BoE denies BCCI dishonesty charge

Britain's central bank rejected on Monday allegations that staff consciously failed customers of Bank of Credit and Commerce International as it opened its defence in an almost 1-billion-pound ($1.87 billion) lawsuit.
Lawyers for Deloitte, Bank of Credit and Commerce International's (BCCI) liquidator, have alleged that the Bank of England knowingly did not protect BCCI depositors when the world's biggest bank fraud resulted in BCCI's collapse, owing over $16 billion.
BCCI was closed in 1991 by regulators in a world-wide swoop, partly organised by the Bank of England, after it discovered the lender had disguised losses and was insolvent.
The Bank of England's lawyer said the allegations, which include the charge that 22 Bank officials, ranging from executive directors to junior employees, acted dishonestly over a decade, were fundamentally implausible.
"Why would public servants act dishonestly?" said Nicholas Stadlen.
"No financial motive has ever been alleged. It is accepted there never was one. No personal move has ever been alleged against any bank official. There is a seam of contemporary documents which are irreconcilable with the allegations."
As the Bank of England is legally protected from negligence claims, the liquidator is pursuing the stronger claim of "misfeasance" - acting dishonestly or in bad faith.
In the longest opening address in legal history, lawyers for the liquidators have spent the first 7 months of the jury-less trial setting out the case against the Bank and taken the judge through 60,000 pages of documents.
The liquidators claim the Bank of England wrongly licensed BCCI when it had not met the necessary Banking Act criteria and that it had then put it's own self interest and protection first in refusing to supervise BCCI.
It is the first time in the Bank of England's 300 year history that it has been taken to court. The liquidators have so far recovered some 5.7 billion US dollars for creditors and hope to add to that fund with an estimated 850 million pound claim against the bank.
Founded in 1972 by Pakistani banker Agha Hassan Abedi, BCCI grew from a small, Asian bank to an empire spanning 69 countries with $20 billion of assets.