Issue in Corporate Failure of Bank Essay

It also raised millions of revenue enhancement by accounting techniques to show false profits and hided their losses which happen in affair and bad debt. The biggest rim role player in memorial According to Manhattan District Attorney Robert M. Morgenthau, the BCCI scandal that came to light in 1991 was the largest bank fraud in world history. Perhaps no other woeful enterprise has relate or at least embarrassed so many prominent people, from billionaire Arab sheikhs to Third World dictators to present and former lead-in figures in the U. S. and British governments.Certainly none could match the international blade of financial chicanery, political intrigue, and unsavoury figures with which BCCI was said to be associated. (Source Encyclopaedia Encarta 2007) BCCI was employed in four major frauds. One was a cover-up of $633m of losses on treasury trading. The second was the illegal acquisition through nominees of some(prenominal) banks in the US, in which it spend $346m. The third was a complex usage of accounts to prop up its largest borrower, the gulf shipping group of Pakistan, to which it lent more(prenominal) than $725m, which was over the limit set by banking regulations.The fourth was fundamental fraud by which BCCI allegedly acquire secret control of 56% of its proclaim shares at a cost of over $500m. BCCI was a serpent take in its own tail. These sums add up to more than $2bn. simply this is a lower limit it omits the enormous cost to BCCI of financing its secret losses. The manipulation to cover up the fraud involved another $2bn, bringing the grand total to intumesce over $4bn. BCCI frauds were the main reasons for its corporate failure. The scale the fraud is breathtaking enough. unless while most frauds involve the disappearance of existing money, BCCI did the exact opposite.It make billions of dollars out of nothing to conceal gaping holes in its balance sheet, wish a giant game of Double Your Money. This involved fantastic financial gymnastics and illegal loans on a huge scale. When BCCI at last came crashing down, it was not with a thud, but in a shower of paper. (Behind unkindly Door FT Publication) BCCI initiated every single route to excel its growth. In a first place its corporate structure was so modify which involved uses of shell corporations frequently termed as satellites, bank confidentiality and secrecy.BCCIs contribute management including nominees which also includes some famous personalities in politics were involved in corruption and made it a supreme atmosphere for crime. BCCIs sorryities included, Fraud by BCCI and BCCI customers involving billions of dollars money laundering in Europe, Africa, Asia, and the Americas BCCIs grafting of officials in most of those locations, Support of terrorism, arms trafficking, and the sale of nuclear technologies circumspection of prostitution The commission and facilitation of income tax evasion, smuggling, and illegal immigration Illicit pur chases of banks and real estate. Source Walker, L. 2001) Abdul Basir, head of BCCI Pakistan operation, says We looked after clients in the most efficient, personalised manner. The baseball diamond market which is home to Lahores famous dancing girls, Prostitutes, who for centuries have provided enjoyment 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. BCCIs Zafar Iqbal, former chief executive, was in charge of managing prostitutes. Corporate Failure of BCCI in that respect were two main reasons of BCCIs corporate failure apart from their criminal activities. These were high risk loans and trading. A banks 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. B CCI was no exception. According to Price Waterhouse, the bank combine these two activities by trading huge amounts of clients money but in its own name, and without their knowledge.