BCCI creditors get further $500m pay-out

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The Independent Online

The liquidators of the collapsed bank BCCI, who dropped their marathon action against the Bank of England last month, are paying out a fifth dividend of about $0.5bn, or an additional 6 per cent, to creditors today.

Deloitte, the liquidators, have now returned 81 per cent to creditors who lost money in the collapse of BCCI in 1991, equating to $6.2bn. They expect to make at least one further payment to creditors. The latest dividend payment comes after the liquidators recovered $85m from Bank of India for alleged fraudulent trading, and after employee stigma claims totalling more than $200m were rejected. Stigma claims arose from former BCCI employees claiming they were unable to find jobs as a result of having worked for the fraud-ridden bank.

The liquidators were forced to make a humiliating climbdown in their £850m damages case against the Bank in November, ending what was believed to be the most expensive legal battle in UK history. The Bank described the decision as "unconditional surrender" and is seeking to recover its legal fees of £70m plus interest. The two sides will resolve costs in court in the week beginning 30 January if they do not reach a settlement.

The creditors' committee had already decided in September that the lawsuit against the Bank should be dropped, but it took until November for this to happen. The liquidators repeatedly tried to negotiate a settlement with the Bank, which stood firm.

As the central bank is legally protected from negligence claims, the liquidators pursued the stronger claim of misfeasance in public office, alleging the Bank deliberately turned a blind eye to fraud at BCCI. The Bank of Credit and Commerce International, nicknamed Bank of Cocaine and Criminals International, collapsed in 1991 owing more than £10bn to creditors.

The Bank has also requested that the judge hand down a written judgment to exonerate it and 22 Bank officials accused of misfeasance.

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