The Bank of England announced that it has rejected a settlement offer by the liquidator for the Bank of Credit and Commerce International that would end a long-running $1.5 billion lawsuit — the first in the Bank of England’s history.
BCCI, which collapsed in 1991 under a debt load of some $1.6 billion, was incorporated in Luxembourg but run in London and subject to regulators in both countries, according to Bloomberg. The bank was also infamous as the subject of U.S. and U.K. probes into money laundering, drug trafficking, and arms dealing, the wire service noted.
Deloitte Touche Tohmatsu, the collapsed bank’s liquidator, is suing the Bank of England for failing to properly oversee BCCI. By law, noted Bloomberg, the national bank can’t be sued for negligence; instead it has been accused of “malfeasance” for knowingly failing to protect investors. About 6,500 depositors lost savings when BCCI went under, reported the Guardian.
Bloomberg also noted that as of 1998, the Bank of England no longer has the authority to supervise banks.
The case, originally filed in 1993, went to trial at the U.K High Court in January 2004. According to the Guardian, it soon made English legal history when the lead counsel for Deloitte made what was then the longest opening argument in an English court — 80 days. That record was surpassed several months later by the Bank of England’s lead counsel, whose opening argument finally wound down after 119 days.
In June, according to Bloomberg, the Bank of England stated that it had spent $70 million on the case so far, and that it had budgeted another $40 million for this fiscal year. Deloitte’s estimates put its legal expenses at about $17 million per year.
“We regret that the bank has so far refused to discuss a settlement,” said Deloitte partner John Richards, in a statement, reported Bloomberg. According to the wire service, a Bank of England announcement stated, “We have always made clear that there would be no deal and no negotiations.”