827 million pounds. I want you to just sit with
that number for a moment. Don't just let it wash
over you like another headline about, you know,
the national debt or a tech company valuation.
Picture it in cash. Picture it in 1995. Yeah,
that's the key. This isn't today's money. At
the time, in U .S. dollars, you're talking about
roughly 1 .4 billion dollars. 1 .4 billion. Gone.
Just evaporated into thin air. It is a staggering
sum. I mean, to put that into perspective, that
amount of money could have funded the construction
of, I don't know, multiple hospitals, finance
small nations. Or as it turns out. Or as it turns
out, it could completely wipe out an institution
that had stood for over two centuries. And that
is the key here. We aren't talking about a loss
spread across a decade of bad quarterly earnings
or a slow agonizing decline where everyone sees
the end coming. No, this is a cliff. It was a
cratering event, a nuclear detonation in the
financial sector. And the victim wasn't just
any bank. It was Barings Bank. The Queen's Bank.
The Queen's Bank. I mean, come on. This is the
United Kingdom's oldest merchant bank. We are
talking about an institution with deep. deep
roots. This is the bank that financed the Napoleonic
Wars. Unbelievable. When the United States bought
the Louisiana territory from France, the Louisiana
purchase bearings helped finance that deal. It
survived the Great Depression. It survived two
world wars. It felt permanent, you know, like
the Tower of London or the monarchy itself. And
then effectively overnight, it was brought to
its knees. And usually when you see a collapse
of that magnitude, particularly of an institution
that that. entrenched, you expect a really complex
web of causes. Right. You expect a rival nation
state conducting economic warfare. You expect
systemic rot involving the entire board of directors
or, you know, a massive, sophisticated criminal
syndicate with hundreds of operatives and supercomputers.
Right. You expect a Bond villain. You expect
Blofeld stroking a cat in a volcano lair. Exactly.
But here we don't have a syndicate. We don't
have a geopolitical conspiracy. We have Nick
Leeson. What? One guy, a 28 -year -old derivatives
trader. A working class kid from Watford. That
is the part that absolutely blows my mind. This
isn't a story about a boardroom of gray -haired
executives in smoke -filled rooms plotting to
defraud the public. No. It's about one young
man in a brightly colored trading jacket in Singapore,
basically gambling the house, the whole house,
and losing. It really is the ultimate case study
in the butterfly effect, or maybe more accurately,
the snowball effect. The snowball effect. I like
that. It's about how a small snowball, a tiny
little lie rolling down a very steep hill, can
eventually trigger an avalanche that just buries
a mountain. So that is our mission for this deep
dive. We are going to unpack how on earth this
happened. How did a boy from a council estate
in Watford end up holding the fate of the global
financial markets in his hands? We aren't just
going to look at the numbers. We're going to
look at the psychology of the cover -up. We need
to understand the sunk cost fallacy that drove
him, the absolute failure of the checks and balances
that should have stopped him, and just the human
story of how a little lie becomes a billion -dollar
disaster. And we have a great stack of sources
for this one. We're analyzing the biography and
criminal proceedings of Leeson, his own accounts
from his autobiography, Rogue Trader, and, of
course, the official inquiry reports. It's going
to be good. It is a fascinating and, frankly,
a terrifying look at the man behind the headlines.
So let's rewind. Let's go all the way back to
the beginning. Who is Nick Leeson? Because when
I think rogue trader destroying a merchant bank,
I picture someone who went to Eaton. Then Oxford.
Someone born with a silver spoon. Exactly. Someone
born with a silver spoon in their mouth, wearing
a signet ring and speaking in that very specific
upper crust received pronunciation. And this
is the first misconception we need to clear up.
And it's so crucial to understanding the psychology
at play here. Nick Leeson was born on February
25, 1967 in Watford, Hertfordshire. His background
was very much working class. The sources mentioned
he grew up on a council estate. For our international
listeners, that's basically public housing. Exactly.
