Leeson: £850m fraud felled Barings

Published on Thursday 7 February 2002 00:00

JUST as in the case of AIB, it was the sudden disappearance of a trader that publicly exposed the massive losses at Barings Bank. The failure of Nick Leeson to arrive for work at his Singapore offices on 23 February, 1995, triggered the collapse of the City’s oldest merchant bank.

Leeson and wife Lisa had fled their apartment at 1:30am to fly to Kuala Lumpur. Over the previous six months, he had been using large sums of Barings’ money to bet that the Nikkei index of leading Japanese companies would begin to rise.

If the gamble had paid off, he would have made a multi-million-pound profit for Barings and a bonus of at least 3 million for himself.

But an earthquake at Kobe in January, which killed more than 5,000 people, sent the Nikkei tumbling. Leeson tried to cover his losses by betting even more on a turnaround.

The day after his disappearance, Barings discovered his losses totalled 850 million. The bank, founded in 1762 and with the Queen among its clients, was bust. It was later sold for 1 to the Dutch banking and insurance group ING.

Leeson was arrested as he stepped off a flight in Frankfurt and fought extradition from Germany to Singapore for eight months. He was eventually sent to face eight charges of fraud and three of forgery.

At the end of the year Leeson was sentenced to six years in prison after admitting two counts of financial misrepresentation. Dozens of executives, implicated in the failure to control Leeson, resigned or were sacked.

He contracted cancer in prison and had an operation to remove a tumour. He and his wife divorced in October 1997.

Leeson’s story, Rogue Trader, was made into a film starring Ewan McGregor. Since his release in the summer of 1999, he has worked mainly as a public speaker.