BCCI defence costing Bank of England £1m a month

Source: Financial Times

The Bank of England is spending more than £1m a month to fight allegations that it recklessly mishandled the regulation of Bank of Credit and Commerce International. The Bank had forked out £20m by last month, and expects to clock up a legal bill of more than £45m by the end of next year, its lawyers say.

The hefty cost of defending the case was revealed in the High Court yesterday as the Bank attempted to prevent the BCCI liquidator introducing criticism of 14 middle-ranking officials in its supervisory department into its £1bn lawsuit.

The Bank maintains that if it has to prepare for these claims, the trial - already put back to January 2004, and expected to last for up to one year - would have to be delayed by another five months at least.

BCCI collapsed in 1991 with debts of $13bn (£8bn), making it the world's biggest liquidation. The liquidator, on behalf of thousands of creditors, is suing the Bank for "misfeasance in public office", alleging that senior officials used their powers wrongly and recklessly.

About £1bn in damages and interest are at stake, but the liquidator has added a claim for punitive damages, suggesting the figure could be higher if the Bank loses.

Gordon Pollock QC, representing the liquidator, told the High Court that the 14 officials had important evidence to give, and should be subject to unrestricted cross-examination.