The auditors to Barings Bank, which collapsed in 1995 after a rogue-trading scandal, were yesterday found negligent by the High Court for failing to discover losses that heralded the ruin of Britain's oldest merchant bank.
Although Deloitte & Touche was ordered to pay damages, the accountancy group claimed victory in a case that has dragged on since 1996 after the judge ruled that the bank was largely to blame.
Christopher Evans-Lombe said Barings Futures Singapore (BFS) had failed adequately to supervise the rogue trader Nick Leeson, which meant he had to take into account a "very high level of fault" on the part of local management. Barings collapsed after Mr Leeson's unchecked trading activities in derivatives at BFS amassed losses of £850m. It was later sold to ING of the Netherlands for £1.
While Mr Justice Evans-Lombe found Deloitte Singapore liable in respect of its audits for 1992 and 1993, he said that after 1994 BFS's fault was so great that Deloitte had no liability. Deloitte should have investigated an imbalance in December 1993 between the amount it had deposited with SIMEX, the Singapore futures and options exchange, and the amount it had received from its customers. "This was an indication of unauthorised trading. Deloitte & Touche should have investigated the imbalance and revealed Leeson's unauthorised trading," the judge said.
Rick Murray, a legal adviser to Deloitte Singapore, said he was extremely satisfied by the decision, in which the judge dismissed 21 of the original allegations against the firm.Damages will be decided at a later hearing.
Mr Leeson was jailed for six and a half years.Reuse content