BCCI Case Sparks Bank Run in Hong Kong : * Scandal: Depositors at Standard Chartered pull out their savings after a rumor spreads that its London license is at risk.

The global scandal over the operations of the Bank of Credit & Commerce International has roiled this colony--one of the world’s key financial centers--all week, culminating Friday in a run on one of Hong Kong’s major banks.

The main downtown office of Standard Chartered Bank was besieged by more than 400 people seeking to withdraw their money. For three days, Citibank’s Hong Kong branches had suffered heavy withdrawals from retail customers.

The run on Standard Chartered was sparked by false rumors the bank’s license in London was in trouble, according to the bank’s public relations director, Grace Yu.

But 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 local depositors at Hong Kong’s BCCI branch--Bank of Credit & Commerce Hong Kong Ltd.--who have strongly criticized the government “may be behind the problem.”

A spokesman for that organization, Danny Tang, told the Associated Press that Nendick’s accusation was “irrelevant, ruthless and senseless.”

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

Earlier in the week, the government was the target of demonstrations by BCCHK customers who were angry at authorities for closing the branch.

Depositors here--at least the organized protesters--believe that BCCHK, a subsidiary of Luxembourg-based Bank of Credit & Commerce Holdings, was properly managed and sufficiently isolated from the troubles of its parent and its BCCI sister firm, so that it should not have been closed.

“We want our money back! We want our money back!” demonstrators chanted earlier this week outside one of BCCHK’s offices. The crowd, some wearing red headbands proclaiming, “Return my blood and sweat!” burned and beat an effigy of Hong Kong Financial Secretary Piers Jacobs.

When regulators in Europe moved last month to shut the group’s key bank, Luxembourg-based Bank of Credit & Commerce International, the Hong Kong government allowed BCCHK to remain open, saying that it appeared solvent and that there was no evidence that the local bank had engaged in fraud.

Then, after one more day of business, Hong Kong regulators ordered BCCHK to close, on the grounds that, despite its separate legal and financial status, it might not be able to withstand the impact of the worldwide controversy engulfing the group as a whole.

Authorities in this British colony are combing the bank’s books to confirm its assets and liabilities. The results may help determine whether the bank can be sold or whether it must be liquidated with greater losses to depositors.

A host of fraud allegations have been leveled against BCCI; some in Hong Kong have charged that financial figures released by BCCHK leave too many unanswered questions. But no one has yet made specific charges that BCCHK was guilty of fraud or other criminal activities.

“They’re looking at the books of the bank in order to try to establish the financial position,” Hong Kong Banking Commissioner David Carse said in an interview. “If they come across fraud, then they will obviously let me and others know. But at the moment, they’re not going in specifically to do that.” Carse said he did not know of any evidence of fraud by BCCHK.

Depositors in Hong Kong, like many in South Asia and Africa, tend to view the worldwide BCCI controversy primarily as a politically motivated attack by Europeans and Americans on one of the Third World’s most important banks. BCC Holdings, and therefore each of its subsidiaries, is 77% owned by the Abu Dhabi government. When BCCHK was closed on July 8, it was a highly visible bank in Hong Kong, with 26 branches and about 40,000 depositors who had entrusted it with $1.4 billion.

The bank was known for paying good interest rates on long-term deposits. While many of its depositors were Hong Kong Chinese, it also had a reputation for friendliness toward Third World depositors and borrowers. Banks and other institutions controlled by the Chinese government were also major depositors, the Hong Kong press has reported.

BCCHK had “and certainly still has the nucleus of a good trade financing bank,” said Hong Kong Registrar General Noel Gleeson, who is in charge of steps to liquidate or sell the bank. “They have a lot of Indian and Pakistani clients, Middle Eastern clients, Indonesians--a lot of Third World clients. And a lot of these people do business around the world through this bank.”

Bank supporters note that government regulators around the globe--including the Hong Kong Banking Commission--had talked with BCC group officials since last year about plans to restructure its worldwide operations into three independent banks, incorporated in the United Kingdom, Abu Dhabi and Hong Kong.

“The banking commission has been keeping a close watch on this bank (BCCHK) for almost a year now,” David Doo, a protest leader, said in an interview. “If there are any irregularities, they should have known long since.”

Protesters hope that their complaints will lead to a quick sale of the bank, with financial guarantees provided by the Hong Kong government, if necessary. But some observers believe that it may only be a matter of time before evidence emerges of improper activities by BCCHK. “Given the worldwide pattern here of what seems to be a conspiracy to defraud, I’d be surprised if BCCHK doesn’t play a role in it. The question is what role,” commented a Western diplomat.

Problems at BCCHK, some of which could interest investigators, have emerged. As one result of talks about BCC group restructuring, BCCHK was required to set aside $73 million in its 1990 accounts to cover bad and doubtful loans; BCCHK’s books for the year, as a result, showed a $55-million loss. Investigators will now take a closer look at the bad loans.

There have also been accusations that at least one BCCHK account, frozen at the request of the U.S. Drug Enforcement Administration, was used to launder drug money. Such activity in Hong Kong would not be surprising and does not by itself prove wrongdoing by the bank.