Bank of Credit and Commerce International

Topics: Bank of Credit and Commerce International, Zayed bin Sultan Al Nahyan, Bank Pages: 12 (4297 words) Published: June 9, 2013
Bank of Credit and Commerce International
From Wikipedia, the free encyclopedia
Bank of Credit and Commerce International|
Industry| Banking|
Fate| Liquidation / Forced closure|
Defunct| 1991|
Headquarters| London (incorporated inLuxembourg)|
Key people| Agha Hasan Abedi (Founder)|
Employees| approx. 30,000|
The Bank of Credit and Commerce International (BCCI) was a major international bank founded in 1972 by Agha Hasan Abedi, a Pakistani financier.[1] The Bank was registered in Luxembourg with head offices in Karachi and London. Within a decade BCCI touched its peak. It operated in 78 countries, had over 400 branches, and had assets in excess of US$20 billion, making it the 7th largest private bank in the world by assets.[2][3] BCCI came under the scrutiny of numerous financial regulators and intelligence agencies in the 1980s due to concerns that it was poorly regulated. Subsequent investigations revealed that it was involved in massive money laundering and other financial crimes, and illegally gained controlling interest in a major American bank. BCCI became the focus of a massive regulatory battle in 1991 and on 5 July of that year customs and bank regulators in seven countries raided and locked down records of its branch offices.[4] Investigators in the U.S. and the UK revealed that BCCI had been "set up deliberately to avoid centralized regulatory review, and operated extensively in bank secrecy jurisdictions. Its affairs were extraordinarily complex. Its officers were sophisticated international bankers whose apparent objective was to keep their affairs secret, to commit fraud on a massive scale, and to avoid detection." The liquidators, Deloitte & Touche, filed a lawsuit against Price Waterhouse and Ernst & Young – the bank's auditors – which was settled for $175 million in 1998. A further lawsuit against UAE President Zayed II, a major shareholder, was launched in 1999 for approximately $400 million. BCCI creditors also instituted a $1 billion suit against the Bank of England as a regulatory body. After a nine-year struggle, due to the Bank's statutory immunity, the case went to trial in January 2004. However, in November 2005, Deloitte persuaded creditor Abu Dhabi to drop its claims against the Bank of England, except for a claim for return of its deposits, in that Abu Dhabi owned 77% of the bank shares at closing, and was therefore also facing a major lawsuit. [2] To date liquidators have recovered about 75% of the creditors' lost money.[5] A decade after its liquidation, its activities were still not completely understood.[4] Contents  [hide]  * 1 History * 2 Lending practices * 2.1 Funding to criminals and dictators * 2.2 CIA funding to the Afghan Mujahideen and the Contras * 2.3 After the decline of Soviet Union * 3 Philanthropic contributions * 4 The Sandstorm report * 5 The forced closure of BCCI * 6 Former directors * 7 See also * 8 Notes * 9 References * 10 External links| -------------------------------------------------

History [edit]
BCCI's founder, Agha Hasan Abedi, started the bank in 1972. Abedi, a prolific banker, had previously set up the United Bank of Pakistan in 1959. Preceding the nationalization of United Bank in 1974 he sought to create a new supranational banking entity. Abedi was succeeded by Swaleh Naqvi as the bank's chief who, in the aftermath following controversy over BCCI, was replaced by Zafar Iqbal Chaudhry in the late 1990s. BCCI was created with capital from Sheikh Zayed bin Sultan Al Nahyan, the ruler of Abu Dhabi in the United Arab Emirates and Bank of America (25%). BCCI expanded rapidly in the 1970s, pursuing long-term asset growth over profits, seeking high net-worth individuals and regular large deposits. The company itself divided into BCCI Holdings with the bank under that splitting into BCCI SA (Luxembourg) and BCCI Overseas (Grand Cayman)....
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