Kweku Adoboli, Former UBS Trader HARDtalk


Kweku Adoboli, Former UBS Trader

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Now on BBC News, time for HARDtalk.

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Welcome to HARDtalk, I'm Stephen Sackur.

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We've all had bad days at the office and been embarrassed

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by our mistakes, but my guest today took terrible workplace decision

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making to a different level.

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Kweku Adoboli was a successful young trader for the Swiss bank,

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UBS, based in London, when his world fell apart in 2011.

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In a series of disastrous trades, many hidden from view,

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he ran up losses totals a staggering $2.3 billion.

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He was eventually imprisoned for almost

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four years for fraud.

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Now he's free.

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So how does he explain blowing a great big hole in his bank?

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Kweku Adoboli, welcome to HARDtalk.

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Thank you for having me.

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Let's begin at the beginning in terms of your career in banking

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in the City of London.

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You joined UBS pretty much as a graduate trainee in the back

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office, and yet within just a very few years you were one

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of their hotshot traders making millions for the bank.

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What skills, what talent did you bring to that job?

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I came into the bank as an intern in my penultimate

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year at university.

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I never wanted to work in an investment bank.

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Didn't know much about the finance industry, but the skills I brought

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were a combination of the skills I was learning as a student

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at university - computer science and management.

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What I wanted to do was learn something about the way

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organisations work, which is why I ended up applying to work

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in operations at the bank.

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My job was to help the risk-takers in the institution to solve

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My job was to help the risk-takers in the institution to solve

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the problems that they faced on a day-to-day basis

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in the institution.

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You talk about the risk-takers.

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You talk about the risk-takers.

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You became one of the risk-takers very quickly.

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Was that because you had a predilection for gambling,

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for taking risks?

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Absolutely not.

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I thought ultimately my progression through the institution was driven

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by the way in which I went about doing my work.

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Always I was trying my best to contribute as best I could.

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I will give you an example.

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I started off my professional, my full-time career in settlements

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in the back office.

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My job was basically to find exceptions in the way

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a trade is settled.

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The way it would normally happen is you would get a spreadsheet

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and a bunch of trades and then you would find out what was wrong

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with them and send them back to the sales people and the traders.

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I realised I would help the sales people and the traders by helping

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them understand what mistakes and what patterns there

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were in the mistakes they were making, which would reduce

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the number of exceptions.

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That kind of going the extra mile meant I kept being given

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new opportunities to do new things in the institution.

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I guess what I'm picking away at is whether you got one heck

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of a kick, an adrenaline rush, from the fact that very quickly

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you were making more money for the bank than many

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of your colleagues.

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In fact I know that bosses were so pleased with you that

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from time to time they would bring other employees to the sort of well

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of the trade floor and they would say,

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take a look at Kweku, learn from Kweku.

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Did that give you one heck of a buzz?

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No, it did not.

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I think there was always a responsibility.

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There was a sense of responsibility in what we were doing.

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It needs to be remembered that we had a $50 billion book,

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in fact one of the biggest books in the entire bank.

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The function of the book was to provide protection

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to our clients and to provide protection to the bank itself

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and to allow the bank to undertake proprietary trading.

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Because of the relative size of the book, the profits that came

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with that were in relative size.

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So if we were making, say, $5 million or $10 million

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in a given day, for example, relative to someone who had a $100

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million book or a $50 million book, they might be making

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?500,000 or ?50,000.

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It is relative.

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I get that.

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What you're saying is that the scale of your operations was huge,

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and therefore the sorts of profits you could make were pretty huge too.

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In a way that leads me to the obvious question,

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if you could make very big money anyway on the desk you were working

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at, why did you decide to cheat?

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We weren't cheating and this is what people don't understand.

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In 2007-08 we were faced with a situation where the manager

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of our book, who had five years experience,

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would help to build the book, to increase the size of the book

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from a $200 million to a $50 billion footprint within a space of three

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or four years suddenly left the bank.

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The bank had the option of replacing him.