His father. was a self -employed plasterer. His
mother was a nurse. This was a grounded blue
-collar upbringing. Right. He attended Kingway
Junior School and then Parmiter School in Garston.
He wasn't rubbing shoulders with the children
of dukes and earls. Not at all. And academically.
Was he some sort of goodwill -hunting -style
secret genius? Did he show early signs of financial
brilliance? Not in the traditional academic sense,
no. He left school after the sixth form in 1985.
He had six O -levels and two A -level passes.
It's respectable, certainly. It shows he was
competent. But it is not the academic pedigree
you would typically associate with the high -flying
world of international derivatives trading in
the 80s and 90s. Not at all. I mean, in that
era, the city of London was still very much an
old boys club. It really highlights the contrast,
doesn't it? You have this incredibly old -school,
aristocratic institution like Barings, where
pedigree was everything, and then you have Leeson.
It makes his rise seem even more impressive at
first. It does. He must have had a massive chip
on his shoulder. I think that's a fair assessment.
He started at the absolute bottom. His first
job was as a clerk at Coutts' private bank on
Lombard Street. Coutts. Again, very posh. Very
posh. That's where the royal family banks. But
Leeson wasn't managing their wealth. He was settling
paper checks. He was in the plumbing of the banking
world. Precisely. Crediting and debiting accounts.
It's tedious, detailed work. But, and this is
important, it teaches you the mechanics of how
money moves. It teaches you where the cracks
are in the system. Right. So in 1987, he moves
to Morgan Stanley. moving up in the world. A
big hitter. A massive step up. But he was still
in the back office. He was in the futures and
options back office, clearing and settling derivatives.
And this distinction is going to be the engine
of our entire story, the difference between the
front office and the back office. OK, let's break
that down, because I feel like the cultural difference
between those two rooms is everything. Front
office is the glamour, right? That's the trading
floor, the shouting, the phone slamming, the
buying and selling. It's the Wolf of Wall Street.
Correct. The front office creates the revenue.
They are the rock stars. They get the massive
bonuses, the client dinners, the glory. The back
office is the engine room. They do the paperwork,
the settlement, making sure the trades actually
happen and the money is where it's supposed to
be. They are often viewed by the traders as support
staff or worse as bureaucratic hurdles. The roadies
versus the band. That is the perfect analogy.
And the traders often treat the back office with
a certain level of disdain. Leeson was in the
back office, but he desperately wanted to be
in the front. And he hit a ceiling at Morgan
Stanley. He did. Without a university degree,
the path to the trading floor just wasn't there
for him. So in 1989, he joined Barings Bank.
For the princely sum of £12 ,000 a year. Which,
to be fair, is about £42 ,000 in today's money.
A decent starting wage for a young man, but he
wasn't rich. However, at Barings, he started
to carve out a reputation for himself, not as
a trader yet, but as a troubleshooter, a fixer.
I love this part of the story because it shows
he was actually good at his job. He wasn't incompetent.
He was actually a very effective operator. Incredibly
competent at the administrative side. There's
a specific incident in 1990 that really cemented
his reputation. He was sent to Jakarta, Indonesia.
Barings had a massive mess on their hands, about
$100 million in unpaid share certificates. Just
sitting there. Just sitting in piles. It was
a backlog nightmare. The back office in Jakarta
had completely melted down. Leeson goes in, rolls
up his sleeves, and he sorts it out. He untangled
the knot. He did. He cleared the backlog. He
proved he could handle pressure, that he could
navigate chaos, and that he understood the systems
better than anyone else. So to the executives
back in London. He looked like a safe pair of
hands. The safest. And then he even investigated
fraud, didn't he? Yes. The supreme irony of this
timeline. In 1991, he returned to London to investigate
a case where another employee was using a client's
account to trade on their own behalf. He helped
unravel that scheme. So by 1992, Barings looked
at Nick Leeson and saw a loyal, effective, sharp
employee who understood the plumbing of the bank
better than anyone. Which... makes what happens
next so tragic. He had built this solid reputation.
