The Bank of England faces the start of a legal action for £850 million sterling in Britain's High Court today over its role in the world's biggest banking fraud.
Lawyers for the liquidator of Bank of Credit and Commerce International (BCCI) will set out the arguments supporting their charge that Britain's central bank knowingly did not protect depositors of BCCI, which collapsed in 1991 owing $10 billion.
The juryless trial is set to last a year.
Around 300,000 Bank of England documents dating back to the 1970s will be presented as evidence and opening submissions from the liquidators, accountancy firm Deloitte & Touche, are expected to last three months.
The Bank of England will call the men who ran the bank from 1973 to 1993 to challenge Deloitte's claim that officials at the bank's supervisory division kept information from them.
As the Bank of England is legally protected from negligence claims, the liquidator is pursuing the stronger claim of "misfeasance" - acting dishonestly or in bad faith.
The case, in which compensation is being sought for the failed bank's creditors, will reveal sensitive internal Bank of England correspondence about BCCI.
A source familiar with the matter told Reuters last week that the bank would not settle out of court as this would encourage future claimants to try to get round the statutory protection from negligence claims.
BCCI was closed in 1991 by regulators in a worldwide swoop, partly organised by the Bank of England, after it discovered the lender had disguised losses and was insolvent.
Founded in 1972 by Pakistani banker Mr Agha Hassan Abedi, BCCI grew from a small, Asian bank to an empire spanning 69 countries with $20 billion of assets.
The Bank of England gave BCCI a licence in 1980 and discussed the bank's status on and off until its collapse, documents cited in Deloitte's claim show.
A 1992 report criticised the Bank of England for not spotting BCCI's criminal behaviour earlier but blamed poor communication and procedures rather than deliberate negligence.