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Replacing him with someone of the requisite experience

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would have cost the bank a lot of money, so they left

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myself and the person who became my supervisor...

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In your mid 20s.

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In my mid 20s.

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The age is not that relevant.

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But it may be.

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We are into an area of judgment here and wisdom.

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What you did was you began to do some to many observers totally

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unacceptable things.

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You created a secret under the desk account.

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I think you called it the umbrella account, which you could dip into

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and out of and people wouldn't know.

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You started to log some phoney trades to make it look as though

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hedges were made an they hadn't.

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You were doing stuff that was completely wrong.

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The reason that happened was because, having been left

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without a manager, with the experience that we had,

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what would happen is we would go to our managers, and you've got

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to remember this was they beginning of the great financial crisis.

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Unprecedented times, when we were running a book

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of unprecedented in size at UBS, and complexity.

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we face these problems right now.

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What can we do to resolve them?

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They would say, you are the experts.

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You are the ones who need to find a way to make it work.

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You are the ones who need to find a way to make it work.

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Do what you can to make it work.

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You're skirting around the key point here.

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You protect the rules and you knew you were breaking the rules.

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The problem with the challenge we faced was that they were

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intractable problems.

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Why after all this time, we are going to go through the story.

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You've served time.

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You were done for fraud.

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Two charges.

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Seven years in prison, you served four.

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Why can't you now acknowledge to me, I did wrong, I'm sorry,

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and this on reflection is why I did it.

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It would be interesting for people to know so we can

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perhaps learn some lessons.

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In terms of accepting my responsibility and the fact

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I was found guilty of a crime, I do accept my responsibility

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in what happened, and I have consistently apologised.

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In fact the first thing I did in court was apologise

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through my lawyers - "beyond all words"

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was the words we used.

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And you accept it was a crime?

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I accept that it was a crime, because in the end, unfortunately,

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some parts of the bank knew what we were doing and some did not.

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Unfortunately that meant that the bank was exposed to a risk

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of loss that it wasn't fully aware.

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The bank had a criminal in its midst and that criminal was you.

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Unfortunately it needs to be put into the context of the environment

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Unfortunately it needs to be put into the context of the environment

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we were working in.

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I have to resile from some of the words you use,

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because we were faced with an intractable challenge.

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No you weren't.

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No you weren't.

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You were faced with a challenge of how much money you wanted

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to make, and you were at the absolutely greedy

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end of the spectrum.

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You wanted your desk to be top dog.

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You wanted the biggest bonus, and as far as the prosecution

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were concerned, you were, to use their phrase,

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a sophisticated liar and a master fraudster.

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I have to...

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Whilst I accept I was found guilty of a crime,

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I have to say that those words, I don't recognise those words

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as a fair description of who I am.

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I'm not a criminal mastermind fraudster.

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I'm not a criminal mastermind fraudster.

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I never was.

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In fact if you look at what was exposed during the trial,

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the knowledge of others, the missiles we used

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being known by others, these mechanisms became

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accepted practice.

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In reality is in extremely complex situations, where we were,

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where we had difficult choices to make as to how to protect

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the bank from the pressures we were facing, we made choices that

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in the end were viewed as criminal by the outside world,

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but within the bank, at the time, the activities

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we were undertaking were viewed in a way that made us feel

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that they were accepted practices.

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But what you are saying without being absolutely direct

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about it is that other people in the bank,

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indeed very senior people, knew and tolerated and accepted

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and perhaps even wanted you to do what you were doing,

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but there's been a thorough investigation and UBS are adamant

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that senior staff had no idea what you were up to.

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There was an investigation and the only person in the bank

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who faced criminal trial and conviction and imprisonment was you.

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The buck stops with you.

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Well, the buck stops with me because I took responsibility.

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However, these are not my words.

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In the words of the regulator, the Swiss regulator,

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the bank was responsible for creating the environment

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that encouraged the risk taking that we undertook.

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That my managers, for example, send e-mails...