He was the guy you sent in to fix the mess. So
naturally, when Barings decides to expand, they
look to him. April 1992. Barings opens a futures
and options office in Singapore. Their goal is
to trade on Cimex, the Singapore International
Monetary Exchange. The Asian markets are exploding
at this time. It's the place to be. That's where
all the action is. They need someone to run it.
They choose Leeson. He's appointed general manager.
This is his big break. He's going to run the
show in Singapore. He is finally getting a shot
at the big time. Everything he wanted. But before
he even gets on the plane, there is a massive
red flag, a huge sliding doors moment that nobody
seems to notice, or rather a red flag that gets
buried. This is a critical moment. Before leaving
for Singapore, Leeson applied for a broker's
license in the UK. You need a license to trade.
And he was denied. Denied? Why? He was their
golden boy fixer. Fraud on his application. Oof.
That is a heavy word. What did he do? He had
a county court judgment against him for an unpaid
debt to National Westminster Bank. It wasn't
a huge amount of money, but it was a legal judgment.
Okay. On the license application, there's a box
that asks, do you have any county court judgments
against you? Leeson ticked no. He lied. He lied.
The regulators in the UK checked the records,
saw that he lied, and they denied the license.
Flat out. So he can't be a broker in the UK because
he lied about a debt. But he's about to go to
Singapore to run a trading desk. Did Barings
know? The source material indicates that neither
Leeson nor Barings disclosed this denial when
he applied for his license in Singapore. So they
just glossed over it, looked the other way. It
appears so. Whether it was a communication breakdown,
I thought you told them, or a willful blinding
to get their man in place. The result is the
same. The result was that the Singapore authorities
were unaware of his history in the UK. He got
the license in Singapore. That is foreshadowing
if I've ever heard it. He starts his new life
with a secret. But the real issue wasn't just
his license, right? It was the job description
itself. This is where the expert in you must
be screaming at the transcript. Oh, this is the
part that makes every risk manager, auditor,
and compliance officer in the world wake up in
a cold sweat. Laughs. I'd imagine. In Singapore,
Leeson was appointed general manager. That meant
he was in charge of the front office, the traders
executing the bets on the SimEx floor. But he
was also in charge of the back office, the people
settling the trades and checking the accounts.
Okay, let's unpack this. Why is that such a bad
thing? To a layman, it sounds like efficiency.
One boss for the whole branch. It is a fundamental
violation of financial safety. It's called segregation
of duties. You need the person keeping the score
to be different from the person playing the game.
If the person making the bets is also the person
writing down the results, they can write down
whatever they want. There's no referee. He is
the pitcher and the umpire. Exactly. There was
no one to check his work because he was his own
boss in both departments. He could make a trade
on the floor, lose money, walk back to the office,
and essentially... Tell the computer system and
the staff he managed to ignore that trade or
record it differently. It removed the only safety
net that exists in banking. The only one that
matters. And Barings allowed this. They did.
It was a satellite office. They wanted to keep
costs down. Why hire two managers when Nick the
fixer could do both? They trusted him. And at
first, that trust seemed well placed. He arrives
in Singapore. He starts trading. And he's killing
it. He was seen as a superstar. Now, we have
to clarify what he was supposed to be doing.
He was supposed to be doing arbitrage. Right.
Let's define that. Arbitrage sounds fancy, but
it's actually a very low risk strategy, isn't
it? Theoretically, yes. It's supposed to be boring.
