Sayed Akbar, who is himself serving a six-year jail term, was senior officer of BCCI's treasury section from 1982 to 1986, having joined the bank in 1976. Mr Akbar claims that he was approached on four occasions by David McKay, 46, who claimed to be acting on behalf of a cartel of losers which included an influential Belgian.
Mr McKay, of Rickmansworth, Herts, is charged with demanding money with menaces from Mr Akbar on or about 20 December last year.
Mr Akbar has been granted leave from Bullingdon Prison, Bicester, to give evidence at the three-day committal hearing at City Magistrates Court; reporting restrictions have been lifted.
Of his first meeting with Mr McKay in November 1994, Mr Akbar said, "He told me the group had lost 40m guilders and that the Belgain was the most influential and if I satisfied him - if I paid him his money - then the Belgian would give me a clean bill of health. Otherwise, my life would be in danger."