Deloittes moves forward on BCCI liquidation with $1bn payout

The payout by main liquidator Deloitte & Touche to creditors in more than 140 countries will bring total repayment so far to 60% of the $9bn owed, with a worldwide raft of legal judgements set to further boost final payment.

The world’s biggest liquidation after the discovery of endemic fraud at BCCI in 1991 left around 70,000 creditors, many with private accounts, believing that no more than 5% of their money could be recovered.

Senior liquidators at Deloittes, Steve Akers and John Richards, will release the dividend payment by cheque and electronic transfer, which follows previous payouts in 1996 and 1998.

Steve Akers said: ‘Creditors should know that we continue to vigorously pursue a number of court judgements, actions and other lines of recovery.’

Deloittes are also set to pursue a $4bn plus claim against the Bank of America for damages in London’s High Court from January 2002, following the failure in the Court of Appeal to have the claim struck out.

The liquidators allege that the manner in which BoA divested itself of its BCCI shares was fraudulent because the US bank knew that its UK partner was trading illegally and left little or no capital as it divested itself for known debts to be repaid.

Damages sought include a $47.5m claim plus interest to cover profit made during the BoA’s retreat from BCCI and $4bn to cover the BCCI deficit.

BoA made a $4m investment in BCCI when it formed in 1972, and enjoyed close contact with the bank providing directors for its board until it sold its $47.5m stake by 1980.

A House of Lords appeal case judgement is also due on a £600m claim by Deloittes against the Bank of England, which uses the little used tort of misfeasance to circumvent the Bank’s litigation immunity.

Experts believe that a successful case against the Bank could drag on for years drying up further creditors funds – Deloittes are believed to have spent £135m already on legal costs and earned fees of $255m by the beginning of the year.

An appeal case judgement from the Southern District Court of New York against Security Pacific Investment Bank is also pending on alleged knowing assistance in the fraudulent movement of money between accounts.

Saudi businessman Abdul Raouf Khalil could also be subject to a $1.1bn judgement award subject to a US appeal court decision, while Ghaith Pharaon has had a £2.1bn judgement against him at Cayman Islands court, with thirteen different litigations pending.

The largest settlement against an auditor was finally made to Deloittes by former BCCI auditors PricewaterhouseCoopers and Ernst & Young with the handed over $195m last November.

Related reading