BoE awarded £73m costs in BCCI 'farce'

The Bank of England was awarded costs of £73.6m yesterday from Deloitte, the liquidator of the collapsed Bank of Credit and Commerce International.

The settlement drew a line under one of the most protracted and costly battles in legal history, described by the case judge as a "farce" that should never have come to court.

The BoE had sought even more from Deloitte to cover the costs of the 12-year case, but that would have delayed any settlement still further.

In November, the liquidator dropped an £850m lawsuit - the first to be brought against the central bank - after two years in court and a dozen years of litigation.

Lawyers for Deloitte argued that the BoE knowingly failed to protect more than 6,500 depositors, who lost their savings after the world's biggest bank fraud precipitated BCCI's collapse in 1991 with debts of more than $16bn (£8.6bn).

By the time the case collapsed, 42 officials at the BoE were accused of dishonesty, including claims that some had misled Parliament.

A spokesman for the BoE said yesterday: "This is an excellent result which allows us to draw a final line under the BCCI case. Without this settlement, there could have been several years of assessment hearings which would have added millions more in costs."

In 1980, the BoE granted BCCI a licence to operate in London but undertook no supervision because the lender was registered in Luxembourg.

The length of the opening speeches made legal history. The case itself, heard at the Royal Courts of Justice in London, became so complex that counsel for each side were separated by a stack of papers five feet high known as the "Berlin Wall". Judge Stephen Tomlinson, who presided over the case, described it as a farce that could have tarnished the British legal system.

In April, he issued an 86-page judgment in which he said that the case had concerned him so much that he warned the Lord Chief Justice.

Judge Tomlinson wrote: "The case was a farce... the case as it was being pursued before me bore little or no relation to that which the House of Lords had considered fit to proceed to trial... I feared that the case had the capacity to damage the reputation of our legal system."