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."Reuse content