Rogue trader Leeson says we should default on debt

by Keith Kelly

The man who brought down Britain’s oldest merchant bank by losing more than £200 million through reckless trading says the Irish Government should reject any bailout by the IMF and the EU and instead default on its loans.

Nick Leeson, who was sentenced to six and a half years in a Singapore prison for his actions at Barings Bank, says that given the relatively small size of the Irish population, the country cannot afford the bailout being offered to the Irish Government as it would cripple the country for years to come.

“Ireland has to default on its debt to the bond holders, and the time to do that is now – if you get involved with the IMF, it will be too late,” said Mr Leeson, who now works as CEO of Galway United.

“The Government needs to postpone the budget, resign and call a General Election, because any other course of action will be too severe for the country. The size of the bailout being discussed cannot be repaid by a country with a population of less than five million people, it just can’t be done.

“The right thing to do is default on repayments to bond holders and start afresh, but that has to be done before any support is accepted from the IMF, as once that support is accepted, it will be too late,” he said.

Leeson, now settled in Galway, joined Barings in 1989 and began working on the futures market on the Singapore International Money Exchange three years later. He began making unauthorised speculative trades which were a success at the start, making the bank large profits, but things soon took a turn for the worse and he began to lose investors’ money.

He used an error account to hide his losses, and the fact he was retained as a trader while continuing in his role as settling his trades meant he was able to hide his losses.

He was eventually caught when he speculated on January 16, 1995, that the Japanese stock market would not move significantly overnight. His timing could not have been worse, as an earthquake hit near the Japanese city of Kobe, sending the markets plummet.

He fled the country but was eventually arrested in Germany, and returned to Singapore for trial. While in prison, he wrote the book called Rogue Trader, which was later made into a film with Ewan McGregor in the lead role. 

For more on this story, see the Galway City Tribune.