Kweku Adoboli, Former UBS Trader HARDtalk

Now on BBC News, time for HARDtalk.

Welcome to HARDtalk, I'm Stephen Sackur.

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

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

making to a different level.

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

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

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

he ran up losses totals a staggering $2.3 billion.

He was eventually imprisoned for almost

four years for fraud.

Now he's free.

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

Kweku Adoboli, welcome to HARDtalk.

Thank you for having me.

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

in the City of London.

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

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

of their hotshot traders making millions for the bank.

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

I came into the bank as an intern in my penultimate

year at university.

I never wanted to work in an investment bank.

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

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

at university - computer science and management.

What I wanted to do was learn something about the way

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

in operations at the bank.

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

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

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

in the institution.

You talk about the risk-takers.

You talk about the risk-takers.

You became one of the risk-takers very quickly.

Was that because you had a predilection for gambling,

for taking risks?

Absolutely not.

I thought ultimately my progression through the institution was driven

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

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

I will give you an example.

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

in the back office.

My job was basically to find exceptions in the way

a trade is settled.

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

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

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

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

them understand what mistakes and what patterns there

were in the mistakes they were making, which would reduce

the number of exceptions.

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

new opportunities to do new things in the institution.

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

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

you were making more money for the bank than many

of your colleagues.

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

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

of the trade floor and they would say,

take a look at Kweku, learn from Kweku.

Did that give you one heck of a buzz?

No, it did not.

I think there was always a responsibility.

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

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

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

The function of the book was to provide protection

to our clients and to provide protection to the bank itself

and to allow the bank to undertake proprietary trading.

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

with that were in relative size.

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

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

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

?500,000 or ?50,000.

It is relative.

I get that.

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

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

In a way that leads me to the obvious question,

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

at, why did you decide to cheat?

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

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

of our book, who had five years experience,

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

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

or four years suddenly left the bank.

The bank had the option of replacing him.

Replacing him with someone of the requisite experience

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

myself and the person who became my supervisor...

In your mid 20s.

In my mid 20s.

The age is not that relevant.

But it may be.

We are into an area of judgment here and wisdom.

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

unacceptable things.

You created a secret under the desk account.

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

and out of and people wouldn't know.

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

hedges were made an they hadn't.

You were doing stuff that was completely wrong.

The reason that happened was because, having been left

without a manager, with the experience that we had,

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

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

Unprecedented times, when we were running a book

of unprecedented in size at UBS, and complexity.

we face these problems right now.

What can we do to resolve them?

They would say, you are the experts.

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

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

Do what you can to make it work.

You're skirting around the key point here.

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

The problem with the challenge we faced was that they were

intractable problems.

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

You've served time.

You were done for fraud.

Two charges.

Seven years in prison, you served four.

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

and this on reflection is why I did it.

It would be interesting for people to know so we can

perhaps learn some lessons.

In terms of accepting my responsibility and the fact

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

in what happened, and I have consistently apologised.

In fact the first thing I did in court was apologise

through my lawyers - "beyond all words"

was the words we used.

And you accept it was a crime?

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

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

Unfortunately that meant that the bank was exposed to a risk

of loss that it wasn't fully aware.

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

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

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

we were working in.

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

because we were faced with an intractable challenge.

No you weren't.

No you weren't.

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

to make, and you were at the absolutely greedy

end of the spectrum.

You wanted your desk to be top dog.

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

were concerned, you were, to use their phrase,

a sophisticated liar and a master fraudster.

I have to...

Whilst I accept I was found guilty of a crime,

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

as a fair description of who I am.

I'm not a criminal mastermind fraudster.

I'm not a criminal mastermind fraudster.

I never was.

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

the knowledge of others, the missiles we used

being known by others, these mechanisms became

accepted practice.

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

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

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

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

but within the bank, at the time, the activities

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

that they were accepted practices.

But what you are saying without being absolutely direct

about it is that other people in the bank,

indeed very senior people, knew and tolerated and accepted

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

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

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

There was an investigation and the only person in the bank

who faced criminal trial and conviction and imprisonment was you.

The buck stops with you.

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

However, these are not my words.

In the words of the regulator, the Swiss regulator,

the bank was responsible for creating the environment

that encouraged the risk taking that we undertook.

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

Are you saying that top people at the bank did know

what was going on?

Because they've categorically denied it.

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

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

to disguise the excess risk that we were taking.

The fraud.

That's the fraud.

That's the fraud.

Well, the problem the bank faced was that they wanted

us to take more risk.

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

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

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

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

traders at the coalface.

This is the reality.

This is the reality.

I'm no financial investigator but I do know what

the courts decided.

They decided you were guilty of fraud.

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

you've been through the ringer.

I have.

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

all of your trades suddenly going against the market,

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

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

but you were losing hundreds of millions.

And then you were losing so much that was unimaginable.

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

$2 billion.

What did that feel like?

Well, I was...

My pathway through the institution was as a problem solver.

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

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

that was going through this process.

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

were trying to find a solution.

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

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

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

There was a moment when the investigators came

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

and they started quizzing you and interrogating you.

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

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

because the police got involved.

When you realised, without using a rude word,

that something had hit the fan and there was no more

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

how did you feel then?