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Are you saying that top people at the bank did know

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what was going on?

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Because they've categorically denied it.

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In the course of the investigation, it was shown that managers knew

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that we were trading out of our risk limits and using mechanisms

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to disguise the excess risk that we were taking.

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The fraud.

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That's the fraud.

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That's the fraud.

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Well, the problem the bank faced was that they wanted

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us to take more risk.

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But at the same time, culturally weren't ready to take that risk.

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The pressure, the responsibility to take that risk tends to...

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The pressure, the responsibility to take that risk tends to...

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Well, in our case it fell on us and it tends to fall on junior

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traders at the coalface.

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This is the reality.

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This is the reality.

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I'm no financial investigator but I do know what

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the courts decided.

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They decided you were guilty of fraud.

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Let's get human about this and personal, because God knows

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you've been through the ringer.

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I have.

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What was it like in the summer of 2011 when you saw

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all of your trades suddenly going against the market,

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and you realised that not just that you were losing, you were used

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to that and you could deal with that, that happens in banks,

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but you were losing hundreds of millions.

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And then you were losing so much that was unimaginable.

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And then you were losing so much that it was unimaginable.

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$2 billion.

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What did that feel like?

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Well, I was...

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My pathway through the institution was as a problem solver.

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That's the same for a lot of traders around me,

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and you have to remember that it wasn't just me

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that was going through this process.

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There was a group of us going through this process and we

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were trying to find a solution.

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We were absolutely focused on protecting the bank's interest,

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so there was no time to stop and think, what does this feel like?

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What it feels like is we need to resolve the problem.

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There was a moment when the investigators came

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in and they took you away and they put new a room

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and they started quizzing you and interrogating you.

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First they said, don't worry, we'll let you out of here

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by midnight, I think, and the fact is they never did,

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because the police got involved.

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When you realised, without using a rude word,

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that something had hit the fan and there was no more

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talking your way out of this and would have to face the losses,

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how did you feel then?

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The same way I felt throughout my entire career.

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My responsibility is to this institution.

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It is to the people to my left and right.

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What can I do to protect them?

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And so I sent an e-mail taking responsibility on my shoulders.

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And the reason why I faced this journey that I faced

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is because I took responsibility.

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This is what people tend to forget, that ultimately I took

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responsibility myself.

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I sent an e-mail saying this has happened, and in that e-mail I tried

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to make sure that nobody else would try to face...

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You are making yourself sound like a victim.

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I'm not trying to make myself sound like a victim.

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The reality is that's what happened.

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I faced the charges I was asked to face.

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I chose to plead not guilty, not because necessarily I thought

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I wasn't guilty of causing the loss or being involved in the loss,

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but because I thought it was my responsibility to make

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sure the full story was told and that everybody could

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understand why it happened.

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Indeed the reason I am here in front of you right now is because I made

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a choice that has allowed this debate to continue to where we are.

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Had I not gone to trial, a lot of the information

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that was made clear during the trial would never have come out.

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But as I said, you are the only member of UBS staff who faced

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trialled and imprisonment as a result of that massive loss.

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trial and imprisonment as a result of that massive loss.

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Are you saying to me that's fundamentally wrong,

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that other people should have been in the dock on trial?

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I'm saying that it really doesn't matter.

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What matters is we focus on the root cause of what happened

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What matters is we focus on the root cause of what happened

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and what lessons can be learnt from it for the benefit

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of others in the future.

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Well, that is important and I want to do that.

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I want to finish going through the Kweku Adoboli story

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if I may.

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You come from a well-to-do Ghanaian family who sent

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you to school at the age of 12.

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You have lived in Britain from the age of 12.

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You had gone through university, you studied hard.

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You had been a success in the bank.

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You had a pretty gilded career trajectory.

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You were doing fantastic.

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You ended up in a prison cell, sharing it with another bloke,

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with one toilet next to the bed, for almost four years.

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Some of it in Maidstone Prison, which I know was really,

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really tough.

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How did you cope?

