It was a startling discovery. The staff at Baring Futures Singapore pried open a drawer always kept locked by Nicholas Leeson in February. “There was a stack of paper, “recalls visiting official Tony Railton, senior clerk for futures and options settlements at Barings group headquarters in London. “There were holes in some.” London manager Brenda Granger says she saw what looked like a “fraudulent document.” And Barings settlement director Tony Gamby remembers finding “some cut-and-paste material” and a “letter with a scissor-cut around the signature.” These were some of the clues that the three Barings employees provided Bank of England investigators. The results of that probe were finally released last month. The report mainly blames Leeson, 28, for Feb 27 collapse of 233-year-old Barings, Britain’s oldest merchant bank. Because of limited access to Barings documents in Singapore, the investigators say, they could not shed light on the most disturbing questions. Among them: Was the roque trader part of a conspiracy? Detailed answer may come soon from Singapore. “The Bank of England report looks like it intended to put most of the responsibility on Leeson,” says one analyst in Lion City. “The British may not like it when the Singapore report comes out.” Adds a local banker: “Some other people could be charged for breaching fiduciary trust.” Prepared by two Price Waterhouse executives, Nicky Tan and Michael Lim, the Singapore report is expected to be more thorough. It may spread blame more evenly among Leeson, Barings officials and British regulators. The Singaporeans, who enjoyed the full cooperation of new Barings owner ING Bank of the Netherlands, spoke at length with Barings executives in London, Singapore and Tokyo. Like British probers, they did not interview Leeson, who is being held in German jail. But they sat down with James Bax, Singapore-based regional manager for Baring Investment Bank (BIB), who had warned Barings in London about letting Leeson handle both trading and settlement. The Bank of England was not able to talk to Bax directly, but received comments from him on the reports proposed conclusions. The British probers came down hard on Leeson, who is fighting extradition to Singapore. (He wants to be tried in London.) The Bank of England says the trader appears to have fabricated documents purporting to show that New York securities trader Spear, Leeds, Kellogg (SLK) owed Barings 7.778 billion yen ($86 million). The phoney files were all part of Leeson’s efforts to hide losses of $1.3 billion incurred over a two-year period from unauthorized futures and options trading on the Singapore International Monetary Exchange and the Osaka Securities Exchange. Leeson had been missing for days when Barings staff forced his drawer open. He had abruptly left a Feb. 23 meeting with Railton to discuss that 7.778 billion yen receivable and never returned. The Bank of England has established that Leeson used a special account, bearing the number 88888, to conceal his losses. The account was set up soon after he arrived in Singapore in 1992. While the report does not specify who opened it, the investigators say Leeson was managing it. The broker later arranged for 88888 to be kept out of most reports sent to London. Because of the subterfuge, Leeson managed to appear a winner, “a-star,” as an excolleague put it, seemingly responsible for huge profits. Barings rewarded him handsomely. fled Singapore. While he waits for Germany to decide whether to send him to Singapore, he is selling his story to various publications .. .for a reported total of $4.5 million. Leeson has not gotten round to naming names yet. But he has promised to do so - to the British Serious Fraud Office. The rogue trader says he will help British authorities win convictions, presumably of others in Barings, if they would ask Germany to extradite him to Britain. But London is said to prefer that he face the music in Singapore. The Singaporeans have charged Leeson with 12 counts of cheating and forgery, which could land him in jail for up to 14 years. Last week Gun Records released in Europe a compact disc by a rock group called the Bollock Brothers. Leeson reportedly contributed a verse from a ballad by telephone connection from jail to a Hamburg studio. The not-so-subtle song: "My Way." The world awaits the would-be minstrel's real recital. a. Who is responsible for the failure at Barings Bank? Why? b. Should the Barings Board of Directors be held accountable for the losses? Briefly evaluate the performance of Barings board of directors. c. Was the existence of the 88888 Account one of the fundamental problems at Barings Bank? Why? d. If you are the Financial Risk Manager of Barings Futures Singapore (BFS), what are the potential risk mitigation you can take to curb the situation?