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Last Updated: Tuesday, 2 March, 2004, 11:28 GMT
Bank told to release BCCI files
Bank of England
The Bank of England is considering a petition to the House of Lords
The Bank of England (BoE) has lost an appeal to keep documents relating to the BCCI banking scandal under wraps.

The Court of Appeal ruled that it must release 10 files of letters between the BoE and its lawyers relating to the collapse of BCCI in 1991.

BCCI's liquidators are seeking almost 1bn on behalf of 6,500 UK depositors who lost savings when BCCI collapsed.

They say the BoE knowingly failed to protect BCCI depositors, a charge denied by Britain's central bank.

Lords petition

The Bank of England had argued that the letters, which roughly relate to the first year after BCCI's collapse, were covered by legal privilege and should not be handed over.

However, its argument was dismissed by the Court of Appeal.

The Bank is now considering whether to petition the House of Lords, Britain's highest court, to see if it can appeal against the ruling.

BCCI, which was founded in 1972 by Pakistani banker Agha Hassan Abedi, was closed by regulators in a worldwide swoop, partly organised by the Bank of England.

High Court trial

The closure came after it was discovered that BCCI, which at its height operated in 69 countries and held assets of $20bn, had disguised its losses and was insolvent.

BCCI TIMELINE
1972: Luxembourg-based BCCI opens branch in London
1985: Price Waterhouse investigates BCCI losses
1987 Luxembourg asks for help to regulate BCCI
1988: Tampa branch of BCCI closed after money-laundering charges
1990: Price Waterhouse says BCCI needs 1.8bn rescue
1991: BCCI closed down by international regulators
1992: Bingham report criticises Bank of England's role
1993: Liquidators issue writ against Bank of England
1997: Labour moves banking supervision to FSA
2004: Court case begins

A report by Lord Bingham a year after the lender's collapse criticised the Bank of England for not spotting BCCI's criminal behaviour.

However, the report blamed poor communication and procedures rather than deliberate negligence for BCCI's collapse.

In the first trial brought against the Bank, lawyers for liquidators Deloitte are seeking a payout of around 850m from the Bank on behalf of 6,500 UK depositors who lost their savings when BCCI collapsed.

Former Bank of England governors Sir Edward George, Lord Kingsdown and Gordon Richardson are due to appear in the witness box at the High Court in London.


SEE ALSO:
Bank of England accused over BCCI
13 Jan 04  |  Business
Britain's biggest banking scandal
13 Jan 04  |  Business
In court: the BCCI case
13 Jan 04  |  Business
Bank faces 1bn law suit
23 Mar 01  |  Business


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