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Well, I guess I coped in the way I always cope.

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I coped in the same way that has resulted in me getting

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to where I've got to in my life, by trying to contribute

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as much as I could.

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In prison I focused on helping the other offenders around me

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with prison process and protecting themselves from the difficulties

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and strictures of being in prison.

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But I also made sure that I was contributing

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to the entire system.

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So I was Prison Council Chairman in all the prisons I was in.

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Trying my best...

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Still trying to be the high achiever.

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Not trying to be a high achiever but trying to make sure

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that the environment I'm in, I'm doing my best to contribute

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as much as I can.

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Not for my benefit, but to make sure that the world I'm

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in functions properly.

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What did your family say to you?

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They've obviously been so proud of you and then there was that sense

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of humiliation, of disgrace.

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I'm not sure that humiliation and disgrace is the right

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word for it.

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Ultimately I've consistently taken my responsibility.

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I've done it in the way that I was taught to as a young person.

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The values of my family are when you're in trouble,

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if you can protect other people, you need to do so.

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Ultimately I'm a boy and I'm the oldest in my family,

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with three sisters, so you are consistently taught

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you need to protect the people around you.

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That's why I am where I am, because in the bank,

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as a trader, we tried to protect everyone around us.

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Our colleagues and our clients.

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The chief financial officer of UBS after all of this

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and after the investigation and the 2.3 billion was uncovered

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and everything else, he reckoned that your loss had been

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a major contributing factor in the loss of 500 jobs at UBS.

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Do you not have an enormous sense of guilt about that?

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I think it's incredibly sad, and I'm very sorry that those job

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losses are attributed to our loss, but the reality is the reason

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we were working so hard, 20-hour days, travelling around

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the world at the drop of a hat to go to see our clients,

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taking losses from our traders and other salespeople

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to try to reduce the impact on them.

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All of those choices were being made in order to further

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the institution's goals.

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That's the tragedy of this thing.

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It happened because we were trying too hard to achieve the bank's

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goals, not to further our own goals.

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I think this is what...

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Let me just stop you there, because you have said that so many

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times in this interview.

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I'm sure you are well aware of the history of "rogue traders".

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Perhaps the most famous of them all, Nick Leeson bust Barings Bank,

0:17:050:17:08

I think $1.3 billion losses he ran up.

0:17:080:17:10

He became very frank afterwards and he said anybody who tells

0:17:100:17:13

you that greed isn't a huge issue in these sorts of cases is simply

0:17:130:17:17

not telling the truth.

0:17:170:17:18

Greed is a word you have consistently avoided

0:17:180:17:20

in this interview.

0:17:200:17:21

Because I'm not a greedy person and I never have been.

0:17:210:17:24

I think it's one of the caricatures that is made of bankers.

0:17:240:17:27

People forget that bankers are human beings.

0:17:270:17:29

They are your brothers and sisters.

0:17:290:17:31

They're your children.

0:17:310:17:32

They are no different to anyone else.

0:17:320:17:34

They are part of a system that treats them a certain way and asks

0:17:340:17:37

them to achieve certain things.

0:17:370:17:48

Now, that is not about them as individuals but them

0:17:480:17:51

as a part of the system.

0:17:510:17:52

That's really important to get right.

0:17:520:17:54

If we are going to move the industry to where it needs to go to,

0:17:540:17:59

we need to get that right.

0:17:590:18:00

These loss events that happened, rogue trading events,

0:18:000:18:03

whatever you want to call them, are driven by the same type

0:18:030:18:06

of behaviour where large amounts of balance sheet assets

0:18:060:18:08

are coagulated into one place.

0:18:080:18:10

And then young people are asked to do their best to return

0:18:100:18:13

yield on those assets.

0:18:130:18:14

It's a very challenging thing to do, but the pressure is placed on them.

0:18:140:18:18

But there is an enormous temptation for you to keep coming back

0:18:180:18:21

But there is an enormous temptation for you to keep coming back

0:18:210:18:24

to blaming the culture and the system and the institutional

0:18:240:18:27

mechanisms, taking away accountability

0:18:270:18:28

and responsibility from yourself.

