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>From http://www.middleeastwire.com:8080/storypage.jsp?id=8397
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Collapse of BCCI still haunts the UK Treasury
Publisher: ArabNews.com
By: Mushtak Parker
Posted: 2002-05-20
LONDON � Whether you believe in ghosts or not, the UK Treasury, the Bush
administration and even the former international auditors Coopers & Lybrand, now
part of PricewaterhouseCoopers, might rightly claim that they are being haunted by
these unseemingly phenomena.
Needless to say, to the hundreds of small shareholders, depositors, savers and
employees involved, these apparitions are in fact the reality of lost investments,
savings and jobs.
In London Treasury officials have been fighting a legal bid by the creditors of the
Bank of Credit & Commerce International (BCCI), which crashed more than a
decade ago, to force them to release confidential papers about the British
government�s role in the collapse of the controversial bank.
A High Court decision in London is imminent and if it goes against the Treasury then
the creditors, led by the bank�s liquidator Deloitte & Touche, would have access to
papers and documents that could reveal what ministers, civil servants and regulators
knew about BCCI before its notorious collapse with debts of more than $10 billion.
Last year, Deloitte & Touche won the right to sue the Bank of England for failure to
properly supervise BCCI, whose operational headquarters was based in the City of
London. In fact, the civil trial has been set to start in April 2003, almost 12 years
after
the actual collapse of BCCI and a full decade after Lord Bingham�s Report in 1992
into the collapse of BCCI strongly censured the Bank of England for its failure in
supervising the Arab-owned institution.
Across the Atlantic, Senator Joseph Lieberman, Chairman of the Senate
Governmental Affairs Committee, last week threatened to subpoena the White
House to establish what contacts the Bush administration had with the failed US
energy giant Enron Corporation, a large corporate donor to the Bush presidential
campaign. The committee has failed to get any information from the White House
since it put in such a request in early March this year. It has blamed White House
counsel for refusing to cooperate and to provide the necessary information. Both
President George Bush and Vice President Dick Cheney were close friends of Enron
CEO Kenneth Lay. The committee is trying to establish whether Enron and other
energy corporates exercised undue influence on the Bush administration energy
policy, which has been criticized by critics and environmentalists as pro-business and
anti-environment.
In yet another scandal of yesteryear, the collapse in 1995 of blue-chip British
merchant bank Barings, following 827 million pounds in losses which resulted from
illegal trading by a �rogue� trade Nick Leeson, the accountants acting for Barings,
Coopers & Lybrand have had their fine reduced on appeal from 1 million pounds to
250,000 pounds. A joint disciplinary tribunal in 2000 gave the accountants a severe
reprimand for their audit failures at Barings.
There are those who stress that the much bigger scandal is the time it is taking for
the wheels of justice to turn. The irony is that the very people that are trying to
spike
the wheels in the above scandals are the governments that are fighting a �just� war
against �international terrorism� and money laundering.
Take for instance the BCCI case. Even though the Bingham Report castigated the
Bank of England for its supervisory failures, the major part of the report remains
confidential and out of the public information domain. A certain shadow Chancellor
Gordon Brown at the time called on the Conservative government of John Major to
release the evidence. Brown of course is the chancellor of the exchequer today and
the Treasury still refuses to release the documents. So much so for �accountability�,
open government and the audit culture that has supposedly sprung up in Western
democracies in recent years. And the poor tax payer gets mugged yet again as costs
spiral. In the case of BCCI, the UK government has already spent 10 million pounds
in legal fees to keep these BCCI papers out of the public domain.
At the time of the BCCI collapse, many of us questioned the almost exclusive
targeting of one financial institution, when in the original endictment document filed
in
the district court in New York named over 20 financial institutions suspected of being
involved in money laundering activities. BCCI was just one of the names, many of
whom were American banks, a few European banks (including two British-registered
banks), and Israeli banks. And BCCI became the focus and was transformed into an
instant pariah of international banking.
There was no doubt that BCCI was mismanaged. But both independent bankers and
fairly senior BCCI officials who were not implicated in any wrong-doing, still maintain
that BCCI as an entity could have been saved and transformed, especially since its
chief shareholder, Sheikh Zayed of Abu Dhabi, was prepared to underwrite a major
multi-billion dollar rescue and restructuring plan. At the time, Bank of England
Governor Eddie George defended the decision to call in the liquidators and stressed
that any rescue of BCCI was not sustainable because the extent of mismanagement
and fraud was too deep.
Critics of the Bank of England and the US authorities stress that on the contrary, Abu
Dhabi was willing to cooperate fully in its rescue of the bank, which would have had a
complete overhaul of management and even shareholders. They stress that BCCI
was condemned to the history books of infamy because of political reasons. It was
seen as a Muslim-owned institution, and the first global financial institution from the
emerging world to challenge the hegemony of the US, European and Japanese
banking majors.
That the BCCI story has yet to be told, is not in question. The role of the Luxembourg
Monetary Institute where the bank�s holding company was also incorporated, has
never been exposed.
Simply saying that the collapse of BCCI was a CIA or MI5 conspiracy misses the
point and does a grave injustice to the thousands of ordinary innocent depositors and
savers, many of whom are incidentally Muslims.
The BCCI episode, like Enron, Barings and all the others, needs closure. So that
people, corporates, banks and countries can get on with their lives.
The basic question of accountability and trust impinges on all � whether the West or
the emerging world. As events in the US, Europe and Japan have show in recent
months, corporate culture is seriously compromised, and the relationship between
governments, political parties and corporates are increasingly becoming blurred.
The danger is that the West, with its financial and political clout, and superior
lobbying and litigation, will once again ride roughshod. Accountability and justice
will
yet again be the losers.
� 2002 [ArabNews.com]. This news item is distributed via Middle East News Online
(MiddleEastWire.com).
End<{{{
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