![The Bank of Credit and Commerce International (BCCI) was an
international bank founded in 1972 by Agha Hasan Abedi, a Pakistani financier
BCCI was created with capital, 25% of which was from Bank of America and
the remaining 75% from Sheikh Zayed bin Sultan Al Nahyan, the ruler of Abu
Dhabi in the United Arab Emirates.
The company itself divided into BCCI Holdings with the bank under that
splitting into BCCI SA (Luxembourg) and BCCI Overseas (Grand Cayman).
The bank registered in Luxembourg with head offices in Karachi and London .
BCCI also acquired parallel banks through acquisitions: buying the Banque de
Commerce et Placements (BCP) of Geneva in 1976, and
creating KIFCO (Kuwait International Finance Company), Credit & Finance
Corporation Ltd, and a series of Cayman-based companies held together as ICIC
(International Credit and Investment Company Overseas, International Credit
and Commerce [Overseas], etc.).](https://image.slidesharecdn.com/bccippt-170505185348/85/Bcci-ppt-3-320.jpg)
Bcci ppt
- 2. Bank of Credit and Commerce International Former type Private Industry Banking Fate Liquidation / Forced closure Founded 1972 Founder Agha Hasan Abedi Defunct 1991 Headquarters London (incorporated in Luxembourg) Number of employees approx. 30,000
- 3. The Bank of Credit and Commerce International (BCCI) was an international bank founded in 1972 by Agha Hasan Abedi, a Pakistani financier BCCI was created with capital, 25% of which was from Bank of America and the remaining 75% from Sheikh Zayed bin Sultan Al Nahyan, the ruler of Abu Dhabi in the United Arab Emirates. The company itself divided into BCCI Holdings with the bank under that splitting into BCCI SA (Luxembourg) and BCCI Overseas (Grand Cayman). The bank registered in Luxembourg with head offices in Karachi and London . BCCI also acquired parallel banks through acquisitions: buying the Banque de Commerce et Placements (BCP) of Geneva in 1976, and creating KIFCO (Kuwait International Finance Company), Credit & Finance Corporation Ltd, and a series of Cayman-based companies held together as ICIC (International Credit and Investment Company Overseas, International Credit and Commerce [Overseas], etc.).
- 4. BCCI TIMELINE 1972: BCCI opens branch in London of Luxembourg bank 1980: Bank of England licenses BCCI as deposit-taking institution 1985: Price Waterhouse investigates BCCI losses 1987 Luxembourg asks for college of supervisors to help regulate BCCI 1988: Tampa branch of BCCI closed after money-laundering charges 1990: Price Waterhouse says BCCI needs £1.8bn rescue 1991: BCCI closed down by international regulators 1992: Bingham report criticizes Bank of England's role 1993: Liquidators issue writ against Bank of England 1997: Labour removes banking supervision to FSA 2001: House of Lords allows court case to proceed 2004: Court case begins
- 5. BCCI’S asset had grown from an initial capitalization in 1972 of $2.5 million , to $4 billion in 1980, to an astounding $23 billion at the point that the Bank of England moved to shut it down. Within a decades BCCI touched its peak. It operated in 78 countries, had over 400 branched, and had assets in excess of US$20 billion , making the 7th largest private bank in the world by assets.
- 6. The 248 managers and general managers reported directly to Abedi and the CEO Swaleh Naqvi. It was structured in such a way that no single country had overall regulatory supervision over it so as not to hinder potential growth and expansion opportunities. Its two holding companies were based in Luxembourg and the Cayman Islands—two jurisdictions where banking regulation was notoriously weak. It was also not regulated by a country that had a central bank. The Office of the Comptroller of the Currency (a bureau within the US Department of the Treasury) told the Federal Reserve in no uncertain terms that BCCI must not be allowed to buy any American bank because it was poorly regulated.
- 7. Price Waterhouse were the accountants for BCCI Overseas, while Ernst &Young audited BCCI and BCCI Holdings (London and Luxembourg). Other companies such as KIFCO and ICIC were audited by neither. In October 1985, the Bank of England and the Monetary Institute of Luxembourg (Luxembourg's bank regulator) ordered BCCI to change to a single accountant, alarmed at reported BCCI losses on the commodities and financial markets. Price Waterhouse became the sole accountants in 1987. Equations for BCCI had been changed after 1987 when Price Waterhouse became the sole accountants in 1987.
