Marathon BCCI Case Begins Again For Bank Of England

by Robin Pilgrim, LawAndTax-News.com, London

29 September 2005

It emerged on Monday that the long-running dispute between Deloitte & Touche and the Bank of England over the collapse of the Bank of Credit and Commerce International has begun again 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.

Beginning his testimony, expected to last around seven weeks, the head of the Bank of England's banking supervision department between 1976 and 1985, Peter Cooke drew attention to the special complications of what has become one of the nation's longest running court cases.

"It's now 30 years ago, so my memory of this and many other things is influenced by a constant need to recall," he explained, according to Reuters.

Recommended