SINGAPORE: SINGAPORE INSPECTOR'S REPORT ON BARINGS BANK HEAVILY CRITICISES MANAGEMENT.

Record ID: 566086

  • Title: SINGAPORE: SINGAPORE INSPECTOR'S REPORT ON BARINGS BANK HEAVILY CRITICISES MANAGEMENT.
  • Date: 17th October 1995
  • Summary: SINGAPORE (OCTOBER 17, 1995) (RTV - ACCESS ALL) 1. SLV/SV/ZOOM PEOPLE WAITING AT CLOSED GOVERNMENT PRESS OFFICE IN MINISTRY OF INFORMATION/PEOPLE ON MOBILE TELEPHONES (3 SHOTS) 0.17 2. SLV RECEPTIONISTS CHECKING SECURITY/ JOURNALISTS ENTERING (2 SHOTS) 0.22 3. SV VARIOUS OF INSPECTOR'S REPORT ON BARINGS BANK COLLAPSE 0.31 4. SV MINISTRY OF FINANCE SPOKESMAN NG KWAI KWONG READING OUT SECTIONS OF REPORT SAYING BY PLACING HIM IN CHARGE, THE BARING GROUP HAD BREACHED FUNDAMENTAL ISSUE OF INTERNAL CONTROL (ENGLISH)/MCU INSPECTORS REPORT (2 SHOTS) 1.04 5. SV ELIZABETH SAM, CHAIRPERSON OF SIMEX, MAKING STATEMENT ABOUT REPORT (ENGLISH) 2.02 6. CU/MCU VIEWS OF REPORT (3 SHOTS) 2.16 SEQ.4: TRANSCRIPT; KWONG: "BY PLACING HIM IN CHARGE (NICK LEESON) OF BOTH TRADING AND SETTLEMENT OPERATIONS, THE BARING GROUP HAD BREACHED A FUNDAMENTAL PRINCIPAL OF PROPER INTERNAL CONTROL, NAMELY THEN NAMELY THE REPONSIBILITY FOR THESE FUNCTIONS SHOULD BE SEPARATED. THIS LAPSE WAS COMPOUNDED BY MR LEESON'S TOTAL LACK OF TRADING EXPERIENCE PRIOR TO HIS POSTING TO SINGAPORE." SEQ.5: TRANSCRIPT; SAM: "THE REPORT CONFIRMS THE IMPORTANCE OF THREE ELEMENTS WHICH HAVE BEEN REPEATEDLY HIGHLIGHTED FOLOWING THE COLLAPSE OF BARINGS. THEY ARE FIRSTLY, THE ORGANIZATION MUST HAVE IN PLACE PROPER INTERNAL CONTROLS. SECONDLY SENIOR MANAGEMENT WITHIN THE ORGANIZATION MUST CORRECTLY APPRECIATE THE NATURE AND RISK OF THE BUSINESS. THIRDLY, THE ORGANIZATION MUST RECRUIT AND RETAIN CAPABLE AND HONEST PEOPLE. THE BARINGS CASE AS WELL AS THE RECENT DAIWA EPISODE HAVE DEMONSTRATED THAT EXTERNAL CONTROLS ALONE, ARE NOT SUFFICIENT TO PREVENT LOSS BY THE ORGANISATION. THE COLLAPSE OF BARINGS HAS ALSO HIGHLIGHTED TO ALL EXCHANGES INCLUDING SIMAX THE NEED FOR IMPROVED RISK MANAGEMENT SYSTEMS." Initials Script is copyright Reuters Limited. All rights reserved.
  • Embargoed: 1st November 1995 12:00
  • Keywords:
  • Location: SINGAPORE
  • City:
  • Country: Singapore
  • Reuters ID: LVAF3RW9L3CTNAIJ4KT8DOG9LWA5
  • Story Text: A Singapore report on the collapse of the Barings Group released on Tuesday (October 17) heavily criticises the then-management of the British merchant bank.

    A team of government-appointed inspectors said it found severe shortcomings in Baring's organisational and reporting structure that failed to check losses by Singapore-based trader Nick Leeson and led to the collapse.

    A Singapore Finance Ministry statement released with the report said the inspectors found the fall of Baring Futures Singapore (BFS) was caused by "institutional incompetence", a lack of understanding of futures business among senior executives, and "a total failure of internal controls".

    It also cited "the efforts of certain senior (Barings) executives to hinder investigations into the discrepancy identified by the external auditors".

    At one point in their report, the inspectors referred to certain claims by Barings executives as giving "rise to a strong inference that key individuals of the Baring Group's management were grossly negligent, or wilfully blind and reckless to the truth".

    The report, commissioned by the Singapore government and undertaken by accountants Price Waterhouse, said Barings chief executive officer Peter Norris tried to conceal unauthorised dealing by Leeson and had played down its significance.

    It alleged he was helped by James Bax, managing director of Baring Futures (Singapore), and group treasurer Anthony Hawes.

    The Finance Ministry statement said Singapore's Commercial Affairs Department had been instructed to study possible criminal acts by persons in Singapore and whether there are grounds to prosecute any such persons.

    The inspectors' report also said the Singapore International Monetary Exchange was possibly too liberal in raising Baring position limits, and that knowledge of Barings' large exposures in 1994 did not evoke a strong reaction from the Bank of England.

    Barings collapsed in February amid trading losses of up to 1.4 billion U.S. dollars, much of which were allegedly run up by Leeson.

    British-born Leeson, 28, is currently in prison in Germany. A German court has ruled he can be extradited to Singapore on charges of forgery and fraud. He plans to appeal against the decision.


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