BCCI trial could top £200m

THE final bill for an historic court case against the Bank of England could top £200m, nearly double previous estimates and setting a new record for the cost of a British trial.

Accountancy firm Deloitte & Touche is suing the Bank over its alleged failure as regulator of the scandal-hit Bank of Credit & Commerce International. BCCI collapsed in 1991 and Deloitte is the liquidator.

The High Court hearing began last month and was originally expected to last a year.

Until now, estimated legal costs for both sides have been forecast at just over £100m. But a detailed investigation of the bills so far, coupled with suggestions that the case may take another two years, gives a figure of £200m or more, senior sources have said.

It would dwarf the estimated £150m cost of the Bloody Sunday inquiry, which is expected to report next summer.

The Bank of England, which has never been sued before in its 300-year history, spent between £15m and £20m between 1992 and 2001 defending the writ, according to previously unpublished figures. For the three years since, it has spent £40m and has said that costs are running at £20m a year.

Assuming that Deloitte's legal costs between 2001 and the opening of the case at the start of this year were also £40m, with another £20m for every year of the trial, costs would hit £140m if the case lasted for a year. But in the High Court on 9 February, Mr Justice Tomlinson was told by Deloitte's counsel, Gordon Pollock QC, that the hearing could stretch into 2006, a prospect the judge described as 'alarming'.

That could take the total bill to £200m or more.

Yesterday, the Bank would not comment on these figures, though it confirmed that half of any expense would result in a cost to taxpayers. This is because 50% of annual Bank of England profits are paid as a dividend to the Treasury and these profits are shrunk by BCCI-related legal bills.

Deloitte wants about £1bn in damages from the Bank for BCCI creditors, because it says the Bank knew that BCCI was riddled with fraud, yet allowed it to remain in business.

Previous fraud-related cases, while hugely expensive by normal standards, have come nowhere near the likely costs of this hearing. The failed 1991-2 trial of those alleged to have taken part in a plan to rig the shares of employment group Blue Arrow cost £40m and achieved no convictions, as did the trial of five accused of fraud in relation to DIY group Wickes. All were acquitted by the summer of last year.

The 1995-6 trial of Kevin and Ian Maxwell and former colleague Larry Trachtenberg - who were all acquitted - cost about £20m.