Case study: BCCI collapse
Implications for Corporate Governance Examples
The BCCI Collapse
- The Luxembourg-registered Bank of Credit and Commerce International (BCCI) was founded in 1972 by Agha Hasan Abedi, with HQs in Karachi and London.
- By 1982 BCCI operated in 78 countries, with over 400 branches, and assets exceeding $20bn, making it the 7th largest private bank in the world.
- Following regulatory concerns and investigations BCCI was found to be established fraudulently, trading illegally on a vast scale, including money-laundering and in 1991 regulators raided and shut its operations in seven countries.
- Legal actions involving $100s of millions persisted for more than ten years including substantial damages settlements from BCCI auditors Price Waterhouse and Ernst Young.
- The BCCI scandal was a major prompt, along with Polly Peck's collapse, for the 1991/2 UK Cadbury Committee on Corporate Governance.