About-turn ends two months of wrangling

Nic Cicutti on City reaction to the latest development

The Serious Fraud Office's decision formally to interview Nick Leeson follows a two-month wrangle between his lawyers and investigators, including the Bank of England, into Barings' collapse.

When it published its long-awaited report into the pounds 830m Barings implosion last month, the Bank's governor, Eddie George, said that its investigators' refusal to speak to Mr Leeson came because he had said he would not co- operate unless he were extradited to Britain. British fraud investigators' initial reluctance to travel to Frankfurt led to criticism from MPs, who claimed that they and the public were being denied the full story of the collapse.

Quentin Davies, Tory MP for Stamford and Spalding, and a member of the Treasury and Civil Service Select Committee said: "None of us seriously thinks that the Bank of England's report is the last word on the subject. The Bank's report had no input from Mr Leeson or the Singapore authorities. We are very likely to conduct a full inquiry of our own."

Two Labour MPs on the committee, Mike O'Brien and Diane Abbott, said it would also be keen to interview Christopher Thompson, the former senior manager responsible for merchant banks at the Bank of England, and Carol Sergeant, his immediate boss.

Mr Thompson resigned days before the publication of the report when it became clear that he would be criticised for giving Barings an exemption from limits on the funding of trading in Osaka and Singapore in 1993.

Mr Leeson's lawyer, Stephen Pollard, said yesterday: "Mr Leeson's offer to the SFO of an interview has been unconditional since early June, and I'm delighted at long last the SFO have agreed to take up that offer."

The SFO's apparent turnaround is seen in the City as part of its attempt to quell criticisms about its effectiveness, following recent allegations of secret deals that allowed Roger Levitt, the failed financial adviser, to escape a jail sentence in 1993.

But some sources claimed yesterday that Mr Leeson's interview by the SFO was little more than a sop, after which it would be "business as usual".