People at the London end of Barings were all so know-all that nobody dared ask a stupid question in case they looked silly in front of everyone else.
Some people did raise concerns about Leeson’s activities. In a January 1995 internal e-mail, Brenda Granger, Head of Futures and Options Settlements in London stated
Awaiting breakdown from my buddy Nick
(once they creatively allocate the numbers).
Such concerns went largely unheeded. Leeson was a celebrity within Barings. While he was secretly accumulating losses in account 88888, he was publicly recording profits in three arbitrage trading accounts, numbers 92000, 98007 and 98008. This was accomplished through cross-trades with account 88888. By performing futures transactions at off-market prices, Leeson was able to achieve profits in the arbitrage accounts while placing offsetting losses in the 88888 account. During 1994, Leeson booked GBP 28.5MM in false profits. This was a staggering profit to earn from futures arbitrage, but it ensured that Barings employees earned bonuses that year. Needless to say, there was little incentive for employees to question the unusually high arbitrage profits. If anything, Leeson was viewed as a star trader who was not to be interfered with.
In a famous 1993 quote, Peter Baring, Chairman of Barings, commented to Brian Quinn, Director of the Bank of England that