The Ostracism of Bert Lance

The White House asks him to fade away

Bert Lance was still fuming last week about the confiscation of Diplomatic Passport X-000065, that official piece of paper certifying to any doubter anywhere that, while he might be out of Government, he still carried clout as Jimmy Carter's good Georgia buddy. "I don't care about the damn passport," Lance told a friend in Atlanta. "But what a lousy way to handle it. They didn't even have the guts to tell me in person." He had, in fact, merely been informed by a bureaucratic letter that his passport had been "audited" and must be returned to the White House.

The former director of the Office of Management and Budget was hurt and angry when he was summoned shortly afterward to the White House by Hamilton Jordan, the President's special assistant and another of Lance's Georgia cronies. This time the White House confronted him directly with an unpleasant reality. Jordan suggested gently--but clearly--to Lance that he must keep as much distance as possible between himself and the President. Though there was no evidence that Carter had ordered Jordan's move, it seemed unlikely that he was unaware of it.

The sometimes stormy and often sorrowful confrontation in Jordan's corner office lasted for more than an hour. Jordan told Lance that he was embarrassing Carter, even endangering his presidency, and that he must get his muddled financial affairs in order. Lance was alternately indignant and deflated, sometimes loud in his anger. He insisted that Jordan's criticism was unjustified and unfair.

On returning to Atlanta, Lance was depressed and bitter. His best friends were deserting him, he complained to one intimate: "Can you imagine standing in Hamilton Jordan's office and being told I'm embarrassing the President--after what's happened to him?" Lance's biting allusion referred to the recent episodes in which gossip reporters have portrayed Jordan as publicly insulting women.

Jordan's move seemed to be based on two White House fears: 1) that Lance might be indicted for his activities as a Georgia country banker before he joined the Carter Administration; 2) that the revelations of his recent dealings with Arab investors could mean that they were trying to buy influence.

Of the two problems, the criminal investigation into Lance's loose banking practices is the most threatening to him. The investigation, which mostly involves charges that have been aired in the press and looked into by a Senate committee, is being directed by a trio of lawyers within the Justice Department, named by Attorney General Griffin Bell last November. The lawyers and their aides have presented some evidence in the glacially slow-moving investigation to a grand jury in Atlanta, since that is the area in which any law violation would have occurred.

The investigation apparently centers on Lance's stewardship of the Calhoun First National Bank, of which he was president from 1963 to 1974. The federal investigators are trying to determine whether Lance's lavish grants of overdraft privileges to relatives and bank officers amounted to a misapplication of funds. Presumably being studied as well is Lance's approval of a $250,000 loan when he headed the National Bank of Georgia in 1975 to Billy Lee Campbell, a former officer of the Calhoun bank, who was convicted of embezzling funds from that institution. One question is whether Lance was aware of thefts at the time of the N.B.G. loan and was trying to help Campbell. Lance's statements in various loan applications of his own, particularly for a $2.6 million loan from New York's Manufacturers Hanover Trust Co., also are under scrutiny. Whether he actually had the collateral he claimed is at issue. To make any false statement in a loan application is a violation of federal law.

Yet it is Lance's continued dealings with a number of apparently interlocked Arab moneymen that may be the cause of the greatest concern in the White House. While there is no evidence that these dealings began while Lance was still at OMB, they clearly were under way shortly after he left office--and Lance seems to have shown a complete disregard for how such dealings might be interpreted.

These murky maneuverings apparently began as Lance left OMB last September. He was looking around for a way to sell his 200,000,000 shares in N.B.G. and thus begin paying off huge personal debts that totaled roughly $5.3 million. A fellow Georgian, R. Eugene Holley, former head of the Georgia state senate's banking committee and a dealer in oil ventures, put Lance's representatives in touch with Agha Hassan Abedi, a banker who is described as "a genius" and "a miracle man" by colleagues in Pakistan. Abedi helped found the Karachi-based United Bank of Pakistan in the late 1960s. The bank prospered sensationally, becoming the third largest in Pakistan and making Abedi a millionaire.

When all banks in Pakistan were nationalized by Prime Minister Zulfikar Ali Bhutto in 1974, Abedi refused to stay on as a civil servant. Instead, he expanded his banking activities into the Middle East, developing close relations with Sheik Zayed bin Sultan al-Nahayan, President of the United Arab Emirates. Abedi also became an important financial adviser to Saudi Arabian Financier Ghaith Pharaon. He, in turn, was part of an inner circle in Saudi Arabia that included Kamal Adham, longtime top security counselor to Saudi Kings.

At the time Lance met him, Abedi had become head of London's fastest growing bank, the Bank of Credit & Commerce International. Founded by Abedi, B.C.C.I. was backed by private Arab investors and the Bank of America. The investors included members of the ruling families of Saudi Arabia, Kuwait and the United Arab Emirates.

Although the precise sequence is not clear, Lance soon became involved with Abedi's associates at B.C.C.I. in an attempt to take over Financial General Bankshares Inc., which controls 15 banks in Washington, B.C., and four states. The Securities and Exchange Commission charged Lance and the others with trying to buy controlling interest without filing required public reports. Lance, with his associates, signed a consent order agreeing not to buy any more shares without full disclosure.

While Lance was involved in this dubious deal, he got some astounding help from his new Arab friends. First, Abedi helped arrange a deal whereby the former Pakistani banker's Saudi Arabian friend, Pharaon, agreed to buy 60% of Lance's stock in the National Bank of Georgia. Pharaon's offered price was $20 a share--some $4 above the prevailing market price at the time. Then in a transaction that is still mysterious, Abedi arranged for a most generous loan to Lance through B.C.C.I. It apparently was for $3.5 million, enough to pay off an outstanding Lance loan from the First National Bank of Chicago. So far, Lance has not produced any documents setting out the terms of the loan, which was not backed by any collateral and contained no schedule for repayment. In London last week, Abedi said it would be "unethical" to discuss whether and why Lance had received a large loan. But he told TIME that his group decided to retain Lance as an investment adviser solely for his financial savvy and familiarity with investment opportunities in the U.S. "We made it clear," insists Abedi, "that we would never talk about exploiting his relationship with the President."

As Lance continued to create controversy, his wife LaBelle appeared on NBC's Today show to plug a book she has written about their troubles, This Too Shall Pass. Ever loyal, she defended Bert's machinations with Arab investors as helping to reduce the nation's trade deficit. Said LaBelle: "It's a good way for us to bring some of our money home again."

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