`Conspiracy' claim astounds

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Speculation by Peter Baring, the chairman of the stricken merchant bank, that it had been the victim of a criminal conspiracy, and deliberately sabotaged, was received with incredulity by the City and Far Eastern markets yesterday.

Mr Baring's assertion that top London executives had known nothing of the high-profile derivatives trading conducted by the bank's star trader in Singapore, Nick Leeson, failed to convince market professionals.

Rumours that directors had been quizzed about the massive exposure to Far Eastern derivatives at at boardroom level at Barings had swept the market earlier this month.

The substantial size and risk of Barings' positions in derivatives on the Japanese and Singapore exchanges was common knowledge in the markets by 19 January. Concern at the perils inherent in such massive trades led to the credit risk managers of several big investment houses ordering dealers immediately to reduce exposure to Barings as much as two weeks before the British merchant bank was engulfed by losses.

"We are simply staggered at the lack of controls in Barings," said a senior American investment bank executive. "Every dealer in Tokyo seemed to know that huge trades were going on. So what the hell were the Barings people doing?"

"The sums being driven by Nick Leeson were moving markets. There is no way people can claim not to have known that something was up," said a trader in Tokyo.

Dealers also rejected the notion that Mr Leeson had shot to prominence from relative obscurity, saying he was handsomely remunerated by Barings for the profits earned from dealing that was well-known for its audacity.