Bank of Credit and
Commerce International Scandal (BCCI). UK Government Forced to Publish
the Sandstorm Report (posted
9 September 2011)
a five-year legal battle the UK government has finally released most of
the Sandstorm Report on 7 September 2011. According to the Bank of
England this report was the basis for the closure of BCCI in July
1991. The report was prepared by Price Waterhouse (BCCI
auditors) for the Bank of England though it was never finalized. BCCI
was the biggest banking fraud of the twentieth century. Some 1.4
million depositors lost $11bn.
Unlike many other large corporate frauds and banking scandals the UK
government did not appoint inspectors to prepare a report.
No parliamentary committee has ever been given sight of the Sandstorm
Report. UK legislators pass laws without knowledge of the facts or
opportunity to interrogate wrongdoers.
UK government was ordered to release the information to Prem Sikka
by the unanimous decision of three judges ( click
here for court judgment) .
is the first time that the UK government has been forced to release
hitherto secret information about a banking collapse. It is the first
time that it has been forced to name wrongdoers and those implicated in
the scandal. the government could not hide
behind the Data Protection Act and claim that it has to protect the
identity of the culprits
Prem Sikka had first requested the information in March 2006 and after
refusal by the UK Treasury and the Information Commissioner he pursued
the matter through the courts. Throughout the case, he represented
himself, incurred his own costs and did not have the benefit of any
legal advisers. The government used taxpayers' resources in a
futile attempt to conceal identity of many people, including convicted
Ever since 1991, most of the Sandstorm Report has been publicly
available in the US though it has been considered to be a state secret
in the UK. This censored version was obtained by AABA and made
publicly available in UK in 1999 (click here).
the digitization of the US Congress Library archives the same is now
available worldwide (click
here). The missing information is shown either as a blank or a dark
Sikka's request was for the missing information. It primarily concealed
the names of the wrongdoers and those implicated in the scandal.
The background to the issues and the
public interest arguments for publication of the missing information
are contained in an affidavit filed with the court by Prem Sikka and is
here. The document shows that the UK government has erected a wall
of secrecy around the BCCI frauds.
To see the information that was concealed you need to compare the censored version
with that ordered by the court. We have already done this and
have highlighted the differences in the flies listed below. These are
shown in a red box. This has
made the files large. To make the download manageable we have divided
the files into two parts. To download it you will need Acrobat 10 or
similar. Both files are large so please allow some time for download.
Depending on the speed of your computer and internet connection it
might take 10-15 minutes.
Report Redacted Part 1 (5MB)
Report Redacted Part 2 (12 MB)
SCHEDULE 2 SECTION 40 ENTRIES IN SANDSTORM REPORT TO BE DISCLOSED.
This disclosure was ordered by the court and it provides background to
some of the individuals named in the Sandstorm Report (see below).
Please note that this document was prepared by the UK Treasury
note that the report is written in code. "Sandstorm" is the code for
BCCI. There are also other entities identified by code - for example
"Fork" and "Tumbleweed" - but their identity is concealed. "Fork"
is/was an overseas bank and directly implicated in the BCCI
In opposing the release of the missing parts of the Sandstorm Report
that its release would somehow "prejudice UK's
with one or more other states". In other words relationship with
corrupt rulers had to take precedence over the people's right to know
and call governments to account. The government's arguments were
Three judges criticised the UK government and said:
"We were surprised to see that the
Treasury sought to extend the protection of the data protection
principles to information about some individuals who exercised ultimate
control over the whole of BCCI’s operations and were the architects of
a group-wide programme of fraud and concealment, not to mention the
creation of a culture that led others with positions of responsibility
within the bank to follow their lead"
(paragraph 42 of the judgement ).
Paragraph 47 of the judgement
individuals named in the Sandstorm Report were not ordinary customers,
but had become involved in the many complex and frequently incestuous
transactions that enabled the BCCI management and a number of
organisations and individuals close to it to commit or conceal fraud.
Those frauds led to severe financial hardship for many of the
“ordinary” customers and we have explained in Confidential
Schedule 2, by reference to each individual, why we consider that
there is a legitimate interest in disclosing their involvement and that
this will not cause unfairness or unwarranted intrusion into their
UK government has clearly been engaged in a massive cover-up.
and used taxpayers' monies to fight the case and continue with its
cover-up. Just look at the names of the individuals and organizations -
these include well known domestic and foreign banks from home and
abroad, rulers from Middle-East, business advisers and sundry. Some of
the people have already been convicted of criminal activity but even 20
years later the UK government was protecting their
identity. Even worse, the UK government has been protecting
individuals who died long ago. For example, BCCI founder Agha Hasan
Abedi died in 1995 but his name was being concealed. Some
individuals have a colourful past and possible links with leading
US politicians and Islamist fundamentalists. Sheikh Khalid bin
Mahfouz, a billionaire Saudi banker paid $225 million to settle charges
of bank fraud in 1993 and died
in August 2009, but his name was still being shielded by the UK
the names concealed by the UK government include:
Khalifa, son of Sheikh
bin Sultan al Nahayan, the ruler of
Sultan bin Zayed
Mohammed bin Zayed
Hamad bin Mohammed al-Sharqi, the Emir of Fujaira
Pharoan, prominent Saudi businessman and financier
time, the No. 2 Saudi investor in the United States
Khalid bin Mahfouz, Saudi businessman and financier and head
largest commercial bank in Saudi Arabia
Fulaij, former institution-affiliated party of Credit and
Commerce American Holdings, N.V., formerly the parent bank holding
company over the First American banking organization.
