LIQUIDATORS to the Bank of Credit and Commerce International (BCCI) are squaring up for their biggest confrontation so far — going head-to-head in court with the Bank of England.

The action against the Bank is set to open at the High Court in January 2004. Success could net another $1.2 billion (£742 million) for BCCI creditors on top of the $5.7 billion raised so far, giving them close to 90 per cent of their money back.

The action centres on the Bank’s licensing of BCCI. The trial was due to open in October this year, but the Bank asked for a postponement.

The Bank is separately fighting an order compelling it to hand over thousands of documents generated at the time of the Bingham inquiry into BCCI a decade ago. The Court of Appeal has ruled in the liquidators’ favour, but the Bank is appealing to the House of Lords.

A trial could prove tremendously embarrassing. The court is expected to hear evidence from John Major, the former Prime Minister, and past Chancellors including Lord Lawson of Blaby and Lord Lamont of Lerwick.

There could be an unwelcome cameo by Britain’s security services, which, some believe, used BCCI to pay sources and operatives around the world. Jack Straw, the Foreign Secretary, last year used public interest immunity orders to block publication of “sensitive passages” from an appendix to the Bingham report.

There is also a case outstanding against Bank of America (BoA), which at one point held a 30 per cent stake in BCCI and was heavily represented on BCCI’s board. The allegation is that BoA, once it knew something was wrong, sold its shares in BCCI, realising a profit of $50 million. With interest over the years, that figure has swelled to $250 million — the amount sought by the liquidators. The BoA action is due to come to trial in London in June 2004.

Other actions are pending against Security Pacific Bank, State Bank of India and Bank of India.

BCCI’s liquidators are continuing with an action against Abdul Raouf Khalil, a former official in the Saudi Government. Now in his seventies, he is accused of siphoning more than $250 million from Capcom, a defunct brokerage owned with Ziauddin Akbar, former head of BCCI’s treasury operation.

Mr Khalil claimed that most of his money was tied up in “the world’s biggest gold museum” in Jedda. It was stocked with items of solid gold ranging, in the words of one past visitor, from the “beautiful” to the “absolutely horrific”.

The museum burnt down last summer and the gold appears to have melted into the desert sands. Mr Khalil has put in an insurance claim of “several hundred million dollars” and the BCCI liquidators are intent on winning a slice of the proceeds.

How the chips stack up

1972: BCCI founded by Agha Hasan Abedi

July 1991: BCCI shut down in global swoop by banking regulators

1992: Bingham report criticises Bank of England (BoE) for supervisory failures

1993-1997: Serious Fraud Office wins convictions in five BCCI cases

2001: House of Lords gives creditors leave to sue Bank of England (BoE)

2002: Saudi “museum of gold” destroyed in mysterious fire

2003: Worldwide liquidators’ and legal fees reach $1.2 billion

2004: Case set to open against BoE