Bank of Credit and Commerce International Scandal

A date that has gone largely unnoticed across the financial world was 5 July 2016. It marked the 25th anniversary of the closure of the Bank of Credit and Commerce International (BCCI), a Pakistani-run but Abu Dhabi-owned bank that was established in 1972, initially also with Bank of America’s participation. Despite the passage of time, doubts still remain as to why such a drastic action was taken by regulators in the United States (US), United Kingdom (UK) and in Europe. In fact, in light of the 2007–08 quasi–global banking crisis, these doubts have only intensified as major banks seem to have behaved not just recklessly, but also did many of the same unsavoury things that the BCCI was accused of doing. The question that remains is whether the BCCI was uniquely corrupt or was it unjustly singled out?

Closing the BCCI was supposedly done in response to widespread allegations of malfeasance in the form of money laundering, bribery, false accounting, running a Ponzi scheme and rather implausibly, if sections of the US and UK media are to be believed, the involvement of bank officials in using prostitutes, indulging in blackmail and illicit arms deals. Furthermore, a few months after July 1991, it was the bank’s liquidator in the US who voluntarily pleaded guilty—on behalf of the now-closed bank—to serious charges filed in the US. In other words, none of the allegations levelled against BCCI, other than those that arose from the entrapment of the bank in Tampa, Florida in 1988, were ever substantively tested in any court, in any jurisdiction. Two US drug enforcement agents had posed as businesspersons and entrapped officials of the bank by procuring services in 1988 to launder money, obtained through the illegal sale and purchase of drugs.