Federal prosecutors last week contended in a superseding indictment that embattled New Jersey Senator Bob Menendez accepted race car tickets and other gifts from Qatar while he helped to orchestrate a financial relationship between a New Jersey businessman and a Qatari investment fund. Back in the late 1970s, Qatar also played a role in a multifarious scandal involving President Carter’s one-time Budget Director Bert Lance – a Qatari cameo that speaks volumes about the often-murky relationship between federal office and international business exploits.
Bert Lance is not a perfect analogue for Senator Menendez. For one thing, he never held elective office. Lance was a Georgia banker and longtime friend of President Carter. He served as Carter’s successful State Highway Director during the to-be President’s stint as Georgia Governor, and he became the Director of the Office of Management and Budget when Carter entered the Oval Office in January 1977.
Lance’s two banks, Calhoun National and the National Bank of Georgia, soon came under press and congressional scrutiny. Lance delayed selling his personal stock in the institutions, and various accusations flew about Lance’s tendencies toward self-dealing, dramatic overdrafts from his personal accounts, and use of a bank-owned plane for personal travel. Lance initially fought the charges, offering a bravura performance before the Senate Committee on Government Affairs. Only days after his defiant stand, however, Lance resigned on September 21st, 1977.
Post-resignation, Lance badly needed money. Before long, he was wading into some sketchy – and bribe-heavy – territory, via his friend, Georgia State Senator R. Eugene Holley.
Some background on Holley: While serving as the influential Senate Banking and Finance Committee Chair in the 1960s, Holley – spurred by a series of complex loans – managed to build a fortune of $59 million, purchasing a Tennessee mountain and a South Carolina island in the process. In the early 1970s, however, Holley’s empire had collapsed.
Hoping for a rebound, Holley in 1975 had teamed up with an Iowa tire-retreading magnate, Roy J. Carver, to form Holcar Oil Corps. Lance’s National Bank of Georgia had given Holcar $200,000 in its early goings.
Holley and Carver zeroed in on a group of oil wells off the coast of Qatar. And they began to use bribery as a way to get what they wanted: They offered $1.5 million to Qatar’s director of petroleum – deposited in the Swiss bank account of the director’s brother – to make sure that they secured the concession.
Eventually, however, Holley and Carver realized that there were all sorts of problems with their new holdings – including the particularly sticky wicket of excess sulfur in the oil. In fact, both a Japanese firm and Koch Industries (yes, those Kochs) had passed on the concession after doing more due diligence than Holcar. Ultimately, they sunk $17 million into the faltering project.
Needing more capital, Holcar sought funds from a Saudi millionaire named Ghaith Pharaon, who invested generously in the faltering concession.
Here’s where Lance entered the legally-dubious scene.
In late 1977, when Lance reached out to Holley for help, the struggling oilman/politician introduced Lance to Pharaon and one of his associates, the Pakistani Agha Hasan Abedi, the chairman of the mysterious and cash-flush Bank of Credit and Commerce International (BCCI). Lance, in turn, got a crucial $2.4 million from Pharaon for selling him the controlling stock interest in the National Bank of Georgia. He concurrently got another $3.5 million as a loan from Abedi.
Holley and Carver had helped lift Lance into far greener financial pastures. But the Holcar team was in ever-increasing trouble. The Qatar petroleum director they had bribed was by this point the Secretary General of OPEC (Organization of the Petroleum Exporting Countries). His successor was not nearly as bribable, and moved to end the concession altogether.
In February 1978, Lance made a phone call to the White House on behalf of Holley and Carver. He phoned Eleanor Connors, secretary to the youthful (and not without his own image issues) Carter aide Hamilton Jordan. Lance asked Connors to set up a meeting between Holley and “an appropriate U.S. State Department official.”
Lance’s phone call led to fast results. Holley indeed interfaced with the State Department’s desk officer for Qatar, and before long, Holley and Carver met in Qatar with the American Ambassador to Qatar, Andrew Kilgore, and the new, recalcitrant Qatar petroleum director. A frustrated Carver allegedly brought up the earlier bribe to the Ambassador, and said, “Who do I go see now? How do I get it done?” in a seeming effort to levy further economic influence. Ambassador Kilgore, concerned that Holley and Carver were trying to bribe, ended the negotiations.
Now, unlike Holcar’s bribe (and later attempted bribe) to the Qataris, Lance did not directly take any money from the two maligned businessmen to place the phone call. But Holley’s earlier help in introducing Lance to Pharaon and Abedi made Lance’s willingness to go to his former employer look a bit quid-pro-quo-ish.
The whole affair remained under wraps until more than a year later. In April 1979, the Department of Justice hit Holley and Carver with a civil injunction banning them from giving further bribes to foreign businesspeople. The injunction marked an early use of the Foreign Corrupt Practices Act, which became law in early 1977 and outlawed Americans from bribing foreign government figures. Since the successful Holcar bribe of the Qatar petroleum director came before the new Act was in place, nothing criminal was warranted.
Still, the civil suit detailed the Lance phone call, and the press took note. “Lance Attempt to Aid Bribe Defendants,” read the Washington Post headline on April 10th, 1979.
Lance’s former colleague Jody Powell, the White House Press Secretary, attempted to minimize the import of the whole scandal. “It isn’t out of the ordinary for a businessman to meet with a State Department official about business matters abroad,” Powell told the press of Holley’s Lance-aided entreaties.
Lance was not directly legally implicated in the Holley and Carver suit. But his involvement in the Qatar affair portended far greater legal tumult.
By this point, Lance’s relationship with Pharaon and Abedi – and his larger dependence on loans – was a serious regulatory problem. Lance had seemingly not repaid any of the loan from Abedi, and had become a de facto employee of BCCI, even – in a move reminiscent of his erstwhile White House scandal – flying around the world on the bank’s planes in attempts to acquire smaller banks for Abedi.
In May 1979, just a month after the Qatar phone call emerged in the press, federal prosecutors indicted Lance and three colleagues for bank fraud, alleging that many of the loans he had secured – including the BCCI one – were used illegally in further financial schemes and showed “a reckless disregard for the safety” of the loaning banks. In April 1980, a jury acquitted Lance. One juror told the press of Lance and his co-defendants, “Even if something happened, could you say they intended to hurt somebody?”
Menendez is a sitting United States Senator; Lance was an already-disgraced former official. Moreover, Lance was never directly charged for anything to do with Qatar – he just made a phone call to his old boss’s people. Still, the Qatar pressure that Lance applied, and its connection to more improper influence schemes in the Emirate, shows the same kind of volatile mix of political influence and international get-rich-quick schemes that have left Menendez in such hot water.
For more on Bert Lance, check out his (decidedly self-serving, but still very interesting) 1991 memoir, The Truth of the Matter: My Life in and Out of Politics.
And head to my Twitter account for supplemental archival threads on each Time Machine piece: @DavidKurlander.
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