Nexus - 0302 - New Times Magazine-pages

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GangBanking BARINGS COVER-UP THE A ‘lone trader’ has been blamed and imprisoned for the 1995 Barings Bank breakdown, but an international banking cabal has gone to extraordinary lengths to keep the real story suppressed. Part 1 oney never evaporates. All too often it may appear to ‘disappear’ or become lost in some lira limbo land, but in reality it is merely recycled into other hands. This is the governing rule to bear in mind when studying boom and bust cycles, stock market 'manipulations', bank collapses and all the other common or garden variety of financial ills that manifest themselves in this cash-rich soci- ety of ours. The Barings debacle is such an event. The collapse of Barings bank on a cold February morning sent shudders of outrage through the financial fraternity of the City of London. It was not that Barings was a large bank, nor even that it was the oldest merchant bank in the land, that aroused these emo- tions. It was that the Chancellor of the Exchequer, Kenneth Clarke, did not consent to res- cue the bank with government (taxpayers') money. The press brayed with mighty indignation at this unbelievable betrayal of established Tory principle, observing that the Bank of England's historic role as ‘lender of last resort’ now lay in tatters. The government's message was clear. Henceforward, only the largest banks could expect to be bailed out in the event that they gamble with their depositors’ money and lose. The smaller houses had better rethink their strategy and deeply reconsid- er their political donations policy to an ailing Conservative Party Central Office. Five months later, the media were back on the attack once again. On this occasion the same columnists, feature writers and editors gave vent to their fury following the publica- tion of the Bank of England's report on the investigation into the events leading to the col- lapse of Barings. The directors and management of Barings were condemned for their slack management and poor oversight that resulted in cumulative losses amounting to £927 million. Despite all the column inches and air time devoted to the debacle, not one report has attempted to expose the enormity of what took place. From the very first day that the collapse of Barings hit the headlines, the legend of Nick _ Leeson, the ‘lone trader’, was trotted out to an unsuspecting public. At the same time, offi- cials at the Bank of England went to great lengths to avoid asking difficult questions—a fact that becomes obvious following close scrutiny of their report. Likewise, these man- darins of money do not appear particularly fazed by the incredible lack of cooperation on the part of all of the involved parties. The latter, apparently, felt it necessary to withhold, suppress, destroy, corrupt or otherwise lose vital documents and other records that no doubt would have been of the greatest embarrassment to the Bank of England's inquiry team had they been unfortunate enough to come across them. In the event, they did not. Thus the real extent of criminality on the part of Barings’ directors, and possibly others, cannot be catalogued, This most recent of bank collapses gives us the opportunity to review the mechanisms by which a major financial scandal is nipped in the bud. It also demonstrates the remark- able supinity of the media who have not reported the multiplicity of shortcomings in the inquiry. Also apparent is the behind-the-scenes cooperation of all the major players who rally around in a desperate attempt to keep the public cocooned in the bewildering haze of a pre-solved whodunnit. Leeson, who is desperate to return to England to face his punishment, rather than be interned in some dingy Singaporean gaol for 1S-odd years, is keeping fairly quiet.' He and his solicitor, Stephen Pollard of Kingsley Napley, are apparently confident that they can negotiate something in exchange for Leeson's avowed desire to return to Britain to face a ‘satisfactory’ sentence. It is speculation (something Leeson and Barings know a great deal about) to suggest that the exchangeable ‘something’ may be Leeson's promise to take the whole rap. Whatever the undertow, the ‘lone trader’ legend remains ridiculous. © 1995/96 by David G. Guyatt 5 Mucking Hall Cottages Mucking Hall Road Barling Magna, Essex SS3 ONJ England, UK Phone/Fax +44 (0)1702 21 7523 5 Mucking Hall Cottages Mucking Hall Road Barling Magna, Essex SS3 ONJ England, UK Phone/Fax +44 (0)1702 21 7523 NEXUS ¢ 31 FEBRUARY-MARCH 1996