Arbitrage is exploiting a tiny price difference
between two markets. In this case, Leeson was
trading Nikkei 225 futures. He would buy contracts
on the CMAX in Singapore. and sell them on the
Osaka exchange in Japan, or vice versa. If the
price in Singapore is $100 and the price in Osaka
is $101? You buy in Singapore, sell in Osaka,
and pocket the $1 difference. Exactly. It's free
money, basically. Or at least it should be. It's
steady, boring money. You aren't betting on the
market going up or down. You are just betting
on that little price gap closing. London thought
he was doing this safe, boring trading. But because
of his dual role. He could hide the fact that
he was doing something very, very different.
He wasn't just doing arbitrage. He was gambling.
But initially, the gambling paid off. Big time.
He made 10 million pounds for bearings, which
was roughly 10 % of their entire annual profit
at the time. Just stop and think about that.
One guy in a small office in Singapore is generating
10 % of a historic bank's entire annual profit.
He must have been treated like a king. Untouchable.
He earned a bonus of £130 ,000 on top of his
£50 ,000 salary. He was the golden goose. But
beneath the surface, the mechanism for disaster
was already running. This brings us to the infamous
account number. You know this story, you know
the number. 8888. A very lucky number in Chinese
culture. 8 symbolizes prosperity. The irony is
just, it's painful. So... What was this account
actually supposed to be? Officially, it was an
error account. In trading, especially back then,
with open outcry, pits people shouting, using
hand signals, paper tickets mistakes happen constantly.
You buy when you meant to sell. You buy 100 contracts
instead of 10. These small discrepancies happen
every single day. So it's like a junk drawer
for small mistakes until you can sort them out.
Precisely. You put the bad trade in the error
account, you unravel it, you take the small loss,
you report it, and you move on. It is standard
practice. But Leeson began using it for a very
different purpose. And the sources say the first
time he used it, elicitly. It wasn't even for
his own mistake. That's the story Leeson tells,
and it aligns with the timeline. He claims he
first used account 88888 to hide a mistake made
by a subordinate. A young, inexperienced team
member had been assigned to buy 20 futures contracts
for Fuji Bank. Instead, she sold them. She sold
them. A classic mix -up. But the market moved,
and suddenly that mistake has a price tag. How
much? It cost Barings 20 ,000 pounds. Now, in
the grand scheme of a merchant bank, 20 ,000
pounds is a rounding error. It is manageable.
Right. If he had reported it. He would have taken
a slap on the wrist. Maybe the junior staffer
would have been reprimanded. But life would have
gone on. But Leeson didn't report it. Why? He
wanted to protect his team. He wanted to be the
good boss. And perhaps, more importantly, he
wanted to protect his own image as the manager
who ran a tight, flawless ship. He didn't want
London to think his office was... sloppy. So
he hid the loss in account 88888. He did. And
that is the first step on the slippery slope.
Once you realize you can hide a 20 ,000 pound
loss and no one notices, it becomes a tool. It
becomes a solution to every problem. He used
it to cover mistakes by a trader who came in
hungover. It became the rug under which he swept
all the dirt. But then, Leeson himself made a
massive error. Okay. He forgot to reconcile a
discrepancy of 500 contracts. 500 contracts.
That is a significantly larger problem than 20
contracts. We're talking about a U .S. dollar
loss of $1 .7 million. Wow. OK, so now the stakes
are totally different. Twenty thousand pounds
is a sorry boss moment. One point seven million
dollars is a you're fired, your career is over
and maybe you get sued moment. Exactly. He concluded
that the only way to keep his job, his lifestyle,
his reputation as a star was to hide it. So he
shoves it in the five eights account. He did.
And because he controlled the back office, he
could instruct the system to simply exclude account
88888 from the reports that were sent to London.
So London sees the profits he's reporting from
his winning trades, but they don't see the losses
accumulating in the secret drawer. They are looking
at a balance sheet that is effectively a fiction.