- 8. In 1990, a Price Waterhouse audit of BCCI revealed an unaccountable loss of hundreds of millions of dollars. The bank approached Sheikh Zayed bin Sultan Al Nahyan, who made good the loss in exchange for an increased shareholding of 78%. Much of BCCI's documentation was also then transferred to Abu Dhabi. The audit also revealed numerous irregularities. Most seriously, BCCI had made a staggering $1.48 billion worth of loans to its own shareholders, who used BCCI stock as collateral.
- 9. Time magazine even quotes CIA head Robert Gates, referring to BCCI as the “Bank of Crooks and Criminals International” BCCI was used as a Laundromat for the billions of dollars a year generated by the hundreds of heroin laboratories in Pakistan's North West Frontier Province (NWFP) that processed Afghani opium and smuggled it onto the world market. BCCI was the central bank for the British and American arms flows to the Afghan Mujahideen. BCCI became a "crown jewel" in the British offshore hot money system because of its ties to the City of London.
- 10. Money laundering in Europe, Africa , Asia, and the Americas BCCI’s bribery of officials in most of these locations Support of Terrorism Arms Trafficking and the sale of nuclear technologies Management of prostitution The commission and facilitation of income tax evasion Smuggling and illegal immigration Illicit purchase of banks and real estate A panoply of financial crimes limited only by the imagination of its officers and customers.
- 11. Its use of shell corporations and bank confidentiality and secrecy havens Layering of its corporate structure Its use of front-men and nominees Guarantees and buy-back arrangements Back-to-back financial documentation among BCCI controlled entities Kick-backs and bribes The intimidation of witnesses The retention of well-placed insiders to discourage government actions
- 12. In March 1991, the Bank of England asked Price Waterhouse to carry out an inquiry. On 24 June 1991, using the code name “Sandstorm” for BCCI , Price Waterhouse submitted the Sandstorm report showing that BCCI had engaged in “widespread fraud and manipulation” Included details of how the Abu Nidal terrorist group had manipulated details and through using fake identities had opened accounts at BCCI’s Sloane Street branch near Harrods in London. Throughout the 80’s, BCCI had set up millions of dollars worth of letter of credit for Najmedeen, largely for arms deals with Iraq. Report indicated: massive manipulation of non-performing loans, fictitious transactions and charges, unrecorded deposit liabilities, fictitious profits and concealment of losses.
- 13. SANDSTORMREPORT • In march 1991, the Bank of England asked Price Waterhouse to carry out an inquiry . • On 24th june 1991, using the code name “SANDSTORM” for BCCI . Price Waterhouse submitted the Sandstorm report showing that BCCI had enganged in widespread fraud and manipulation. • Throughout the 80s, BCCI had set up m illions of dollars worth of letters of credit for , largely for arms deals with Iraq. • Report indicated : massive manipulation of non performing loans , fictitious transactions and charges, unrecorded deposit liabilities,fictitious profits and concealment of losses.
- 14. On 5 July 1991: Regulators shut down the offices of BCCI in five countries. Around a million depositors were immediately affected by this action. On 15 November, BCCI, Abedi and Naqvi were indicted on federal charges that it had illegally bought control of another American bank, Independence Bank of Los Angeles, using Saudi businessman Ghaith Pharaon as the puppet owner. BCCI’s liquidators ( Deloitte, PWC) pleaded guilty to all criminal charges pending against the bank in the United States, clearing the way for BCCI’S formal liquidation that fall. BCCI paid $10 million in fines and forfeited all $550 million of its American assets – at time , the largest single criminal forfeiture ever obtained by fedral prosecutors. The money was used to repay losses to First American and Independence and to make restitution to BCCI ‘s depositors. None of this was enough to rescue both banks , however ; Independence was seized later in 1992, while First American was forced into merger with First Union in 1993.
- 15. MAGNITUDE OF IMPACT • BCCI’s closure left 1,50,000 depositors around the world scrambling to recover lost money. • The biggest loser of all was Abedi’s backer, Sheikh of Abu Dhabi. • Eventually small depositors recovered 75% of their claims, leaving a final loss by depositors of around $2Billion. • Abedi was indicted in the US but he died in 1995 before facing the trial.
- 16. THANK YOU BY : SANCHI 1328 RAHUL 1332 AARTI 1340