[tialaramex]

Leeson is an example of a bank completely failing to use controls whose purpose is to prevent exactly what happened. The bank should have another employee who is in effect marking Leeson's homework, and instead he was allowed to mark his own, so when he was down a million dollars he could say he was up a million dollars, and keep his job. And of course it's quickly not just one million. This isn't hindsight, these were normal controls, but Barings just didn't bother.

[jen20]

The tragic part of this story is that none of those who should have been responsible for implementing such controls faced any kind of legal action.