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Trader Blamed for Bank Collapse Detained in Germany

March 3, 1995

FRANKFURT, Germany (AP) _ Singaporean officials delivered an arrest warrant and extradition request today for the British futures trader whose financial risk-taking ruined Britain’s oldest investment bank.

The warrant charges Nicholas Leeson with ``forging auditors’ documents,″ Leeson’s lawyer, Eberhard Kempf, said today. Frankfurt prosecutor Hans-Hermann Eckert said earlier a copy of the warrant mentioned passport falsification and mishandling of funds.

Asked if Leeson had information that could implicate others at Baring Brothers & Co., the 232-year-old bank that collapsed Sunday, Kempf said, ``I presume.″

He said he did not know if Leeson acted alone in his trading at the bank’s Singapore offices.

Kempf said he would fight the extradition. Leeson has repeatedly told police he wants to return to Britain.

``Like anyone else who is in prison, the first thing he wants to do is get out,″ Kempf said before heading into the prosecutor’s office to examine the warrant.

Leeson was to appear before a magistrate in Frankfurt today.

He and his wife, Lisa, arrived in Frankfurt on Thursday after spending about a week on the run in Southeast Asia. Leeson was taken into custody, but Mrs. Leeson was released. Her husband’s lawyer said she had gone to Britain.

Leeson, a manager in Barings’ Singapore office, is blamed for losing an estimated $1 billion by betting _ wrongly _ on which way the Tokyo stock market would go. The mounting losses brought down the 232-year-old bank in a matter of weeks.

The London tabloid The Sun reported today that Leeson called a friend before he was detained at Frankfurt and told him that senior officials at Barings knew and approved of what he was doing. He told the friend, who was not identified, that he would bring them down if they don’t support him, the Sun said.

Also in London, the Financial Times reported today it had obtained internal bank documents showing Barings auditors warned executives in August that Leeson might override the bank’s controls.

The business daily said the audit warned that Leeson had control of trading in Barings’ Singapore office and of the settlement department there, which was supposed to monitor the trades he made.

The audit was provoked by ``exceptional″ profits produced by Leeson’s unit in Singapore last year _ $30 million in the first seven months, or roughly a third of Barings’ profit for the period, the newspaper said.

Barings PLC, the bank’s holding company, on Sunday was put under the control of court-appointed administrators, who are trying to assess what can be salvaged of the institution that had Queen Elizabeth II among its clients.

Adminstrators Ernst and Young said Thursday they were in exclusive negotiations to sell most of the firm to ING Group, a financial services concern based in The Netherlands.

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