Judge Slams BCCI Case Against Bank Of England

by Robin Pilgrim, LawAndTax-News.com, London

17 April 2006

In a judgement made public on Wednesday, High Court Judge Stephen Tomlinson condemned the long-running case brought by the liquidators of BCCI against the Bank of England as a "farce".

Accounting firm Deloitte, which acted as liquidator for BCCI, 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 the bank'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.

A cost hearing must now take place before the Bank of England can collect the GBP73 million in costs and GBP8 million in interest that it is owed. According to a report in the Times, Mr Justice Tomlinson has offered to preside over the hearing with the costs judge.

In his written judgement, Tomlinson stated that:

"I warned the lord chief justice that I feared the case had the capacity to damage the reputation of our legal system", and supported an assertion made by the Bank of England that the liquidator was "prepared to make wild fanciful allegations, which were plainly unsupported by and/or inconsistent with the documents and, when confronted by the hopelessness of an allegation, twisted and turned so as to preserve the allegation or the ability to put it to cross-examination".

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