The BCI Legal Action Group (BLAG) was set up to try to recover the £75m losses of victims of Pruthi’s BCI ponzi fraud – the largest in UK history. Redress was sought from the FCA, City of London Police, SFO and the FOS all of whom failed to bring any compensation or take any action against HSBC who provided facilities for the fraud without which it could not have taken place. HSBC failed to comply with the statutory anti-money laundering legislation in not spotting and stopping the fraud at an early stage resulting in it running unabated for 3 years hitting over 650 victims.
The FOS, which is meant to be a backstop for complaints against the banks, has unbelievably proved itself as “not fit for purpose” by claiming that it doesn’t have jurisdiction to consider the case. This is very odd since HSBC is a bank domiciled in the UK and subject to UK laws which the FOS are meant to deal with breaches of. The Mayfair firm of solicitors Forsters brought a very detailed 200 page (along with 12 lever arch files of appendicies) complaint to the FOS on behalf of BLAG laying out the breaches that HSBC had committed. This was responded to with a one-page curt response from the adjudicator who clearly was told to find any tortuous reason possible to drop the case.
Amazing no investigation by the police was ever made into HSBC’s role in the UK’s biggest Ponzi fraud. The FCA claimed to have made a report on the matter, but this report has not been disclosed to BLAG despite numerous requests under the Freedom of Information Act citing “commercial confidentiality”. All the police and FCA managed to do was to track down and return a measly 1.7% of stolen assets spending more money in professional liquidator’s fees and VAT (£90k) than was actually returned to the victims. Of the £1.6m recovered from Pruthi by way of insurance, cars, art etc only £0.85m was returned the rest going in fees to the liquidator. Assets were not traced nor recovered especially some large sums paid to overseas “associates”. Pruthi was not made subject to an Proceeds of Crime Order which would have considerably enhanced the recovery quantum.
BLAG now only has one option available for it’s victims to make things right . That is to call HSBC to account for it’s criminal lawbreaking in the UK and seeking redress for the victims. This requires a private criminal action to be brought against HSBC. Contact has been made with no less than 5 barristers specialising in banking fraud and AML who have considered the evidence and are of the view that we have good prospects, however without funding we are unable to take this forward. If you are as shocked by this story as we are, and would like to support us or interested in helping to fund such a claim then please contact us via email to firstname.lastname@example.org.
In conclusion, this whole episode shows how ineffective the government bodies are at doing their jobs and protecting the public from such large scale frauds in the first place. Also how incapable they are of helping the victims to recover their losses once they are discovered in stark contrast to the USA where all the victims of the Madoff ponzi fraud have been fully compensated. This is yet another green light to not just the criminal gangs but anyone contemplating such major fraud and makes the UK a haven for such fraudsters seeking to steal large sums from the public at large.