Re Barings (No.5) [1999] 1 BCLC 433

• Barings was a Merchant Bank. Due to activities of one rogue trader in Far East, bank collapsed.

• Disqualification proceedings were brought against three of its former directors who were based in London. Was alleged they had been guilty of serious failures of management in relation to rogue trader; for instance, they had:

  • Given rogue trader huge funding without proper inquiry

  • Not instituted appropriate internal management controls

Held

• Director must maintain sufficient knowledge of company’s business to enable them to discharge their duties as directors

• Where director lawfully delegates power, is not entitled to place unquestioning reliance on others to do their job

  • Rather must take reasonable steps to monitor delegee

• Extent of this duty depends on facts

  • Where delegee is trustworthy and competent, less supervision required

FACTS

• Directors occupied very senior position in company

• Were paid very well

• Had failed to comply with duties expected of them

  • Thus disqualification order was justified.

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