Bank failed to do duty over BCCI, say MPs

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The Independent Online
AN ALL-PARTY parliamentary committee looking into the Bingham report on the collapsed Bank of Credit and Commerce International has sharply criticised the Bank of England's supervisory role and its unwillingness to discipline staff involved.

Acrimonious exchanges erupted among members of the Treasury and Civil Service Committee yesterday over whether their findings should lead to additional government compensation for BCCI victims in the UK.

The committee's report concluded that 'the Bank of England failed to discharge its supervisory duties in respect of BCCI'. Using the words of the Chancellor, Norman Lamont, it said compensation for UK depositors should only be made where the Bank had failed in its supervisory role.

But the final line of the report recommending government compensation for BCCI victims was lopped off at the last minute after Conservative members voted against it, overruling opposition MPs on the committee.

Distressed BCCI victims in the audience leapt to their feet to challenge the outcome.

Homa Shahidi, an Iranian BCCI depositor, cried: 'You come and live on pounds 1 a day and then say no to compensation]'

A Labour MP, Diane Abbott, accused Tory MPs of backtracking on the issue. 'It is the view of the Labour members that they have been quite simply leaned on by Treasury ministers,' she said.

Quentin Davies, a Conservative member, called her charge 'pure fantasy'. He opposed government compensation because it would set a precedent that would damage financial market integrity.

An angry former BCCI branch manager also attacked Mr Davies for comments he thought implied branch management were to blame for the fraud. 'You should be ashamed of yourself,' he declared.

Councils that lost money in the BCCI crash and Labour MPs renewed their demands for government compensation. But the Bank of England and the Government said they did not see the case for further compensation.

The report said that the 'overwhelming impression from the hearing was one of complacency about the Bank's handling of BCCI'. But committee members said the Bingham report gave them no cause for concern over the elevation of the Bank's deputy governor, Eddie George, to the governorship.