Barings Trader to Stay in Germany Awaiting Extradition to Singapore

A German court on Friday ordered that Barings bank trader Nicholas W. Leeson remain in jail awaiting a hearing on a petition by the government of Singapore to extradite him in connection with the ruin of Britain’s oldest merchant bank.

Leeson’s German lawyer, Eberhard Kempf, told reporters in Frankfurt that the 28-year-old trader will fight the extradition charge, a battle that could last for months.

“He would certainly prefer to go to London than to Singapore,” Kempf said.

The British government has made no moves to extradite Leeson. But on Friday, Britain’s Serious Fraud Office announced it is opening an investigation into the Barings case following disclosures that senior bank officials in London had been warned of Leeson’s dealings in Singapore last summer but ignored them.

Leeson, who has been accused of breaking the bank by losing an estimated $1 billion in futures trading, was detained Thursday by German police in Frankfurt, where he arrived with his wife, Lisa, on a flight from Southeast Asia. The two had been in hiding for a week after disappearing from Singapore. The German court ruling to keep Leeson in custody came after officials from Singapore delivered an arrest warrant and extradition request. The warrant charges Leeson with “forging documents in preparation for fraud,” Frankfurt prosecutor Hans-Hermann Eckert told reporters.

No date has been set for his next court appearance.

Leeson’s family has told their hometown paper in Watford that they believe he is being set up as a scapegoat for the Barings failure, and the London tabloid press quotes an unidentified friend of Leeson’s as saying that the trader insisted he had been acting with the knowledge of his superiors.

Asked if Leeson had information that could implicate others at Barings, his attorney Kempf said, “I presume.”

Leeson’s wife is quoted in the Daily Mirror upon her return to London as saying, “People must hear our side of the story.”

Leeson was general manager of the Singapore operation with control over both trading and the auditing of trades in his unit. Barings officials have said he hid his losses from them in phony accounts. Observers outside the bank say Barings clearly ignored internal signals and rumors in the market that they were over-extended in Asia.

Some observers have suggested that the bank failed to take action because of infighting, while others say it may have been because Leeson was making so much money for them.

Times researcher Ulli Seibert in Frankfurt contributed to this report.