0:18:280:18:29

Absolutely not.

0:18:290:18:30

The reality is I have taken responsibility,

0:18:300:18:32

and I've been asked to pay a price.

0:18:320:18:34

Three-and-a-half years in prison, half a decade of fighting

0:18:340:18:36

against being deported from the United Kingdom.

0:18:360:18:38

Which you may well be, because anybody who's been sentenced

0:18:380:18:41

to a prison sentence of more than four years who does not

0:18:410:18:44

have a British passport is usually sent back to their home country.

0:18:440:18:47

That's going to happen to you.

0:18:470:18:49

Well, I hope it doesn't.

0:18:490:18:51

I've lived here since I was a child.

0:18:510:18:53

Ultimately I'm a product of the British education system.

0:18:530:18:55

I am a product of the British financial system.

0:18:550:18:58

What happened has got nothing to do with my nationality.

0:18:580:19:00

I cannot stress enough how British culturally I feel and how much it

0:19:000:19:04

would be crushing to be deported from my home.

0:19:040:19:06

Separated from my friends.

0:19:060:19:07

But can you see how Britain might not want you any more,

0:19:070:19:11

as a convicted fraudster who cost his bank $2 billion.

0:19:110:19:13

I can see why that might be a temptation if you don't

0:19:130:19:17

understand the root cause of what happened, which is why

0:19:170:19:19

I first take responsibility.

0:19:190:19:25

At the end of my trial the judge said, you never

0:19:250:19:28

denied what you've done, which is absolutely right,

0:19:280:19:30

and I still don't.

0:19:300:19:31

No, but you discuss at great length whether one should really call it

0:19:310:19:35

a crime, and you discuss at great length whether in fact

0:19:350:19:38

you were simply following out the logic of the instructions you

0:19:380:19:41

were given by your senior managers.

0:19:410:19:42

If we do end this interview by talking about learning lessons

0:19:420:19:45

and thinking about the culture of banking which allowed your

0:19:450:19:48

situation to develop, are you telling me that consistently

0:19:480:19:50

traders, people like you, were and are given far too much

0:19:500:19:53

leeway and leniency by those compliance people in the banks

0:19:530:19:56

who are supposed to ensure that you follow the rules?

0:19:560:19:59

Not just compliance people.

0:19:590:20:05

Not just compliance people.

0:20:050:20:06

It's not just management, it's the entire system.

0:20:060:20:08

There's so much complexity involved and there's so much pressure

0:20:080:20:17

to generate returns, especially in a system where fields

0:20:170:20:19

in have been crushed to the point where the only way to generate

0:20:190:20:23

profit is to go up the risk curve, OK?

0:20:230:20:26

And the reality is that that pressure comes to tell.

0:20:260:20:34

If you look backwards over time, these things keep happening,

0:20:340:20:37

and they keep happening because of the culture in the industry

0:20:370:20:40

and because of the purpose of the industry.

0:20:400:20:42

Not because necessarily the people within it are bad,

0:20:420:20:45

but because of what they are being asked to try and achieve.

0:20:450:20:48

Let's talk about risk, because it's inherent

0:20:480:20:50

in the business that you were in.

0:20:500:20:52

Of course, you are banned now from going back into finance,

0:20:520:20:55

but risk is at the core of it.

0:20:550:20:57

Are you saying that institutionally the banks, to this very day,

0:20:570:21:00

embrace too much risk?

0:21:000:21:01

They're kind of forced to embrace too much risk,

0:21:010:21:04

because, like I say, central banking policies crunch

0:21:040:21:07

the yields that banks can earn on the assets that they deploy.

0:21:070:21:10

That forces the banks to go up the risk curve.

0:21:100:21:26

In order to maintain the same level of profitability,

0:21:260:21:28

it's the only way to do it, you have to take more risk,

0:21:280:21:31

if you're going to generate the same amount of profit

0:21:310:21:34

when the yields are crushed.

