Nexus - 0302 - New Times Magazine-pages

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The brave band heaved a sad sigh and then brightened up asa © Warren Commission report: "That dog don't hunt." Nor, appar- sly thought struck them. There were other banks involved in the ently, do the proud heuristic boys of the Bank of England's inquiry fiasco; and they were, after all, the Bank of England. Therefore, it team. stood to reason that members of their own banking fraternity In the meantime, the sum of £830 million has apparently disap- would help them even if others outside the fraternity wouldn't. peared. In this context, the report says: "Almost all the figures, Flushed with excitement, they rushed to Citibank (Singapore), analysis and conclusions...are derived from the inquiry's analysis bankers to the doomed BFS. With details of funds transfers over _ of a photocopy of the 88888 account statement originally found by BFS's account, they would be able to piece together a real Tony Hawkes." This account was BFS's ‘dump’ or error account humdinger of a cash-flow analysis. It is an established fact thata | where mismatched trades were temporarily lodged. We are told cash-flow analysis cannot fail but provide a clear trail of where the — that Leeson hijacked the account and concealed all his naughty money went, how often, what sizes were involved, and so on. —_ and massive loss-making trades in it. Despite this deeply cunning Every bank inspector knows the golden rule regarding cash-flow and highly deceptive ploy, Leeson daily forwarded details of the analysis. It’s the oldest and most trustworthy tool in the book for _five-eights account to London for reconciliation. This practice unravelling anything, including embezzlement, criminal fraud, continued over the course of the two years he was trading in collusion and corruption (well, perhaps not the last two). Citibank Singapore. Meanwhile, London could not reconcile or fathom out declined to allow the team to inspect its records. the account and apparently disregarded it as unimportant. Being a thorough team, they decided to contact Banque On 23rd February 1995, all hell broke loose as Leeson and his Nationale de Paris (BNP) in Tokyo (BFS's [777777] :s«ife legged it to Kuala Lumpur. Oddly, it only external account), but BNP refused was that very same day that Tony Hawkes, them access to their records and staff. Group Treasurer, flew from Tokyo to be rd sory = arise had | The most salient points of +i and ~ rw = ee! 4 is telephone tapped (in line with the practice Boos: * ingaporean night he discovered, to his of most banks, BFS and Barings London rou- the entire inquiry are immense surprise, the mysterious and unim- tinely taped their dealers’ telephone calls), summed up in the portant five-eights account brimming with they rushed back to Barings and asked nicely . di spectacular losses. if they could have copies of the telephone Innecuous-soun ing Leeson, who was by now safely in Kuala eee riikas We amined ct (fae OO os cincccare’ Messes Bax end Tones, parties whom they jdentified (but did not documents and somewhat meekly stating that he was sorry, ten nee heels | individuals section of the| Hs lt wes Sécong nd teow However, these third parties also did report. has not, unsurprisingly, been available dotaed trading wecords eely or con, fam, Unis Section, more than Seen igen a any Hapa: ae duct interviews with them", the other 337 pages of the when noting that they were not "able to _nni do iu tice HM report combined, isthe um oe wesc arn most revealing and has not been discussed in the press to any extent. aged to write a 337-page report. By far Jones declined to be interviewed.) the majority of information they gath- Despite the fact that James Bax was the ered comes from those documents, Regional Managing Director for Asia, records and formal interviews that whereas Simon Jones was the Director Barings, London, allowed them or spe- of Operations with specific responsibil- cially prepared for them—except, of ity for offices in Singapore, Kuala course, those records that were not Lumpur, Bangkok and Jakarta, they "retained" or were “missing or corrupt- have both flatly denied that Leeson ed" or otherwise not available for reported to them. This begs the ques- inspection. tion why Leeson addressed his unseen resignation fax to them. Presumably satisfied with their investigation, the inquiry team Then again, Leeson had stated in his resignation fax that he was uncharacteristically whinged that they had "not had unfettered _ill—so ill, it seems, that he didn't know to whom he reported. access to all relevant directors and staff of the Barings Group and In fact, there is no one within the Barings Group, not one per- its records". They even wryly observed that "we have not been son, who has accepted responsibility for managing or directing able to perform some important investigation work" (witness the | Leeson. He was so unmanaged that his proposed bonus, totalling above). Nor could they verify the "strategy which lay behind the £450,000 for the year ending December 1994, presumably was unauthorised trading conducted by BFS" and Leeson, nor "exclude authorised by no one. In the same manner, his annual remunera- the possibility that anyone else at Barings [Singapore, London, tion and other increasing perks were likewise authorised by the Tokyo or elsewhere] was involved in this unauthorised trading", | same no one, to the same extent that his ‘unauthorised’ trading nor even "exclude the possibility that third parties were involved", —_ activities were. nor that funds transmitted to BFS may "have been misappropriat- However, despite pulling in large losses year on year, Leeson, ed". But closing the introduction of their report on a high note, _ we are told, was able to report large profits. The cumulative loss- they were able to conclude that: “Despite these limitations, we es for BFS started with £2 million for 1992 and increased to £23 consider that we have been able to ascertain the causes of the col- million for 1993. Thereafter they leapt to £324 million for 1994 lapse of Barings..."—-to wit, it was the lone trader who dun it, guv; and almost tripled to £927 million (£830 million trading loss plus honest! As Walter Matthau, playing the role of a cynical southem _—_losses on foreign exchange and other charges) by March 1995. congressman in Oliver Stone's film, JFK, observed in regard to the Commenting on Leeson's year-on-year figures, Peter Baring, NEXUS ¢ 33 FEBRUARY-MARCH 1996