A complete fiction. London thought he was executing
a very specific low risk strategy. They saw the
profits coming in. What they didn't see was that
to generate those profits, he was taking wild,
unapproved risks. And every time he lost, he
just hid the evidence. And there's a question
about personal gain here, too. Leeson always
insisted he didn't use the account to steal money
for himself, rightly. He wasn't siphoning cash
into a Swiss bank account to run away to a tropical
island. He has always maintained that. He claims
it was all about reputation management, keeping
his job, and maintaining that star status. However,
we have to be objective with the sources. Investigators
later located approximately $35 million in various
bank accounts tied to him. That is a significant
discrepancy from, I just wanted to keep my job.
It is. Whether that money was... bonuses he felt
he earned through his fraudulent profits or direct
skimming is, I think, up for debate. But regardless
of whether he was lining his own pocket, the
primary driver of the collapse was the trading
losses themselves. The hole he was digging was
getting deeper every single day. And this brings
us to the psychology of the gambler. Because
that's what he became. He wasn't trading anymore.
He was gambling. And he had a specific strategy
for when he was losing. The doubling strategy.
In gambling theory, it's often called the Martingale
system. It's seductive because the math seems
to work. Right. The idea is simple. If you lose,
you just double your bet next time. Exactly.
Because if you win the double bet, you make back
your original loss plus a profit. If you bet
100 pounds and lose, you're down 100. So you
bet 200. If you win, you're now up 100 overall.
If you lose that, you bet 400. Then 800. It works
mathematically until you run out of money. Or
until a house limits your bet. But here, Leeson
was the house. He was the one approving the funds
from London. He was the one overriding the limits.
And the most dangerous part. It had worked for
him before. It had. In 1993, he had a negative
balance of £6 million in the error account. He
doubled down, the market turned in his favor,
and he cleared the debt. He got back to zero.
He even vowed he would stop. But you never stop
when you're winning like that. That just reinforces
the bad behavior. It tells you, I can fix this.
I fixed it last time. I'm invincible. That is
the success bias. He believed he was a trading
genius who could outsmart the market. He thought
he could bend the mickey to his will. But the
numbers started to turn against him and they
turned aggressively. Let's look at the timeline
of these losses because the acceleration is just
terrifying. At the end of 1992, the error count
is down 2 million pounds. Manageable for a bank
like Barings, but bad. Okay. By late 1993, it's
down 23 million. This is now a serious crisis.
A huge problem. And by the end of 1994, it has
ballooned to 208 million pounds. 208 million
pounds. That is. I mean, how do you hide a hole
that big? You can't just slide that under the
carpet. That's a mountain under the carpet. You
have to lie constantly. You have to become a
master manipulator. Leeson had to fabricate stories
to London to explain why he needed more and more
cash. Right. Because trading requires cash. It
requires margin. Can you explain that for us?
Sure. When you trade futures, you don't pay the
full price up front. You put down a deposit,
which is called a margin. If the market moves
against you, if you are losing money. The exchange,
in this case Cimex, issues a margin call. They
call you up. They say, you are risky right now.
Give us more cash to cover your position or we're
closing you out. So Cimex is calling Leeson saying,
we need $10 million today. And Leeson has to
call London to get it. Exactly. And he would
tell London, hey, business is booming. We're
doing so many trades for clients. I need more
liquidity to fund these profitable positions.
Or he would say the exchanges raised their rates
or a client is late paying. He made up endless
excuses. And London sent the money. He sent the
money without close scrutiny because Leeson was
their star performer. You don't question the
goose laying the golden eggs, even if the goose
is asking for an awful lot of bird seed. They
were blinded by the reported profits. They thought
they were funding a money printing machine. There
is a famous story where the auditors actually
got close. They asked about a discrepancy. And
Leeson forged a bank statement. Forged it how?
He physically cut and pasted numbers from one
statement to another using scissors and glue,
photocopied it to hide the cut lines, and faxed
it to the auditors. High -tech fraud. Scissors
and glue. And it worked. They signed off. So
we enter 1995. The hole is massive, $208 million.
But maybe, just maybe, if the market stays calm,
if nothing crazy happens, he can slowly trade
his way out of it. That was likely his hope.
