Rather than laying out the B.C.C.I. scandal in purely expository fashion, "The Outlaw Bank" borrows the technique so memorably employed by Bob Woodward and Carl Bernstein in their account of Watergate, "All the President's Men": Mr. Beaty and Mr. Gwynne tell us not just the B.C.C.I. story, but the story they see behind the story. The Time reporters were early to assert B.C.C.I.'s central role in financing Pakistan's development of nuclear weapons and that the bank kept on its payroll a "black network" of hit men and spies trained in terrorism and electronic eavesdropping -- a sensational allegation that like some, but not most other revelations in this extensively detailed book, is unsatisfactorily documented. (And indeed, the authors say they cannot confirm "black network" involvement in assassinations.)

They even have their own Deep Throat, a "highly placed American intelligence source" they call Condor, whose credibility was apparently so great that if he confirmed something, Time published it as "fact, without attribution." Condor's utterances are often Delphic: "You just want to look around. Not everything is as it appears." There are clandestine meetings in London and the Caribbean, in train stations and aboard a 747 bound for Casablanca. Mr. Beaty remarks to Mr. Gwynne, "I can't decide whether we still work for Time or we're in the middle of a spy novel."

They limn the B.C.C.I. story in a way that's both lucid and absorbing, providing necessary historical background but not impeding the narrative momentum. For all its intrigue, though, B.C.C.I. lacks Watergate's satisfying dramatic arc. The contours of the story are too unwieldy. Even the institution's origins are murky: it was created by a slick Pakistani banker named Agha Hasan Abedi, a Shiite Muslim who dreamed of creating a multinational banking empire out of the oil money in which the Arab states were awash in the 1970's. Mr. Abedi, a natty dresser with a fondness for pink shirts, pinstripes and lizard-skin shoes, schmoozed and bribed his way through the Middle East and then around the world, doing favors here and setting branches up there, soon building a bank holding company that when it was shut down by international bank regulators in 1991 had assets of more than $20 billion.

"The enduring mystery at the heart of the BCCI affair," the authors write, was why the bank got away with it for so many years. They assert that as early as 1979, United States intelligence knew about B.C.C.I.'s criminal involvement with terrorists and drug dealers -- but Washington did nothing until compelled by unrelenting pressure from Robert M. Morgenthau, the Manhattan District Attorney.

Why? The United States Government (like those of France, England, Germany, Israel, Saudi Arabia and like so many other Governments around the world) was too deeply entangled in B.C.C.I.'s web. According to Mr. Beaty and Mr. Gwynne, both the Central Intelligence Agency and the Defense Intelligence Agency kept slush funds with B.C.C.I. to finance covert operations.