Staff 'closed eyes' to BCCI collapse

Senior Bank of England officials "closed their eyes and turned away" from their duties in the £13 billion collapse of the notorious BCCI bank, the High Court heard today.

Instead of acting as regulators they were reckless "beyond negligence and beyond incompetence" and showed bad faith, the court was told. As a result, creditors of BCCI were left £9billion out of pocket when the collapse came in 1991 in Britain's biggest corporate scandal. The opening shots were fired today in an historic and "brutal" hearing expected to last a year and run up a legal bill of £100million.

Accountants Deloitte Touche Tohmatsu, the BCCI liquidators, are suing the Bank and are understoodto have targeted 22 people in its supervisory department.

The Bank's lawyers hit back by describing the action as "wholly without precedent" and "not only misconceived but outrageous".

The case is being heard in Court 71, and press and public were queuing long before the courts were unlocked 90 minutes ahead of the hearing opening.

Gordon Pollock QC, representing DTT, told the court the case had so far been fought "in a fairly brutal fashion". He went on to describe the Bank of England as "once, and I emphasise once, one of the most revered and respected public institutions of this country".

He added: "It is comparatively rare than an action for misfeasance in public office comes to these courts and even rarer that an action is not brought against some low-level official in the planning office or even a warder over-enthusiastically embarking upon his own system of retribution against a prisoner," he said.

"In this action some of the individuals being criticised are among the most senior public officials (at the Bank)." He denied the case was based on "targeted malice" or that the Bank's officials wish to harm the BCCI depositors.

"We will seek to demonstrate that over a considerable period of time the Bank deliberately ran away from seeking to find out sufficient information about BCCI because it didn't want to be drawn into the role of supervisor," he said.

The case continues.