In an 800-page report, the subcommittee on Narcotics, Terrorism and International Operations squarely blamed the UK central bank for its part in what amounted to a three-way agreement to use British bank secrecy laws to keep the true state of BCCI from its depositors and creditors, denying them 'vital information which could have protected them'.
For over a decade, says the report, the Bank of England had harboured 'deep concerns' about BCCI but did nothing. In April 1990, when a now celebrated audit by Price Waterhouse, under the then senior partner Sir Jeffrey Bowman, showed the bank was rotten to the core, it instead 'colluded' with the accounting firm and Abu Dhabi, by then BCCI's majority owner, to keep it from collapsing.
In fact, the Senate subcommittee charges, the Bank's permission to allow BCCI to shift its headquarters from London to Abu Dhabi was an attempt to wash its hands of the affair, to 'make it someone else's problem'. In the process vital records were transferred to Abu Dhabi and they have still not been released to investigators. This was a 'costly and probably irretrievable error'.
For his part, the Governor of the Bank of England, Robin Leigh-Pemberton is accused of imposing a caveat emptor rule on UK depositors in their choice of bank, denying them regulators to provide them with the facts.
'BCCI had become a bank too big to fail. In the effort to avoid that failure, the Bank of England was in no position to tell anyone the truth . . . until it was too late.'
To this end, the Bank mounted a 'strenuous effort' to prevent Manhattan District Attorney Robert Morgenthau, by then in full pursuit of the scandal, from obtaining the 1990 audit which contained information that would have destroyed BCCI. As a result, the US Federal Reserve only learnt of the BCCI fraud and its US ramifications not from its sister central bank in London, but from Mr Morgenthau. Price Waterhouse (UK) is deemed no less culpable for its failure to heed several warning signals from 1987 onwards about BCCI's true condition, and then signing off on the bank's books and records in 1990, on the dubious assurance that Abu Dhabi would bail BCCI out. For four years Price Waterhouse's actions had in effect helped BCCI 'in misleading depositors, regulators, investigators and other institutions as to its true condition'.
According to the report, BCCI provided financial benefits to employees of the auditing firm going through its accounts. At the least, this created 'an impression of impropriety'. The benefits included loans to two PW partnerships in the Caribbean, and possibly housing for PW partners and the 'acceptance of sexual favours provided by BCCI officials to certain persons affiliated with the firm'.
The final culprit, at least at the London end of the BCCI fiasco, is Abu Dhabi. Not only did it take part in the conspiracy of silence from April 1990 to July 1991, it failed to honour the 1990 commitment which should have seen depositors and creditors fully repaid after the final collapse.
The report also sets out evidence of wrongdoing by Abu Dhabi representatives at BCCI, which might explain the emirate's refusal to provide documents requested by US investigators, thus preventing full exposure of the global wrongdoings of the bank.
Senator John Kerry, chairman of the subcommittee, indicated yesterday there might be fresh criminal indictments of Abu Dhabi individuals involved with BCCI.
In the US, the trials of former Defense Secretary Clark Clifford and Mr Robert Altman, former chief executives of BCCI's illegally acquired First American Bank, are set to begin next year. But, the report says, BCCI's US connections did not end there.
The bank's 'professional help' in Washington at various times also included former US senator John Culver, two former Federal prosecutors, two former White House and State Department officials and James Lake, currently a deputy director of President Bush's re-election campaign.
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