A member of the Senate banking committee, Sen. Charles Schumer (D-NY), has called on bank regulators to "remove" a one-time fugitive and accused money launderer, Saad Shafi, from his job as the manager of a Los Angeles bank.
Schumer was reacting to an ABC News investigation that found Shafi was able to get his job, and U.S. citizenship, despite fleeing the U.S. in 1988 after he was indicted in a case involving the BCCI bank and accusations the bank helped hide millions of dollars for Colombian cocaine bosses and former Panamanian dictator Manuel Noriega.
"I am utterly amazed that someone at this high a level, and this visible, in the middle of a major scandal can come back into this county and without blinking an eye be allowed to run a major bank," said Schumer, who called the situation "shocking."
"I think the bank examiners ought to figure out a way to remove this person," he said.
Shafi fled the U.S. for Pakistan in 1988 after being indicted by a federal grand jury on charges he and other executives at the Bank of Credit and Commerce International, BCCI, helped Colombian drug bosses and Panamanian strongman Manuel Noriega hide millions in drug money.
After 11 years on the lam, U.S. prosecutors decided to dismiss the charges against Shafi, apparently convinced he would never be extradited by Pakistan, his home country, to face the BCCI charges.
By 2005, he had been granted U.S. citizenship and had gone back to work in the U.S. banking industry.
When ABC News found Shafi working as the manager of the Los Angeles branch of the Habib American bank, an FDIC-insured institution chartered and headquartered in New York, Shafi dodged questions about the case and said he needed to speak to his attorney.
Shafi was one of 13 BCCI officials and drug traffickers indicted after a long-term investigation that included secret recordings made by undercover federal agent Bob Mazur.
Shafi met the agent at the BCCI branch in Nassau, Bahamas.
"He made it very clear to me he was ready, willing, able and experienced to handle the hottest money that could be provided," Mazur told ABC News.
In one of the recorded conversations, Mazur, posing as a financier for the Medellin cocaine cartel, told Shafi, "My clients for their own reasons sell cocaine in the United States."
"We are equipped here for everything," Shafi told the undercover agent.
According to the grand jury indictment, Shafi later handled an initial transaction of $382,950 that he was allegedly told was drug money.
"He handled millions of dollars," said Mazur.
It was Mazur who first realized Shafi had come back to the U.S. as he researched a recently published book on his life as an undercover agent, The Infiltrator.
Habib American Bank
Shafi "is not a fit person to run a bank," said Jack Blum, who investigated BCCI for the Senate Foreign Relations Committee. "Banks should be run by people of good moral character."
A lawyer for The Habib American bank, Marcus Asner of Arnold and Porter, said Shafi was placed on leave on Tuesday evening following inquiries from ABC News.
"The bank takes this very seriously," Adner said. "Since ABC brought this to our attention, they've hired us as outside counsel but the bank can't comment further at this time because of that ongoing inquiry."
New York State banking officials, which have oversight of Habib American, also appeared to be unaware the onetime fugitive was running the Los Angeles branch.
"We don't look down to the branch level," said Jacqueline McCormack, the chief of staff for New York Superintendent of Banks Richard Neiman.
Officials at the FDIC also said they did not know a man once accused of laundering drug money was in charge of the Los Angeles branch of the bank they insure.
Fled to Pakistan
After he fled to Pakistan, Shafi, a member of a prominent family with political connections, continued to work in the banking industry there.
Shafi first returned to the United States in 2003 and worked briefly at an investment firm in the Seattle area.
He later moved to the Los Angeles area and now lives with his family in Anaheim, CA.
Questions Raised About Quality of Bank Regulation
Shafi started at the Artesia branch of Habib American but then was promoted to run the Los Angeles branch, according to a bank employee.
Its website says the bank "will adhere to the highest levels of honesty, integrity and efficiency in providing value added services to our customers."
Former Senate investigator Blum says the Shafi case raises larger questions about the quality of bank regulation by New York State and others.
"It's painful because after all the problems we've had in the banking business, for something this basic to be slipping by the regulators and the people who license banks is very distressing."