Political storm brews on BCCI

Click to follow
Indy Politics
QUESTIONS were tabled in the Commons yesterday which are expected to herald the beginning of a political row over the collapse of the Bank of Credit and Commerce International.

Terence Higgins, past Tory chairman of the Commons Select Committee on Treasury Affairs, asked the Chancellor, Norman Lamont, to say when the Bank of England and the Government would reply to his former committee's report on the BCCI collapse.

The bank, which was criticised in the report for allowing BCCI to remain open in spite of reports about fraud, is expected to reply to the committee next week.

The Government is expected to delay its own response until around the time of the Bingham inquiry into BCCI. Downing Street confirmed last night that it was unlikely that the Bingham report would be published until after the Commons rises for the summer recess on 16 July.

Although the Government will be accused of trying to avoid criticism in the Commons, it threatens to become a highly-charged political debate during the summer, and could shake the Government's faith in the regulation of the City, which has been under fire since the Maxwell pension scandal broke. Bingham committee sources said that the final report had not been produced and was not imminent.

Lord Justice Bingham has sent drafts of some sections of his report to individuals named in it for their comments. This fuelled speculation that the bank; the auditors, Price Waterhouse; and the Abu Dhabi government, BCCI's majority shareholder, would share some of the blame.

Brian Sedgemore, a Labour member of the Treasury select committee, said last night: 'It looks as though there is going to be another ministerial whitewash.'

If ministers are absolved from blame, as expected, Mr Sedgemore and other Labour campaigners will demand the publication of the evidence to the Bingham inquiry. There is certain to be a political row over the role played by successive Chancellors, including John Major. They escaped direct criticism in the committee's report - published shortly before the general election - over allegations that they failed to act more decisively over BCCI.