BCCI 'allowed to carry one despite fears'

THE former head of banking supervision at the Bank of England today admitted allowing renegade bank BCCI to stay in business despite suspecting it was involved in money-laundering.

Brian Quinn, now chairman of Celtic Football Club, was appearing as the first witness in the marathon High Court battle between the Bank of England and Deloitte, the liquidator of BCCI which was shut down in 1991 with debts of £9bn.

Deloitte is claiming £850m in damages, accusing the Bank of failing in its supervisory duties by not closing BCCI down as soon as suspicions became aroused.

Referring to a 'realistic assessment' of BCCI by a Bank official at a meeting in October 1990, seven months before it was shut, Quinn said the official 'indicated that a lot of tightening-up of systems had taken place within BCCI over the previous 12 months but he was cautious of suggesting a bank with several branches in places such as Colombia was free from money-laundering'.

He said: 'I do not recall thinking this was anything other than a realistic assessment.'

Quinn denied the Bank was 'desperate' to keep BCCI open despite having serious misgivings about its business.

He said: "I didn't want to keep BCCI going at all costs. I treated it on its merits. Was I desperate for BCCI to continue? No - never desperate. If anything, we were keen to try to save an institution if it was capable of saving.'

Quinn also denied the question of the Bank's regulatory responsibilities was 'a taboo subject'. The case continues.