The Bank of England today faces accusations in London's High Court that it ignored wrongdoing at the Bank of Credit and Commerce International (BCCI), which collapsed in 1991, leaving debts of more than US$10 billion.
Liquidator of the failed bank, Deloitte and Touche, 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.
According to reports, 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 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 is likely to be 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.
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