Lord Justice Bingham's inquiry into the supervision of BCCI says the Bank waited four months after senior officials in its banking supervision department were told of key facts about BCCI's fraudulent activities. The Bank closed BCCI down on 5 July last year.
It emerged separately from a senior ministerial source in Westminster that the Prime Minister and cabinet colleagues will be cleared of blame. But it is believed that the bank's majority shareholders in Abu Dhabi, as well as the Bank of England, are among those subject to sharp criticism.
There has been speculation at Westminster that the inquiry report was delayed until after the start of the parliamentary recess yesterday to quash the political controversy that it would provoke. There was a furore last year about allegations that ministers had been warned by insiders about BCCI's activities - which involved money laundering and the theft of billions of dollars - months before it was closed down. John Major, who was Chancellor until less than a year before BCCI was closed, gave evidence to the inquiry. Draft chapters of the report have been sent to the ministers involved, the Bank of England and other major players.
Abu Dhabi is accused of a nine-month delay from April 1990 in informing the Bank about a dollars 2.2bn fraud at BCCI. But sources close to the Abu Dhabi authorities are understood to have reacted strongly to that accusation, claiming that Lord Justice Bingham relied on second-hand information on events in Abu Dhabi in April 1990.
They point out that his main source on the allegation that information was withheld - BCCI's auditors, Price Waterhouse - was not present at crucial meetings in the Gulf at the time. Furthermore, the invasion of Kuwait diverted the emirate's attention during the summer of 1990. Its knowledge of the fraud by then was far less comprehensive than Price Waterhouse alleged to the inquiry.
The criticism levelled against the Bank of England is that even though it had established the key points of the fraud as early as 4 March 1991, it continued to negotiate a rescue package with Abu Dhabi until the closure.
Abu Dhabi sources are understood to see this as undermining claims that the Bank would have closed BCCI in the previous year if it had had earlier information from the Gulf.
One claim is that information passed by Abu Dhabi to senior officials within the Bank by February 1991 was not passed to the Bank's most senior officers until several months later.
The Bank dismissed as 'absolute nonsense' another claim that it leaked the Bingham criticisms of Abu Dhabi this week.
Lord Justice Bingham has told the Government that his final report will be delivered to the Chancellor and the Bank before the end of the month. Ministers will decide how much to publish.Reuse content