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Case of Bank of Credit and Commerce International

Krunal Shah Parth Thakar Dipika Patel Bhumika Dave Karan Shah Nidhi Patel

Snapshot ‡ ‡ ‡ ‡ ‡ ‡ ‡ Overview of BCCI Introduction Initial Problems Causes of Failure Auditors Move Bingham Report where was actually fraud??? .

000 employees ‡ 80. subsidiaries and affiliates ‡ 73 countries .000+ deposits/claims ‡ 400 branches.Overview of BCCI ‡ Founded 1972 ‡ Headquarter:-Luxemburg ‡ 5th largest privately owned bank ‡ 30.

" . transparency and accountability.Corporate Governance ‡ Corporate governance is all about "promoting corporate fairness.

.Overview of BCCI ‡ 1972. 7 BCCI officials were arrested. ‡ 1987.Senior employee alerts price waterhouse to fraud at BCCI.Agha hasan Abedi founded BCCI. ‡ 1982. ‡ 1989.Clark Clifford becomes chairman of first American Bank Shares.Price waterhouse appointed sole auditors of BCCI ‡ 1988-Abedi has heart attack and hands over to Swaleh Naqvi.

Auditors repots find BCCI needs additional finance of £1.Price waterhouse reports on fraud at BCCI(june) Bank of England shuts down branches.BCCI¶s liquidation begin legal. . 1991. 1992.Reports on BCCI by Lord Justice Bingham 2004.8bn.Overview of BCCI 1990.

pakistan in 1950s. . .By 1960s he joined United bank based on pakistan and after meeting with king of Abu Dhabi he convinced him to start BCCI. He was keen to expand banking areas that would benefit the poorer section of socoiety.Introduction ‡ Agha Hasan Abedi:he was bank employee in Habib bank in karachi.

. ‡ With in a decade BCCI touches its peak and started operated in 78 countries with 400 branches and had assets of US $20bn ‡ It was 7 largest private bank in world.Introduction ‡ BCCI was a major nationalized bank founded in 1972.

Initial Problems ‡ ‡ ‡ ‡ Major client Gulf Group got bankrupt. No lender of Last resort Payment of Ponzi Scheme 7 officers of Bank were arrested .

Causes failure ‡ Losses in treasury operations and poor lending ‡ Manipulation in account ‡ poor Internal control ‡ Non disclosure to Bank regulator and their clients ‡ Insufficiency of Funds ‡ spread over up to Top level management. .

‡ CEO Naqvi of BCCI has made false document to deceive the auditor. .8bn and as a result of it Naqvi had appealed share holders for additional raising of Equity and raised $400mn equity.Auditors move ‡ Two firms Ernest & Whinney and Price Waterhouse ‡ In 1987 it was decided to have only 1 Auditing firm that is Price water house. ‡ Auditors reported BCCI need additional finance of £1.

‡ Auditors were anxious to move ahead with refinance and restructuring of BCCI.Auditors report ‡ Price waterhouse had faced 2 issues that is of Financial Viability of BCCI Possibility of Fraud. . ‡ Price waterhouse were not informed only 2 days before the closure.

‡ Two auditors were one of the major issue in the Bingham report.] ‡ According to bingham without Whistle blower¶s action price waterhouse have taken longer time to gather evidence of fraud. .The Bingham Report ‡ Main critics was that on the one hand price waterhouse was auditor of BCCI while on the other hand it was also earning huge fees from Management consultant.

Bingham Report ‡ Bingham identified he called a ³Problem of culture´ at the bank where officials were rather easily deterred shed away from tackling difficult problems head on were over concerned about criticism and repeatedly made inadequate responses on supervisory matter .

where was actually fraud??? ‡ ‡ ‡ ‡ Manipulation of account Non discloser Ponzi scheme Drug Trafficking and Money Laundering .