Barings+Bank.ppt

Barings Bank: Rogue Trader Where are the slippery slope? Are there any potential threats to Baring Bank’s governance? Misunderstanding objectives and fiduciary duty? He made money! Failure to identify and manage ethics risks? He was in control of the investment operation and the record-keeping back office that should have provided information that would have brought questions on his increasing losses and need for cash. The Head Office of Barings had warnings in term of reports of potential lack of control and of the need of lots of cash, but did nothing because they thought Leeson was making a lot of money, Conflict of interests? Management were needy and greedy Nick was operating on his own. He had evidently decided to make unhedged investments on his own to increase his profits to recoup his losses that had been hidden in the Error Account No. 88888. Dealing with star Unfortunately, exceptions to compliance or control systems usually end up badly. The star gets into trouble because s/he are unaware of problem areas, or think that rules are not for them to observe. Therefore, the star must be convinced or cajoled into accepting the ethical culture and compliance system. Top management must set a strong, committed example, and be convinced what they are doing is important or else the star may not accept the overture. The star may well respond to a self-interest argument – that the system will protect the reputation and financial health of the organization, and thereby protect him from other employee actions. He, as a leader should serve as a good example to others. After all, he wouldn’t want to see another case like Barings Bank, or… What ethical and accounting controls would you advise ING to institute I would recommend instituting the following in order to move the firm away from reliance on faith in the “old boy” or “old school tie” networks: a full ethical culture program, including: a code of conduct Training initial and annual sign-off reinf