Chancellor chuckles at Mr Leeson's expense

For the likes of Tony Benn, the collapse of Barings bank vindicated all their warnings about the casino economy. "This is gambling. It is speculation. It characterises the world financial community," the veteran left-winger told the Commons.

Less predictably, a similar view of the derivatives market, in which the bank's £600m-plus losses were sustained, was taken by Sir Peter Tapsell, Tory grandee, stockbroker and bank adviser.

There was "rather a fundamental difference" between a futures market in things such as agricultural products, base metals and oil, and one which sought to guess the movements of stock exchange indices, Sir Peter observed during exchanges on a statement by Chancellor Kenneth Clarke.

"That latter form of futures market really is so speculative in nature as to deserve the term `gambling', and perhaps should be banned in international law."

But Mr Clarke said most banks engaged in some derivatives trading. "We have to ensure the regulations stop pure gambling - purely taking positions of a highly speculative, impossibly risky kind - and make sure we do not over- regulate."

Announcing an inquiry by the Board of Banking Supervision, chaired by Eddie George, Governor of the Bank of England, Mr Clarke said when the full facts were known all the lessons would be drawn and, if necessary, corrective steps taken.

"This failure is, of course, a blow to the City of London. But it appears to be a specific incident unique to Barings centred on one rogue trader in Singapore."

Gravity temporarily deserted the Chancellor as he dwelt on the disappearance of the said trader, 28-year old Nick Leeson from Watford. Dale Campbell- Savours, Labour MP for Workington, said Mr Leeson might have a very different story to tell and his life could be at risk.

Mr Clarke thought the MP was dramatising matters but was right to say they could not leap to the conclusion that there was fraud and criminal offences. "We have no idea. Mr Leeson has left his desk." Chuckling, the Chancellor went on: "That is no doubt because, at the very least, he finds it embarrassing to describe his responsibility for a series of investments which has brought down an entire 250-year-old banking group. His explanation will indeed be interesting when he emerges."

For Dennis Skinner, Barings was the latest victim of the "betting-shop mentality" he has railed against for years. The Chancellor should "call a spade a spade", the Bolsover MP said. "Derivatives and gambling on derivatives is based, in this case, on betting on the Japanese stock exchange in another 12 months' time. What wealth creation is there in that?

"Here we have got one of the elite banks going under because somebody gambled just like somebody in the betting shop, one after another trying to recoup their losses when all those jobs were at stake."

Sir Peter Tapsell apart, the message to Mr Clarke from the Tory benches was to maintain "a light touch" on regulation. Peter Brooke, MP for the City of London and a member of Lloyd's, told the Chancellor: "Whatever the lessons of this bitter failure, will he ever be mindful the pre-eminent position of the City of London derives from its skilful acceptance and management of risk. If excessive regulation to remove risk ... were to occur, the principle casualty would be the strategic salience of the City."

The prospect of Lady Thatcher's former press officer, Sir Bernard Ingham, joining the Press Complaints Commission appeared to get the approval of Stephen Dorrell, Secretary of State for National Heritage, yesterday.

Mr Dorrell told MPs at Question Time that Sir Bernard's views were "irrelevant" to any move to appoint him and added that no one could deny he was "effective". If an effective regulator was required then that should be the criterion applied to potential candidates, he said.

The bluff Yorkshireman served Lady Thatcher at Downing Street for 11 years and now writes a column for the Daily Express. But an attempt to recruit him by Lord Wakeham, the commission chairman and former Cabinet minister, has split the watchdog body.

Raising the issue, Chris Smith, Labour's heritage spokesman, said that above all what was needed from the PCC, if self-regulation was to work, was a "fair-minded and impartial" weighing up of sensitive events. "How can this possibly happen when a man as rudely opinionated and irrational as Sir Bernard Ingham is proposed for membership?"

Mr Dorrell said the Government had made clear it would prefer a model for regulation of the press built on the principles of self-regulation. It followed that responsibility for appointments rested with the press itself. But having said that, it seems to me that any model for self-regulation depends for its effectiveness on an effective policing body. And whatever else may be said about Sir Bernard Ingham, nobody could deny the proposition that he is effective."

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