Ruling family of Abu Dhabi gets a few mentions
Crown Prince of Abu Dhabi is mentioned
Hasan Abedi. BCCI founder
Kamal Adham, Director of both BCCI. and First American (also
head of Saudi Arabian intelligence)
Akbar, BCCI Grand Cayman, helped Swaleh Naqvi
Akbar, BCCI Treasury official,
Azmatullah, BCCI accounts officer for major customer accounts,
helped Swaleh Naqvi
Iqbal, BCCI chief executive, Head of Treasury and General Manager
of Grand Cayman to 1986.
Imam, accounts officer for an entiry identified as WXYZ
and Dr. Pharaon.
Kazmi, BCCI officer
Raouf Khalil, a shareholder in both BCCI. and First American
Naqvi, BCCI executive and deputy to Abedi
Naqvi, accounts officer for an entiry identified as Tumbleweed,
helped Swaleh Naqvi
Habib-Ullah, helped Swaleh Naqvi
Khan, Accounts officer for Adham and Jawhary, left the bank before
1991, received $0.3 million; helped Swaleh Naqvi
Rizvi, BCCI executive responsible for relationship with the Virano
Group - left BCCI in 1990, helped Swaleh Naqvi
Sheikh, accounts officer of Gulf Group util 1988; paid $1.7 mllion
Abbas, General Manager of Baharian until 1990 helped Swaleh Naqvi
Tahir, General Manager BCC Emirates
Raza, Joint Executive for Asia/Middle East, formerley General
Manager for NBO
Chaudhary, General Manager Europe
Chowdry, General Manager, UK Region
Haque, Executive for UK Region
Doha, Manager IBU UK Region (later with Al Rahi in London)
Jamil, General Manager Hong Kong
Siddiki, Central Executive
Motta, Legal Department, UK Region
Dhabi Investment Authority (ADIA)
Al-Rahji Bankng and Investment Corporation
Altman, US lawyer, acquitted of UAA charges but settled a civil
with US Feds
Arab Livestock Company ALSCO)
brokers used by BCCI Treasury
Limited, a subsiairy of Capcom,
a company subsequenlty controlled by Z
Commodity Dealers (Capcom)
Clifford, US lawyer and Presidential adviser
Dubai Islamic Bank
Investment Real Estate Co.
ATB (a UK bank)
Bank of Georgia
Commercial Bank of Saudi arabia (NCB)
Bank of Scotland, Singapore
Arabian Fertiliser Company (SAFCO)
National Commercial Bank (SNCB)
Bank of India (SBI)
Offshore, or Secrecy Jurisdictions Links
words "Grand Cayman" were purged throughout the document (for example,
see para 1.25, 4.3, 7.13). The name of a Turks and Caicos company
(para 7.17), North American Finance and Investment, was also withheld.
The name of Arab Livestock Company (ALSCO) and its location in Bahrain
(for example, see para 7.24) and Saudi National Commerce Bank operating
from Bahrain (para 6.27, 8.7, 8.12) was also withheld. The word
"Bahrain" was withheld in para 1.25. The name of Royal Bank of
Scotland, Singapore (para 3.5) was withheld.
UK government did not withdraw ambassadors. The UK government did
not seek extradition of the culprits, shut down foreign embassies,
demand trade sanctions or regime change. It just covered up the names
of wrongdoers and kept parliament and the people in the dark. How can
anyone trust the Bank of England or the Treasury to tell the truth
about the current banking crash?
release of the information has considerable relevance to the
current banking crisis. The UK government can now be forced to publish
reports. They can be forced to publish the names of the wrongdoers.
UK government secrecy meant that many financial institutions were
unable to make appropriate assessments of risk. Under the UK (and many
other countries) law, financial institutions are required to apply the
"Know Your Customer" (or KYC) tests. Since the UK government shielded
the names of many wrongdoers it did not enable the institutions to
assess the risks. It would be recalled that BCCI indulged in money
laundering. Many of the parties associated with BCCI are still active
business world today.
Sandstorm Report prepared by BCCI auditors Price Waterhouse documents a
catalogue of fraud which had been taking place over a long period of
time. Yet auditors continued to give a clean bill of health to BCCI.
All audit reports were unqualified.
had all the
associated with contemporary corporate governance: audit committees,
non-executive directors, mission statements, internal auditors,
auditors, vision statements and corporate social responsibility
no one spoke up. There was no independent investigation into the
BCCI. The investigation and lessons may have generated a debate about
banking regulation and governance, but that was not to be. We only
how the current banking crisis might have been checked if the UK
not so keen on cover-up.