The same way I felt throughout my entire career.

My responsibility is to this institution.

It is to the people to my left and right.

What can I do to protect them?

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

And the reason why I faced this journey that I faced

is because I took responsibility.

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

responsibility myself.

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

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

You are making yourself sound like a victim.

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

The reality is that's what happened.

I faced the charges I was asked to face.

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

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

but because I thought it was my responsibility to make

sure the full story was told and that everybody could

understand why it happened.

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

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

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

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

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

trialled and imprisonment as a result of that massive loss.

trial and imprisonment as a result of that massive loss.

Are you saying to me that's fundamentally wrong,

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

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

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

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

and what lessons can be learnt from it for the benefit

of others in the future.

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

I want to finish going through the Kweku Adoboli story

if I may.

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

you to school at the age of 12.

You have lived in Britain from the age of 12.

You had gone through university, you studied hard.

You had been a success in the bank.

You had a pretty gilded career trajectory.

You were doing fantastic.

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

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

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

really tough.

How did you cope?

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

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

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

as much as I could.

In prison I focused on helping the other offenders around me

with prison process and protecting themselves from the difficulties

and strictures of being in prison.

But I also made sure that I was contributing

to the entire system.

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

Trying my best...

Still trying to be the high achiever.

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

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

as much as I can.

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

in functions properly.

What did your family say to you?

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

of humiliation, of disgrace.

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

word for it.

Ultimately I've consistently taken my responsibility.

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

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

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

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

with three sisters, so you are consistently taught

you need to protect the people around you.

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

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

Our colleagues and our clients.

The chief financial officer of UBS after all of this

and after the investigation and the 2.3 billion was uncovered

and everything else, he reckoned that your loss had been

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

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

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

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

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

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

taking losses from our traders and other salespeople

to try to reduce the impact on them.

All of those choices were being made in order to further

the institution's goals.

That's the tragedy of this thing.

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

goals, not to further our own goals.

I think this is what...

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

times in this interview.

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

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

I think $1.3 billion losses he ran up.

He became very frank afterwards and he said anybody who tells

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

not telling the truth.

Greed is a word you have consistently avoided

in this interview.

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

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

People forget that bankers are human beings.

They are your brothers and sisters.

They're your children.

They are no different to anyone else.

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

them to achieve certain things.

Now, that is not about them as individuals but them

as a part of the system.

That's really important to get right.

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

we need to get that right.

These loss events that happened, rogue trading events,

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

of behaviour where large amounts of balance sheet assets

are coagulated into one place.

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

yield on those assets.

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

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

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

to blaming the culture and the system and the institutional

mechanisms, taking away accountability

and responsibility from yourself.

Absolutely not.

The reality is I have taken responsibility,

and I've been asked to pay a price.

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

against being deported from the United Kingdom.

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

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

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

That's going to happen to you.

Well, I hope it doesn't.

I've lived here since I was a child.

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

I am a product of the British financial system.

What happened has got nothing to do with my nationality.

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

would be crushing to be deported from my home.

Separated from my friends.

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

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

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

understand the root cause of what happened, which is why

I first take responsibility.

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

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

and I still don't.

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

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

you were simply following out the logic of the instructions you

were given by your senior managers.

If we do end this interview by talking about learning lessons

and thinking about the culture of banking which allowed your

situation to develop, are you telling me that consistently

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

leeway and leniency by those compliance people in the banks

who are supposed to ensure that you follow the rules?

Not just compliance people.

Not just compliance people.

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

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

to generate returns, especially in a system where fields

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

profit is to go up the risk curve, OK?

And the reality is that that pressure comes to tell.

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

and they keep happening because of the culture in the industry

and because of the purpose of the industry.

Not because necessarily the people within it are bad,

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

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

in the business that you were in.

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

but risk is at the core of it.

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

embrace too much risk?

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

because, like I say, central banking policies crunch

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

That forces the banks to go up the risk curve.

In order to maintain the same level of profitability,

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

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

when the yields are crushed.

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

the same level of profits as before, or more.

What they in compliance and regulation and oversight,

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

side of the business, on the trading desks,

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

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

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

hundreds of thousands of pounds personally

because of spread betting.

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

of millions of dollars.

Of the bank's money.

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

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

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

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

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

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

I was very risk averse.

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

to embrace spread trading.

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

It's not about blame.

It's about explaining how these things occur.

We are almost out of time.

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

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

Is that what you believe?

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

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

this kind of massive mega loss?

Yes, I do.

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

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

again, because culture hasn't moved enough.

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

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

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

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

as a compelling reason, because there is value.

It is not just my idea.

It's universities and institutions and the finance industry.

But is it cultural?

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

to understand about risk, or is it regulatory?

Do there need to be much tougher regulations?

There are multiple pillars.

It is not necessarily about tougher regulation,

it's about smarter regulation.

It's about understanding that the people at the coalface

are human beings that are incredibly fallible, especially under

the pressure of consistent pressure-filled risk-taking,

and that risk-taking affects your ability to make

conscious and clear decisions.

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

activities as criminal.

But when they are profitable they are accepted practice.

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

for being on HARDtalk.

Thank you for your time.