Coopers paid £65m in Barings case

Link: Barings: Deloitte acted negligently

The amount of the settlement, reached in late 2001, was revealed in the judgement of Justice Evans Lombe in relation to the case between Barings and Deloitte & Touche.

Coopers & Lybrand had been due to face High Court action for its role in the bank’s collapse. Barings claimed the firm’s audits did not identify the dangers posed by the unauthorised transactions of rogue trader Nick Leeson.

Barings Futures (Singapore) had claimed for the amount of losses suffered as a result of Leeson’s trading in February 1995 with other parts of the group also putting in substantial claims in relation to Coopers’ 1994 audit of the bank.Last week, rival Big Four firm Deloitte & Touche was found negligent for its part in the Barings collapse by the High Court. Justice Evans-Lombe found that Deloitte Singapore was liable in its audit work for Barings Futures in Singapore for the years 1992 and 1993.

The amount of damages that the firm will have to pay in connection with this judgement has not yet been decided, but will be determined in due course according to KPMG, the Barings Group liquidator.

Although a substantial amount, the Coopers & Lybrand settlement has raised doubts among some in the industry over whether the current drive to establish a liability cap for accountancy firms is necessary. An amount of £65m is unlikely to cause major damage to any of the Big Four.

Coopers & Lybrand has also suffered at the hands of the Joint Disciplinary Scheme, which found that the firm’s belief that Leeson’s activities ‘posed little (or no) risk to the Barings Group, but yielded vary good returns’ was implausible and ‘demonstrates a degree of ignorance of market reality that totally lacks credibility’.

The firm was fined £250,000 while Coopers partner Gareth Maldwyn Davies was fined £25,000.