Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, September 28, 1995 TAG: 9509280038
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
SOURCE: Associated Press
DATELINE: NEW YORK LENGTH: Medium
The loners implicated in the scandals that stung Daiwa, bankrupted Barings and unraveled Kidder Peabody are a different breed than the scamsters who masterminded the 1980s insider trading and thrift debacles.
Today's alleged crooks, such as the former Daiwa Bank manager accused Tuesday of forging documents that led to a $1.1 billion loss, were motivated by a desire to save face and shield themselves from the embarrassment of admitting past mistakes, ethics experts said Wednesday.
Unlike the greed-mongers of the 1980s, who cheated to make millions for themselves, Toshihide Iguchi isn't believed to have fattened his bank account. Instead he allegedly broke the law to keep his job and maintain his reputation as a winner on Wall Street.
``At Daiwa, there was no personal profit,'' said lawyer Ira Lee Sorkin, a former Securities and Exchange Commission administrator who now represents white collar defendants in fraud cases. ``The motivation was fear of being perceived as a loser.'' In the high-stakes arena of securities trading, ``you want to be perceived as a Master of the Universe,'' said Sorkin, using a phrase coined by author Tom Wolfe in his ``Bonfire of the Vanities'' 1980s parody. ``Being a winner is everything.''
Iguchi, 44, was charged with doctoring Daiwa's books over a period of 11 years to hide losses from trading U.S. government securities. He was arrested over the weekend.
Daiwa said Iguchi sold stock owned by the bank to cover up his losses in trading U.S. government bonds, then hid account statements and altered documents to fool his superiors.
Iguchi was in charge both of trading and of the back room operations that monitor trades, meaning he was policing himself.
In a similar case, Nicholas Leeson, a 28-year-old rising star at Barings Bank in Singapore, exploited his managerial responsibilities over the back room to hide escalating losses on trades he made on sophisticated future contracts. Leeson lost $1.89 billion, which caused 232-year-old Barings to collapse.
Leeson says he gambled on the stock market to reverse his mistakes and save the bank. ``I was trying to correct a situation,'' Leeson said in an interview from a German jail broadcasted on British television last month. ``I didn't steal any money.''
To be sure, Iguchi, Leeson and Joseph Jett, a former bond trader at the now-defunct Kidder Peabody accused of concocting $350 million in phony profits to hide losses, all benefited financially from performances that were enhanced by their cheating.
But ethics experts said their alleged misdeeds were designed to protect themselves from disciplinary action and conceal their failings from bosses, who themselves may have been willing to close an eye to shenanigans as long as profit margins were surging. Of course, the consequences of the traders' attempts to hide their mistakes were no less devastating than if they stole money directly.
``Being so concerned about covering up mistakes is a form of self-interest; and morally it's not any less serious than theft it it leads you to engage in a cover-up,'' said Allen E. Buchanan, professor of business ethics at University of Wisconsin in Madison.
``Being greedy and heedless of shareholders is one type of moral wrong,'' Buchanan said, ``and another is to be self-deceptive in thinking that what's good for you is also good for the company.''
by CNB