Ex-BCCI employees fight $1.8bn payout

DEPOSITORS' four-year battle for compensation from the collapsed Bank of Credit & Commerce International (BCCI) takes its latest tortuous twist this week with a crucial court case in Luxembourg.

On Friday, the country's Appeal Court will hear objections from former BCCI employees to a $1.8bn (pounds 1.14bn) global settlement by the bank's former controlling shareholder, the government of Abu Dhabi.

The hearing is the last main obstacle to a payout to victims of the bank, which shut in July 1991 after more than $10bn disappeared in the world's biggest ever banking fraud.

After total liquidation costs of more than pounds 150m, some 90,000 creditors have yet to see a penny.

Lawyers for four disaffected employees will argue that the settlement is far too lenient on the Gulf emirate.

They claim liquidators Touche Ross have not ring-fenced some $150m of staff pension money from the rest of claims.

Touche are confident the appeal will fail. "It's not just hope. We are fully confident that clearance will be given for the liquidation to proceed," a spokesman said. "The employees' claims are commercial issues that will be dealt with by the liquidators."

The accountants also vow to pursue the Bank of England over alleged regulatory negligence.

Former BCCI auditors Price Waterhouse and Ernst & Young are also in the firing line, with a $250m settlement with PW now under negotiation.

In a further twist, former Abu Dhabi lawyer David Sandy, partner of London law firm Simmons & Simmons, faces prosecution in the US over alleged tampering with evidence.

He will hear in court on 15 December whether he has been successful in dismissing the action, according to New York assistant district attorney John Moscow.

Depositors meanwhile, tired of litigation and mounting costs, are fiercely critical of the staff's delaying tactics.

"We're strongly hoping the settlement will go through. We want to see the money as soon as possible," said Adil Elias, head of creditors' action group the Depositors' Protection Association.

"They should not obstruct our deal. We have been trying for so long. We're really tired now. It's been over four years and there are so many victims waiting for payment."

Courts in Britain, the Cayman Islands and Luxembourg (BCCI was registered in all three) finally gave the deal the go-ahead late last year and early this year before the staff appealed in April.

A Luxembourg court had already blocked a previous $1.7bn offer, after creditors including the DPA objected.

Former employees warn, however, of more law suits even if they lose this week.

"Abu Dhabi would not be happy to sign the (settlement) agreement while these cases go on," said Mohammad Qayyum of the BCCI Campaign Committee and one of the four Luxembourg appellants.