The European supervisors within BCCI’s College of Regulators, principally the Bank of England and the Luxembourg monetary authority, arranged a meeting in Luxembourg on 5 July 1991 with Ghanim Faris Al-Mazrui, who attended as the representative of BCCI’s Abu Dhabi majority shareholders. The UAE Central Bank, although also a member of the College of Regulators, was excluded from the key discussions and arrangements leading to the coordinated action against BCCI.
The purpose of the meeting on 5 July 1991 was to inform BCCI’s representatives of the regulators’ decision to close the Bank, a course of action that had been determined without prior consultation with the UAE Central Bank, despite its membership of the College of Regulators alongside the European supervisory authorities (central banks), including the Bank of England. By that stage, the course of action had already largely been settled. The Bingham Report records that, by the evening of 2 July 1991, the Bank of England considered it preferable to “act first and discuss afterwards” rather than enter into further dialogue with the majority shareholders. The Bank proposed that Mazrui should effectively be presented at the 5 July meeting with a choice between agreeing to an orderly voluntary liquidation and facing compulsory regulatory action.
On 4 July, the proposed plan of action was put before the Bank of England’s Board of Banking Supervision. The Governor explained that the Bank and the Luxembourg authorities would meet Mazrui the following morning, after which coordinated legal and regulatory action would be taken to close BCCI S.A. and BCCI Overseas and freeze their assets and liabilities. The Bingham Report records concern that Mazrui was, in effect, to be confronted with a fait accompli.
Mazrui had been closely involved in discussions concerning BCCI’s restructuring programme and the continuing financial support being provided by Abu Dhabi. The support package had already risen to approximately US$5.1 billion, including promissory notes, guarantees and a proposed subscription for new shares that had been increased to US$650 million in June 1991. By 3 July, Price Waterhouse understood that the Abu Dhabi Government had indicated that it was committed to provide financial support of approximately US$7 billion, although it was not prepared to give an unlimited or open-ended commitment.
At the formal meeting on the morning of 5 July, the Bank of England and the Luxembourg authorities informed Mazrui that the proposed restructuring of BCCI was no longer considered viable and that immediate supervisory action would be taken. Bingham records that Mazrui had arrived expecting to resolve outstanding questions concerning financial support, the year-end accounts and the restructuring of the Group, and that he “had no inkling of the bombshell which was to be detonated.”
Mazrui asked for time to report back to the Abu Dhabi Government and complained strongly that the shareholders should have been informed beforehand. According to the Bank of England’s note of the meeting, he offered an Abu Dhabi guarantee of all deposits if BCCI’s licence were retained, although Mazrui subsequently disputed that he had authority to make such an offer. The Bank nevertheless confirmed that its decision to take action was final and that there was no alternative proposal available.
In response to the announcement of BCCI’s abrupt closure, Mazrui moved Abu Dhabi to bring its financial support for the BCCI restructuring to an end. The further US$650 million capital subscription, which had been remitted on 4 July 1991, just one day before the closure announcement, was subsequently recalled, while restrictions were reportedly imposed through the court in Abu Dhabi on the promissory notes forming part of the earlier shareholder support package.
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