PARLIAMENTARY EARLY DAY MOTION
BANK OF ENGLAND NEGLIGENCE OVER BCCI (3 November 1992)

That this House believes that the report by Lord Justice Bingham shows the Bank of England to have been negligent in its supervisory duty to protect British depositors with BCCI; notes that this is not a matter of hindsight for, as Bingham shows, as early as 1979 the Bank 'was not only entitled but obliged to refuse a licence' to BCCI, (paragraph 2.30) but granted one anyway; notes that in 1984 the then Governor approved a plan to incorporate BCCI in the United Kingdom in order to regulate it more effectively but that the bank failed to carry this policy through when it encountered resistance from BCCI, and that the Bank 'was rather easily deterred' (2.46); notes that from 1985 the Bank shied away from taking the lead supervisory role over BCCI and thus accepted 'a highly unsatisfactory supervisory situation as should have been obvious at the time' (2.57); notes that by 1986, adequate grounds existed to revoke or to impose conditions upon BCCI's licence and that in their failure to exercise their powers, 'the supervisors tended to lose sight of their primary duty to protect the bank's United Kingdom depositors' (2.67); notes that on this occasion and subsequently, 'the Bank failed to measure up to the task' (2.72); notes that on several occasions in the 1980s the Bank failed to make the enquiries that a 'rigorous supervisor' ought to have done (2.162); believes that the ultimate responsibility for this damning catalogue of errors resides with the Governor; and concludes that for him to continue to cling to his position leaves him with neither credibility nor honour.

Sponsored by:
Dr Calum MacDonald (Labour)