Clark McAdams Clifford

CLIFFORD, CLARK McADAMS

Clark McAdams Clifford was a prominent Washington, D.C., attorney who served as an adviser to every Democratic president from HARRY S. TRUMAN to JIMMY CARTER. He was White House counsel to President Truman, personal lawyer to JOHN F. KENNEDY, and secretary of defense under LYNDON B. JOHNSON. Later his reputation suffered seriously with his involvement in a scandal over the Bank of Credit and Commerce International (BCCI).

Clifford was born on December 25, 1906, in Fort Scott, Kansas, and spent his childhood in St. Louis. He entered Washington University, in St. Louis, in September 1923. In the fall of 1925, after two years as an undergraduate, he entered the university’s law school. He received his law degree in 1928 and practiced law in St. Louis until entering the navy in 1944.

Lieutenant Clifford began his career of public
service in 1945 as a naval aide to President
Truman. In 1946, he became special counsel to
the president. Clifford played an important role
in the birth of the national security system. He
helped draft legislation creating the DEFENSE
DEPARTMENT and worked with others in the
Truman administration to establish the CENTRAL
INTELLIGENCE AGENCY (CIA), the U.S. Air
Force, and the NATIONAL SECURITY COUNCIL.
Clifford had been associated with Kennedy
since Kennedy’s days as a congressman and senator.
After Kennedy’s election to the presidency
in 1960, Clifford assisted in the transition, helping
pick members of the cabinet and other
important high government officials. He also
served as a personal legal adviser to President
Kennedy and his family.
During the Johnson administration Clifford
advised the president on matters of foreign policy.
Clifford served as secretary of defense from
March 1968 to January 1969. During his short
tenure at the Pentagon he was the leader of an
influential group of officials who persuaded
Johnson to de-escalate the VIETNAM WAR. He
argued that the burden of fighting should be
transferred from the U.S. troops to South Vietnamese
forces as quickly as possible.
As the years went by Clifford rose in status as
an influential elder statesman. Several years after
most would have begun enjoying their retirement,
the 70-year-old Clifford was advising
President Carter on foreign policy issues, as he
continued his work with the DEMOCRATIC
PARTY and high government officials.
Despite his long-standing prominence at the
top levels of government, Clifford’s later years
were consumed with a scandal surrounding
BCCI. BCCI was founded in 1972 by Aga Hassan
Abedi, a Pakistani financier who retired in 1990
owing to health problems. From the start, BCCI
officials had grandiose dreams of the organization
becoming a worldwide financial power, the
equal of large Western banks but with special
ties to developing countries. Unfortunately, the
bank never had a great deal of capital and was always desperate for deposits. One of BCCI’s
largest customers was the Gulf Group, a consortium
of shipping companies. The Gulf Group
made substantial deposits to BCCI in 1972, but
began borrowing from BCCI heavily after that.
By 1977, BCCI’s loans to the consortium had
become so large that Gulf Group accounts were
transferred from BCCI’s London office to its
Cayman Islands subsidiary to avoid British limits
on the amount the bank could lend to individual
customers. This deception eventually
grew to involve approximately 750 accounts and
a special department within the bank dedicated
to carrying out the subterfuge. To cover its
losses, the bank apparently resorted to a variety
of schemes such as using deposits from other
customers to make interest payments on delinquent
loans. To add needed capital, BCCI lent
money to its existing shareholders to buy more
stock. The purchases artificially inflated the
stock price, thereby giving the appearance of
increased capitalization, but BCCI was only
investing its depositors’ money in the bank.
On July 5, 1991, banking regulators in seven
countries—the Cayman Islands, France, Great
Britain, Luxembourg, Spain, Switzerland, and
the United States—seized the assets of BCCI,
charging that the bank had engaged in widespread
FRAUD over a number of years. The
seizure set off a worldwide investigation that
touched several U.S. government agencies, some
leading figures in Washington, D.C.—most
notably, Clifford—and individuals in several
other agencies. The collapse of BCCI had
tremendous repercussions throughout the
world.
In the United States, the main issue was
whether the federal government had made sufficient
efforts to investigate BCCI prior to its
seizure in 1991. Various federal agencies had
been interested in BCCI since the late 1980s. The
CIA had prepared a report in 1986 alleging that
BCCI was the owner of First American Bankshares,
a major Washington bank. In 1989, the
CIA prepared a report that alleged possible
