WASHINGTON -- Clark Clifford, a former secretary of defense, adviser to Presidents, and chairman of First American Bankshares in Washington, was indicted Wednesday by federal and New York grand juries of alleged secret dealings with Bank of Credit and Commerce International of Luxembourg.

Indicted along with Mr. Clifford on fraud charges was Robert Altman, his law partner and former president of First American, which regulators found was secretly controlled by the scandal-plagued BCCI.

Both men denied knowledge of the connection and categorically denied the charges Wednesday.

Government officials said Mr. Clifford and Mr. Altman concealed important information from the Federal Reserve Board about efforts of BCCI, which was closed a year ago, to expand its operations in the United States.

Also on Wednesday, the Federal Reserve Board initiated civil enforcement proceedings to determine if Mr. Clifford and Mr. Altman should be barred from U.S. banking.

At the request of the U.S. Justice Department, the Fed deferred assessment of civil monetary penalties pending completion of the federal criminal inquiry.

The Fed said their participation in BCCI's acquisition of First American Bankshares violated the Bank Holding Company Act.

Mr. Clifford and Mr. Altman acted as BCCI's principal lawyers in the United States.

Witnesses for the Prosecution

Assistant Attorney General Robert Mueller also announced that two key figures in the BCCI scandal have pleaded guilty to charges in the case and are expected to be witnesses against the prominent Washington lawyers.

Sheik Kamal Adham, a Saudi Arabian businessman, and his accountant, Sayed Jawhary, pleaded guilty Monday in New York State Supreme Court to banking-law violations. Mr. Adham, a former head of Saudi intelligence, agreed to pay $105 million in fines.

A New York grand jury also charged Mr. Clifford and Mr. Altman with receiving bribes, and Mr. Altman was charged with several counts of falsifying business records.

Manhattan District Attorney Robert Morgenthau said his office will seek $40 million fines and penalties from Mr. Clifford and Mr. Altman.

Mr. Morgenthau said that as a result of their work with the BCCI group, which is alleged to be a corrupt enterprise, Mr. Clifford and Mr. Altman made $25 million from stock sales and legal fees.

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