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Report of the Directors
On behalf of the Directors I have pleasure in placing before you the Consolidated Statement of Condition and Consolidated Statement of Earnings of BCCI Holdings (Luxembourg) S.A. for the year ended December 31, 1988, together with the Auditors' Report.
A number of unfortunate circumstances marred the otherwise satisfactory operational results of the Group in 1988. First came the serious illness of the President, Mr. Agha Hasan Abedi, in March. He is currently making satisfactory progress. The management structure of the Group, however, showed the expected resilience and strength which ensured continuity and smooth transition. ln October, we were faced with an indictment in Tampa, Florida, ich alleged that nine of our employees had violated U.S. money laundering laws by laundering $14 million. The individuals have denied the charges and are contesting them vigorously, as are the bank entities. It has not been suggested or alleged that either the corporate management or the Directors had any knowledge of the transactions. Appropriate steps have been taken in the United States and elsewhere to strengthen procedures and controls, particularly on client relationships.
Although this last event generated a high degree of adverse publicity the Group underlying strength and viability unimpaired resulting in a strong balance sheet at the year end with assets exceeding $20 billion and improved opera profit of $192 million for the year. The profit figures, however, were influenced by against commercial and border risk situations, a step decided as a matter of prudence and in the light of the regulatory guidelines on such risks. The decision had the full support of our shareholders who contributed to the increase of $100 million in the Group's Capital fund subsequent to the year end. Some of the countries where the Group has an operating presence will continue to be affected by external debt problems. These remain of serious concern not only to the financial community but also to the political leaders around the world. It is clear that a fresh approach is needed requiring a large degree of financial realism and political goodwill. The recent initiatives must be seen as a positive step in the right direction.
With our geographic diversification and having made conservative provisions in 1987 and 1988, we can face the next financial year with confidence and anticipate a good improvement in our earnings.
In accordance with our well-established philosophy, a gross amount of $21 million was allocated to various charitable causes.
I take this opportunity to thank the Central Banks and Regulatory Authorities in the countries where BCC operates for their guidance and day to day assistance.
I also place on record my deep appreci¬ation for the loyalty and hard work of each and every BCC staff member often under difficult circumstances. Their collective contribution will form the foundation for the Group's future growth in the year ahead.
Yves C Lamarche
Director