Thieving Bankers

Kweku Adoboli: I’m not a thief. I acted out of loyalty to bank

The rogue trader replies to his old boss at UBS from his detention centre cell as he awaits a ruling on deportation

Adoboli was convicted of the UK’s largest financial fraud and sentenced to seven years in jail. After his release more than 100 MPs signed a letter asking Sajid Javid, the home secretary, to grant him leave to stay in Britain

Share

Saved

I am writing this in an all-male, high-security immigrant removal centre in West Drayton. It’s convenient for Heathrow, but the airport can’t really accommodate charter deportation flights. These now run from Stansted late at night or very early morning. That’s because many of the deportees are in shackles, with two Mitie security guards accompanying each one on to the plane, and it’s not a sight that they want scheduled passengers to see.

I was due to be on one of these flights, destined for Ghana, a place where I have not lived since I was four, at 22.30hrs on September 18, but a last-minute injunction was served and I was granted a temporary reprieve.

Those of us still in Harmondsworth were locked in our cells, but we couldn’t escape the shouts and screams. Most of the shouting came from reluctant deportees as they were dragged on to the buses, but the higher register screams were from the girlfriends and children who had gathered at the gate in a final bid to say goodbye.

I have little doubt that amongst those being expelled were several like me, who have lived in the UK since childhood. People with a British education, British friends, British families and a British sense of self, heading for foreign lands where they speak none of the dialects, have no friends and few skills relevant to their new community. Broken, tired people.

On Monday, October 1, I was allowed access to the online version of this paper and read that Ossie Grübel, the mercurial chief executve of UBS when I was arrested in 2011 for illegal trading methods at the bank he ran, still thought I needed “to face up to the consequences” and accept further punishment.

Dear Mr Grubel,

From your interview in The Times last week, it’s clear you feel I should continue to pay for the failures I made in pursuit of the bank’s goals. Goals that you set. Nothing of what I am about to write is intended to absolve me of responsibility for what happened. The punishment for my actions was a seven-year sentence. I accepted my punishment and served more than three and a half years, without liberty, as a model prisoner. I’m sorry if you believe that is insufficient.

With your reputation and charisma, you had a huge impact when you joined UBS in early 2009. Following the global financial crisis we were desperate for leadership. Your message to traders was simple: “Take more risk.” At the time, The Economist called it your gambling-for-redemption strategy.

I was part of a small team of two traders that eventually grew to four, responsible for the complex $50bn Exchange Traded Funds (ETF) and Index Futures desk. With just 30 months of trading experience between us, my supervisor and I took responsibility for the entire ETF book. You say the purpose of our desk was to find arbitrage opportunities by buying undervalued securities and selling overvalued securities. That wasn’t the function of the ETF desk. Our job was to give clients access to complex securities by wrapping them up in a single, simplified, instrument. Through us, our clients could gain exposure to any asset class: gold, oil, bonds, commodities, options or equities. The world’s most sophisticated hedge funds and fund managers used these products to protect themselves against dislocations in financial markets and speculate on price movements. But because of the dislocations in the market, they effectively transferred their risk to us. Our lack of experience, knowledge and seniority made us extremely vulnerable. We resorted to using an “umbrella”– off-book accounts– to service the bank’s positions and manage risks.

By June 2011, the ETF desk had made $135 million of profit for the bank, ten times the previous year’s profit. Then, in mid-June, the targets were increased by 50 per cent. Within weeks, we collapsed under the pressure of the impossible target we were being asked to achieve. On September 12, 2011, after a series of bad investment decisions, my team and I decided there was nothing more we could do to improve the losses we had taken. Two days later, I sent an email taking sole responsibility, even though nearly 20 of us were held accountable in various ways. Only I was charged. Only I went to trial. Only I went to prison.

I took responsibility, but I couldn’t plead guilty to the charges I faced. I am not a thief or an embezzler – and the world had to know that all my choices were driven by loyalty to my institution and the corporate culture it fostered. By pleading guilty I would not have been able to show, as the trial did, that I never acted for personal financial gain.

ETFs are now six times larger than they were when I was trading seven years ago. In 2018, we have seen several examples of what happens when supposedly perfect hedges suddenly become imperfect: Facebook; Vix; Italy; Turkey; Russia; Argentina; and more. In your comments to The Times you said we never see a crisis coming because otherwise it wouldn’t be a crisis. But in doing so you identified the very issue that is likely to cause the next financial calamity: what seems to have no risk can be full of risk. ETFs still seem the obvious candidate.

We need to teach everyone the lessons we’ve learnt. Otherwise, the markets and our communities will face further severe consequences as risk management fails again. What greater atonement could we both make than to identify such risks and the cultures that lead to them? If I’m deported, I won’t be able to do that. But you still could.

Yours sincerely,

Kweku

Behind the story: the $2bn hit
When Kweku Adoboli took the decision to begin booking fictitious trades at UBS, he embarked on a course of action that would cost the Swiss bank $2 billion in losses and wipe billions more off its share price (Harry Wilson writes).

Adoboli had been a junior trader on UBS’s delta one trading desk responsible for managing a multibillion-dollar trading book. He used his experience of having previously worked in the bank’s back office to hide loss-making trades that would end up becoming the biggest financial fraud in British history. He was caught after an internal investigation turned up discrepancies, leading him to confess. As well as the financial hit to UBS, the scandal led to several resignations, including that of Oswald Grübel, chief executive. Mr Grübel said this month that he regretted that the bank’s control systems had not picked up the problems earlier: “But it didn’t happen and the main reason for that was because he was very intelligent about it,” he said.

Adoboli was sentenced in 2012 to seven years in prison and was released in 2015 after serving half of his sentence. Since then he has worked with over 7,000 students, senior executives, branches of the government and the media. He was spoken about the dangers of a toxic culture in the City that can drive employees to commit crimes. He had been living in Scotland before being detained after the Home Office decided that he should be deported as a foreign citizen convicted of a criminal offence.

Oswald Grübel, the former chief executive of UBS, told The Times last week that Kweku Adoboli should “face the consequences” of his actions and questioned whether he had yet given an “honest answer” about his motives (Harry Wilson writes).

Mr Grübel is a veteran banker who previously had run Credit Suisse, UBS’s rival. He resigned within days of the losses from Adoboli’s trades emerging.

“I have never known him personally, so I have no feelings,” Mr Grübel said. “He got a trial and it’s very clear from the trial that he defrauded the bank on purpose and with intelligence. So he has to face the consequences.” The former UBS boss also questioned Adoboli’s apology, saying: “Yes, certainly you can say that, but it doesn’t mean much, I think.”