He needed stability. He needed the market to
be boring so he could earn premiums and slowly,
slowly fill that hole. So on January 16, 1995,
he placed a massive bet designed to profit from
a quiet market. He placed a short straddle on
the Singapore and Tokyo exchanges. OK, short
straddle. That sounds technical. Break it down
for us. What was he betting on? A short straddle
is a volatility strategy. You are betting that
the market will not move significantly up or
down. So stability. You want the price to stay
within a tight range. You're essentially selling
the potential for big movement. If the market
stays calm, you collect the premiums, the fees
and make a profit. It's a bet on boredom. So
he's looking at the Japanese economy and saying,
stay still. Don't do anything crazy. Just have
a normal Tuesday. Yes. He practically bet his
life and the bank's life on a quiet day in the
markets. And then the universe intervened. January
17th, 1995. The very next day. The Great Hanshin
Earthquake hits Kobe, Japan. It was a catastrophe.
A magnitude 6 .9 earthquake. It devastated the
city of Kobe. Bridges collapsed. Buildings fell.
Fires raged. Thousands of people lost their lives.
A massive humanitarian disaster. And naturally,
the Asian financial markets reacted. They reacted
violently. The foundation of the Japanese economy
was shaking, literally and metaphorically. The
Nikkei index plummeted. And Leeson's bet was
that the market would stay stable. Instead, it
swung wildly downwards. His short straddle was
decimated instantly. He was losing millions.
by the minute. This is the moment. This is the
ultimate crossroads. He could have stopped. He
could have picked up the phone, called London
and said, there's been an earthquake. It's a
natural disaster. The positions are blown. We've
lost a lot of money. It would have been a career
-ending phone call. He would have been fired.
He would have been investigated for the previous
losses, for sure. But bearings would have survived.
They would have taken a massive hit, maybe hundreds
of millions, but they likely would have survived.
The earthquake would have been the excuse. It
was an act of God. But he didn't make the call.
No, he did the opposite. This is the sunk cost
fallacy taking over his entire brain. He tried
to recoup everything in one go. What did he do?
He looked at the crashing market and decided
to bet on a rapid recovery. He bet that the Japanese
economy would bounce back immediately after a
massive earthquake. That seems insane. It was
a long, long future arbitrage. A desperate, massive
bet that the Nikkei stock average would rise.
He was buying futures contracts aggressively.
He was effectively trying to prop up the entire
Japanese stock market single -handedly with Barings
money. He was trying to catch a falling knife.
And he was doing it with money Barings didn't
really have. He was leveraging the bank to the
hilt. But the recovery never happened. The aftershocks
continued, the damage assessment grew worse,
and the market stayed down. And the losses just
kept ticking up. Every time the number on the
screen dropped, Barings lost millions more. By
February, the game was up. The losses in account
808 .88 reached 827 million pounds. 827 million.
Which was twice the available trading capital
of their entire Barings group. He had bet the
bank. Literally. Yeah. And lost it twice over.
He lost the bank. The equity was gone. The reserves
were gone. It was all gone. So what does he do?
The walls are closing in. The margin calls are
coming in. And he has no more lies to tell. Does
he face the music? On February 23, 1995, Nick
Leeson leaves a note on his desk. Two words.
What did it say? I'm sorry. And he flees. He
runs. He and his wife Lisa, they flee Singapore.
Imagine that flight. You're sitting in economy
class knowing that when you land, the entire
global financial system is going to be talking
about you. Knowing you've destroyed a 233 -year
-old institution. Three days later, February
26, Barings Bank is declared insolvent. There
was a frantic attempt in London to organize a
bailout. The Bank of England got all the major
banks in a room. We need to save Barings. But
when the other banks saw the scale of the black
hole, that 827 million number, they walked away.
