The main creditors of Bank of Credit & Commerce International (BCCI) have agreed to accept $1,800 million in compensation from Abu Dhabi. This opens the way for the first compensation pay-out to be made more than three years after BCCI collapsed.

Creditor committees in the three centres where BCCI was registered – Luxembourg, the Cayman Islands and the UK – have accepted the package, which must now return to the courts in all three countries. UK courts should hear the case in early November, the Cayman Islands mid-month and Luxembourg at the end of November.

This means Abu Dhabi could start making payments by early December. Any appeals in the three courts would delay this, as was the case when a previous settlement was blocked in the Luxembourg court. ‘Past experience shows that although this may seem like the end of the road it’s not necessarily the case,’ says one source in London.

Once all three courts have given their approval, Abu Dhabi will pay $1,550 million. The remaining $250 million will be paid into an escrow account over three years.

Abu Dhabi could be repaid up to $450 million if the liquidator, the UK’s Touche Ross, is successful in making certain specified recoveries.

A number of other legal proceedings are under way or could be launched over the BCCI affair. Touche Ross is suing the Bank of England (central bank) for its alleged negligence over not closing BCCI sooner. Touche Ross has also issued writs against the auditors Price Waterhouse (MEED 15:4:94). Abu Dhabi could also sue Price Waterhouse, sources say.

Former BCCI chief executive Swaleh Naqvi has been sentenced to 11 years and three months in prison in the US after pleading guilty to three charges of criminal fraud and deception in a plea-bargain. He was ordered to pay $255.4 million restitution. Federal prosecutors can move to reduce the sentence over the next year if Naqvi helps them with their further investigations.

On 21 October, Naqvi pleaded not guilty in a New York court to associated charges.