criminal activities conducted by BCCI, including
MONEY LAUNDERING. Questions remained
about what the federal government knew of
BCCI’s illegal activities and when it became
aware of them.
Clifford was chairman of First American and
his law partner Robert Altman was president.
First American was allegedly acquired in 1982 by
a group of Middle Eastern investors who were
using BCCI money, but Clifford and Altman
said they believed that the investors were acting
on their own. From 1982 to 1991, Clifford had
assured federal regulators on several occasions
that BCCI had no connection with First American.
On August 13, 1991, both men resigned their
posts at First American. In September, Clifford
testified before the House Banking Committee
that he had been duped by BCCI and had not
known that it had owned the controlling interest
in First American during the nine years that
he ran the bank.
On July 29, 1992, Clifford and Altman were
indicted simultaneously by federal and New
York state grand juries on charges of conspiring
to defraud the FEDERAL RESERVE BOARD by concealing
the role of BCCI in acquiring U.S. banks.
At the heart of the case were allegations of an
elaborate scheme by BCCI to expand illegally
into the United States by purchasing First American
and acquiring National Bank of Georgia.
Again, Clifford and Altman assured federal, as
well as state, regulators that the group of Middle Eastern investors who purchased First American
in 1982 had no ties to BCCI, and insisted that
they believed the group had acted on its own.
Nevertheless, Clifford and Altman were aware of
BCCI’s attempts to purchase other banks. In
fact, both men represented BCCI when it first
attempted to acquire U.S. banks in the late
1970s, and in a series of transactions in the
1980s, the two allegedly made a profit of nearly
$10 million on First American stock that they
purchased with loans from BCCI and later sold
at a much higher price to a buyer who reportedly
was subsidized by BCCI.
Following the two indictments, federal and
state prosecutors tangled in a complex legal procedural
drama about where or when the two
would be tried. In September 1992, the federal
trial was postponed, thereby allowing the New
York state prosecution to proceed. But then the
state trial was delayed as Clifford’s lawyers tried
to have the charges dropped because Clifford
was in poor health. Clifford, age 86, eventually
underwent quadruple bypass heart surgery, on
March 22, 1993.
On March 30, 1993, the state trial of Altman
began in a Manhattan courtroom. The prosecution
alleged that Altman had participated in an
elaborate scheme of deceit to help BCCI gain a
foothold in the U.S. banking system. Altman
countered that federal regulators were making
him a scapegoat to deflect criticism of their own
failings in the BCCI affair.
On April 7, federal prosecutors asked the
judge to dismiss the charges against Clifford and
Altman. Clifford’s physical condition made it
questionable that he would be able to stand trial
and it was impossible for him to assist his attorneys
in preparation for trial. The judge agreed
and formally dismissed the federal charges
against Clifford and Altman.
On August 14, a state court jury found Altman
not guilty on four counts. Of the original
eight felony charges, the judge had dismissed
four during the trial, leaving the jury to deliberate
on one count of scheming to defraud and
three counts of filing false documents. During
the trial the prosecution offered only CIRCUMSTANTIAL
EVIDENCE, failing to prove that Altman
was aware of BCCI’s illegal activities.
After the state court acquittal, and with Clifford’s
health still precarious, efforts to prosecute
the BCCI case in the United States ended,
although it continued in other countries. No
one can say for certain what happened to the
$12 billion in missing depositors’ funds. About
one million people who lost money live in thirdworld
countries and England. In England,
depositors are expected to receive a return of 30
to 40 cents on the dollar; third-world depositors
can expect even less.
In 1996, in an interview conducted by CNN
as part of its 24-part documentary on the COLD
WAR, Clifford discussed a number of topics
including President Truman’s reaction to Winston
Churchill’s Iron Curtain speech, the Truman
Doctrine, the MARSHALL PLAN, the
blockade of West Berlin, and U.S. strategy during
the Cold War. Clifford died at age 91 on
October 10, 1998, in Bethesda, Maryland. In
2001, he was portrayed by actor Donald Sutherland
in HBO’s Path to War, a retelling of Lyndon
Johnson’s involvement in Vietnam.

FURTHER READINGS
Berger, Marilyn. 1998. “Clark Clifford, Key Adviser to Four
Presidents, Dies.” New York Times. Available online at (accessed June 13, 2003).
Clifford, Clark M., with Richard Holbrooke. 1991. Counsel to
the President. New York: Random House.