Official inquiries are often presented as the final and authoritative explanation of controversial government decisions. Their findings subsequently become embedded in parliamentary debate, regulatory history, academic writing and the media.
Yet an inquiry can never be more comprehensive than the questions it is permitted to ask.
Its independence cannot therefore be judged solely by the reputation or judicial standing of the person appointed to conduct it. Equally important are who establishes the inquiry, who determines its terms of reference, which matters are placed within its scope, what evidence is available, which witnesses are examined and, above all, what questions are excluded.
This creates a fundamental weakness-and a potential conflict of interest-in the system of government-appointed inquiries, particularly where the institutions responsible for defining the inquiry’s scope are themselves involved in the decisions under examination. In some cases, the limitation of an inquiry’s scope may itself be intentional - designed not necessarily to dictate the final conclusion, but to ensure that the most difficult or politically sensitive questions are never fully examined.
A predetermined outcome does not necessarily require interference with the person conducting the inquiry. The result can be substantially influenced at an earlier stage simply by defining the question narrowly enough.
An inquiry may investigate faithfully everything within its terms of reference while leaving untouched the very issue that caused public concern in the first place.
The Question That Is Never Asked
This distinction is particularly important in the case of BCCI.
Following the closure of the bank, the Bingham Inquiry was asked principally to examine the supervision of BCCI under the Banking Acts, whether the actions of the United Kingdom authorities had been appropriate and timely, and what lessons should be learned for future banking supervision.
Those were legitimate questions.
But they were not necessarily the most important questions arising from the events of July 1991.
The fundamental issue was not simply:
Why had the Bank of England failed adequately to supervise BCCI?
It was also:
Why, after participating in and allowing an extensive restructuring programme to develop, did the authorities suddenly abandon that process and choose immediate closure?
And, closely connected with that:
Was closure actually necessary when substantial financial support from Abu Dhabi remained available and alternatives to the destruction of the international banking group were still being pursued?
The Bingham Inquiry did not make that question the central focus of its investigation.
That limitation matters.
Investigating the Regulator Without Fully Investigating Its Decision
There was also an unavoidable institutional difficulty.
The Bank of England was not an independent observer of the events being examined. It had supervised BCCI, had extensive knowledge of its difficulties, had dealt with Price Waterhouse and other regulators, had participated in the restructuring process and ultimately played a central role in the move to close the bank.
Yet the subsequent inquiry concentrated largely upon the quality of the Bank's supervision rather than subjecting the ultimate decision to abandon restructuring and proceed to closure to an equally searching examination.
The consequence was that the official narrative became centred upon regulatory failure followed by necessary intervention.
That narrative may contain much that is correct. But it does not answer the separate question of whether the particular intervention chosen was the only reasonable course available.
A comprehensive inquiry into the closure would have required a much more direct examination of:
- what was known about BCCI's losses and irregularities before the section 41 report;
- what precisely in that report was genuinely new;
- what corrective measures were already being implemented;
- the extent of Abu Dhabi's financial commitment;
- the restructuring arrangements discussed with the supervisory authorities;
- why those arrangements were abandoned;
- what alternatives to closure were considered;
- what communications took place between British and foreign regulators immediately before closure;
- what pressure was being exerted from the United States; and
- whether political or institutional considerations influenced the timing of the decision.
Without confronting those issues directly, an inquiry into supervision could never, by itself, settle the wider historical question of whether closure was justified.
When Policy Precedes the Evidence - Iraq and Weapons of Mass Destruction
The controversy surrounding Britain's participation in the 2003 invasion of Iraq provides a powerful later illustration of why official explanations and narrowly focused inquiries must sometimes be treated with caution.
The British Government's public justification for military action relied heavily upon the claim that Saddam Hussein continued to possess weapons of mass destruction and that Iraq represented a sufficiently serious threat to justify military intervention.
Those weapons were not subsequently found.
More importantly, the much later Iraq Inquiry revealed that the process by which Britain arrived at war was considerably more complex than the public presentation at the time suggested.
By July 2002, Tony Blair had already written privately to President George W. Bush in terms which, the Iraq Inquiry later concluded, placed Britain on a path that would make it very difficult subsequently to withdraw its support for the United States.
By early January 2003, before the UN inspection process had been exhausted, Blair had concluded that military action was likely to be required and that, if conflict could not be avoided, Britain should support the United States.
This chronology is significant because it raises the question of whether intelligence and legal justification were being assessed in an entirely open policy environment, or in one in which the political direction had already substantially hardened.
Intelligence Presented With Greater Certainty Than the Evidence Justified
The later Iraq Inquiry found that the intelligence available before the invasion had not established beyond doubt that Saddam Hussein was continuing to produce chemical or biological weapons or pursuing an active nuclear weapons programme.
It also found that public statements by the Government conveyed greater certainty than the underlying intelligence assessments justified.
The distinction is critical.
Governments are entitled to reach judgments on uncertain intelligence. But there is a profound difference between saying that intelligence indicates a possibility or probability and presenting that assessment publicly as though the underlying facts have already been established.
The WMD case demonstrates the danger that can arise when evidence is interpreted within the framework of a policy that political leaders are already strongly committed to pursuing.
The eventual failure to discover the alleged stockpiles made the consequences unmistakable: the principal public premise used to generate support for war proved to be wrong.
The Changing Legal Position
The legal justification for military action provides an equally important example.
Within government there had been serious legal doubts about whether military action without a further United Nations Security Council resolution would be lawful.
