Anger over BCCI 'cover-up'

Victims of the crash say Bank of England knew the extent of corruption
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The Independent Online
The Bank of England is holding on to documents which could prove its culpability in the $10bn (pounds 6bn) collapse of the Bank of Credit and Commerce International (BCCI) in 1991, it will be claimed this week.

Victims who lost their deposits in the crash will be told by their solicitor that it is time for the Bank to come clean and disclose all the papers leading up to the collapse. Bernard Clarke of Memery Crystal, solicitors for the BCCI Depositors Association, said that the conviction earlier this year of Abbas Gokal, the shipping mogul, of receiving pounds 750m worth of fraudulent loans from BCCI, had for the first time shown the existence of internal Bank documents proving officials knew it was a corrupt organisation.

"The defence in the Gokal trial had internal Bank of England memoranda which revealed what view the Bank was forming internally of BCCI," said Mr Clarke. "They will reveal a knowledge this was a fraudulent institution. One of the papers is a note from a senior official saying 'We know the bank is not being properly run.'"

The meeting of the depositors at the House of Commons on Tuesday will also hear a plea from Mr Clarke and Adil Elias, the association chairman, for publication of the whole of the official report by Lord Justice Bingham into the disaster. Only the summary of Lord Bingham's report has been issued: the appendices detailing the Bank's supervision of BCCI have remained under wraps.

The new Government, elected on a commitment to greater freedom of information, feels that the depositors should be prepared to order the publication of the rest of the relevant material. "The Bingham report said the appendices recount the history of the supervision by the Bank in greater detail, so they have got to be relevant," said Mr Clarke. He added: "And if they are not damaging to the Bank, why not save everybody a lot of time, effort and money and let us have a look at them? If they do not reveal any shortcomings, why not release them?"

Dr Elias will tell his members he believes there is "a smoking gun in these documents which is why they should come to the public domain". To date, he said, the Bank "has fought tooth and nail to prevent the liquidators gaining access to Bank documents".

The depositors' suspicions of a high-level cover-up were fuelled by the fact that the Chancellor of the Exchequer at the time BCCI's problems accelerated was John Major. By the time the bank went under he had become Prime Minister.

The victims of the crash, who have received only partial compensation of 24.5 per cent, will direct their fire at the slowness of the liquidators, Deloitte & Touche, in recovering their cash. They will want the process to be speeded up, not least in an attempt to rein in the liquidators' fees, now over $200m.