BCCI (Hansard, 18 November 1992)

§ 16. Mr. Vaz
To ask the Secretary of State for Scotland if he will make a statement on what assistance he will give to local authorities that have lost money in the Bank of Credit and Commerce International.

§ Mr. Stewart
Two of the four Scottish authorities that had money deposited in BCCI applied for and were granted borrowing consent to enable them to cope with their losses.

§ Mr. Vaz
The Minister is no doubt aware that since those arrangements were entered into, the Bingham report has been published which severely criticises the role of the Bank of England. Those criticisms have been accepted by the Government and the Bank of England. Since the publication, the Bank has now decided to issue a health warning with its list of authorised institutions. Bearing in mind the fact that Scottish local authorities relied on that list and that there has been severe criticism, does the Minister agree that there is a compelling and overwhelming case for compensation to be paid to those local authorities? Is it not outrageous that Scottish poll tax payers and future council taxpayers have to pay for the mistakes of the Bank of England?

§ Mr. Stewart
I do not accept the hon. Gentleman's analysis. Only two Scottish authorities requested any assistance. My right hon. Friend the Secretary of State granted Western Isles islands council consent to borrow £24 million and Ross and Cromarty district council 291 consent to borrow £1.8 million to help those councils to cope with their losses. On the hon. Gentleman's other point, although the Bingham report makes a number of criticisms of the Bank of England in its supervision of the Bank of Credit and Commerce International, it makes it clear that prime responsibility for the losses rests with those who devised, directed and implemented the fraud.

§ Mr. Macdonald
But compensation was not within the remit of the Bingham inquiry, which leaves the Government as judge and jury of their own case. Does the Minister acknowledge that an independent verdict on compensation for local authorities and all depositors can come only from the Treasury and Civil Service Select Committee? Should the Select Committee come up with a 292 new report including a verdict on compensation, will the Government undertake to respect the findings of that report?

§ Mr. Stewart
Of course the Government will consider most seriously the recommendations of the Treasury and Civil Service Select Committee, as they consider seriously the recommendations of all Select Committees. I must repeat to the hon. Gentleman that, following representations from himself and from the Western Isles islands council, my right hon. Friend granted that council consent to borrow £24 million. As the hon. Gentleman knows, we have been sympathetic to the economic case that has been put forward by the Western Isles islands council in relation to the other aspects of the general programmes.