The Iraq Inquiry records that government legal advisers had warned in 2002 that regime change was not itself a lawful basis for military action and that they were not then aware of facts providing a respectable legal basis for war without further Security Council authority.
Lord Goldsmith, the Attorney General, subsequently produced detailed advice on 7 March 2003. His position was not an unqualified declaration that war was unquestionably lawful. He considered that the safest legal course remained obtaining a further Security Council resolution, although he accepted that a reasonable case could be advanced that earlier resolutions provided sufficient authority without one.
He expressly recognised legal uncertainty and the possibility that a court might take a different view. Contemporary reporting and the later Iraq Inquiry therefore generated substantial controversy over the evolution of the Attorney General's position in the days immediately preceding the invasion.
Ten days later, on 17 March, a much shorter and unequivocal statement of the Government's legal position was placed before Parliament and Cabinet.
The Iraq Inquiry later criticised the process. It found that ministers did not receive a full written explanation of how the Attorney General's position had developed and that there was little substantive Cabinet discussion of the legal issues.
It is important not to state without evidence that Lord Goldsmith was ordered by Tony Blair to change his legal opinion. Goldsmith himself rejected suggestions that he had improperly changed his view because of political pressure.
Nevertheless, the chronology raises a legitimate and serious concern.
The Government's political and military commitment was advancing rapidly; British forces were already being prepared and deployed; the United States was moving towards invasion; obtaining a second Security Council resolution had become increasingly unlikely; and the Government required a clear legal basis if Britain was to participate.
Against that background, the Attorney General's position moved from substantial caution to the statement ultimately relied upon to justify military action.
That sequence alone demonstrates why independence of legal advice must be judged not simply by the professional standing of the adviser, but also by the political environment in which the advice is sought, refined and ultimately presented.
A Decision Increasingly Difficult to Reverse
The strongest finding of the Iraq Inquiry in this context may therefore be the least dramatic.
It concluded that Blair's approach to President Bush in 2002 had placed Britain on a course from which withdrawal became increasingly difficult.
That matters because once a government has politically committed itself to a course of action, institutional pressures change.
Intelligence may increasingly be examined for evidence supporting the policy.
Legal advice may increasingly be required to establish how the policy can lawfully proceed.
Public communications may increasingly be directed towards persuading Parliament and the population that the chosen course is necessary.
None of this requires a formal conspiracy.
It requires only a government that has already substantially decided what it wishes to do.
At that point the danger is that the administrative machinery ceases to ask:
“What does the evidence require us to do?”
and instead begins to ask:
“What evidence and legal authority are required for us to do what has already been decided?”
That distinction goes to the heart of the limits of official decision-making and subsequent inquiries.
Inquiries Can Legitimate Rather Than Investigate
The Iraq experience also demonstrates why early official reviews cannot automatically be treated as the final historical account.
Different investigations examined intelligence, the death of Dr David Kelly and other individual aspects of the controversy. But it took the far broader Chilcot Inquiry, reporting thirteen years after the invasion, to reconstruct the decision-making process in sufficient depth to show that Britain went to war before peaceful options had been exhausted and that military action was not, at that stage, a last resort.
The lesson is uncomfortable but important.
Official inquiries are capable of exposing government failure.
But they are also capable, particularly when narrowly framed, of giving institutional authority to an incomplete explanation.
A limited inquiry can answer the questions placed before it correctly while simultaneously helping to establish an official narrative that avoids more damaging questions.
The Power Lies in the Terms of Reference
For that reason the terms of reference should never be treated as an administrative formality.
They can determine the outcome before the inquiry begins-not by instructing an independent chairman what conclusions to reach, but by determining what he is permitted to investigate.
If an inquiry is asked why supervision failed, it will investigate supervisory failure.
If it is not asked whether closure was necessary, it may never fully test the justification for closure.
If it is asked whether intelligence procedures operated correctly, it may not determine whether political leaders had already decided upon military action and subsequently used intelligence to support that policy.
The desired institutional outcome can therefore sometimes be obtained without manipulating evidence or interfering with an inquiry at all.
Control the question, and it may become unnecessary to control the answer.
Applying the Lesson to BCCI
This is why the Bingham Report, important though it undoubtedly remains, should not be allowed to close historical examination of BCCI.
Bingham demonstrated serious failures in the Bank of England's supervision.
But identifying those failures does not prove that worldwide closure on 5 July 1991 was unavoidable.
Nor does the discovery of serious wrongdoing within parts of BCCI answer why an advanced restructuring programme-with new management, substantial Abu Dhabi ownership and financial support, and the involvement of international regulators-was abandoned rather than completed.
The distinction is fundamental:
The existence of serious problems justified intervention.
It did not automatically determine what form that intervention had to take.
That second question required an inquiry prepared to examine the Bank of England not merely as a failed supervisor, but as an institution responsible for one of the most consequential banking decisions of the period.
It required scrutiny of the alternatives available immediately before closure.
It required examination of why restructuring ceased to be acceptable.
It required examination of the influence of the United States and other regulators.
And it required those responsible for closure to demonstrate why the destruction of an international bank operating across more than seventy countries was preferable to restructuring, recapitalisation, separation of viable operations or an orderly resolution.
That comprehensive inquiry was never held.
The historical record should therefore remain open.
The question is not whether BCCI contained serious irregularities. That has long been established.
The unresolved question is much more specific:
Did the evidence discovered in 1991 make immediate worldwide closure unavoidable-or was closure a policy decision for which other viable alternatives were available but never subjected to adequate independent examination?
That is the question any objective assessment of BCCI’s closure should now address, and one that deserves further examination by professional bodies, researchers and independent analysts.
