The Banking Scandal That Led To Decades Of Investigation

Posted on Thursday, March 9, 2023 by Lydia SinclairNo comments

There are several important milestones that transformed accountancy and increased the need for forensic accounting jobs, such as the major collapses of Lehman Brothers, WorldCom and Enron.

However, one of the strangest and most far-reaching accounting scandals led to decades of litigation around the world, and a massive lawsuit against the Bank of England itself for allowing it to run despite knowing of its suspicious and often criminal business practices.

The story of The Bank of Credit and Commerce International, once described by former CIA director Robert Gates as “Bank of Crooks and Criminals International”, was exceptionally eventful but before its spiral into corruption and fraud had a more noble aim.

It was originally founded in Luxembourg by Agha Hasan Abedi in 1972, a Pakistani banker who wanted to bring banking services to the third world, initially garnering a quarter of BCCI’s capital from the Bank of America and the rest from the ruler of Abu Dhabi, Sheikh Zayed bin Sultan Al Nahyan.

Over the next decade, it would grow exponentially, which even as early as 1982 concerned creditors, as did accusations that they had opened accounts for Manuel Noriega, Saddam Hussain, Samuel Doe and other dictators, as well as handling money for the Medellin Cartel run by Pablo Escobar.

This is a violation of international lending laws, and investigations starting in 1986 revealed that the bank actively solicited deposits from drug traffickers and was part of money laundering activities.

Following this was the Sandstorm report in 1991 submitted by Price Waterhouse, which showed that not only were they engaged in illegal activity, but had manipulated their books to such a degree that the auditors found it impossible to reconstruct the financial history of BCCI, with estimated losses of up to $17bn.

It also revealed that several terrorist groups had accounts in London, which led to the bank being raided and forcibly liquidated, the legal fallout of which lasted until 2021.

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