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Court Rejects Depositors’ Suit

April 8, 1995

SAN FRANCISCO (AP) _ A federal appeals court on Friday dismissed a lawsuit by depositors seeking damages in connection with the $10 billion collapse of the scandal-plagued Bank of Credit and Commerce International.

The class-action suit had claimed racketeering and violations of international law by bank officials and others allegedly responsible for BCCI’s downfall. The bank itself was not sued.

The defendants included the bank’s chairman, former Defense Secretary Clark Clifford; its president, attorney Robert Altman; numerous domestic and foreign financial institutions, the nation of Abu Dhabi, and former Panamanian leader Manuel Noriega, who kept a BCCI account for his government intelligence branch.

The lawsuit accused the defendants of bribing officials, financing terrorism and drug dealing, illegally acquiring U.S. banks, stealing bank funds, arranging loans to insiders and delaying BCCI’s shutdown by misrepresenting its condition.

But the 9th U.S. Circuit Court of Appeals said the depositors had no right to sue for the bank’s losses. Upholding a Los Angeles federal judge’s dismissal of the case, the court said only a bank, and not its depositors, can sue over actions by bank officers that hurt all depositors.

``Suppose the `BCCI pirates’ looted the bank,″ Judge Andrew Kleinfeld wrote in the 3-0 ruling, quoting a phrase used in the lawsuit. ``Can a depositor in a bank sue a bank robber?″

BCCI was seized by regulators in July 1991 after auditors’ reports disclosed huge losses from illegal loans to corporate insiders and speculative trading. Some 250,000 people have yet to get their money back.

Clifford and Altman quit after a disclosure that BCCI had secretly gained control of First American Bankshares, once the largest bank in Washington, D.C. Altman was acquitted of criminal charges, and Clifford was not tried because of his age and ill health. The bank’s onetime second-ranking official, Swaleh Nahvi, is serving an 11-year sentence for fraud.

Attorneys for the plaintiffs were not immediately available for comment.

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