starring Ewan McGregor, Anna Friel, Yves Beneyton, Betsy Brantley, Michael Garner, Simon Shepherd and Nigel Lindsay
written and directed by James Dearden
Do you remember when Britain’s Barings Bank went bankrupt a few years ago? That was in 1996, I think. Barings Bank was the oldest private bank in the world. Not the largest, by any means, but one of the biggies in the U.K., and it was brought to ruin by a “rogue trader” - Nicholas Leeson - making illegal, un-monitored stock market trades from his base in Singapore that ran up over ₤1 billion in debt spelling insolvency for Barings, and creating fears for a time that the entire British banking infrastructure was on the verge of collapse.
It was in all the papers.
Nick Leeson fled Singaporewith his wife, Lisa, trying to get back to Britain. While on a transit stop in Frankfurt, Germanyhe was apprehended and extradited back to Singapore where he was eventually convicted of fraud, forgery, and “breach of trust.” Sentenced to 6½-years in Singapore’s Changi jail, he was released after 4½-years. (He was diagnosed with cancer while in prison, as well.) He told his fascinating story in Rogue Trader, co-written with Edward Whitely, on which this film is based.
This is a story of young people - much younger than I am now - intoxicated with the wealth of their success in business and the expatriate atmosphere of the Little Tigers economies of Asia (places like Singapore, Hong Kong, Taiwan, Malaysiaand Indonesiabefore the financial meltdown of 1997).
Nick Leeson lands his dream job as a futures trader on the Singapore Stock Exchange. An employee of the bank, he is supposed to keep his futures trading separate from the banking business proper. It’s technically illegal to mix the two. But when he makes some errors and loses some money he opens an office errors account - the five-eights, or 8-8-8-8-8 account - to store the records of the losses until some future time when he can get funding to settle them and balance his accounting. Setting up such an account was not the problem. The problem was that instead of regaining his losses on the market and balancing his books he continued losing money hand-over-fist and lost all control.
In the end he lost over ₤300 million. But by the time the bank executives became aware of his activities and losses they were too slow to act. The information leaked to the media, became public knowledge, caused a crash in the value of Barings bonds and stocks and the losses ballooned to over ₤1 billion before the bank could even start damage control-and-recovery. Recovery became impossible. In the end Barings was sold to ING Bank of Hollandfor a mere ₤1. A sad story. But how and why did it happen?
Money. Madness. Pride. Greed. Greed-motivated failure to slow down, investigate and stop a disaster that was eminently detectable to anyone who looked close enough. That’s what it was all about.
British people have a special disposition for being twits.
Like most computerized money transactions today - on the stock exchange or at you local UFJ ATM - Nick Leeson was not dealing in anything real. I mean really Real. For investors and speculators today money is just a number on a computer monitor, and real losses or gains in value are just speculation, estimates, whims almost. So Leeson was losing his customer’s money by the truck load, and paying them off with the bank’s money so it looked like he was earning profits through his stock market trading, but all the while hiding his losses through chicanery and clever accounting.
Everyone at the head office in Londonthought Leeson was earning truck loads of money, and so no one bothered to closely audit his accounts when irregularities began to be noticed. Everyone was drunk on greedy dreams of profits all the while they were losing their shirts. Young, megalomaniac twits, that’s what I call them, and it illustrates a proposition I have advanced before, that business people with MBA degrees are better at ‘managing’ businesses to death then they are at profitably operating them. In addition, British people have a special affinity for being twits.
Leeson’s boss in London, Ron, is fond of making greedy-sounding exclamations that he probably doesn’t really understand: “We are going to make so much money. But more to the point, you are going to make so much money; Failure is not an option; and, Being good is not good enough.”
Nick tries to use business doublespeak and jargon to confound his superiors when they begin to ask questions about all the cash injections he requests from the bank - supposedly to meet his customers’ margin calls. And it works, too. In the film actors strike odd, confused visages when they hear Leeson talking, but everyone-to-a-man is too shy to say, “I don’t understand. What does that mean?”
Leeson was regarded as a stock market genius. He knew the truth as anything but and was constantly under stress that he would be discovered as a fraud. Which he eventually was, of course. He traded form Singapore, but always using the Japanese Nikkei Index, and after the Kobe Earthquake of 1995 (the “Great Hanshin Earthquake”) the Nikkei sank below ¥18,000 and the game was up. In order to return to profitability, regain the money he had lost and balance his books Leeson needed a Nikkei Index of about ¥19,000 or above. The Nikkei suffered a long, slow decline all through the 1990s, so Nick’s position in the mid-90s was fragile at best.
In my personal life I do something similar to Leeson’s attempts to hide his bad trading. I mean, I live my liveout of two bank accounts - one for everyday use and anniversaries, etc. But I often find that I have to shuffle money from one account to another to pay health insurance, resident taxes and more, and in order to successfully pay for those special tings like airplane tickets. This fiddling around between the two accounts becomes a perpetual habit.