This Day in History | 1991 Bank collapse costs taxpayers millions

The closure of the Bank of Credit and Commerce International has lost about 20 local councils up to £30m in investments.
BCCI was forced to shut its doors by the Bank of England last week amid fraud allegations.
Councillors from Scotland to the south-west of England fear that poll taxes will have to be raised to offset the losses.
BCCI remained on the most recent list of investment banks approved by the Bank of England and circulated by the Department of the Environment just over a fortnight ago.
Council losses range from £6.5m in Bury to £0.6m in Bristol.
In the borough of Bury, Greater Manchester, the sum accounts for all surplus money that the council has saved for investment over several years.
The leader of Bury Council Colin Jones said: “We don’t know where we stand.”
He continued that the authority would be “absolutely crippled” if they had to make up the deficit themselves.
None of the BCCI’s former customers are aware of how much, if any, compensation will be paid to them, but current insurance schemes set a limit of £15,000.
In spite of criticism from both sides of the Commons, the Treasury has already confirmed that the councils will be treated in the same way as other unsecured creditors.
Councillors estimate that it could cost tax payers an extra £50 a year in poll tax to recoup the money.
The Association of District Councils is writing to all of its 300-plus members to confirm the full extent of the losses.
A wide variety of local authorities have already confirmed that they are affected, including 11 English district councils, three metropolitan districts and two Scottish districts.
Some, like York, have invested with BCCI for several years, but others, like Allderdale had only placed funds there in the last week.

Courtesy BBC News

In context

In the end 35 councils lost nearly £90m. Western Isles Council suffered the greatest loss of £23m which led to the resignation of the council leader, Donald Macauley.
Councils blamed the government and Bank of England for continuing to recommend BCCI, as evidence of its fraudulent activities mounted. A public inquiry was launched.
The Commons Treasury and Civil Service committee’s investigation heard evidence from all sides and criticised councils for being careless with their funds.
In March 2001 BCCI liquidators, Deloitte and Touche, were finally granted the right to sue the Bank of England over its failure to properly regulate BCCI.
The lawsuit began in January 2004 and was the first the Bank had faced in its 300-year history.
Deloitte dropped the case in November 2005 after a reserve judgement from the High Court said the case was no longer in the best interest of creditors.