(For immediate release)

Unpublished Bank of England report on the closure of BCCI made publicly available

An unpublished Bank of England report code named "The Sandstorm Report" has been made publicly available on the internet site ( of the Association for Accountancy & Business Affairs (AABA).

The report was the final event in the closure of BCCI, which took place on 5th  July 1991. The Sandstorm Report has been hushed up by successive UK governments even though it is publicly available in the USA under its 'freedom of information' laws. There is no moral or ethical defence for the British government's failure to publish the report. Members of Parliaments are being asked to scrutinise regulatory legislation (for example, relating to the Financial Services Agency) without sight of the report.

The Sandstorm report contains considerable information about BCCI frauds, cover-ups and regulatory lapses by various authorities. It also raises fresh questions about the conduct of BCCI auditors, Price Waterhouse (now part of PricwaterhouseCoopers). It shows that Price Waterhouse performed conflicting tasks. For example:

It is clear that these conflicts compromised auditor independence. The Sandstorm Report shows that it was Price Waterhouse that advised BCCI management to move its Treasury operations from London to Abu Dhabi. A letter on the Price Waterhouse headed paper (see page 175 of the internet) states the following:

"A further feature arising from the review of Treasury operations in 1985 was the potential liability to the Corporation Tax arising from the Division's activities in the period 1982 to 1985. Following advice from ourselves and from the Tax Counsel during 1986 it was determined that this liability could be significantly reduced if the Bank ceased trading in the United Kingdom and claimed a terminal loss. As a consequence of this advice, the Treasury activities were moved from London to Abu Dhabi with effect from 31 October 1986. Price Waterhouse assisted with the transfer from London to Abu Dhabi and we are pleased to report that the transfer was conducted smoothly".

The Sandstorm Report shows (page 215) that BCCI's Treasury operations were causing considerable concern to the Luxembourg authorities. For any accountant to give advice on tax matters, they need to know the nature, duration, the past, present and future of the losses. What did Price Waterhouse know?

Lord Justice Bingham's report on BCCI (Inquiry into the Supervision of the Bank of Credit and Commerce International, London, HMSO, October 1992) noted, "in October 1986 when BCCI told the Bank [i.e. Bank of England] that the Central Treasury was to be relocated to Abu Dhabi in ten days' time. ……… the Bank was critical of BCCI's failure to inform it in advance, since the move had of course been planned for months. ……… an official of the Bank described the move as "unhelpful" " (page 46).

The US authorities examined the role of BCCI auditors and issued a damning report in December 1992. Despite claiming to be a 'global' firm, Price Waterhouse (UK) did not co-operate with the US authorities on the ground that

 The 26 Price Waterhouse firms practice, directly or through affiliated Price Waterhouse firms, in more than 90 countries throughout  the world.  Price Waterhouse firms are separate and independent legal entities whose activities are subject to the laws and professional obligations of the country in which they practice ...

 No partner of PW-US is a partner of the Price Waterhouse firm in the United Kingdom; each firm elects its own senior partners; neither firm controls the other; each firm separately determines to hire and terminate its own professional and administrative staff.... each firm has its own clients; the firms do not share in each other’s revenues or assets; and each separately maintains possession, custody and control over its own books and records, including work papers.  The same independent and autonomous relationship exists between PW-US and the Price Waterhouse firms with practices in Luxembourg and Grand Cayman  (Page 257 of the 1992 US Senate's Report).

The UK governments have done nothing to secure Price Waterhouse co-operation.. Furthermore, they have hushed up the Sandstorm Report. There has been no independent UK investigation of the conduct of BCCI auditors. Currently, the Joint Disciplinary Scheme (JDS) is examining the conduct of BCCI auditors. However, JDS has no independence from the professional accountancy bodies or the auditing industry. There are no open hearings and the evidence collected, if any, is not available for public scrutiny.

A whitewash is expected.