The Bank of Credit and Commerce International (BCCI) was a substantial international banking organisation comprising a group of banks, subsidiaries and affiliated companies, with branches and offices operating across many countries and a workforce representing more than 100 nationalities.
BCCI as a Banking Organisation
From its establishment in 1972, it provided banking services to individuals, businesses, financial institutions and governments, with a particularly significant presence in developing countries across Asia, Africa, the Middle East and Latin America.
The closure of BCCI in July 1991, through collective action initiated by European regulators and led by the Bank of England, was followed by extensive negative publicity. Many allegations were presented in highly sensational terms, and descriptions published at the time remain widely available on the internet and through information services. Their continued repetition has reinforced the impression that BCCI operated under a “criminal culture from top to bottom.”
Such descriptions may imply that the Bank operated without proper organisational structures, internal controls, accounting systems, reporting procedures, staff training or regulatory supervision. The information presented under BCCI: The Bank, however, demonstrates that BCCI was a functioning international banking organisation. It maintained management structures, operational procedures, internal controls, audit arrangements, accounting and reporting systems, defined staff responsibilities and dedicated training academies that were comparable to, and in certain respects more extensive than, those maintained by other major international banks.
BCCI was also subject to supervision by central banks and banking regulators in each country in which it maintained a banking presence. Its branches provided genuine and, in many countries, valuable banking services to individual customers, businesses, financial institutions and public bodies. The existence of wrongdoing within certain parts of the organisation should not therefore be taken to mean that every branch, employee or banking activity formed part of a criminal enterprise.
Some members of BCCI’s senior management may have used or misused companies associated with, financed by or controlled through the BCCI Group. However, there appear to have been few, if any, substantiated findings that the principal purpose of such conduct was the personal enrichment of those senior managers. The allegations more commonly concerned attempts to conceal losses, protect the Bank’s financial position, support associated companies or maintain confidence in the institution. This does not excuse any wrongdoing, but it is an important distinction when considering the frequently repeated claim that BCCI was operated primarily as an organisation for personal criminal gain.
Touche Ross, appointed as the English liquidators, subsequently reported that BCCI had an estimated deficit of approximately £5.6 billion at the time of closure. This figure contributed to descriptions of BCCI as the largest financial fraud then uncovered. Such accounts, however, frequently failed to explain that the financial shortfall had been addressed, at least in substantial part, through a support package linked to a restructuring programme funded by BCCI’s majority Abu Dhabi shareholders.
That support was withdrawn following the decision to close BCCI, which the shareholders maintained had been taken without prior consultation with, or adequate notice to, them or the UAE Central Bank. The reported deficit should therefore be considered in the context of the collapse of the restructuring programme and the withdrawal of the financial support upon which the proposed rehabilitation of the Bank depended, rather than being presented solely as evidence that the entire amount represented losses arising from fraud.
Although allegations of widespread fraud were presented as the principal justification for the closure of BCCI, other perspectives on the decision have also circulated. These include questions about regulatory motives, political and commercial pressures, BCCI’s expansion in developing countries, its challenge to established Western banking interests, its relationships with China and Third World governments, and the decision to close the Bank rather than allow the restructuring programme supported by its Abu Dhabi shareholders to continue. These perspectives do not remove the need to examine proven wrongdoing, but they form an important part of the wider debate concerning why BCCI was closed and whether other options were available.
The section - BCCI The Bank - seeks to present a broader and more balanced account of BCCI as a banking institution, including its organisational structure, management systems, operational controls, services, international presence and contribution to banking development, particularly in countries that had historically received limited attention from the established Western banking sector.
