BOI ORDERD TO PAY $82 MN IN BCCI CASE

London's High Court ordered state-run Bank of India to pay around $82 million in compensation for "fraudulent" transactions with the collapsed Bank of Credit and Commerce International (BCCI).

Judge Nicholas Patten said Bank of India's London-based manager knew BCCI's deposits with India's sixth-largest commercial bank were being used to defraud BCCI creditors and that the Bank of India must bear responsibility for the manager's actions.

BCCI collapsed in 1991 owing over $16 billion in the world's biggest banking fraud. BCCI's liquidator, Deloitte, is currently pursuing a separate lawsuit of nearly £1 billion against the Bank of England over its regulatory role in the collapse.

Bank of India denied knowing what was going on but Patten launched a scathing attack on its oversight procedures and said that allowing it to duck responsibility would set a precedent.

"It would allow banks such as BOI, which choose to rubber-stamp the recommendations of their senior managers without ensuring that all proper diligence has been carried out, simply to sidestep liability by relying on ineptitude."

The case focused on six BCCI deposits with BOI between 1981 and 1985.
Patten awarded damages of $43.2 million to Deloitte, which along with interest of $39 million resulted in a total sum of just over $82 million.

Bank of India, with 22 million customers, posted a 16 per cent rise in net profit to Rs 2.29 billion ($51 million) in its third quarter ended December 31. It shares closed up almost one percent at Rs 58.20 on Friday.

BCCI was closed in 1991 by regulators in a worldwide swoop, partly organised by the Bank of England, after it discovered the lender had disguised losses and was insolvent.

Founded in 1972 by Pakistani banker Agha Hassan Abedi, BCCI grew from a small, Asian bank to an empire spanning 69 countries with $20 billion of assets.