[CTRL] Fwd: [cia-drugs] Claims Against U.K. Central Bank Are `Implausible,' Court Told

Mon, 19 Jul 2004 09:08:09 -0700

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The idea bank officials ``were simply sitting back and doing nothing about it is simply inconsistent with the evidence,'' Stadlen said. Most of the officials had recommended that the bank initiate full supervision of BCCI, he said.
 
 
Claims Against U.K. Central Bank Are `Implausible,' Court Told

July 19 (Bloomberg) -- Lawyers for the Bank of England said allegations that 22 of its officials acted with dishonesty when they allowed Bank of Credit and Commerce International SA to operate in the U.K. are ``fundamentally implausible.''

``Every court that has had to look at these allegations has pointed out that these are fundamentally implausible even without looking at the evidence,'' Nicholas Stadlen QC, representing the central bank, told the High Court in London. There's been only one reported case of misfeasance, the allegation of bad faith put forward by Deloitte Touche Tohmatsu, in 300 years, he said.

``Public officers who commit this tort, it seems, are rather like a No. 31 bus,'' Stadlen told the court. ``You wait 300 years for one to come along and then there are 22 of them all at once.''

The Bank of England today began its defense against the 850 million-pound ($1.6 billion) claim by Deloitte, acting for U.K. depositors. The liquidators argue the central bank acted recklessly by giving BCCI the go-ahead in 1980 to operate in the U.K. and failing to supervise it properly before revoking its license in 1991. Gordon Pollock QC, Deloitte's lawyer, took 80 days for his opening arguments, the longest in the country's legal history.

Immunity Limits

The Bank of England is expected to begin calling witnesses next year that will include former governor Sir Edward George. George and other officials will face questions about decisions at the central bank before BCCI's 9 billion-pound collapse. The case, which began Jan. 13, may set a precedent on the limits of the immunity granted to U.K. regulators. Such officials can only be sued for dishonesty.

No financial or personal motives had been alleged for the bank officials accused of wrongdoing, Stadlen said. There were many documents that were ``irreconcilable'' with the liquidators' claims, he said.

Stadlen, who opened his address this morning saying ``after six months the empire strikes back, '' told the court the liquidators must prove the officials deliberately acted dishonestly and abused their power.

Stadlen said the liquidators' main complaint against the Bank of England is its failure to supervise BCCI properly. ``Consolidated supervision could not be done unless you restructured the group,'' he told the court. The bank ``didn't have the legal clout to do it.''

BCCI was incorporated in Luxembourg and run from London, splitting responsibility between regulators in both countries. Pollock has claimed the central bank knew Luxembourg lacked the resources to supervise BCCI well.

Full Supervision

The idea bank officials ``were simply sitting back and doing nothing about it is simply inconsistent with the evidence,'' Stadlen said. Most of the officials had recommended that the bank initiate full supervision of BCCI, he said.

Stadlen will take as long as five days for an outline of his arguments. The case will then be halted as the liquidators and central bank move on July 26 to the U.K.'s highest court, the House of Lords, to begin arguments over disclosure of documents.

The central bank has challenged an appellate court decision that the liquidators are entitled to documents relating to legal advice it received. The House of Lords decision will help define which documents are covered by lawyer-client privilege.

BCCI's clients included Panamanian dictator Manuel Noriega and Palestinian terrorist Abu Nidal. It was nicknamed the Bank of Cocaine and Criminals International after probes by Lord Thomas Bingham in the U.K. and by the U.S. Congress found evidence of money laundering and arms and drugs trafficking. The bank also hid credits, falsified accounts and created dummy loans, the probes found.

The bank was founded in 1972 by Agha Hasan Abedi, a Pakistani with financial backing from Sheikh Zayed bin Sultan al-Nahyan, the ruler of the United Arab Emirates, and Bank of America Corp. BCCI profited when oil prices quadrupled shortly after its inception, as Arab clients looked for a place to deposit cash. Bank of America sold its stake by 1980.

The case is 1993 folio 1309, Three Rivers District Council and others and Bank of Credit and Commerce International SA (in liquidation) v the Governor and Company of the Bank of England.

Pollock and law firm Lovells are acting for Deloitte, while Stadlen and Freshfields Bruckhaus Deringer are representing the central bank. 


To contact the reporter on this story:
Liz Chong at  [EMAIL PROTECTED]
Julia Kollewe at  [EMAIL PROTECTED]

To contact the editor responsible for this story:
Eamonn Sullivan at  [EMAIL PROTECTED]


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