Bank set for 'bloody BCCI battle'

THE Bank of England has declared there will be no surrender in its £1bn landmark case brought by the liquidators of failed lender the Bank of Credit and Commerce International (BCCI), despite a threat that the trial is set to get 'bloody' for the Bank and former senior officials.

The trial of the Bank, accused of 'misfeasance' in its regulation of the fraud-ridden BCCI which it closed down in 1991, is set to restart on Monday.

After a record six-month opening earlier this year by the counsel for the liquidators of BCCI, who are seeking compensation for creditors who lost deposits in the shutdown, the Bank's legal team is set to present its case.

This will lead to the calling to the witness stand of a blue-chip array of the Bank's senior staff over the past 20 years.

In addition to three former Governors, Sir Edward George, Lord Kingsdown (Robin Leigh-Pemberton) and Lord Richardson, it is understood eight other officials will be called, with examinations expected of two former heads of banking supervision, Peter Cooke and Brian Quinn.

It will be the first public examination of the officials, who are likely to be quizzed closely on what happened during the regulation of BCCI.

The liquidators allege that not only was the Bank acting unlawfully in improperly or dishonestly regulating BCCI, it was also 'knowingly reckless' in endangering depositors' money.

The cross-examinations of the Bank witnesses will be led by Gordon Pollock, the celebrity lawyer who has already laid several punches on the Bank in his opening address, aided by Clare Montgomery who is regarded in the legal world as one of the feistiest advocates since George Carman.

Christopher Grierson, solicitor to the liquidators, said: 'These cross-examinations are going to be bloody.'

Cooke, head of supervision at the Bank of England from 1976 to 1985, is now a paid adviser to the Bank of China's London-based international investment banking arm.

The Bank insisted today that it has no intention of settling the case out of court, reiterating a statement by the current Governor Mervyn King, who said in the summer: 'In any event it is impossible to contemplate settlement in an action in which 22 present and former members of this country's central bank are accused of dishonesty.'

Key figures in the case

THE role of Peter Cooke, head of supervision at the Bank of England from 1976 to 1985 - key years in the emergence of BCCI in the UK - is seen as vital to the liquidators' case.

Now 72, he left the Bank in 1988, subsequently working for Price Waterhouse, a joint auditor of BCCI which settled separately with the liquidators.

Cooke remains active in the banking world. A high-profile author of the Basle banking accord, he has been put forward as a non-executive director of the image-tarnished Bank of China.

Cooke's successor Brian Quinn, whose jobs since leaving the Bank have included the chairmanship of Celtic football club, will also come under the spotlight.