Cash promise to Leeson boss 'was way out'

Barings collapse: Bank chief condemns pounds 500,000 offer
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The Independent Online
The boss of the jailed trader Nick Leeson, who was promised a pounds 500,000 bonus hours before Barings collapsed, should in hindsight have been offered something minimal instead, the bank's deputy chairman said yesterday.

Andrew Tuckey is said to have promised Mary Walz the huge award 13 hours before news broke of the disaster which Leeson caused in Singapore.

Mr Tuckey told a tribunal that even if Leeson's activities had been uncovered earlier, her bonus would have been "minimal".

"In retrospect, our assessment of the financial products group's profits was way out," he said. "Mary Walz had failed to understand, along with others, what Nick Leeson was doing. If we had detected Nick Leeson earlier she probably would have received a minimal bonus."

He added: "I did not know anything of the disaster that had overwhelmed Barings until midnight that day."

Nicholas Underhill QC, for the bank, asked whether Ms Walz would have received a bonus if the bank had known about Leeson's disastrous losses on the day the bonuses were handed out.

Mr Tuckey replied: "No. I would have cancelled all those conversations." He admitted that he had praised Ms Walz and handed her a note informing her of her pounds 500,000 bonus, but claimed that it was only provisional.

"I handed over the paper bearing the words 'Mary Walz - 500,000'," he said. "I was seeing 40 other people over a period of two days. The slip of paper had no legal significance - it was just to make sure there were no mistakes.

"I wrote the note just before she walked in. I did not say it was provisional because it seemed obvious. It was inconceivable that a director could not have been aware of this.

"I told her she had had a fantastic year. The department had substantially outstripped any other area of the business for the year in question.

"The performance of the equity group was very remarkable although other parts of the business were also profitable. It was the most exceptional part of the business."

Mr Tuckey told the hearing that bonuses in Ms Walz's department had to be profit-related to encourage success. Bonuses in her department were more reliant on profit than any other within the bank.

Ms Walz claims the pounds 500,000 bonus under the Wages Act. The hearing at Stratford, east London, continues.