Decision on more Barings arrests expected soon

Former directors await Singapore's next move. Stephen Vines reports from Hong Kong

Singapore's Finance Minister, Richard Hu, yesterday indicated that a decision was imminent on whether further arrests would be made following the imprisonment of Nick Leeson in the wake of what he called the Barings ''fiasco''.

Mr Hu was answering a parliamentary question about whether further prosecutions would be made in the light of the Singapore inspectors' report into the affair which made accusations against a number of Barings executives.

"The Commercial Affairs Department (CAD) has been pursuing these leads", Mr Hu said. "They are in the process of finalising their report. Let us wait for it. It should not be long."

The two men most clearly in the firing line, because they are stationed in Singapore, are James Bax, former managing director of Barings Asia Pacific, and Simon Jones, former chief operating officer of Barings South Asia. Both men remain in the island state with their passports held by the authorities.

However the report does not suggest that either played any role in Leeson's unauthorised trading in Japanese stock exchange futures, which triggered the collapse of Barings.

Mr Bax worked entirely on the equities side of Barings' business while Mr Jones was essentially an administrator. Mr Jones did not administer the company's futures trading business as Leeson was authorised from London to conduct his own "backroom" work.

However, they were both directors of Barings Futures (Singapore) and therefore may be held technically responsible for the collapse of the company, which triggered the downfall of the entire Barings edifice.

The Singaporean authorities have a particular problem with Mr Bax because at the only official press conference held in the wake of the Barings collapse last February they highlighted a letter he sent to his superiors in London warning of the lack of control over Leeson's activities, pointing out that, despite his position, he had no role in supervising Leeson's work. The authorities used this letter to demonstrate that Barings had been warned, from the inside, about the problems arising in the futures market trading.

The inspectors handed over their report to the Minister of Finance last September. However, the outlines of its contents were known around last July. Had there been a strong case against either Mr Bax or Mr Jones, it is almost certain that they would have been charged alongside Leeson.

However, it appears that Mr Bax, in particular, gave considerable assistance to the CAD and was sufficiently trusted to be allowed out of the country at least twice on business and once for a family holiday. He was about to leave Singapore again, with the permission of the CAD, at the time the inspectors' report was made public.

Other Barings directors in London, such as Peter Norris, the former chief executive officer of Barings Investment Bank, were slated in the report but can only be returned to Singapore after extradition proceedings which would have to prove the existence of a criminal offence under English law.

The authorities are acutely aware of the dangers of moving solely against the expatriate directors based in Singapore, not least because of the signal it would send to other foreign investors with staff stationed there. Moreover, such a move might encourage foreign directors of companies based in Singapore to leave at the first sign of trouble.