Barings bondholders to sue

JOHN EISENHAMMER

Financial Editor

Bondholders of Barings yesterday decided to sue the former top executives of the collapsed merchant bank and three prominent City houses in an effort to recover more than pounds 100m lost last year.

The directors to be named in the writs are Peter Baring, the former chairman, Andrew Tuckey, the former deputy chairman who is still working at Barings on a consultancy basis, and Peter Norris, the former head of investment banking. All three resigned last year shortly after Barings collapsed under nearly pounds 900m of losses run up by Nick Leeson in illicit derivatives speculation.

The City advisers are BZW Securities, Hoare Govett Securities of the ABN Amro group and Cazenove & Co, which participated in the January 1994 bond issue.

When ING, the Dutch bancassurer, bought Barings last year, it left out of the deal the Barings holding company that had issued the bonds, rendering them worthless. A large number of private investors, as well as several powerful institutions like Scottish Amicable and Legal & General, lost money.

"We are confident that proceedings will be issued as anticipated in early March," said Jonathan Stone, a lawyer leading the Barings Perpetual Noteholders Action Group. The writs will be aimed at recovering the original pounds 100m lost on the bonds, and a further pounds 9m in lost interest payments, as well as costs of litigation. The action group is represented by the solicitors SJ Berwin. BZW and Hoare Govett yesterday made no comment on the announcement of impending legal action.

Mr Stone said the legal action would be based on claims that the January 1994 bond prospectus put out by Barings plc and the managers, Hoare Govett, BZW, Cazenove and Baring Brothers & Co, was defective. "There are a number of issues in the document which give rise to considerable concern, and if it had not been defective, the bonds could not have been issued," Mr Stone said.

Ernst & Young, administrators to Barings Group, have issued writs against three firms of accountants alleging negligent auditing and claiming several millions of pounds. The firms involved are Coopers & Lybrand in London and Singapore and Deloitte Touche in Singapore. Ernst & Young have been collecting evidence since the collapse of the merchant bank in late February 1995.

Mr Baring, Mr Tuckey and Mr Norris have all been investigated, along with 20 other former executives fired by ING last year, by the City watchdog the Securities and Futures Authority. Some of the senior executives are expected to face disciplinary sanctions.

The bondholders said the decision to resort to legal action resulted from frustration at lack of progress in attempts to persuade ING to recognise the grievances of the investors.

According to Mr Stone, ING committed a serious error of judgement when it agreed shortly after purchasing Barings to honour the pounds 90m bonuses due staff for 1994, despite the fact that the merchant bank had been bankrupted. In view of this, ING should be willing to consider meeting the pounds 100m compensation claim, Mr Stone said.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Executive / Foreign Exchange Dealer - OTE £40,000+

£16000 - £40000 per annum: Recruitment Genius: A Foreign Exchange Dealer is re...

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

Day In a Page

The long walk west: they fled war in Syria, only to get held up in Hungary – now hundreds of refugees have set off on foot for Austria

They fled war in Syria...

...only to get stuck and sidetracked in Hungary
From The Prisoner to Mad Men, elaborate title sequences are one of the keys to a great TV series

Title sequences: From The Prisoner to Mad Men

Elaborate title sequences are one of the keys to a great TV series. But why does the art form have such a chequered history?
Giorgio Armani Beauty's fabric-inspired foundations: Get back to basics this autumn

Giorgio Armani Beauty's foundations

Sumptuous fabrics meet luscious cosmetics for this elegant look
From stowaways to Operation Stack: Life in a transcontinental lorry cab

Life from the inside of a trucker's cab

From stowaways to Operation Stack, it's a challenging time to be a trucker heading to and from the Continent
Kelis interview: The songwriter and sauce-maker on cooking for Pharrell and crying over potatoes

Kelis interview

The singer and sauce-maker on cooking for Pharrell
Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea