An investigation is imminent into the role of accountants Price Waterhouse in auditing for four years the books of scandal-hit Bank of Credit and Commerce International, the Guardian has learned. Officials from accountancy's ruling bodies will try to discover how $13 billion could disappear from under the noses of one of the world's most prestigious accountancy firms.

BCCI, the biggest fraud in world history, rendered a bank supposedly worth $20 billion and operating in more than 60 countries around the world entirely worthless. Should Price be found guilty of serious professional shortcomings, named partners could be expelled from accountancy. The firm could face unlimited fines.

This is a second blow this year to what is now the merged operation of PricewaterhouseCoopers. Earlier this week it emerged that a verdict was about to be presented by the disciplinary tribunal judging claims that Coopers - formerly Coopers & Lybrand - had been seriously deficient in dealing with client Robert Maxwell.

The BCCI affair - as with the Maxwell case - will be probed by the Joint Disciplinary Scheme operated by the accountancy profession. Until now, the JDS has been barred by a court injunction from proceeding against Price Waterhouse because an inquiry could prejudice a planned lawsuit against Price by the liquidators of BCCI, Deloitte & Touche.

That case was settled in September 1998, with £117 million being paid to Deloittes by Price, along with Ernst & Young (which audited part of BCCI until 1987) and the former majority shareholder of BCCI, the Sheikh of Abu Dhabi. With the case closed, the path is clear for the JDS to begin its investigation. JDS chief Chris Dickson is expected to ask the court to lift the injunction some time this month.

Until 1987, BCCI employed two auditors, Price for its BCC (Overseas) arm and Ernst for BCCI. The former was based in the Cayman Islands, the latter in London and Luxembourg. In October 1985, the Bank of England and the Luxembourg authorities, alarmed at reports that BCCI had lost hundreds of millions of dollars in commodity and financial markets, ordered BCCI to appoint a single auditor for the whole group.

Ernst lost out and, in 1987, Price became sole auditor for the worldwide bank. In March 1990, a Price audit of BCCI pointed to an unaccountable loss of hundreds of millions of dollars, after which the sheikh topped up BCCI's account with his own funds.

In January 1991, Price was tipped off that BCCI was keeping secret files in Abu Dhabi, and in March the Bank of England asked Price to carry out a secret inquiry. The landslide had begun. On June 24 1991, Price reported to the Bank that BCCI was riddled with fraud. On July 5, the Bank shut BCCI.

Controversy has raged over Price's role. Critics have pointed to the way in which BCCI, founded in 1975, was almost certainly insolvent by 1977, a decade before Price became sole auditor, which ought to have been spotted. Price partner Ian Brindle said last year at the time of the settlement with Deloittes: "Price Waterhouse were part of the solution, not part of the problem; we discovered the fraud and reported it to the appropriate authorities."

In reaching their settlement with Deloittes, Price admitted no liability and accepted no blame for the existence of the fraud.

Once the inquiry is under way, Price personnel will be required to answer questions as to their conduct during the years they audited BCCI.

With acknowledgements to Dan Atkinson and the Guardian .