The SFO's decision to reduce its interest in the affair follows advice from its top accountant working on the case. Following a review of available evidence, Michael Kenney concluded that there were insufficient grounds to justify further investigations.
Mr Kenney gave the advice to the SFO two days after George Staple, the office's director, told MPs that the inquiry into fraudulent trading, which centres on Barings former directors rather than Nick Leeson, the rogue trader, was still continuing.
"We are talking about investigating matters that could lead to the prosecution of individuals," Mr Staple told members of the Treasury and Civil Service Committee on 12 June.
Mr Kenney, on secondment to the fraud office from the accountants Grant Thornton, was pressed to look further into the financial position of the Barings group immediately before its collapse, after Brian Sedgemore, the Labour MP, had made fresh allegations of fraudulent trading at the bank. At the committee hearing Mr Staple had to field questions from Mr Sedgemore about the state of the SFO's inquiries.
Mr Staple said: "We are still conducting an investigation in this country. Yes." He added: "Fraudulent trading is what the SFO is looking at, we are investigating that . . . If the SFO believes there is a realistic prospect of conviction we will bring charges."
In order to prosecute any directors or former directors of the UK bank for fraudulent trading, the SFO would have to show the directors knew that the losses being clocked up by Mr Leeson in Singapore had put the bank into an insolvent position and that they had none the less continued trading while insolvent for a significant period.
Sources say that, having considered the evidence available, Mr Kenney decided that he had seen nothing to indicate knowledge by the directors of the huge losses incurred on Mr Leeson's notorious account 88 888 until 24 February, the day they approach-ed the Bank of England in an attempt to stave off collapse.
There is still a possibility that investigations may be resumed at some point if further evidence becomes available.
An SFO spokeswoman said allegations of fraudulent trading had been passed on to the office and had been looked into. "We do not normally go into details of an investigation unless a formal decision has been made and to the best of my knowledge there has been no formal decision."
The SFO is co-operating closely with the Bank of England, which is conducting the main City of London investigation into the collapse.
"If their investigation uncovers anything that might be of interest to us, they will pass it to us," the SFO spokeswoman said.Reuse content