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Clifford, Clark Mcadams

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.

"Politics is a very important part of our government …it's the lubricant that keeps things running smoothly."
—Clark Clifford

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 Bank-shares, 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 third-world 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 <www.mtholyoke.edu/acad/intrel/clifford.htm> (accessed June 13, 2003).

Clifford, Clark M., with Richard Holbrooke. 1991. Counsel to the President. New York: Random House.

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Clifford, Clark

Clifford, Clark (1906–1998), longtime presidential adviser and secretary of defense.In his role as adviser to many Democratic presidents, the Washington lawyer Clark Clifford was extraordinarily influential at decisive moments of the Cold War. As special White House counsel during President Harry S. Truman's first term, the Missourian worked with George Elsey in 1946 on a key top‐secret report to Truman, assessing U.S. Soviet relations. Explaining Soviet policy as a quest for domination, Clifford and Elsey recommended expanded military programs and foreign aid efforts to support potential allies overseas. Clifford also helped draft the National Security Act of 1947 that created the Department of Defense and the National Security Council. Early in 1948, he played a key role in the debate over Palestine by supporting partition and U.S. recognition of the state of Israel.

Resuming private law practice in 1949, Clifford developed an important corporate clientele that made him one of the wealthiest and most influential attorneys in Washington for decades, through the 1980s. Moreover, he developed close personal, advisory, and legal relationships with leading Democratic politicians, including John F. Kennedy. During the Kennedy‐Johnson administrations, he served as a member, and then chairman, of the President's Foreign Intelligence Advisory Board (PFIAB), where he strongly supported efforts to modernize intelligence collection capabilities by adopting the latest electronic and satellite technologies.

As an informal adviser to President Lyndon B. Johnson, Clifford was highly critical of escalating the Vietnam War, which he believed could not be won. Johnson initially rejected his recommendations for a negotiated settlement, but Clifford kept his access to the White House by publicly supporting the war. When Robert S. McNamara left his position as secretary of defense, Johnson appointed Clifford his successor on 18 January 1968; his official tenure lasted from March 1968 to January 1969.

As Clifford began his work at the Pentagon, the Vietnamese Communists launched the Tet Offensive, a development that confirmed Clifford's growing pessimism about the war. Worried that the “bottomless pit” of war could wreck America's social fabric, he began strongly to advocate disengagement. By the end of 1968, he had helped convince the president to stop the bombing of North Vietnam, begin negotiations with the Viet Cong, and support a greater South Vietnamese role in the fighting—a move that presaged Richard M. Nixon's later “Vietnamization” policy.

Clifford also played a central role in another Johnson initiative renewed by the Nixon administration: an attempt to begin strategic arms limitation negotiations with Moscow, which foundered when the Soviets invaded Czechoslovakia in August 1968. However, Clifford contributed to escalation of the arms race by approving air force programs to test multiple independently targetable reentry vehicle (MIRVs), also in August 1968. Returning to private law practice after he left the Pentagon in January 1969, Clifford remained a Washington influential, although financial scandal tarnished his reputation at the end of his life.
[See also Vietnam War: Domestic Course; Vietnam War: Changing Interpretations.]

Bibliography

Clark M. Clifford , Counsel to the President: A Memoir, 1991.

William Burr

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Clifford, Clark McAdams

Clark McAdams Clifford, 1906–98, U.S. government official, b. Fort Scott, Kans. Admitted to the bar in 1928, he engaged in private practice before serving (1944–46) in the U.S. navy. As special adviser (1946–50) to President Harry S. Truman, Clifford was influential in foreign policy, defense, and labor matters; he helped to formulate the Truman Doctrine (1947) and the legislation that created (1949) the Department of Defense. He also planned Truman's successful 1948 campaign strategy. After another period of private law practice, Clifford served (1961–63) as a foreign policy adviser to President John F. Kennedy and then became (1963) chairman of the Foreign Intelligence Advisory Board. In this capacity he supervised all U.S. espionage operations and played a crucial role in determining U.S. policy in Vietnam. As Secretary of Defense (1968–69) in Lyndon B. Johnson's cabinet, Clifford came to oppose further American participation in the Vietnam War, concluding that it was unwinnable. He went on to become a wealthy corporate lawyer. Clifford was chairman (1982–91) of First American Bankshares, which was secretly and illegally owned by the foreign Bank of Credit and Commerce International (BCCI). In 1992 he was indicted on charges stemming from BCCI's secret ownership of First American, but the charges were dismissed (1993) for health reasons.

See his autobiography (1991); see also D. Frantz and D. McKean, Friends in High Places (1995).

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