C.I. scandal in the U.S. It may not be the last.