Barings — The Singaporean View
| Date | 01 February 1996 |
| Published date | 01 February 1996 |
| DOI | https://doi.org/10.1108/eb025737 |
| Pages | 366-368 |
| Author | Rinita Sarker |
| Subject Matter | Accounting & finance |
Journal of Financial Crime — Vol. 3 No. 4 — Fraud
FRAUD
Barings — The Singaporean View
Rinita Sarker
'All you needed was one mutant cell. It was the
perfect environment for a cancer to grow rapidly
and it grew into a tumour beyond all propor-
tions.
Before we knew it, it had killed the whole
body.' Trader, Barings Securities, Singapore
The Board of Banking Supervision's (BoBS) non-
contentious report into the collapse of Barings
(July 1995) appears to subscribe to the above view
in making Nick Leeson the scapegoat responsible
for Barings' £830m derivative losses. In sharp con-
trast the Price Waterhouse (PW) Report is forth-
right in its condemnation of Barings' 'institutional
incompetence', blaming not only senior manage-
ment as 'grossly negligent or wilfully blind and
reckless to the truth', but also taking to task Coop-
ers & Lybrand, Barings' accountants, SIMEX, the
exchange on which Leeson traded and the Bank of
England, whom it alleges placed 'legal obstacles' in
its path during the making of the report.1 In Singa-
pore,
SIMEX have fined Barings Futures Singa-
pore (BFS) £3.1m, the Ministry of Finance has
agreed with report recommendations that BFS
should be wound up, Leeson has received a custo-
dial sentence of six-and-a-half-years' imprisonment
and Barings' senior management face further crim-
inal investigation. The British regulatory response
in the shape of the Bank of England, SFA and
SFO has been so low-key in comparison as to
provoke allegations of
a
political cover-up. Stephen
Pollard, Lceson's lawyer, contended that the City
establishment preferred to see Leeson prosecuted
in Singapore where the full story could not be told
due to the limited scope of the charges against
him, thus sparing the embarrassment of others
involved, and ensuring that Leeson received a
longer prison sentence and took full responsibility
for the affair.2 While these allegations have yet to
be substantiated, it remains clear that the Bank of
England, in complacently permitting the BoBS, a
body with no history of forensic investigation, to
conduct the main UK inquiry into Barings, has
allowed the Singaporean authorities to steal a
march over it.
PROMOTING THE POACHER TO
GAMEKEEPER
Ironically enough, Leeson's promotion to Head of
Settlements in 1992 at BFS followed his successful
investigation on behalf of Barings Securities into a
case of apparent fraud in the derivatives area
between a Barings' employee and a client in Octo-
ber 1991. According to the PW Report, Leeson
applied to SIMEX for a trading licence in 1992,
and was granted one after he made a false state-
ment that he had no judgment debts against him.
As SIMEX had no contact with the SFA, they were
unaware that the SFA had previously rejected a
similar application from Leeson for this reason.
Page 366
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