Touche threatens BCCI action

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The Independent Online
TOUCHE Ross, the accountancy firm that is liquidating BCCI, yesterday threatened action against the Bank of England in the light of the criticisms contained in the Bingham report.

But there was a mystery surrounding what the liquidators and their legal advisers can do. As a regulator, the Bank of England is immune from prosecution under the Banking Act. The only exception is where bad faith is involved, but this criticism does not appear in the Bingham report.

There was speculation that the liquidators would instead mount a campaign similar to the one under way among local authorities to convince the Government of its duty to contribute because of what the Bingham report revealed about the Bank's 'deficient' supervision. Whether this would lead to a settlement without a legal lever over the Bank is unclear.

Touche said: 'The Bingham report contains direct criticisms of the Bank of England and its role in the events which led up to the closure of BCCI. It contains information about the role of third parties. It is obviously of significance for creditors. The liquidators' line of duty is clear. They and their legal advisers are urgently considering the report in order to determine the appropriate course of action.'

An dollars 8bn ( pounds 5bn) lawsuit has already been started against Price Waterhouse and Ernst & Young, BCCI's former auditors.

The government of Abu Dhabi will be immune from legal action in a deal under which it will contribute up to dollars 2.2bn to creditors. This leaves the Bank of England as the only remaining third party.

Creditors led by Keith Vaz, the Labour MP, demanded that the Prime Minister intervene for better compensation and asked for 'valid reasons' why the governor of the Bank of England, Robin Leigh-Pemberton, should not be dismissed. A group of about 70 former BCCI staff was also last night reported to be planning to sue the Bank for negligence.