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Re Barings plc and others (No 5), Secretary of State for Trade and Industry v Baker and others (No 5)

COURT OF APPEAL, CIVIL DIVISION
MORRITT, WALLER AND MUMMERY LJJ

MORRITT LJ.
1. In February 1995 the Barings group collapsed under the weight of the loss of £827m incurred through the unauthorised activities of Mr Nick Leeson, the assistant director and general manager of Barings Futures (Singapore) Pte Ltd (BFS). In consequence, on 26 and 27 February 1995, administration orders were made by the court in England in respect of Barings plc (Plc), Bishopcourt (BB&Co) Ltd (BB&Co), Bishopcourt (BS) Ltd (BSL) and Baring Securities (London) Ltd (BSLL). On 27 February 1995 BFS was placed in interim judicial management under the laws of Singapore. Inquiries into the unauthorised activities of Mr Leeson and the causes and circumstances of the collapse of Barings were conducted in London and Singapore. The inquiry in London was carried out by the Board of Banking Supervision of the Bank of England. Its report (BoBS) was published by HMSO on 18 July 1995. The inquiry in Singapore was carried out by inspectors appointed by the Minister of Finance. Their report dated 6 September 1995 (SIR) was published by the Ministry of Finance in Singapore later that year.2. On 21 February 1997 the Secretary of State for Trade and Industry instituted proceedings under the Company Directors Disqualification Act 1986 seeking, pursuant to s 6, disqualification orders, as defined in s 1, against ten respondents who were directors of one or more of Plc, BB&Co, BSL and BSLL. We make plain at the outset that the Secretary of State did not question the honesty and integrity of any of the respondents. The material relied on in support of the application included BoBS and SIR and evidence given to those investigators. Orders ranging from two to five years were made against five of the respondents under the Carecraft procedure (see Re Carecraft Construction Co Ltd [1993] BCLC 1259, [1994] 1 WLR 172) and against another two of them without opposition. The application in respect of the remaining three, Mr Ron Baker, Mr Andrew Tuckey and Mr Anthony Gamby, was heard by Jonathan Parker J over 44 days between 12 May and 21 October 1998. In his judgment given on 1 December 1998 (reported at [1999] 1 BCLC 433) he determined that disqualification orders should be made against each of them. After hearing further submissions as to the length of such orders, on 21 December 1998, he ordered them to be disqualified for six, four and five years respectively. This is the appeal of Mr Baker from the order made against him. He argued his appeal in person. He did so with an ability, clarity and, given the mass of material, brevity for which we both thank and commend him. Given the publication of BoBS, SIR and the comprehensive judgment of Jonathan Parker J we will confine our description of the background to this appeal to what is necessary to explain the judge's decision, the grounds of appeal and our conclusions on them. Introduction

3. Mr Baker became a director of BB&Co on 27 April 1992. He was also a member of the treasury and trading committee of BB&Co and of the assets and liabilities committee (ALCO) into which it merged in November 1994. BB&Co carried on the business of a merchant bank specialising in corporate finance and debt trading. It was the wholly owned subsidiary of Plc and the holding company of BSL. BSL was a broker dealer operating primarily in the Asia Pacific region. The indirect subsidiaries of BSL included Baring Securities (Japan) Ltd (BSJ), Baring Securities (Singapore) Ltd (BSS), BSLL and BFS. As we have indicated Mr Leeson was employed by BFS. In terms of 'line management' whereby juniors report to seniors in a particular geographic location or within a particular company Mr Baker was not responsible for his activities. But Barings also operated a system of 'matrix management' whereby each type of trading, business activity or financial product...
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