Considering that they presided over one of the greatest debacles in financial history, most of the former executives of Barings Bank are doing quite well, thank you, 4 1/2 years after that venerable English institution's spectacular collapse.
Sir Peter Baring, the last chairman of his family's merchant bank, remains a knight of the realm and a respected benefactor of the opera; he divides his time between his country estate and his home in London's trendy Notting Hill. Several other members of Barings' top brass have moved on to new jobs in the financial industry.
And then there is Nick Leeson, the low-level derivatives trader who ran up big losses in Barings' Singapore branch in 1994-95. Denounced by the British government as a "rogue trader," he has been stuck with most of the blame and the only criminal sentence to result from the billion-dollar fraud that destroyed the bank.
When Leeson returned to Britain this week -- after 4 1/2 years in a Singapore prison -- he was the epitome of a broken man. His orange carry-on bag held all his worldly possessions, he said: a shirt, running shoes and a baseball cap. Frail at 32, he is under treatment for colon cancer and has a 30 percent chance of death in the next four years. His wife, Lisa, has divorced him and married another securities trader. Asked about his employment prospects, he responded with a silent grimace.
For all that, Leeson received a greeting here that could hardly be called sympathetic. Ernst & Young, the consulting firm acting as liquidator on behalf of four groups of Barings creditors, slapped him with an injunction freezing any assets he has now or may acquire. An alliance of Barings stockholders said it, too, may seek a lien against Leeson. Britain's Press Complaints Commission is raising doubts about his plan to sell his story to a London newspaper.
And yet the executives who supervised Leeson when he was breaking the bank have so far suffered little or no legal trouble. Judith Dow of Ernst & Young's London office says the firm has no plan to pursue the assets of Baring or other former Barings officers and directors.
"The liquidators came to the conclusion that it was more profitable for the directors to assist us," Dow said. That is, in return for cooperation in various other efforts to collect money for the creditors, the former directors will be left alone.
All of which has spawned a burning controversy in The City, London's financial district. Why is lowly Leeson the target, while the top brass skate free?
One theory -- held by Leeson himself, among others -- is that the disparate treatment reflects the class distinctions that still hold sway in England as a whole and in The City in particular.
The Baring family is as blue-blood as they come in British society. Peter Baring was born into a family banking business that counted the royal family among its depositors; he loved to remind people that one of his ancestors had lent Thomas Jefferson the money for the Louisiana Purchase. The board and management suite of Baring Brothers and Co. were filled with gentry from the finest families and the best schools.
Nicholas W. Leeson, a plasterer's son from the blue-collar suburb of Watford, had only a high-school education -- from a non-selective public high school, at that -- when he landed a clerical job at Barings' securities subsidiary in 1989.
Another reason the creditors are going after Leeson is the constant flood of rumor in financial circles here that he salted away a few million of his own during his years as a highflier. Leeson and his lawyer flatly deny that. But the man may have been in a position to divert money, had he wanted to, after he was posted to Barings' Singapore branch in 1992.
There Leeson started trading a derivative contract called a Nikkei future -- essentially, a bet on the average price on the Tokyo Stock Exchange at some future time. By all accounts, he was good at it. At one point in 1994, his small operation in Singapore was Barings' biggest single profit center.
But even good traders lose much of the time, and that was Leeson's downfall. As he tells it in his 1996 memoir, "Rogue Trader," one of his staffers one day lost $30,000 on a single trade. Rather than fire the young woman, Leeson created a new computer record -- "Account 88888" -- and hid her losing transaction there.
Leeson got away with that because Barings broke a basic rule of banking. It had assigned Leeson not only to do the trades, but also to manage the back office where trades were recorded. Investigations by the British and Singaporean governments concluded that Barings made that fateful choice to save the money it would have cost to hire a full-time back office manager.
Over time, the unaudited 88888 account became addictive for Leeson. When he made money on a trade, he reported the profits to delighted bosses back in London. When he lost, he hid the deal in the 88888 account. By late 1994, he was asking for -- and receiving -- millions of dollars per week from London to cover margin calls on the growing loss account.
The official investigations say Peter Baring and others wondered occasionally what Leeson was up to, but decided not to look a gift horse in the mouth. Leeson himself wrote, "I was astonished that nobody stopped me. People in London should have known."
At the start of January 1995, Leeson's loss account was up to $80 million or so. He launched an all-or-nothing campaign to make it all back by betting hugely on Nikkei "straddles," contracts that will turn a profit as long as the market stays roughly even.
This worked well -- for two weeks. Then the disastrous Kobe earthquake sent the Tokyo stock market gyrating. The straddles became massive losers. When Leeson and his wife finally fled in February -- traveling around Southeast Asia under her maiden name -- he thought his 88888 account totaled about $500 million. By the time Barings figured out what had happened, the losses had ballooned past the billion-dollar mark.
Barings went bust. Major financial institutions and small investors alike were left high and dry. These creditors have been trying ever since to get some money back. The newly released felon has potential assets. He could make some money from the new movie "Rogue Trader." Produced by TV interviewer David Frost, starring Ewan McGregor and Anna Friel as Nick and Lisa, the film closely tracks Leeson's book, offering a tense and lucid account of Leeson's financial maneuvers. It premiered on HBO last month and is now in general release in Britain, where reviews have been good. It may hit the U.S. theater circuit later this summer.
Then there's a reported $160,000 Leeson is to receive for his exclusive deal with London's Daily Mail newspaper -- if the press commission doesn't invoke a rule against paying criminals for their stories.
When he arrived at London's Heathrow Airport on Sunday, carrying that forlorn orange bag, Leeson left it to his lawyer, Steven Pollard, to declare that the former trader "has nothing left of any substance."
Leeson himself spoke for less than a minute to the media horde. "I want to state clearly here that I know I did wrong," he said. "I was foolish and I very much regret what happened. . . . Now I want to get on with the job of rebuilding my life."
CAPTION: Nicholas Leeson, before serving a Singapore prison sentence for fraud.
CAPTION: Barings Bank collapsed in 1995, and most of the blame and the only criminal sentence for the billion-dollar fraud went to trader Nick Leeson.