Bank denies retirement of Barnes is linked with BCCI

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The Independent Online
THE Bank of England yesterday announced the surprise early retirement of Roger Barnes, the official in charge of supervising the failed Bank of Credit and Commerce International in the years leading up to its closure in July 1991.

Mr Barnes was one of the Bank supervisors criticised in a tough report on BCCI last October by Lord Justice Bingham. He is to hand over on 1 September to Michael Foot, who runs the Bank's European division.

But the Bank denied that there was any connection between Mr Barnes's retirement later this year - which will be at the age of 56, four years before the normal age at the Bank - and the Bingham report. Mr Barnes had made a request in early 1992 to retire in mid- 1993, a spokesman said.

He added: 'There was no connection with the report. He asked to leave beforehand. The Bank was quite clear that no resignations were justified by the report. Our system of supervision was described by Bingham as one that had served the community well and Roger Barnes could take a lot of the credit for that.'

The Bank, with the backing of Treasury officials, resisted all attempts last year to force resignations or reshuffles at any level as a result of the criticisms in the Bingham report, which accused the Bank of a failure of supervision.

On the day the report was published, Eddie George, now the Governor-designate, described Mr Barnes as a 'world class bank supervisor recognised as such by most of the banks he supervises and by other supervisors'.

Mr Barnes's initial request to retire early came half-way through the Bingham process, launched in summer 1991. Drafts of the report were not delivered to the Government until mid-summer 1992, and until that point officials said they had no idea of his findings.

Mr Barnes joined the Bank in 1961 and became head of banking supervision in 1988, at a time when BCCI was arousing suspicions, but two years before evidence of extensive fraud came to light.

Lord Justice Bingham criticised the Bank and its supervisors in detail for decisions going back to the early 1980s. As a result, the Bank set up a fraud investigation team and a legal unit to overcome the faults that had been identified. Mr Barnes was one of those singled out for personal criticism.

Lord Justice Bingham concluded that Mr Barnes's 'impassivity' on receiving messages from auditors doubting the probity of a top BCCI executive 'seems to me to show a rooted unwillingness to believe ill of BCCI'. He also said that, while respecting Mr Barnes's motives for not telling the Board of Banking Supervision of the auditors' suspicions, 'I consider this a misjudgement.'

The new head of supervision, Mr Foot, is a 46-year-old Cambridge and Yale-educated economics graduate who joined the Bank in 1969.

The supervision team has been beefed up with the appointment of an additional deputy head, Carol Sergeant, 40, who will be responsible for the main British clearing and merchant banks.

Members of the Commons Treasury Select Committee meet in private today to debate what is expected to be a highly critical report on the Bank and BCCI, to be published next week.

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