The Bank of Credit and Commerce International (BCCI) is remembered largely through the allegations surrounding its closure in July 1991. A fuller perspective must also consider the institution it became, the people it served and the alternatives to its destruction by regulators in the West led by the Bank of England.
An International Bank Serving the Developing World
Founded in 1972 under the leadership of Agha Hasan Abedi, BCCI expanded across the world within 19 years into an international bank with a presence in 73 countries. Its customers included individuals, businesses, financial institutions and governments.
BCCI principally sought to serve the developing world - a much larger but comparatively neglected market. It established a strong presence across Asia, Africa and the Middle East, where many customers considered its services more accessible and responsive than those traditionally provided by established Western banks.
Trade, People and Opportunity
The Bank financed foreign trade and encouraged commercial links among developing countries. It also trained thousands of bankers, giving employees from diverse backgrounds opportunities to gain international experience and assume responsibilities previously concentrated in established Western institutions.
These achievements reflected the dedication of employees conducting ordinary banking business as members of the BCCI family. Their contribution should be distinguished from wrongdoing associated with a few individuals at BCCI’s Central Office.
A Wider Vision
For Abedi, banking formed part of a wider ambition to strengthen the economic and institutional capacity of developing countries. BCCI and associated charitable foundations supported education, healthcare, research, culture and humanitarian initiatives.
These activities form part of the Bank’s history and deserve examination alongside its financial affairs, management failures and regulatory controversies.
Placing the Allegations and Closure in Perspective
Acknowledging BCCI’s achievements does not excuse false accounting, concealed losses or other serious misconduct. Equally, acknowledging wrongdoing does not establish that closure was the only appropriate response. Concealment of losses should also be distinguished from the diversion of funds for personal enrichment; one does not, by itself, establish the other.
An Abu Dhabi-backed restructuring programme proposed separating viable banking operations from problem assets, alongside changes in management and supervision. BCCI’s auditors, Price Waterhouse, together with leading management and legal advisers instructed by Abu Dhabi, were developing the programme to address the Bank’s difficulties and avoid closure.
Abu Dhabi provided substantial financial support, including a further US$650 million transferred on 4 July 1991, without being informed that the Bank of England had already moved towards coordinated closure. Regulatory action was announced the following day, 5 July, while BCCI was still conducting banking business.
A new perspective therefore begins by considering BCCI as a functioning international bank, rather than treating the allegations as its entire history. It asks whether accountability for wrongdoing should have been combined with protection for customers, employees and viable banking operations and whether closure had already been decided while restructuring was still being pursued.
The evidence, individual allegations, official reports and comparisons with other banks are examined in the accompanying pages.