Secret backer of BCCI group revealed

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The Independent Online
FAISAL Islamic Bank of Egypt is one of two secret financial backers of the Depositors' Protection Association, a group of BCCI creditors that last year scuppered a dollars 1.7bn compensation deal paid for largely by BCCI's majority shareholder, Abu Dhabi, writes John Willcock.

FIBE is a medium-sized Egyptian bank based in Cairo. Its chairman is Prince Mohamed al-Faisal al-Saud of Saudi Arabia's ruling family.

The Saudi connection with the depositors' association illustrates the tension between Saudi Arabia and Abu Dhabi over BCCI. Last night solicitors working for Sheikh Khalid bin Mahfouz, former chief operating officer of National Commercial Bank of Saudi Arabia, were finalising a dollars 10bn writ against the Abu Dhabi Investment Authority over its part in the saga.

The depositors' association, headed by Dr Adil Elias, a Sudanese-born businessman now based in Florida, has led demands for bigger compensation from Abu Dhabi.

Dr Elias has insisted that the depositors' association represents mostly small depositors. However, nearly dollars 400m belonging to depositors of FIBE was lost in BCCI's treasury operations in the mid-1980s, according to the 1991 Price Waterhouse report that led to BCCI's shutdown.

FIBE was the main source of unrecorded deposits used by BCCI to conceal losses.

The bank is majority-owned by the Egyptian government but affiliated to the Geneva-based Dar Al-Maar Al-Islami group.

Dr Elias has criticised Touche Ross, BCCI's liquidator, for being too soft on Abu Dhabi and has threatened that unless creditors are paid 50 per cent of all their claims by the majority shareholders before July 1994 then the depositors' association will sue the emirate, with or without the liquidator's help.

The liquidator is unable to negotiate directly with FIBE because legally it has an obligation to treat all creditors on an equal basis.