Judge tells court of his surprise that the Deloitte action against BoE had been allowed to drag on for so long
BCCI’S liquidator Deloitte was instructed by the collapsed bank’s creditor committee to immediately halt its action against the Bank of England on 26 September, but only managed to extricate itself from the £1bn litigation yesterday.
Deloitte declined to answer questions on the delay, but some creditors are unhappy with its handling of the litigation. The judge presiding over the case, Mr Justice Tomlinson, added fuel to the fire when he told the court yesterday: “It has been a matter of surprise to me for about a year now that the action was being pursued.”
It has been one of the most expensive cases in British legal history and will probably cost creditors more than £100m in legal fees. Deloitte will have to pay the bulk of the Bank’s legal fees as well as its own. Its fees are racking up at £1m a year, and the Bank is spending £2m.
Given that Deloitte has managed to recover an amazing 81 per cent of the creditors’ money, complaints are likely to remain muted. Deloitte said it had made the decision after a reserve ruling by the High Court, stating that the case was no longer in the creditors’ best interest. However the decision to abandon the case was taken more than six weeks earlier.
As revealed by CityA.M., Deloitte attempted to settle the case in September, but the Bank rejected its approaches. Barlow Lyde & Gilbert partner Claire Canning said: “It was always the case that the Bank could not settle and would never settle.”
Bank of England Governor Mervyn King said yesterday: “The foolish determination to pursue a hopeless case for so long has also led to a huge waste of creditors’ and taxpayers’ money, and I hope everyone concerned will take a close look at how and why such a very weak case took 12 years to come to an end. The Bank will be seeking the largest possible compensation for its costs.”