But in response to the Bingham report the Government and Bank insisted that no heads would roll and announced detailed measures to improve banking law and the policing of the banking system.
The highest-profile measure is the appointment of a senior chartered accountant to head a fraud investigations unit at the Bank.
BCCI, from which dollars 10bn went missing, was closed down in July 1991 when the Bank of England pulled the plug on a rescue plan financed by the government of Abu Dhabi, the majority shareholder, leaving thousands of depositors, including many Asian businesses, stranded. The closure followed years of rumours of BCCI's crookedness, including money-laundering for General Manuel Noriega, the former Panamanian leader.
In the Commons, the Chancellor rejected Labour demands for the resignation of Robin Leigh- Pemberton, the Governor of the Bank of England, but the pressure for him to go continued last night. Norman Lamont also said the report cleared the Prime Minister of any blame.
The report details a long series of mistakes or omissions by the banking supervision department at the Bank of England, headed by Roger Barnes, who is named in 49 paragraphs of the 220-page report. But Eddie George, deputy governor of the Bank, said there would be no resignations.
'If we were to respond to this pressure that blood must be spilled we would be weakening our supervisory capability rather than strengthening it. That is not what we are about to do. Roger Barnes is a world class (bank) supervisor and is recognised as such by most of the banks he supervises and by other supervisors. He is also the person delivering the service that Bingham says has served the community well.'
The report does not allege impropriety or incompetence at the Bank. But the picture built up is of mistakes in handling the supervision of BCCI dating back as far as 1980, of misjudgements and of failure to recognise the importance of key pieces of evidence as clues to the fraud mounted.
The report says: 'The Bank did not pursue the truth about BCCI with the rigour which BCCI's market reputation justified.' It came to rely 'to an excessive extent' on the auditors, Price Waterhouse, but its duty to supervise banks cannot be delegated. Lord Justice Bingham says: 'In these respects the Bank's supervisory approach to BCCI was in my opinion
Abu Dhabi is also attacked for not telling the Bank or the auditors what it had learnt in April 1990 from the former chief executive, Swaleh Naqvi, about what was happening. Abu Dhabi said last night it was 'surprised' at the criticism.
Price Waterhouse is also criticised, mainly for not communicating effectively enough what it knew, but of the three parties involved it comes out best from the report. The report says an anonymous informant, a senior BCCI executive, began tipping off Price Waterhouse about BCCI's real nature in early October 1989, and the auditors grew confident he was right.
The report also accepts that tough investigations into BCCI in the US in the spring of 1991 may have tipped the balance at the Bank in favour of closure.
Leading article, page 18
Bank's reaction, page 22Reuse content