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    BCCI SCANDAL: Bank of Credit and Commerce International (UK) 1991

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    gagana s
    BCCI was a major international bank founded in 1972 that expanded rapidly through the 1970s. However, by the late 1970s it was suffering from reckless lending and bad debts. Throughout the 1980s, numerous regulators scrutinized BCCI due to concerns about money laundering and poor regulation. In 1991, a report revealed that BCCI was involved in massive money laundering and financial crimes. This led regulators in seven countries to seize BCCI's branches around the world, ultimately liquidating its assets and reimbursing many depositors. The closure of BCCI was the biggest bank fraud in history at the time.

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    BCCI SCANDAL: Bank of Credit and Commerce International (UK) 1991

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    gagana s
    55 views3 pages
    BCCI was a major international bank founded in 1972 that expanded rapidly through the 1970s. However, by the late 1970s it was suffering from reckless lending and bad debts. Throughout the 1980s, numerous regulators scrutinized BCCI due to concerns about money laundering and poor regulation. In 1991, a report revealed that BCCI was involved in massive money laundering and financial crimes. This led regulators in seven countries to seize BCCI's branches around the world, ultimately liquidating its assets and reimbursing many depositors. The closure of BCCI was the biggest bank fraud in history at the time.

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    BCCI SCANDAL

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    BCCI was a major international bank founded in 1972 that expanded rapidly through the 1970s. However, by the late 1970s it was suffering from reckless lending and bad debts. Throughout the 1980s, numerous regulators scrutinized BCCI due to concerns about money laundering and poor regulation. In 1991, a report revealed that BCCI was involved in massive money laundering and financial crimes. This led regulators in seven countries to seize BCCI's branches around the world, ultimately liquidating its assets and reimbursing many depositors. The closure of BCCI was the biggest bank fraud in history at the time.

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    55 views3 pages

    BCCI SCANDAL: Bank of Credit and Commerce International (UK) 1991

    Uploaded by

    gagana s
    BCCI was a major international bank founded in 1972 that expanded rapidly through the 1970s. However, by the late 1970s it was suffering from reckless lending and bad debts. Throughout the 1980s, numerous regulators scrutinized BCCI due to concerns about money laundering and poor regulation. In 1991, a report revealed that BCCI was involved in massive money laundering and financial crimes. This led regulators in seven countries to seize BCCI's branches around the world, ultimately liquidating its assets and reimbursing many depositors. The closure of BCCI was the biggest bank fraud in history at the time.

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    BCCI SCANDAL: Bank of Credit and Commerce

    International (UK) 1991


    Bank of Credit and Commerce international (BCCi) was a major
    international bank founded in 1972 by agha Hassan abedi, a
    pakistani financier. The BCCI was incorporated in luxembourg
    with head offices in Karachi and london. The bank primarily
    focused on serving Muslim and third-world clients. The
    quadrupling of oil prices in 1973-74 led to huge deposits by
    arab oil producers. As a result BCCI expanded rapidly in the
    1970s. BCCI also acquired parallel banks through acquisitions.
    BCCI entered the African markets in 1979, and Asia in the early
    1980s. BCCI was among the first foreign banks awarded a
    license to operate in the Chinese special economic Zone of
    Shenzhen. By 1980, BCCI was reported to have assets of over $4
    billion with over 150 branches in 46 countries. BCCIexpanded
    rapidly and by 1991 it had 420 offices around the world and a
    presence in 70 countries. Forced Closure of the Bank although
    BCCI’s published results showed ever-rising profits, by the late
    1970s the bank was suffering an alarming level of bad debts
    due to reckless lending. BCCI came under the scrutiny of
    numerous financial regulators and intelligence agencies in the
    1980s due to concerns that it was poorly regulated. Reality was
    not reflected in BCCI’s accounts because the losses were
    concealed.
    MAJOR CORPORATE GOVERNANCE FAILURES CHAPTER
    Major Corporate Governance Failures in a Cayman Islands
    subsidiary, a bank within a bank known internally as ‘the
    dustbin’, safe from regulatory scrutiny. As the losses mounted
    Abedi resorted to more and more desperate ways of keeping
    the bank afloat. He tried ‘proprietary trading’, but the results
    were further huge losses. The bank only kept going by
    fraudulent accounting and massive misappropriations of
    depositors’ funds. Desperately in need of new sources of
    deposits and revenue, from the early 1980s BCCI’s Panama
    branch acted as money-launderer for Latin America’s drug
    barons. Subsequent investigations and the inquiry report in
    June 1991 for BCCI by Price Waterhouse at the behest of Bank
    of England code named ‘Sandstorm Report’ revealed that BCCI
    was involved in massive money laundering and other financial
    crimes, and illegally gained controlling interest in a major
    American bank. The report indicated massive manipulation of
    non-performing loans, fictitious transactions and charges,
    unrecorded deposit liabilities, fictitious profits and concealment
    of losses. Uncovering of BCCI’s fraud and illegal operations in
    the 1991 probe led to a massive regulatory battle in 1991.
    Eventually on July 5, 1991 customs and bank regulators in
    seven countries moved quickly to seize and take over the
    bank’s branches in the UK, US, France, Spain, Switzerland,
    Luxembourg and the Cayman Islands. BCCIs assets were
    ultimately liquidated, and a pool was established to reimburse
    depositors who had lost their funds when the bank shut down.
    The BCCI scandal was the biggest bank fraud in history. Its
    closure left 150,000 depositors around the world scrambling to
    recover lost money. The biggest loser of all was Abedi’s backer,
    the Sheikh of Abu Dhabi. Eventually small depositors recovered
    75 per cent of their claims, leaving a final loss by depositors of
    around $2 billion. Abedi was indicted in the US but he died in
    1995 before facing the trial.

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