View from City Road: Bank faces crisis of confidence

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The Independent Online
IF BCCI was guilty of supporting terrorism, managing prostitution, smuggling, money laundering and bribery - to name but a few of its faults - what was the body which allowed to it continue in business doing? Has the Bank of England become the bank that likes to say yes?

With the publication of the Kerry report the Bank of England has belatedly gone on trial, hard as it tried yesterday to reject the US Senate's authority. In its defence it said that it had not been asked to contribute witnesses or information to Senator Kerry's committee. It therefore dismissed the findings as 'bizarre'.

Unfair though the committee's methods appear to Bank of England officials such as Brian Quinn, it should not have been so dismissive of the findings. They have to be taken seriously, especially in the absence of Lord Justice Bingham's report. This should now be published without further delay.

If the Bank's complaint is to hold any water - and the Bank of England's reputation over this issue is to have any chance of recovery - the public must see what Lord Bingham has to say now.

On the basis of the Kerry report, the Bank of England looks like a regulator which simply was not doing its job, at the expense of depositors and creditors.

The US Senate's review of the Bank's handling of the BCCI fraud found it to be 'wholly inadequate' as a regulator and said it withheld information from the public for 15 months before closing BCCI down. Those responsible for what may be the greatest fraud in history should take responsibility if the Bank is to hold on to its regulatory role.

Robin Leigh-Pemberton, Governor of the Bank of England, is stepping down next year, so it is unnecessarily mean to call for his resignation. But the same does not apply to all of his colleagues, especially those most closely involved in supervising BCCI.

Mr Quinn, head of supervision until 1988 and then executive director in charge of supervision, and Roger Barnes, head of supervision from 1988, look particularly exposed. They must be allowed to give their side of the story, but yesterday's evidence suggests that they are as vulnerable as their predecessors who supervised Johnson Matthey Bankers.

If the public's faith in the Bank's regulatory skills is to be rebuilt, the Bank will have to take responsibility. The most visible way of doing that would be for one or more of those responsible to step down.