Bank Of England Won't Settle BCCI Case

by Robin Pilgrim, LawAndTax-News.com, London

07 October 2005

It emerged this week that the Bank of England has rejected attempts by Deloitte to reach a settlement with regard to the ongoing lawsuit against it over the collapse of the Bank of Credit and Commerce International.

The long-running dispute between the audit firm and the Bank of England over BCCI's collapse began again last week after a summer recess.

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

The liquidator claims 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 is 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.

The Bank of England has never been successfully sued, and Deloitte and Touche's campaign for justice has been complicated by the fact that the former financial regulator is immune to all negligence claims. Therefore, the liquidator must prove that the central bank knew that it was acting illegally.

Speaking to Reuters this week on behalf of Deloitte, John Richards announced that:

"It is our usual practice to approach defendants to see if they are willing to negotiate and we regret that the Bank has so far refused to discuss a settlement."

He went on to add:

"The Bank has unlimited public finance at its disposal, unlike the commercial organisations we have successfully pursued for recovery."

However, a Bank of England spokesman told the news service on Tuesday that:

"We've always made clear there would be no deal and no negotiations."

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