Twenty years on, is Nick Leeson really sorry for breaking the bank?
Nick Leeson was the original rogue trader, bringing down Britain's oldest bank, Barings, and going on the run. Twenty years on, his actions are hard to forgive, say some who remember himNick Leeson on his release from jail in Singapore in 1999 Photo: MURRAY/Rex Features
In the mid-1990s, urgent messages were sent by fax. And almost exactly 20 years ago one landed in the London office of Peter Baring, the chairman of Barings Bank, from a junior colleague based in Singapore.
It was sent by Nick Leeson, who said he was ill and wanted to resign. It was the last of a long string of lies he had told to his bosses. He wasn’t ill. He was on the run, holed up in a luxury hotel in Malaysia, after racking up an astonishing £832 million of losses.
The fax was sent on February 23. By February 26th administrators had been called in to manage the collapse of Britain’s oldest merchant bank, which had been trading continuously since 1762 – one of the greatest names in the City wiped out by one “rogue trader”.
Twenty years on, the name Nick Leeson and Barings still resonates, even for those that have lived through the run at Northern Rock, the collapse of Lehman Brothers and numerous banking scandals that have incurred losses of far greater magnitude.
In part, it was the drama of a man in hiding – captured and exaggerated (but only slightly) by a Hollywood film starring Ewan McGregor. In part, it was the staggering ignorance of Leeson’s bosses, who were clueless there was a vast black hole hidden in their accounts.
- But mostly, it was the character of Leeson himself, not a master criminal, but a 28-year-old in a backwards baseball cap, a D in A-level Maths, a pretty wife, and an remarkable ability to hide a secret.
Nicholas Edwards worked as a senior investment banker in the London office of Barings. He remembers meeting Leeson in Singapore: “He was an ordinary fellow, from an ordinary background, doing an ordinary job.”
Stephen Pollard was his lawyer, who represented him for many years. “I remember reading all the press cuttings on the way out to Frankfurt [where he was finally arrested] when I was due to meet him for the first time, and I remember thinking am I going to meet an arch-villain or some sort of spiv? And I just met a very quiet, calm and straightforward boy from Watford.”
In the frenetic week while he was on the run, and failed attempts were made to shore up the bank, wild rumours circulated that he must have had an accomplice, and that there was bound to be have salted away millions of pounds.
But neither proved correct.
His crime started back in 1992, soon after he was sent to Singapore by Barings, as an up and coming trader to run the derivatives trading desk. He maintains initially he was covering up for a junior colleague who lost £20,000 on the trading floor one day. Leeson set up the error account 88888 to hide the bad trade, but then he started using it himself.
Any bad trade he could hide in this account, which bizarrely was never checked by a compliance officer or senior management, mostly because Leeson was in charge of the Singapore back office himself.
He was mostly trading futures on the Nikkei 250, the main Tokyo index, on behalf of clients. In theory most his business should have been “cash neutral”; if money was made or lost it would have been client money – Barings was just meant to be taking a commission. Only a small amount of the trades were meant to be proprietary – on behalf of the bank itself.
But Leeson was using the bank’s money to bet on the market, hoping that he would eventually claw back the losses in the 88888 account and no one would be any the wiser.
Dominic Lindley, a financial markets consultant, says: “Barings should have worked out something was out of the ordinary, because he was requesting vast funding to be transferred to Singapore. But they wanted to believe they had found a magic money making machine.”
Leeson, as portrayed by Ewan McGregor in the 1999 film Rogue Trader
When Leeson’s office desk was broken into after he went on the run, his bosses found a pot of glue, scissors, and various blank headed letters – which he had used to fraudulently authorise some of his trades. Part of his deception involved little more than cutting and pasting people’s signatures on letters and faxing them through to head office.
Pollard says: “Nick made the fundamental error – when you are in a hole, you need to remember when to stop digging.”
By Christmas 1994, Leeson was sitting on losses of £280 million – catastrophic but not fatal for the bank, which had about £350 million to its name. But then the Kobe earthquake hit and the Nikkei, which he was betting would recover, slumped. The game was up.
“I was 25-years-old when I was working in Singapore and I should have turned around and asked for help and advice. And I didn’t. It was my biggest regret,” Leeson said a couple of years ago.
If this sounds like the product of many hours’ therapy, it is perhaps not surprising: he gained a psychology degree on his release as a way of coming to terms with the catalogue of disasters that befell him in the country’s harsh Tanah Merah prison. He even wrote a book many years later “Back from the Brink: Coping with Stress”, which took the form of conversations with a psychologist. A more recent book he has written about debt combines a personal finance manual with childhood recollections of his family being continually in debt and cheating the coin-operated rental television.
The first blow was when Lisa left him, despite sticking by him initially and dutifully visiting him in jail – even taking out sheets she had slept in so he could smell her scent. “I realised I could never, after his deception, love him again” she told an interviewer a decade ago. She was also terribly wounded that in his book he talked about her miscarriage.
She married another banker, Keith Horlock, has two children and lives a quiet life in Kent.
To make matters worse, while in jail, Leeson was diagnosed with colon cancer. He was offered treatment, but only if he agreed to being handcuffed to his bed. He refused – and called the prison authorities’ bluff, saying he would prefer to die in jail. He was treated, without restraint.
Pollard says: “He had a hard upbringing, so he was physically tough and could look after himself. He was also quite mentally strong.”
Leeson, pictured in 2011
On his release, liquidators from the bank served him with a bill for £100 million and he was only allowed to earn a modest monthly living allowance. He did this by delivering after dinner speeches, for which he was paid handsomely, often £6,000 a pop. Initially, the liquidators took a cut, but after five years they finally gave up.
The last 12 year or so have been good to him. He married an Irish beautician Leona Tormay and moved to Ireland; he got a job at Galway United football club, where he rose to be chief executive. He resigned in 2011, after the club struggled, and now works for a debt advisory company but still gives speeches – he is appearing at next week’s Nottingham Business Expo.
He had a son with Leona, despite believing the cancer treatment would make children impossible.
Leeson was always very clear that the losses he incurred were his fault, but he claimed he failed to realise the cataclysmic effect they would have. “Not once did I consider the bank would collapse. I don’t think I knew what the bank was worth,” he has said.
Many of his former colleagues are less forgiving.
Edwards met him three years ago for a BBC radio programme, The Reunion. “I was rather struck by his lack of remorse. He was resolute – yes, he was sorry it had happened but it was very matter of fact. He seemed to blame the system, as supposed to the fact that he is a ruthless, unscrupulous cheat and liar. That’s what it boils down to.”
Edwards finds it hard to accept Leeson's tale of redemption.
“I do think it is wrong that Nick is able to earn a living from his notoriety. If he wants to earn a living stacking shelves at Tesco, that’s absolutely fine. But I do have a problem with someone paying him a handsome fee talking about how he brought down Barings.”
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