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Friday, December 4, 1998 Published at 13:32 GMT

Business: The Company File

BCCI claimants lose compensation appeal

No legal recourse for the 6,000 who lose vast sums in BCCI

The Court of Appeal has ruled out a compensation case for the thousands of claimants who lost vast sums in the collapse of the Bank of Credit and Commerce International (BCCI).

Some 6,000 individuals from all over the world tried to sue the Bank of England for acting dishonestly when it licenced the BCCI.

They argued that the Bank of England failed to revoke the BCCI licence to operate in the City of London.

BCCI collapsed in 1991 owing more than £6bn to some 30,000 depositors in 69 countries.

Case 'not defensible'

The Appeal judges voted two to one to reject the case. They said they were aware of the "grievous losses" suffered by the depositors, but their case was not defensible.

[ image: Syed Abkar, former head of BCCI's UK Treasury division]
Syed Abkar, former head of BCCI's UK Treasury division
The verdict upheld the original decision taken by Lord Justice Clarke in October 1997.

A Bank of England spokesman said: "We are pleased the judgement of Lord Justice Clarke striking out the BCCI liquidators' claim against the Bank of England has been upheld by the Court of Appeal."

The two judges who voted against the appeal said: "Is it reasonably arguable that the Bank at any stage made an unlawful and dishonest decision knowing at the time that it would cause loss to the plaintiffs? To that question, in the light of our analysis of the evidence, the answer is plainly no."


Adbdul Hameed Chiragh, an accountant convicted of helping to cover up the fraudulent financial dealings which led to the BCCI collapse, was jailed for five-and-a-half years in November 1997.

Mr Chiragh was convicted of setting up a series of fake accounts for bogus companies when the bank's auditors began to raise questions about missing funds.

Liquidators winding up the affairs of BCCI dropped legal proceedings against the bank's auditors Price Waterhouse and what was the Ernst &Whinney partnership in return for £75m.

In return the liquidators for the bank, Deloitte and Touche, withdrew lawsuits pending against the two accountancy firms.

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