The aftershock: Dobson brands Young devious and disobedient

Click to follow
Peter Young appears to have engaged in a systematic and complex attempt to disguise losses and cover up the fact that he was failing to comply with instructions from superiors to reduce his exposure to unquoted securities, Michael Dobson, chief executive of Deutsche Morgan Grenfell, said yesterday.

Mr Dobson also refused to rule out the possibility that he benefited personally from his dealings. Morgan Grenfell has obtained an injunction freezing his assets. It was taken out in conjunction with Royal Bank of Scotland, trustee to the two funds he managed.

Commenting on the scandal, which left a pounds 180m hole in Morgan Grenfell Asset Management, Mr Dobson denied that it reflected a general failure in management controls. But he confirmed that Deutsche Bank, Morgan Grenfell's parent company, would shift ultimate responsibility for the unit trusts business over to Frankfurt, where it will be put under the control of the bank's mutual funds division.

"Clearly what has happened is highly embarrassing and completely unacceptable. It's never happened before, we are not used to it, and it will never happen again," he said.

"However, the implication that it is symptomatic of a wider breakdown in internal controls is not right. This was a localised incident on the unit trust side. Deutsche has acted decisively and swiftly to ensure that investors are not disadvantaged.

"Mr Young plainly did wrong. He misled everyone and breached his position of trust. Why he was not controlled properly within existing structures we are still trying to establish. How did he do it? How did he get away with it for so long? These are all questions we are trying to answer. Some highly complex structures were set up to disguise the fact that he had gone against the instructions of his superiors."

Mr Young had been ordered to sell down his positions to comply with rules on unquoted securities but did not. "He was devious, smart and clever," Mr Dobson said.

"The best interpretation that can be put on it is that he believed in his investments and thought he was acting in the best interests of investors by doing this, but even if this is the case he plainly acted in a way which is completely unacceptable."

It is understood that Mr Young has not been fired but remains on suspension so that Morgan Grenfell can ensure access to him and his co-operation in continuing investigations.