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Did Rogue Trader Millions End Up In Africa?

The tail end of one of the world’s great rogue trader stories was the bizarre allegation that millions of dollars had been stashed away in Africa.

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Everybody remembers Nick Leeson, the young trader who broke Barings Bank—where the Queen was a customer—but few recall the African connection.

It was the last couple of pages of a report written by the board of banking supervision issued on behalf of the Bank of England, alleged that Leeson had a number of assets in South Africa.

This document was issued six months after the collapse of Barings Bank in 1995, when Leeson lost it GBP 862 million pounds ($1.4 billion) through unauthorized trading.

“I’d never been to South Africa at that stage. The only connection I can draw is that we did have a couple of South African clients that we transacted futures for…but that’s the only South African connection,” says Leeson.

The 46-year-old was in Johannesburg for a few days speaking about risk management, compliance and corporate responsibility laced with his remarkable story.

Barings Bank was the oldest merchant bank in London and had funded the Napoleonic wars. Leeson, the son of a plasterer from Watford, was seen as the whizzkid in the Singapore office.

He made huge profits for the bank and was very successful in speculative trades, but lost his midas touch when he tried to hide losses from bad trades in an error account called 88888. It had been set up to cover up a mistake made by an inexperienced trader. Instead of taking a loss, Leeson played the odds in an attempt to recover money.

It all fell apart when Leeson placed a short straddle—a risky strategy an investor uses when he or she believes that a stock’s price will not move up or down significantly—on the Nikkei, banking on the exchange remaining stable overnight. Leeson should have been safe in such a position, but the Japanese earthquake on January 17, 1995, in Kobe caused the Nikkei to go into free-fall.

Facing huge losses with Asian markets in panic, he tried to recover the losses with short-term gambles based on the recovery of the Nikkei. Unfortunately, the earthquake dashed these hopes.

Back in London, the Bank of England rejected a bailout days before Barings declared bankruptcy. The Bank almost went bust in the 1890s over investments on Latin American bonds, this time there was no reprieve.

Feeling helpless, Leeson fled the country leaving a scribbled note saying “I’m sorry”. He was arrested in Germany, and nine months later was extradited to Singapore where he was sentenced to more than six years in prison.

Leeson was the only Englishman in a prison full of triad gangs. He was locked up in a tiny cell with two others for 23 three hours a day.

In prison, Leeson was diagnosed with colon cancer and lost weight and most of his hair from chemotherapy. The Singapore authorities were determined not to allow their high profile prisoner to die behind bars and assigned him the doctor of former Singapore president, Lee Kuan Yew. In prison, Leeson wrote his autobiography, while back in London Sir David Frost was producing a film about his life.

“The film came out before I did,” he chuckled.

Writer and director of the film, James Dearden, pretending to be Leeson’s uncle, flew to Singapore to discuss the plans with him, but little passed between the two.

“That’s the only input I had in the movie. It was a standard 15-minute visit. The questions he was asking weren’t specifically about what was going on. It was more like how are you, have you seen your aunt? He only asked a few questions concerning the movie,” says Leeson.

Then Leeson was released after four and a half years on the grounds of his health and good behaviour. He has now recovered fully from cancer and lives in Galway, Ireland with his second wife and three children.

In 2006, he became CEO of Galway United, a professional football club. He resigned in 2011, but remains a shareholder. While working at the football club Leeson published his second book, Back from the Brink, Coping with Stress.

Leeson has tried his hand at online poker and is now a speaker for conferences and dinner’s around the world, getting paid to talk about risk and corporate responsibility—even though he’s the face of catastrophic failure in both fields.

Thirteen years after his release from prison, Leeson was appointed as an alternative insolvency practitioner at GDP Partnership, a financial firm, in Ireland, in April. He is assisting over-indebted borrowers negotiate deals with their banks. Whatever he does in life, he will be labelled with two words—rogue trader.

“When stuff was written in the paper it was always painful to read. Sometimes it still is now. My name is always prefaced with ‘rogue trader’ which is okay, the book is called that. Sometimes you get ‘disgraced banker’ or ‘fraudster’, a couple of those words still anger me, but you kind of have to take it on the chin.”

Leeson took the losses that took him to prison on the chin and maintains that he never profited from his unauthorised trading.

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Economy

Cryptocurrency for Africans

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George Gordon is on a quest to revolutionize the financial system. The director of Africa Master Blockchain Company talks digital currencies, blind risks and board games.


What is this new African cryptocurrency you are offering?

Where the majority of current digital currencies are based on speculative models, AfriUnion Coin (AUC) and the AfriNational Tokens (ANT)are designed for a transactional purpose allowing international payments, remittances, foreign direct investment as well as day-to-day transactions at local retail stores and other outlets. While the option for speculative trade is available with AUC, the focus is not around that.

Each African country will have a specially-designed ANT which will allow users to pay for goods and services and bills easily through completely digital means without requiring any bank account. AUC and ANT will be fully interchangeable to one another and there will be no fees for the user.

It’s the natural next step for digital finance from mobile banking which most Africans are accustomed to. The ability to freely have the power to send and receive money locally and internationally will allow the freedom of choice and spending power many Africans don’t have currently.

What is your own investment philosophy?

