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.Eventually his losses amounted to some £780 million,the bank went under (a rescue effort in London failed) and was declared bank-rupt, and was then sold for one pound to the Dutch ING Bank.Leeson had walked out of the office and left Singapore a few days before his28th birthday in the hope of reaching London where he hoped to cooperatewith the Serious Fraud Office and face a hopefully lenient sentence in a Britishjail.During a landing at Frankfurt, however, he was arrested by German policeand held until his extradition to Singapore.In that period he gave an interviewto David Frost; he had not yet faced trial so he was understandably cautious.Nevertheless, he made illuminating comments about his path into crime.Afteran early release from a Singapore prison on health grounds (he had been sen-tenced to six and a half years), he was later far more critical of Barings in inter-views.But he did not substantially deviate from this early account.In that interview with Frost for the BBC he related how he had dug himselfinto a hole that he could not climb out of.He claimed that the first deviantstep in Singapore involved £20,000, which gave him  sleepless nights.Thatfirst step was ostensibly to help a young inexperienced woman who had madea minor error: to hide her mistake he opened an  error account.The idea ofan error account is that you  park your mistakes there until you can rectifyanomalies at a later date.Leeson began to use the error account to hide hisown fraudulent transactions: when the amount was £40,000 it was a little eas-ier than with that first £20,000 he recounted.Apparently it became increas-ingly easy for him to accept the fraudulent amounts until they had reachednearly £800 million (!) and he faced exposure.He explained that on a bad day109Individuals, Corporations and CrimeThis SAGE ebook is copyright and is supplied by NetLibrary.Unauthorised distribution forbidden.05-Minkes-3706:06-Minkes-Ch-05 5/29/2008 12:55 PM Page 110he might lose £30 million but on a good day make £40 million: this reinforcedhis conviction that he could make it and he tried to beat the market on hisown; if he kept taking positions, then the market might just respond.He alsoadded  this was not like real money as if commitment to the game had tiedhim to the means, the gambits in the dealing room, and clouded out the ends(that he was investing other people`s money, real money, in a fiduciary rela-tionship).This stance is rather like the gambler on a losing streak mortgagingthe house for one final throw of the dice to win everything back  or losingeverything.Indeed, Frost says,  But that s a gambler speaking and Leesonreplies that futures and derivatives is effectively a form of gambling: he simplytook a risky gamble and lost.The significance of Leeson s account is twofold.First, he had committed adeliberate fraud with staggering consequences (although the offences were, infact, relatively minor and technical) and on the surface it appears that he actedon his own as an  individual.His downfall perfectly exemplifies the social-psychology of the slippery slope metaphor.This assumes that once on theslope you will go on  sliding.For Leeson is quite explicit on the nature of theslope  the initial move is troublesome but each successive move became eas-ier for his conscience  and the way he gradually became committed todeviance while able to rationalize it to himself.We will never know with anycertainty what really went through his mind but he conveyed it as a businessaccident rather than deliberate criminality and, at least initially, committed inthe interests of the company.Indeed, he stole nothing.Second, and crucially, he could only commit and get away with the fraudbecause he was working in an organization that was seriously malfunctioning.The Bank of England Report (1995) and other sources make it perfectly clearthat almost everything that could go wrong did go wrong:Barings collapse was due to the unauthorised and ultimately catastrophic activities of, itappears, one individual (Leeson) that went undetected as a consequence of managementfailure and other internal controls of the most basic kind.Management failed at various lev-els and in a variety of ways & to institute a proper system of internal controls, to enforceaccountability for all profits, risks and operations, and adequately to follow up on a num-ber of warning signals over a prolonged period.Neither the external auditors nor the reg-ulators discovered Leeson s unauthorised activities.(Bank of England Report, 1995: 250)And let us bear in mind that this was a highly experienced, respectable bankwith an impeccable reputation.In brief, senior management did not under-stand this new business of derivatives: internal and external signals about hisover-exposure on the markets were ignored; local supervision of him was trulyabject; he was able to work in the back and front office at the same time; andwhen he asked for large sums of money from London, these were sent with-out hesitation although they even exceeded Bank of England limits.In effect,this was system failure which created a context that presented him with an110 Corporate and White-collar CrimeThis SAGE ebook is copyright and is supplied by NetLibrary.Unauthorised distribution forbidden.05-Minkes-3706:06-Minkes-Ch-05 5/29/2008 12:55 PM Page 111enticing opportunity to commit fraud on a massive scale.The organization wascomplicit and virtually made him a victim of its gross incompetence so that hecan even be seen as a scapegoat for serious management failure.In this portrait there is a depiction of the psychology of a fraudster enteringdeviance and sliding down the slippery slope.But the metaphor could also beapplied to the organization: Barings was on a slippery slope of its own andLeeson simply made the slide more precipitous until it ended in bankruptcy [ Pobierz caÅ‚ość w formacie PDF ]