Barings transfer dubbed `criminal'

It was a criminal offence for Barings to transfer twice the amount of its own assets to fund trading in Singapore, Eddie George, Governor of the Bank of England, said yesterday.

Responding to intense questioning by the Treasury select committee on the events leading up to the collapse of the investment bank, Mr George said the Bank of England was not informed that Barings transferred £760m to finance Nick Leeson's derivatives speculation.

Of that amount, £330m was borrowed from Barings Bank itself, which had a total capital of only £350m. "We do not know the day-to-day detailed exposure of every institution," Mr George said, adding: "It is a criminal offence to advance this sort of money without telling us."

Brian Sedgemore, Labour MP for Hackney South and Shoreditch, said it was inconceivable that this amount of money was sent out without people knowing about it.

"That is exactly right, and that is what our investigation is looking into," Mr George replied.

The Bank of England was not informed about an internal audit report at Barings from August 1994, critical of Mr Leeson's activities; nor of concern expressed on 27 January 1995 at a special risk control committee meeting in London.

"No one informed us," Mr George said. "We got no report on controls at the Singapore office."

Criticised for ineffective supervision, Mr George rounded on members of the committee, saying there were "unrealistic expectations of what supervision can achieve".

Noting there were 500 financial institutions to be supervised by the Bank, Mr George said it was neither practical nor effective in cost terms to expect detailed supervision of every institution.

"I don't think it is unreasonable to suggest a lot of people inside Barings knew a lot of things were wrong - this was not the case of a rogue trader but of a rogue bank," Mr Sedgemore said. "You need a system that informs you to protect depositors."

Mr George replied: "How can we achieve this, that you get information on time - there is a practicality and a cost to this. People must decide what they want."

Responding to criticism from ING, the Dutch owners of Barings, that the Bank of England's inquiry was taking too long, Mr George told the committee that it was entirely up to the new proprietors if they wanted to dismiss staff thought responsible.

"We have not said to ING you cannot get rid of employees. We said, until we have all the facts we are not requesting them [ING] to get rid of people." The Bank hoped to have the fact-gathering part of its investigation - establishing who knew what, and when, at Barings - completed in June. This report would be published as long as it did not run into litigation problems, Mr George said. "We are proceeding as quickly as possible, but every fact needs to be checked and cross- checked."

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Selby Jennings: VP/SVP Credit Quant- NY- Investment Bank

Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...

Selby Jennings: Quantitative Research | Equity | New York

Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...

Selby Jennings: SVP Model Validation

Not specified: Selby Jennings: SVP Model Validation This top tiered investment...

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

Day In a Page

A timely reminder of the bloody anniversary we all forgot

A timely reminder of the bloody anniversary we all forgot

Who remembers that this week we enter the 150th anniversary year of the end of the American Civil War, asks Robert Fisk
Homeless Veterans appeal: Former soldiers pay their respects to a friend who also served

Homeless Veterans appeal

Former soldiers pay their respects to a friend who also served
Downfall of Dustin 'Screech' Diamond, the 'Saved By The Bell' star charged with bar stabbing

Scarred by the bell

The downfall of the TV star charged with bar stabbing
Why 2014 was a year of technological let-downs

Why 2014 was a year of technological let-downs

Security breaches and overhyped start-ups dominated a year in which very little changed (save the size of your phone)
Cuba's golf revolution: But will the revolutionary nation take 'bourgeois' game to its heart?

Will revolutionary Cuba take 'bourgeois' golf to its heart?

Fidel Castro ridiculed the game – but now investment in leisure resort projects is welcome
The Locked Room Mysteries: As a new collection of the genre’s best is published, its editor Otto Penzler explains the rules of engagement

The Locked Room Mysteries

As a new collection of the genre’s best is published, its editor explains the rules of engagement
Amy Adams on playing painter Margaret Keane in Tim Burton's Big Eyes

How I made myself Keane

Amy Adams hadn’t wanted to take the role of artist Margaret Keane, because she’d had enough of playing victims. But then she had a daughter, and saw the painter in a new light
Ed Richards: Parting view of Ofcom chief. . . we hate jokes on the disabled

Parting view of Ofcom chief... we hate jokes on the disabled

Bad language once got TV viewers irate, inciting calls to broadcasting switchboards. But now there is a worse offender, says retiring head of the media watchdog, Ed Richards
A look back at fashion in 2014: Wear in review

Wear in review

A look back at fashion in 2014
Ian Herbert: My 10 hopes for sport in 2015. Might just one of them happen?

Ian Herbert: My 10 hopes for sport in 2015

Might just one of them happen?
War with Isis: The West needs more than a White Knight

The West needs more than a White Knight

Despite billions spent on weapons, the US has not been able to counter Isis's gruesome tactics, says Patrick Cockburn
Return to Helmand: Private Davey Graham recalls the day he was shot by the Taliban

'The day I was shot by the Taliban'

Private Davey Graham was shot five times during an ambush in 2007 - it was the first, controversial photograph to show the dangers our soldiers faced in Helmand province
Revealed: the best and worst airlines for delays

Revealed: the best and worst airlines for delays

Many flyers are failing to claim compensation to which they are entitled, a new survey has found
The stories that defined 2014: From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions

The stories that defined 2014

From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions
Stoke-on-Trent becomes first British city to be classified as 'disaster resilient' by the United Nations

Disaster looming? Now you know where to head...

Which British city has become the first to be awarded special 'resilience' status by the UN?