Bank Of England Seeks High Court Exoneration In BCCI Case

by Robin Pilgrim, LawAndTax-News.com, London

01 February 2006

It emerged this week that the liquidator of BCCI, accounting firm Deloitte, has offered to pay the Bank of England GBP73 million in costs and GBP8 million in interest to settle the dispute between the two parties regarding liability for costs in the action over the bank's collapse, but has failed to apologise for accusing the central bank of wrongdoing.

Deloitte launched the lawsuit against the central bank, which was the UK's financial regulator at the time of the collapse, in an attempt to secure some form of compensation for BCCI's 6,000 British depositors.

The liquidator claimed that the Bank of England consistently ignored wrongdoing at BCCI, contributing to the US$10 billion in debt that it left when it collapsed. One of the main charges levelled by Deloitte was the fact that the Bank of England knew that BCCI's main place of business was London (despite its being registered in Luxembourg), and that armed with that knowledge, the central bank should have been more vigilant in its regulation of BCCI.

Deloitte finally threw in the towel in November 2005, unconditionally withdrawing the case after a 12 year battle.

The Bank of England's counsel, Nicholas Stadlen, described the climbdown at the time as "the most remarkable and humiliating climbdown in the history of English litigation".

According to a Financial Times report on the matter, the Bank of England has accepted the GBP73 million as an interim payment, but is calling on Mr Justice Tomlinson to provide a written judgement giving detail on why Deloitte's conduct of the long-running case should entitle the central bank to indemnity costs.

Mr Stadlen observed this week, according to the BBC, that the accounting firm had made "disgraceful and entirely unfounded allegations", and was now "seeking to skulk in the shadows without any suggestion of an apology".

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