Nobody wanted to touch it. Nobody. The Bank of
England didn't step in to save it, and Barings
collapsed. Imagine the scene in London. People
showing up to work at this centuries -old bank,
finding out it's gone. 1 ,200 employees lost
their jobs. People lost their pensions. All because
of account 88888. Meanwhile, Leeson is on the
run. Where did he go? It was a global manhunt.
He was the most wanted man in the world. He went
to Malaysia, then Thailand, and finally made
his way to Germany. He was trying to get back
to the UK, right? He was. He thought he would
get a fairer trial there. He was terrified of
the Singaporean judicial system. Singapore is
known for being very strict. He did not want
to end up in Changi prison. But he didn't make
it to Heathrow. No. He was arrested in Frankfurt
on November 20, 1995. And then the extradition
battle begins. Which he lost. He was sent back
to Singapore. The Singaporean authorities wanted
to make an example of him. This happened on their
watch, on their exchange. They needed to show
that their financial laws had teeth. Right. And
that you couldn't just treat their market like
a casino. So he goes to trial. What was the charge
exactly? He pleaded guilty to two counts, deceiving
the bank's auditors and cheating the Singapore
exchange, which included forging documents. Remember
the scissors and glue? Scissors and glue. And
the sentence. It's been enough years. In Shandy
Prison. Now, Changi has a reputation. It's not
a country club. It's not one of these white -collar
resort. prisons? Not at all. It's a very strict,
tough prison. We're talking sleeping on concrete
floors, minimal comfort, strict discipline. And
while he was in there, his life continued to
fall apart. He got sick, right? Very sick. He
was diagnosed with colon cancer. That is just
brutal. Facing a prison sentence in a foreign
country and then getting a potentially terminal
diagnosis. The forecasts were grim. It wasn't
clear at all if he would survive the sentence.
And his personal life. His wife, Lisa. Yeah,
his wife, Lisa. Remember, she worked at Barings,
too. They met in Jakarta. She was part of that
world. She was with him when he fled. She stood
by him initially. But the strain was too much.
The revelations of his infidelity, the constant
lies, the pressure of the media. She divorced
him in 1997 while he was still incarcerated.
So he's in a Singaporean prison. He has cancer.
His wife has left him. And he's the most hated
man in banking. That is rock bottom. It really
is. Against the odds, he survived the cancer,
he received treatment, and he was released in
July 1999 for good behavior. He served four years
and four months. When he gets out, the world
has changed. But his name is famous. Infamous.
He had become a brand. While in prison, he wrote,
He published his autobiography, Rogue Trader,
in 1996. Which became a massive bestseller and
then a movie. Starring Ewan McGregor. Which is
wild. You destroy a bank, you go to prison, and
Obi -Wan Kenobi plays you in the movie. It almost
glamorizes it, doesn't it? It certainly cemented
his place in pop culture. It turned him from
a criminal into a character. But he didn't just
stop at the book. He tried to rebuild a life.
And this is where the story takes a very weird
turn for me. He goes into... Football. Laughs.
Yes. This is one of those facts that sounds like
bad fiction. In 2005, Leeson joined Galway United
FC. In Ireland? A League of Ireland football
club, yes. What was he doing? Was he the star
striker? No, no. He was appointed commercial
manager. Then he rose to general manager. And
by July 2007, Nick Leeson, the man who bankrupted
Barings, was the CEO of a football club. That
is an incredible second act. I used to run a
bank into the ground. Now I run a football club.
How did that go? Well... There is a bit of irony
here. He resigned in 2011 after the club suffered
financial difficulties. You can't make this stuff
up. You really can't. To be fair to him, Irish
football clubs often struggle financially, so
it wasn't necessarily a Leeson scandal or fraud.
But the headline writes itself, Leeson leaves
amidst financial trouble. Right. It's just too
perfect. But he also pursued education. In 2003,
as a mature student, he completed a Bachelor
of Science in Psychology at Middlesex University.
