Perhaps this is inevitable–the consequence of climbing into bed for almost half a century with talent that ranged from the Mafia (repeatedly) to drug lords of every odor from Canarsie, N.J., to the palaces of Bangkok, Thailand. The CIA has always promoted itself as an equal-opportunity employer.

Created by the National Security Act of 1947 to counter by any imaginable means–preferably foul–the postwar depredations of International Communism, the CIA was expected to immerse itself at society’s tangled depths. What it was not to do was join the heavies.

With BCCI debris increasingly scattered throughout world capitals, any number of questions on just this point are now bouncing around. Charges are already circulating that CIA representatives “collaborated with the (BCCI’s) black network in several operations”; that, preoccupied with Afghanistan, CIA officers turned a “blind eye . . . to the heroin trafficking in Pakistan,” and that BCCI money bankrolled the “covert sales of American arms to Iran in 1986.” Administration involvement with the BCCI’s warehouse of financial combustibles is likely to smolder through the remainder of the ‘90s. A slow fuse, promising a tremendous blast.

This may be unavoidable. Throughout U.S. intelligence history, whenever enough cash changes hands, those hands have rarely emerged clean. The money it requires to bribe an agent or buy off another country’s senior officials seldom originates in a vestry collection plate. “Espionage is not for archbishops,” Allen W. Dulles, the Eisenhower Administration’s CIA director, was fond of confiding to his underlings. Dulles definitely knew.

Financially, the CIA was conceived in sin. Before there was a CIA, there was an OSS, the Office of Strategic Services. The OSS’s parent, the Coordinator of Intelligence, was authorized by Franklin D. Roosevelt in 1941, in good part to permit the Roosevelt Administration to support its friends around the world–no matter what the laggard and frequently isolationist Congress might prefer. The OSS provided an effective off-the-books, “unvouchered” instrumentality to accomplish the executive branch’s unadvertised purposes.

The movement of money would remain a stumbling block to the intelligence community. This problem sharpened after the OSS was disbanded in September, 1945. As Cold War pressures heightened, and breakpoints, like the bitterly contested 1948 Italian elections, loomed, the State Department stamped out of the bureaucracy a completely new–and classified–entity given over to covert warfare, in general, and the distribution of cash by the bale, in particular: the Office of Policy Coordination.

The handful of Wall Street investment bankers and savvy international lawyers who melded the Office of Policy Coordination into the CIA knew quite a bit about floating money in and out of projects–even before they descended to government employment. One increasingly influential voice belonged to Dulles, a corporation lawyer esteemed for his foreign-service background and his manipulations from Switzerland on behalf of the OSS.

Dulles had again become a player in the postwar anti-Bolshevik crusade by masterminding the Committee for a Free Europe–the purportedly independent propaganda clearinghouse that underwrote expenses of Radio Free Europe and Radio Liberty. In truth, most of the funding originated with the U.S. government. It had appeared prudent to Truman-era officials to mask the origins of whatever taxpayer dollars supplemented the Radios. All through the start-up decades of the CIA, intelligence officials laundered costs by way of a galaxy of private charitable institutions–from the Granary Fund to the Kaplan Foundation–which pushed along CIA allocations, via specific international banks, to continuing operations throughout the world.

By every account, the bank of choice for many years was the Schroder Trust. The New York merchant banking house of J. Henry Schroder had long been identified with its esteemed British counterpart. Both stemmed from private ventures in Cologne and Hamburg. Before World War II, the Schroder combine had consistently performed as a powerful instrument of Nazi foreign and commercial policy. Adolf Hitler struck the deal that put him in charge of Germany over lunch at Baron Kurt von Schroder’s mansion in Cologne.

Dulles had long served–with certain ill-disguised misgivings–as general counsel and board member of the New York affiliate of J. Henry Schroder. Almost as his dowry, Dulles laid before the U.S. intelligence community the international amenities of the Schroder group once he became involved with the agency in the late ‘40s. Schroder retained its long-standing ties throughout South and Central America, as well as durable associations with senior German industrial and intelligence personalities–including many former Nazis. It was this network that became the flywheel of innumerable CIA projects in Europe–especially after Dulles himself moved up to director in 1953.

Even then, the question arose who was using whom. By 1980, when the Nugan Hand Bank in Australia collapsed shortly after the apparent suicide of its founder, Frank Nugan, another incident of massive CIA involvement in a profoundly corrupt banking empire slowly reached public awareness. Like BCCI, the Nugan Hand Bank amounted to a global Ponzi scheme. After recruiting a reputable-appearing assortment of retired senior U.S. military and ex-CIA personnel, the Nugan Hand entrepreneurs scoured U.S. military installations worldwide for deposits. They pledged to pay double-digit interest–offshore and tax free. They used this stake to underwrite rogue enterprises throughout the planet.

The renegade ex-CIA arms merchant, Edwin Wilson, financed his catastrophic weaponry empire through Nugan Hand, including, by the end, the transfer of tons of plastique to Moammar Kadafi. According to a galvanizing 1982 series in the Wall Street Journal by Jonathan Kwitny, the bank not only financed, but arranged for the trans-shipment of, millions of dollars worth of heroin–often by the contract pilots who flew for Air America, the CIA’s huge proprietary fleet. “Air America was a Vietnam War-era airline,” Kwitny wrote, “with close connections with the CIA. U.S. drug enforcement officials now acknowledge that the airline also occasionally ran heroin out of Southeast Asia’s famed ‘Golden Triangle’ poppy-growing areas.” A Joint Task Force study by Australian officials confirmed the extensive use of the Nugan Hand Bank as a blind depository by CIA leaders. The fast-moving co-founder of the bank, ex-Green Beret Michael Hand, bragged regularly about his intimacy with CIA operatives before he disappeared. By then the bank itself had collapsed.

With Nugan Hand down, the rise of the BCCI was more than providential. Had not a coalition of Pakistani and Saudi sharpshooters set it up, the agency would probably have contrived to reinvent it. U.S. diplomacy of recent decades has depended more on whom we can pay off quietly than whom we can talk around. It remains much cheaper to bribe than invade, as our intelligence mentors, the British, always insisted. Yet still they object, because BCCI payments went out at CIA request to winkle out the unpublished details of English arm sales and overseas contracts.

As early as 1986, according to the former U.S. Customs Service commissioner William Von Rabb, CIA Director-designate Robert M. Gates labeled BCCI the “Bank of Crooks and Criminals.” Von Rabb has not specified whether Gates considered this a term of endearment or opprobrium.

TAKING ON BCCI: The first indictments have been brought against the corrupt banking empire. The man responsible, Manhattan Dist. Atty. Robert Morgenthau, talks about it. Page 3.