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Former Trader Says Barings' Managers Made Losses Worse

September 11, 1995|From Bloomberg Business News

LONDON — Former Barings trader Nicholas Leeson said incompetence by his bosses and the Bank of England made the bank's losses much worse than they had to be, as he accepted the blame for the collapse of Britain's oldest merchant bank.

In his first interview since Barings collapsed in February and his arrest in Frankfurt, Germany, on March 2, Leeson said failure by Barings managers to understand futures and options allowed him to rack up losses undetected for more than two years.

Leeson, who is seeking to return to Britain for trial instead of being sent to Singapore, said Barings senior executives met his request for as much as $1.08 billion to cover mounting losses in January because they didn't understand what the money was for.

"The first day I asked for the funding there should have been massive alarm bells ringing," Leeson told British Broadcasting Corp. interviewer David Frost.

"But it was advantageous to me that the senior people in London that were arranging these payments didn't understand the basic administration of futures and options. And that was probably the biggest failing."

Leeson also said the Bank of England was responsible for the losses more than doubling from $501.4 million to $1.326 billion on the first day of trading after Barings went into administration, the British equivalent of Chapter 11 bankruptcy reorganization, because it decided to sell his losing futures and options positions into a falling market.

Leeson was interviewed by Frost in the Frankfurt-Hoechst prison earlier this week.

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