High Court rules against Mount Banking director

A DIRECTOR of Mount Banking Corporation has lost his High Court appeal against the Bank of England's decision to close the bank and disqualify him as a director in 1992.

Suresh and Navin Shah, brothers, had initially challenged the Bank of England's move with the first appeal to the Banking Appeal Tribunal. Last October the tribunal found the Shahs were not 'fit and proper' to act as directors of a bank. Navin Shah appealed against the ruling on two points of law.

Mr Justice Vinelott dismissed the appeal and awarded costs in favour of the Bank of England. The written judgement will be available on Tuesday. Andrew Milne, a solicitor acting for Mr Shah, said the judge's criticisms centred mainly on Mount Cayman, the Cayman Islands subsidiary of the bank which, on its own, would not have led to action against Mount Bank.

The Bank's regulators had originally made numerous allegations about the brothers, including the claim that they laundered money from India stolen from Standard Chartered Bank. No evidence of laundering was found.

The Shahs said that without such allegations the court order to close Mount would not have been granted.

Mount Bank was the first to be closed while it was solvent. Yesterday, Phil Wallace, the bank's liquidator from KPMG Peat Marwick, said depositors had already received 30p in the pound. He expected them to be refunded in full provided one creditor claiming dollars 90m did not appeal the rejection of his claim. If there were a successful appeal, depositors would receive about 70p.