Issue in Corporate Failure of Bank of Credit and Commerce...

Issue in Corporate Failure of Bank of Credit and Commerce International (BCCI) Introduction and background: Bank of Credit and Commerce International known as BCCI was founded by Pakistani financer Mr. Agha Hasan Abedi in 1972. It’s headquarter was located in London and was incorporated in Luxembourg. BCCI was ranked 7th largest private bank with total assets which amounts to $20.6 billion. By the end of 1988, BCCI’s network included 417 offices in 73 countries. The annual report noted that the bank now served 1.3 million customers through 14,000 staff members of 90 nationalities. (Peter et al. 1992) BCCI was initially funded by rich Arab businessmen who wanted high return on their investment without taking big risks. They haven’t got†¦show more content†¦(Source: Walker, L. 2001) Abdul Basir, head of BCCI Pakistan operation, says: â€Å"We looked after clients in the most efficient, personalised manner.† The diamond market which is home to Lahore’s famous dancing girls, Prostitutes, who for centuries have provided entertainment for emperors and their courtiers – and latterly for politicians, Arab Sheikhs and bankers. BCCI used these girls to treat Arabs rich businessmen and major shareholders. BCCI’s Zafar Iqbal, former chief executive, was in charge of managing prostitutes. Corporate Failure of BCCI There were two main reasons of BCCI’s corporate failure apart from their criminal activities. These were high risk loans and trading. A bank’s treasury plays a key role in managing its financial affairs by trading large amounts of money and currencies. Some if this dealing is done on behalf of clients. But bank treasuries also speculate on whether currencies will rise or fall, using their own money. BCCI was no exception. According to Price Waterhouse, the bank combined these two activities by trading huge amounts of clients’ money – but in its own name, and without their knowledge. The bank setup a central treasury in 1982 to bring together and put to work the pools of cash that lay around 73 countries network, holding $10bn of assets. It has to keep a large stock of liquid money because of its homeless status. There money market was unsuccessful due to over trading and enormous trading losses which its officialShow MoreRelatedBcci Case Study for Auditing5660 Words   |  23 Pagesthe branch offices of the Bank of Credit and Commerce (BCCI) has been seized by regulators in seven countries. The closure of the bank is mainly due to massive fraud and corruption that happened at the heart of the bank. BCCI also involved in other illegal activities such as money laundering, dubious lending, fraudulent record-keeping and support in terrorism. The BCCI was a supranational bank founded in London in 1972 by a Pakistani financier, Agha Hasan Abedi. Overall, BCCI was expanded from 19 branchesRead MoreThe Theory Of Accounting Fraud3500 Words   |  14 Pagescase of the B ank of Credit and Commerce International (BCCI). BCCI was founded in 1972 by Agha Hasan Abedi (Trento, 2005). Within a decade BCCI had over 400 branches in over 70 countries and claimed assets of $25 billion (Wearing, 2005). In 1989, a senior employee at BCCI alerted PriceWaterhouse (BCCI’s auditors) to the possibility of fraud within the company (Jones 2011). After investigation BCCI’s balance sheet was found to contain a number of either fictitious or irrecoverable loans. 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