Bank of England to call first witness in BCCI case

The Bank of England is to call its first witness tonight (NZ time) to defend itself against claims that it acted dishonestly in its regulation of the fraud-ridden Bank of Credit and Commerce International.

Finally, after a record one and-a-half years of opening statements by both sides, two former Bank of England officials will take the witness stand.

First up is Brian Quinn, the Glasgow Celtic football club chairman, who was in charge of banking supervision at the central bank between 1985 and 1991, when BCCI collapsed owing more than £10bn to creditors.

The second witness will be Peter Cooke, who preceded Mr Quinn as head of the supervisory department between 1976 and 1985, and has recently been invited by Bank of China on to its board. He was in charge when BCCI was licensed in 1980. Lovells, the law firm advising BCCI's liquidators, estimates that it will take at least three months to cross-examine each witness.

Christopher Grierson, a partner at Lovells, said: "We're really at the heart of the case now. However much you present the case on the documents, the full story only emerges when you get the people who were actually involved at the time stepping into the box to explain what actually went on."

Gordon Pollock, the QC acting for the liquidators, set a new record last year when he took 80 days to present the creditors' case in the £850m compensation claim against the Bank.

But his record was then broken by the opening statement from Nicholas Stadlen, the Bank's barrister, who outlined the Bank's defence for 119 days and ended the longest speech in legal history on 25 May.

Mr Stadlen is fighting claims that 22 Bank officials knew that BCCI was in a bad state long before its crash and failed to take steps to prevent what has been described as the largest banking collapse in modern history. The liquidators also claim that the Bank knew that it should never have granted a licence to BCCI in 1980.

The charge of "misfeasance" is being brought because the Bank cannot be sued for negligence. Mr Stadlen has said that only one successful case of misfeasance has been reported in 300 years.

About 30 UK local authorities lost a combined $140m when BCCI collapsed.

Stan Monaghan, who was on Bury council and sits on the creditors' committee co-ordinating claims, said the council only invested in BCCI because the Bank put it on its list of recommended financial institutions.

"What we're trying to get is justice," he said.

- INDEPENDENT