Sir Eddie squares up for BCCI lawsuit

SIR Edward George, former governor of the Bank of England, is set for a remarkable swansong - in the witness box.

Incensed by suggestions that he or his staff acted dishonestly over the collapse of Bank of Credit & Commerce International in 1991, George is determined to give evidence when a £1.2 billion lawsuit comes to trial in January.

Under the law, the Bank, which until 1997 was responsible for regulating all British banks, cannot be sued for incompetence, only for the much more serious offence of 'misfeasance in public office'.

It was responsible for regulating all British banks until it was stripped of its powers by the incoming Labour Government in 1997.

Undaunted, BCCI's liquidator, accountant Deloitte & Touche, has filed a claim and issued summonses against 21 people who worked for the Bank at the time in a case unprecedented in the institution's 300-year history.

George, who retired in June, has not yet been summonsed, but a Bank source said yesterday that it was 'highly likely' he would testify. The source added that the ex-governor deeply resented the implications of the liquidators' lawsuit.

Although he was deputy governor at the time of the collapse, George's speciality was in ' openmarket operations' rather than in banking supervision. Nevertheless, Financial Mail understands he feels he ought to defend past and present Bank staff.

Deloitte's lawyers have summonsed seven people who were senior staff in 1991, the best known being former director Brian Quinn, now a consultant who sits on a number of boards.

One of the remaining six, Brian Gent, has died, and only one still works for the Bank. Of the 14 more junior staff, three are still with the Bank, three have moved to the Financial Services Authority, three have moved elsewhere and five have retired.

Deloitte claims the Bank was 'wilfully' negligent in its duty properly to supervise BCCI from 1979 to the moment in July 1991 when it led regulators around the world in shutting it down. BCCI, with branches in more than 60 countries, proved to be the biggest fraud in history, with 'black holes' in its accounts totalling £13 billion.

The liquidators want damages from the Bank to pay to the 500,000-plus creditors who lost money with BCCI. Officially, the group was based in Luxembourg and the Cayman Islands, although its Leadenhall Street headquarters in the City was its nerve centre.

Victory for Deloitte would effectively wipe out the Bank of England's capital of £1.5 billion, but in reality, the Treasury would have to pay the damages.