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No winners in the fall of the House of Baring

As the merchant bank's former accountants go into the dock, the leading players in the sad saga are tracked down

Heather Tomlinson
Sunday 24 June 2001 00:00 BST
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In the High Court on London's Strand, less than two miles from the old headquarters of Baring Brothers, one of the final chapters in the sad story of the demise of the venerable merchant bank will take place this week.

After failing last week to reach a last-minute settlement, PricewaterhouseCooopers will now face a £1bn legal claim brought against it by Ernst & Young, the liquidators of Barings. PwC, or to be more accurate the Coopers & Lybrand part of the firm, has a history of having to defend its auditing after a high-profile collapse – it was the firm that signed off the books for the Maxwell empire.

Also in the dock will be the Singapore branch of Deloitte & Touche, which directly audited the business that employed the infamous "rogue trader" Nick Leeson. The accountants will argue that the collapse was due to management failure and fraud, and nothing to do with their auditing procedures, and the case will reopen wounds that many hoped had been healed.

Since the fateful weekend in February when Barings fell apart, few involved in the bank have fared well. Mr Leeson's £800m worth of punts on the Singapore futures exchange made him perhaps the most famous trader in the world – if for the wrong reasons. After Barings' collapse he went on the run, but was arrested in Frankfurt and returned to Singapore, where he was jailed for fraud.

Mr Leeson has certainly not kept out of the public eye since he was released from prison early to recover from colon cancer. He was back in trouble in April when he was convicted of drink-driving, receiving a two-and-a-half year ban as well as community service. Last year saw him on the other side of the law, subjected to a crazed attack in Blackpool, where he was bottled in a nightclub.

Now completing his first year of a psychology degree at Middlesex University, Mr Leeson is unlikely to be a penniless student – he has a good little earner speaking at con-ferences about his experiences. He has, in fact, earnt thousands throughout Europe lecturing on risk management and internal audit procedures – as someone who bypassed them so successfully, he is bound to be an expert on the matter.

It should be added that Mr Leeson has given much of the cash to charity, and has done a lot of work for Colon Cancer Concern. But any wages that he receives must be split with Baring's liquidators.

While he may have been through a great deal, one former colleague says he still has much to answer for: "He lost his health and a good chunk of his life so I think he has been punished enough. But a lot of people's lives were ruined and it's hard to feel sorry for someone who did that."

As for Mr Leeson's long-suffering wife Lisa, she wasn't put off the banking industry. She divorced him in 1997 but later married Keith Horlock, at the time a trader at HSBC in London. They now have a child and were last heard of living happily in Orpington. She and her former husband had another taste of the limelight when they were played by Anna Friel and Ewan McGregor in a movie – appropriately entitled Rogue Trader. Like the bank, it bombed.

Few of the senior executives of Baring Brothers were unscathed by the bank's collapse, or the subsequent investigations by the financial regulators and the Department of Trade and Industry. Of the Baring family members then employed at the bank, Peter Baring, the chairman, has now entirely retired from public life. Michael Baring, a senior figure in the unsuccessful rescue, died of a heart attack in 1999 while out hiking.

Andrew Tuckey, who was the deputy chairman at Barings, was struck off the Institute of Chartered Accountants' membership book. He has not been elbowed out of the City altogether, however. He now works as a consultant at Credit Suisse First Boston, the giant investment bank.

Peter Norris, the former head of investment banking at Barings, is also employed as a consultant, working on "general business issues". He has an official position at John Brown Enterprises, the company that recently sold John Brown Publishing, which publishes Viz and Bizarre, to London-based I Feel Good Holdings. He is also believed to have advised Sir Richard Branson on expanding the Virgin Active healthclub chain.

The bank itself has not fared well. In 1995 it was sold for just £1 to Dutch financial group ING, which then tried to resurrect it. But this year ING scaled back the investment banking operations and sold off its US arm.

One of the factors in ING Barings' lack of success was that the stars of the old Barings corporate finance department, James Lupton and Simon Borrows, left to join the investment banking boutique Greenhills. They now advise the likes of Cable & Wireless, 3i and Trinity Mirror.

The PwC case is likely to drag on for months, dredging up old grievances. And then it will be over, leaving nothing but losses, ruined careers and the memories of what was once a great merchant bank.

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