Nexus - 0303 - New Times Magazine-pages

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This occurs at 11 pm, Sunday evening. On Monday 27th February, the Barings collapse is front-page news with reported losses of £600 million, soon to grow to £1 bil- lion. The legend of Nick Leeson, the lone trader, is set in financial aannrata Leeson, denied knowledge of this account—until it was ‘discov- This occurs at 11 pm, Sunday evening. ered’ in February 1995 by Tony Hawkes during the course of the On Monday 27th February, the Barings collapse is front-page same evening that Leeson fled to Kuala Lumpur. news with reported losses of £600 million, soon to grow to £1 bil- Moreover, senior directors in Barings were aware of market lion. The legend of Nick Leeson, the lone trader, is set in financial rumours that the bank was in trouble in January 1995, attested to —_ concrete. by the report which notes; "Indeed, queries were raised at a high Friday 3rd March 1995, the media report that Internationale level from reputable sources [not identified], and even included a Nederlanden Groep has announced it is negotiating to purchase query of 27th January 1995 from the Bank for International _ Barings for £1.00. The depositors and clients of Barings breathe a Settlements in Basle." No doubt the gnome-like creature in Basle _ sigh of relief. Leeson is arrested in Frankfurt and gaoled, pending rang and politely asked what the hell was going on. an extradition request from Singaporean authorities. Briefly, the chain of events is as follows. Thursday evening, Saturday 4th March, negotiations almost break down over 23rd February 1995, Leeson and his wife flee to Kuala Lumpur. __ Barings directors’ bonuses. The split is hurriedly resolved by ING Miraculous in his timing, Tony Hawkes, Group Treasurer, flies to | which agrees to pay out an additional £95 million to cover these Singapore from Tokyo, arriving in the early hours of Fic 2 pata related payments. February, whereupon he ‘discovers’ the ; 7 Things begin to settle down. However, unknown 88888 account. With the sharp Peter Baring speculates to the media that alacrity born of a long dull flight, he imme- Leeson may have been involved with others diately realises that this account contains in a "conspiracy" to wreck the bank. This enormous losses. In London, the lights bum On 18th July 1995, the | remarkable allegation quickly dies a death, all night as frantic team members attempt to Bank of England publishes and the Leeson ‘lone trader’ legend reverts to reconcile mismatched and senseless figures, 4 ‘ i ‘ prominence. and succeed in a period of only 12 hours—a its long-awaited inquiry Months flow by with just the sporadic magnificent feat that nonetheless had been report media comment outlining Leeson's desperate entirely outside their skills during the pre- . attempt to return to England to stand trial. ceding two years. Leeson, meanwhile, faxes Bax and Jones in Singapore with a resigna- tion letter. On Friday 24th February 1995, "certain directors" (not identified) meet in London. They are later reported to be “crying”. Taking legal advice, they decide the bank can continue trading throughout the day. At noon, Peter Baring meets Rupert Pennant-Rea, Deputy Governor of the Bank of England, and informs him they (Barings) have been subject to a mas- sive, "deliberate fraud”. (Later, on 23rd March, Rupert Pennant-Rea resigns from the Bank of England following gutter-press revelations regarding his Not one newspaper Every overture is met with a stone wall. The F . Special Fraud Office (SFO) isn't interested. comment on the highly Questioned in the House about Leeson's significant and, in my England-leaning posture, Kenneth Clarke rt * glibly retorts that it is a matter for the view, the most important SFO, and castigates his questioner for report section, entitled "Limitations on access to having xenophobic fears about documents and Singaporean justice. Despite Leeson providing them with a confidential lct- individuals", is mentioned. ter of relevant evidence, the SFO remains unmoved. On 18th July 1995, the Bank of England publishes its long-awaited inquiry report. The press goes ballistic over Barings’ lack of controls and gross mismanagement. Not one newspaper® comment on the highly significant and, private sex-life. His position on the in my view, the most important report three-man Board of Banking section, entitled "Limitations on access Supervision, charged with the responsibility of investigating the to documents and individuals", is mentioned. The result is that collapse of Barings, remains unfilled during the remainder of the | Leeson remains unheard, uninterviewed, uncharged, unfree and inquiry.) un-over-here. Nonetheless, he is harangued as being singularly The Governor of the Bank of England, Eddie George, immedi- _ guilty. ately curtails his holiday and flies home. Frantic efforts are made If Barings hadn't been purchased by ING—even for a stick of to save Barings over the weekend. Whilst not directly reported, it masticated chewing gum—the Bank of England would've been in is apparent that the first port-of-call is H. M. Treasury, which is truly deep shit. Why? For the simple reason that all the docu- lobbied with a heartfelt plea for a massive injection of government _ ments, records, missing computer archives, missing phone tapes, funds. The Treasury, we learn, is informed of the crisis "during _etc., would have been legally available to it. Under its statutory the course of the afternoon" of Friday 24th February. Ken Clarke acts, the Bank of England has a number of legal powers and characteristically tells the Old Lady's men to bugger off. duties. However;these can be dusted down and exercised "only to Rupert Pennant-Rea spends all of Sunday 26th phoning bankers _ the extent that such companies may adversely affect the interests in London, Europe and the US, pleading for one of them to step _of the depositors of the bank itself". ING's purchase of Barings forward and take over Barings. Several are initially interested, but _ resolved this most difficult question. The depositors, and, for that all back off when they learn that the actual size of the losses is still matter, their customers including the Queen, were safeguarded. “unquantifiable". The bottom of the Barings black hole cannot be The shareholders of Barings, on the other hand, were not, and are accurately determined for several more weeks. Wringing their out of pocket to the tune of several hundreds of millions of communal hands in grief, the unhappy men of the Old Lady of pounds. Inasmuch as the depositors are now sitting pretty, the Threadneedle Strect eventually resign themselves to fate and Barings records (and testimony of staff members) now legally appoint three partners of Ernst & Young to act as Administrators. _ reside with ING. NEXUS ¢ 31 APRIL-MAY 1996