LEESON-BANKING/SCANDALS-FILE No lessons learnt from banking scandals, says rogue trader Leeson

Record ID: 565868

  • Title: LEESON-BANKING/SCANDALS-FILE No lessons learnt from banking scandals, says rogue trader Leeson
  • Date: 26th February 2015
  • Summary: LONDON, ENGLAND, UK (FILE) (REUTERS) BUILDINGS IN THE CANARY WHARF FINANCIAL DISTRICT
  • Embargoed: 13th March 2015 12:00
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  • Location: France
  • Country: France
  • Topics: General
  • Reuters ID: LVABUCLKKX399Z5LBCXS426ZKNIB
  • Story Text: EDITORS PLEASE NOTE: THIS EDIT CONTAINS MATERIAL WHICH WAS ORIGINALLY 4:3
    Twenty years after Nick Leeson brought down Britain's oldest investment bank, the rogue trader immortalised in book and film says little has changed in an industry that continues to throw up one scandal after another.
    Leeson, whose $1.4 billion loss as a Singapore-based junior derivatives trader led to the 1995 collapse of Barings Bank and earned him more than three years in prison, told Reuters that the root of the problem remains a banking culture that will not change until there is genuine fear of punishment for misconduct.
    "You know the story is one of incompetence and negligence on a grand scale. I think every time you see financial scandal, be that rogue trading, be that global financial collapse, it's poor systems, poor controls and poor people. You know, I think it characterises absolutely everything that you see, everything that's wrong that happens in the marketplace," he said on Wednesday (February 25).
    A number of high-profile cases have resulted in prison sentences for the likes of former Societe Generale trader Jerome Kerviel and former UBS trader Kweku Adoboli, while the industry has paid $166 billion in fines for a string of scandals from rate rigging to swaps mis-selling.
    And Leeson says it will happen again.
    "I think it's inevitable that it will happen again. You look at what's happened over the last 20 years, you know, there's been a lot of focus on the individuals that have committed the crimes, and they are crimes, there's no way of excusing that. People have looked at bonuses, you know, you've had Treasury Select Committees and now we're fining the banks. You know, the banks have been fined 166 billion dollars in the last six years. And it's not working."
    On Wednesday HSBC bosses were grilled by a British parliamentary committee over failings in the operations of its Swiss private bank, which has been accused of allowing clients to dodge taxes.
    Leeson also believes that the calibre of people overseeing sometimes extremely complex and esoteric financial instruments needs to be strong enough to spot potential pitfalls.
    "It's ok to scapegoat Nick Leeson because he was individual. It's ok to scapegoat Kweku Adoboli, fines of the organisation aren't working. But maybe, you know, the chain of command needs to be looked at a lot more and they need to be held accountable for the culture and the activities that exist within their organisation."
    He said he had not been sufficiently challenged at Barings.
    "I wasn't challenged for three years... people were accepting what I was telling them...So there was this inclination to believe, but they didn't really get behind the detail and look into it, and challenge as they should have done. And that's the problem... a severe lack of challenge during that time at Barings and I think that exists to this day within financial markets because there is an inclination to believe and people quite easily forget what's happened in the past."
    The son of a plasterer, Leeson now lives in Galway in Ireland. He spent three-and-a-half years in a Singapore jail after the Barings scandal, survived cancer and went on to write the book "Rogue Trader", which was later made into a film with Ewan McGregor in the title role.
    He said his time in prison gave him the opportunity to reflect on the person he had become.
    "There was a lot of self-reflection and I took a lot of time out to look at things that I'd done, ways that I'd behaved, decisions that I'd made. And it's quite intense and you really try to drill down into the detail and get, you realise that you didn't like the way that you were, that you didn't like the way you reacted to situations and you try to change those going forward."
    Leeson now earns most of his living from talking engagements, from risk-management presentations for corporate clients to after-dinner speeches about his experiences.
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