The liquidators to Barings Bank are to press on with a multimillion-pound claim against Deloitte & Touche, the accountancy firm, after settling out of court yesterday with the other auditor in the case, PricewaterhouseCoopers.
Ernst & Young was suing PwC and the Singapore arm of Deloittes for £1bn, accusing the firms of being negligent in failing to spot unauthorised derivatives trades made by Nick Leeson that left Barings with debts £850m in 1995. Coopers & Lybrand, which merged with Price Waterhouse in 1998, was auditor to the Barings Group in London and succeeded Deloitte as auditor to Barings Future Singapore in 1994.
E&Y yesterday reached a non-binding agreement with PwC in a confidential settlement thought to be worth up to £100m. The settlement requires approval by a commercial judge and is expected to be finalised by 23 July.
Deloittes remains determined to defend itself in court. It was not party to the discussions between E&Y and PwC.
Charles Aldous QC, counsel for E&Y, said the continuing case against Deloittes would be simplified after yesterday's settlement. The case had been expected to be the most expensive and lengthy of its kind, taking up to two years and costing about £100m.
About 40 barristers and solicitors crammed into the High Court yesterday, accompanied by more than 1,000 files. The parties will reconvene on 10 July to plan the case, which is not expected to begin before October. It was due to start on Monday this week but was postponed to allow E&Y and PwC to reach their settlement.
It is thought that Deloittes' lawyers plan to defend with a stinging attack on Barings and Coopers & Lybrand. Jonathan Gaisman, QC for Deloittes, yesterday said it would be wrong to delay hearings further on the basis of a non-binding agreement between PwC and E&Y.
The settlement is the latest twist in the quest to bring the curtain down on the Barings scandal, a saga now in its sixth year. Almost all of yesterday's brief hearing was spent debating the date of the next session. At one point, the judge, Mr Justice Evans-Lombe, said: "I want to get on with this process."
Earlier this month, a group of creditors failed in a legal bid to have KPMG replace E&Y. The group holders of Barings bonds issued in 1986 is said to concur with PwC deal.
In 1998 creditors at US "vulture funds" blocked a settlement, believed to be worth less than £100m, brokered between E&Y and auditors by the City Disputes Panel. The funds had bought Barings bonds at knock-down prices after the crisis emerged.
In a case of worldwide note, Mr Leeson received a six-and-a-half year prison sentence in Singapore for his part in Barings' collapse and was released on good behaviour two-and-a-half years early to recover from cancer of the colon. ING, the Dutch financial services group, brought most of Barings' liabilities in 1995 for a symbolic £1.Reuse content