Bloomberg News

Bank of England, BCCI Legal Costs Case Ends, Judgment Awaited

January 31, 2006

A U.K. court said it will rule later on whether the Bank of England should receive public exoneration over allegations aired during a 12-year lawsuit against the liquidators of Bank of Credit and Commerce International SA.

The U.K. central bank is seeking repayment of a record 81 million pounds ($143 million) in legal expenses from the case. Justice Stephen Tomlinson today told the High Court in London he would order the Bank of England's costs to be assessed on an ``indemnity'' basis, the highest amount recoverable.

The bank is asking for a further ruling formally clearing itself and 22 other former and current employees of any wrongdoing and providing guidance for the specialist body that will assess and apportion the costs of the dispute.

Deloitte abandoned the 850 million-pound lawsuit, the first ever against the Bank of England, on Nov. 2. It accused the central bank of failing to properly supervise BCCI before it was shut down in 1991 with as much as $16 billion in debt in one of the largest-ever global banking failures.

Deloitte has already paid more than 73 million pounds to the Bank of England as an interim payment in the costs dispute, the largest-ever in English legal history. Some of that money may be returned to the liquidators after the costs assessment.

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.

To contact the reporter on this story: Megan Murphy in London at mmurphy41@bloomberg.net.

To contact the editor responsible for this story: Eamonn Sullivan at esullivan@bloomberg.net


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