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Bank Runs, Hunger Strikes in Nervous British Colony

August 9, 1991

HONG KONG (AP) _ Anxious depositors converged Friday on one of Hong Kong’s major banks to withdraw cash in a run illustrating the jittery climate created by the Bank of Credit and Commerce International scandal.

More than 400 people seeking to withdraw their money mobbed the Standard Chartered Bank’s main downtown office.

Most branches extended hours until 9 p.m. to serve the extra customers.

The British-owned bank has operated in Hong Kong for more than a century and is one of the British colony’s most important financial institutions. It issues the colony’s paper money, along with the Hong Kong and Shanghai Banking Corp.

Hong Kong financial circles have been reeling from the closure of most of BCCI’s worldwide operations on charges of money laundering and links to drug barons and terrorists.

The government on July 8 closed the local BBCI branch, the Bank of Credit and Commerce Hong Kong Ltd., but has refused to investigate allegations of money laundering and other illegal activities.

Another run occurred this week at Citibank, when hundreds of depositors withdrew their funds following unverified reports it was facing financial problems in the United States. The run subsided Friday after bank officials denied the reports.

Rumors that Standard Chartered’s license in London was in trouble sparked Friday’s run, according to the bank’s public relations director, Grace Yu. She denied the rumors.

Hong Kong’s secretary for monetary affairs, David Nendick, blamed the BCCI scandal for the runs and said they were the result of ″an orchestrated campaign by people determined to destabilize banks in Hong Kong.″

He said an organization of Hong Kong’s BCCI branch depositors, who have strongly criticized the government, ″may be behind the problem.″

A spokesman for that organization, Danny Tang, said Nendick’s accusation was ″irrelevant, ruthless and senseless.″

″What is happening is that people are starting not to trust the government,″ Tang said.

Five depositors in BCCI’s Hong Kong subsidiary entered the second day of a hunger strike to demand the government investigate into the Hong Kong branch.

The hunger strikers have collected 5,000 signatures protesting the closure of the BCCI branch, which held about $1.4 billion.

In other BCCI developments:

-A bankruptcy judge in New York on Friday extended until November an order barring new lawsuits against the bank and freezing its U.S. assets. The decision by U.S. Bankruptcy Judge James Garrity came over objections from state and federal regulators who said the freeze could interfere with their investigations of BCCI.

-An alleged coffee smuggler linked to BCCI was indicted on tax evasion charges, the U.S. attorney announced in Miami. The indictment accused Munther Bilbeisi, whose brother runs BCCI’s branch in Jordan, and business associate Kenneth Grushoff of hiding smuggling income in 1984-87.

-A senior government official said in Islamabad, Pakistan, it would be politically ″suicidal″ to send BCCI’s ailing founder to New York to face fraud and embezzlement charges. Pakistan has received no request from Washington to extradite the wheelchair-bound Agha Hasan Abedi.

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