Psychology. That makes sense. Trying to understand
what happened in his own head. Exactly. He wrote
a second book, Back from the Brink, Coping with
Stress. It included conversations with a psychologist.
He was clearly trying to process the trauma and
the behavior that led to it. He admits now that
he lacked the emotional tools to just... ask
for help. And he hits the speaking circuit. Yes,
the after -dinner circuit. He advises companies
on risk and corporate responsibility. He basically
says, don't do what I did. Here is how you spot
a me in your organization. There is a detail
in the notes about a trading jacket. Oh, yes.
In 2007, a trading jacket thought to be worn
by Leeson on the Symex floor, those bright yellow
jackets they wore, was sold on eBay. How much
do you think it went for? I don't know, a few
hundred quid. It went for 21 ,000 pounds. You're
kidding me. 21 ,000 pounds. Wow. People love
a piece of history, even if it's a history of
disaster. But the most recent twist in his career
is perhaps the most surprising of all. 2023.
Yes. In March 2023, Leeson joined a corporate
intelligence firm called the Red Mist Market
Enforcement Unit. That sounds like a special
ops team from a movie. It does. And his role.
He is a private investigator. dealing with cases
of financial misconduct. So the poacher has turned
gamekeeper. Exactly. He is now hunting down people
who are doing what he did. He's helping investors
recover money from fraudsters. Which one to no
one, I guess. That seems to be the logic. He
knows where the bodies are buried because he
used to dig the graves. So he's living in Galway.
He's remarried to an Irish beautician named Leona
Torme, and he's investigating financial crimes.
It is a long, long way from the council estate
in Watford and a long way from Changi Prison.
It is a remarkable trajectory from clerk to genius
to convict to CEO to investigator. So let's bring
this home. We've unpacked the timeline. We've
looked at the earthquake, the error count, the
doubling down. What does this all mean? Why does
this story still resonate 30 years later? Why
are we still talking about Nick Leeson? I think
it resonates because it exposes the fragility
of the systems we trust. We think of banks as
these monoliths of stability built of stone and
logic. But Barings was destroyed because of a
failure in what's called operational risk. Operational
risk. Define that for us. It means the risk of
loss resulting from inadequate or failed internal
processes, people and systems. Right. Barings
failed because they let profit blind them to
protocol. They let the fox guard the hen house
because the fox was bringing in golden eggs.
They ignored the red flags because the green.
ink on the balance sheet was so bright. It's
the star culture, isn't it? If someone is making
money, nobody has questions. Precisely. And for
the individual, it is the ultimate lesson in
the sunk cost fallacy. Explain that for the listeners.
It's the tendency to continue an endeavor once
an investment in money, effort, or time has been
made. Leeson lost money. Instead of accepting
that loss, he felt he had to invest more to fix
it. He threw good money after bad. He couldn't
accept the initial hit. He couldn't, so he destroyed
everything trying to avoid it. It's that moment
where you have to decide, do I admit I messed
up and take the pain now? Or do I hide it and
hope it goes away? And the lesson of Nick Leeson
is, it never goes away. It compounds. It snowballs.
It's fascinating. It's a story about finance,
sure. But it's really a story about pride. and
fear and human fallibility. And the terrifying
reality that a single person in the wrong place
with the wrong permissions can bring down a giant.
So here is a thought to leave you with. Nick
Leeson is now out there investigating financial
misconduct. He's the guy looking for the hidden
accounts. Is that redemption? Or is it just the
only job left for the guy who wrote the book
on hiding losses? That's a question only he can
answer. But it certainly suggests that you can't
ever truly run away from your past. And for you,
the listener, if you made a mistake at work tomorrow,
a big one, one that might cost you your promotion
or your reputation, would you own up to it immediately?
Or would you open your own version of account
88888 and try to fix it before anyone noticed?
It's a harder question to answer than we'd like
to admit. That's it for this deep dive. Thanks
for listening.