Lord James Callaghan was the Prime Minister of the United Kingdom from 1976 to 1979.
Lord Justice Bingham records that by 1989 Callaghan had known to the BCCI founder, Agha Hasan Abedi, for approximately seven years, largely through their joint involvement in the Cambridge Commonwealth Trust.
Bingham described the association as having developed into warm personal regard and noted that Callaghan sometimes acted as an unofficial adviser to the BCCI Group.
By this stage, Abedi’s health had deteriorated following a heart transplant and he was no longer able to run the Group as before.
Callaghan came to believe that BCCI had lost some of its direction in Abedi’s absence.
He considered that one possible future for the Bank, once the Tampa proceedings had been resolved, would be to establish the Group more firmly in the United Kingdom and place it under more direct Bank of England supervision.
Meeting the Governor of the Bank of England
Callaghan did more than express that view privately.
A meeting was arranged with the Governor of the Bank of England on 25 May 1989.
At the meeting, Callaghan advocated the possibility of relocating the BCCI Group to the United Kingdom under Bank of England supervision.
The Governor agreed to consider the proposal but raised a number of concerns about BCCI’s ownership, management structure and the practical difficulties of supervising the international Group.
The Bank of England was reluctant to assume greater regulatory responsibility for BCCI in its existing form.
The proposal therefore did not proceed at that stage.
Nevertheless, the episode is historically important because it shows that long before the final restructuring of 1990–91, people associated with BCCI were already considering whether a clearer corporate structure and more direct UK regulation could provide a solution to some of the Bank’s structural problems.
Was Callaghan an official of BCCI?
Callaghan’s relationship with BCCI should be undrstood carefully.
There is good evidence that he:
- knew Abedi personally;
- worked with him through the Cambridge Commonwealth Trust and other initiatives;
- sometimes acted as an unofficial adviser;
and personally discussed BCCI’s future regulatory structure with the Governor of the Bank of England.
But this does not mean that Callaghan was part of BCCI’s executive management.
Nor has evidence been found showing that he was considered for appointment as chairman of one of the three successor banks proposed during the 1991 restructuring.
His role is better understood as that of a prominent former statesman who had developed a personal relationship with Abedi through charitable and international development activities and who, on occasion, advised or assisted BCCI on matters concerning its broader position.
Meeting through Jimmy Carter
Callaghan later said that he was introduced to Agha Hasan Abedi by former United States President Jimmy Carter in 1981.
The meeting developed into a relationship that continued through the 1980s. It helps explain how the relationship began, why it continued and why Callaghan later became interested in BCCI’s future structure and regulation in Britain.
Abedi had long believed that a bank operating extensively in developing countries should contribute to education, health, international understanding and development as well as conventional commercial banking.
BCCI and organisations established or supported by Abedi therefore provided substantial funding to educational and charitable initiatives.
One of the most important British connections was with the Cambridge Commonwealth Trust.
Contemporary reporting records Callaghan saying that Abedi became an important supporter of the Trust after their introduction.
The Cambridge Commonwealth Trust
The Cambridge Commonwealth Trust was established in October 1982 to help students from Commonwealth countries study at the University of Cambridge.
Agha Hasan Abedi and James Callaghan both became trustees.
BCCI provided substantial financial support for scholarships, helping students from countries including Pakistan, India, Bangladesh, Sri Lanka, Zambia, Zimbabwe and China to study at Cambridge.
By 1987, published BCCI material described the Trust as permanently supporting a number of BCCI Cambridge Scholars each year. Among its trustees were Abedi, Callaghan and other prominent Commonwealth and international figures.
For Abedi, such activity formed part of a much broader programme of educational and development initiatives.
For Callaghan, whose public life had long involved Commonwealth affairs, the Trust provided a practical means of expanding educational opportunities for students from Commonwealth countries.
Their shared involvement helped deepen their personal relationship.
A wider international association
The Cambridge Commonwealth Trust was not the only connection.
Callaghan attended the launch of Abedi’s Third World Foundation in London in 1979, together with figures including Jamaican Prime Minister Michael Manley and Commonwealth Secretary-General Shridath Ramphal. He subsequently became associated with the Foundation.
Abedi and Callaghan were also involved in related educational trusts.
Their international development interests sometimes led to travel and joint initiatives.
In 1986, for example, Callaghan travelled privately to China to examine possibilities for attracting foreign finance to developing and rural industries.
BCCI representatives accompanied him during part of that visit after discussions with Abedi about the possibility of the Bank becoming involved in suitable projects.
The relationship was therefore not confined to ceremonial appearances or social occasions.
It developed through continuing work in education and international development.
Key Sources
Lord Justice Bingham, Inquiry into the Supervision of the Bank of Credit and Commerce International, 1992 - particularly paragraphs dealing with Callaghan’s relationship with Abedi and his meeting with the Governor of the Bank of England.
The Washington Post, 7 August 1991 – contemporary account including Callaghan’s recollections of being introduced to Abedi by Jimmy Carter and Abedi’s support for the Cambridge Commonwealth Trust.
Cambridge Commonwealth Trust / BCCI historical material – records Abedi and Callaghan among the trustees and describes BCCI-supported Cambridge scholarships.
BCCI historical material on China, 1986 – records Callaghan’s development-related visit and the participation of BCCI representatives.