I am a gambler! I believe in taking risks and putting things on the line. That being said, blind risk or whimsical guesses don’t get you very far. Always acquire enough information to understand to a reasonable level what the thing you are planning on investing is or how it works and then trust your instinct and gut feel.

What advice would you give entrepreneurs wanting to invest in blockchain?

First, do some research in terms of what the blockchain technology is being applied for or created in terms of its application to an industry or project. Thereafter, check the white paper for the design of the platform as well as its functionality and applicability to what it is trying to achieve. If it aligns with your personal investment rules, then go for it,however, remember that blockchain is continuously evolving and thus you need to explore outside the usual and standard.

First cash-less, now card-less. What is the future of online banking?

If we are looking into what is currently science fiction, I would say the future is digital contact lenses that will be able to connect you to all your social media accounts, internet, news as well as make payments by just looking at QR codes or specialized barcodes to approve and accept payments.

Now, realistically we are not far off from such innovation and technology, but for the time being, I think the next step is scanning of QR codes at retailers and having the transaction automated from your wallet to the retailers digitally.

What is your most prized investment and why?

My mind. I believe that the work I have put into developing my mind, and continue to do so every day, is the number one investment that I have ever done. It allows me to look at things in a unique perspective as well as provides me with the tools to push boundaries and create new opportunities.

Money, success, fame? Which is most important to you?

I would have to say success… because it is most likely going to bring the other two as well, right? But success in the form of starting something and letting it grow and succeed and knowing that something new exists because of your efforts.

What do you spend your money on mostly?

Board games. I love board games and believe it’s a fantastic way to expand your mind as well as have fun with friends.

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Investment Guide

King Price CEO On Why He Invested On Insurance

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King Price Insurance’s CEO Gideon Galloway, who built an insurance company in South Africa worth over $226 million in six years, talks investments, industry trends and how self-driving cars will change the entire car insurance landscape.

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Economy

Offering The American Dream

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Gar Lippincott and Daniel Ryan of Atlantic American Partners were in South Africa recently looking for high-net-worth individuals wanting to invest in the US.

It’s a warm spring day in September, and Gar Lippincott and Daniel Ryan have just arrived in South Africa. It is Lippincott’s first time in the country, and he is jet-lagged.

A little over two months ago, he was booked to fly here from the United States (US) but was turned back at immigration.

“At Atlanta airport, the lady looked at Daniel’s visa and let him through and she looked at my visa and she said ‘I am afraid you can’t get on the plane because you have to have a blank page on your passport’. I said ‘I have three blank pages’ and she said ‘no, it’s supposed to be the one that says visa on it’. She said it’s the rules in South Africa so I had to sadly go back home… now when I was coming, I was told that’s not an issue anymore so I am happy they have made traveling into the country easier,” says Lippincott.

With a brand-new passport, he’s here with Ryan looking for people who want to invest in the US in exchange for a green card.

Lippincott, the Managing Partner of Atlantic American Partners, says he has always been keen on South Africa for its growth opportunities and prospects.

“From what I understand, the things that are causing short-term decline in the economy in South Africa are set up to provide long-term growth and hopefully people will understand this,” he says. Ryan, the company’s Managing Director of Emerging Markets – Africa, agrees: “I lived in Malawi for 12 years and South Africa is still considered the shining one throughout the continent. Even with all the problems, everyone still wants to come here because of the opportunities.”

According to an AfrAsia Bank report, South Africa comes second to Mauritius in boasting the highest number of high-net-worth individuals.

These are the kind of people Ryan and Lippincott target through their work at Atlantic American Partners. The company has real estate investors and professional private equity fund managers that manage money for banks, insurance companies, and pension funds. In addition, they help people get US green cards and ultimately US citizenship through the US government’s EB-5 Immigrant Investor Visa Program.

“Basically we look for people who want to move to the United States and we help them do so legally by investing and the nice thing is, with our program, they are also able to get a nice return on investment,” he says.

According to Lippincott, for a $500,000 investment that creates 10 jobs for American workers, you could get a green card in about two years and be a US citizen in about six or seven years. “Twenty seven countries have an investor visa program but with most of them, it’s essentially a fee you pay, or you need to be actively engaged in the day-to-day operation of a business. For example, you invest $1.5 million in Australia, but you need to hire employees and generate a certain amount of revenue. One of the biggest advantages with our program is you actually invest the $500,000 into a fund. We act as a trustee of that money and within five to seven years, they get that money back with a bit of return on investment and you are a permanent citizen in the US.”

Atlantic American Partners invests the money in real estate developments like hotels, apartments and student accommodation.

“What’s nice about the program is it doesn’t only cover the investor; it covers the spouse and children under 21. Our biggest family was a Hungarian family with seven children so they got nine green cards for $500,000,” says Lippincott.

The company says it has had positive response in South Africa. “Two months ago, we were here and we had scheduled six presentations for 100 people and we ended up speaking to 450 people. Most were business people, people worried about the economy, people worried about the political future of South Africa and people concerned about the education future of their children,” says Ryan.

According to Lippincott, despite the news of the clampdown on immigration, the US economy is booming and will perish without immigration. In the era of Donald Trump and his anti-immigrant views, that’s heartening news indeed.

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