0:21:340:21:35

And ultimately there's a cultural imperative to try and generate

0:21:350:21:38

the same level of profits as before, or more.

0:21:380:21:41

What they in compliance and regulation and oversight,

0:21:410:21:43

what they should really ensure they do is employ people on the risk

0:21:430:21:46

side of the business, on the trading desks,

0:21:460:21:48

who do not have a predilection to embrace too much risk.

0:21:480:21:52

You, for example, correct me if I'm wrong, got into spread

0:21:520:21:55

betting as a side issue, a personal thing, and you lost

0:21:550:21:57

hundreds of thousands of pounds personally

0:21:570:21:59

because of spread betting.

0:21:590:22:00

You clearly were a guy who should not have been handling hundreds

0:22:000:22:03

of millions of dollars.

0:22:030:22:05

Of the bank's money.

0:22:050:22:06

The reality, again, and it is very difficult to see into this

0:22:060:22:09

in the length of time that we have in this show,

0:22:090:22:12

but the reality is you have to teach people to embrace risk taking.

0:22:120:22:16

A lot of us, myself especially, are actually quite risk averse.

0:22:160:22:19

I found myself in a situation, having gone into the institution

0:22:190:22:22

as an operations analyst, being asked to become a risk-taker.

0:22:220:22:25

I was very risk averse.

0:22:250:22:28

In order to encourage me to learn how to trade risk I was encouraged

0:22:280:22:31

to embrace spread trading.

0:22:310:22:34

Ah, so again it comes back to blaming the system.

0:22:340:22:36

It's not about blame.

0:22:360:22:37

It's about explaining how these things occur.

0:22:370:22:39

We are almost out of time.

0:22:390:22:41

Everything you have have said to me in this interview suggests to me

0:22:410:22:44

that you believe that this sort of disaster could happen again.

0:22:440:22:48

Is that what you believe?

0:22:480:22:52

That right now in the international banking system, the way risk

0:22:520:22:55

is handled and trading is done, it could all happen again,

0:22:550:22:58

this kind of massive mega loss?

0:22:580:22:59

Yes, I do.

0:22:590:23:03

Whilst I think that there is cause for hope, because the debate

0:23:030:23:06

is happening, there is the reality that it could absolutely happen

0:23:060:23:09

again, because culture hasn't moved enough.

0:23:090:23:16

We've begun the debate, so there is cause for hope.

0:23:160:23:19

I've met some people and I'm being asked to contribute to that

0:23:190:23:22

change, which I hope I will be able to do.

0:23:220:23:33

It is one of the reasons why I'm asking not to be deported

0:23:330:23:37

as a compelling reason, because there is value.

0:23:370:23:39

It is not just my idea.

0:23:390:23:41

It's universities and institutions and the finance industry.

0:23:410:23:43

But is it cultural?

0:23:430:23:44

Is it you going in and talking to traders about what they need

0:23:440:23:47

to understand about risk, or is it regulatory?

0:23:470:23:50

Do there need to be much tougher regulations?

0:23:500:23:52

There are multiple pillars.

0:23:520:23:53

It is not necessarily about tougher regulation,

0:23:530:23:55

it's about smarter regulation.

0:23:550:23:56

It's about understanding that the people at the coalface

0:23:560:23:58

are human beings that are incredibly fallible, especially under

0:23:580:24:01

the pressure of consistent pressure-filled risk-taking,

0:24:010:24:02

and that risk-taking affects your ability to make

0:24:020:24:05

conscious and clear decisions.

0:24:050:24:09

And that later, after the mistakes are made, it's easy to label certain

0:24:090:24:12

activities as criminal.

0:24:120:24:13

But when they are profitable they are accepted practice.

0:24:130:24:16

Kweku Adoboli, we have to end there, but I thank you very much

0:24:160:24:19

for being on HARDtalk.

0:24:190:24:20

Thank you for your time.

0:24:200:24:22

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