27-year-old wannabe Kweku Adoboli was running $50bn of bets on behalf of UBS, a bank whose shareholders' funds had recently reduced by an unfortunate series of accidents to a sum not much larger than the amount Adoboli was playing with. Then he was sick all over the management's shoes. Sick, sick sick. $2.3bn of sick. Whose fault was that?
For three years, Adoboli ran his own operation inside UBS. He called it the "Umbrella". Its results never appeared on management reports, except when it suited him to leak some Umbrella profit into the results he was reporting. Adoboli's immediate manager knew all about the Umbrella. "Thank f*** for your umbrella", he quipped in a casual email.
His boss's bosses were probably unaware of the Umbrella, but they sure knew about Adoboli. They slapped his back. They quintupled his pay. They put him on UBS's future leaders programme. This did not happen in an instant. Adoboli had been working as a trader for five years before he was rumbled.
Despite the fact that UBS had only recently suffered catastrophic losses in New York and had conducted a huge renewal of its management and culture under an austere new, bonus-declining boss - Oswald Grübel - the whole culture of the UBS investment bank was directed towards encouraging Adoboli to scoff the sweets.
And despite its best efforts - or perhaps despite its only marginal, nominal efforts - UBS patently had no mechanism to ensure that the wannabe with $50bn did not get carried away.
You could contemplate excusing Adoboli's bosses if he had lost $2.3bn in a day, or even a week. But he had being going berserk for three months before they caught up with him in September 2011. Testimony at the trial suggested that after two spectacularly bad months, the Umbrella held $12bn of losses. These seem to have been utterly invisible to UBS. The situation abated towards the end, and by the time the Umbrella hoved on to management's radar, the losses had shrunk to $2.3bn.
So Oswald Grübel resigned. And Francois Gouws and Yassine Bouhara, the joint heads of UBS's global equities business resigned. Maybe UBS has reclaimed a few million pounds worth of pay from them. Apparently the Swiss and UK financial authorities are investigating their contribution to the catastrophe. Maybe in due course they will be fined. But I bet you a pound to a penny they won't be going to jail. The outcome for them will be a small footnote to the coverage of the Adoboli trial.
This is wrong. It's all upside down. Sure Adoboli was dishonest and deceptive. Sure he had to be tried. Yes, found guilty, he must go to jail. But for heaven's sake Adoboli’s fate should be a footnote to the trials of his bosses. They should be in the dock. If found guilty, they should be in jail. But, regrettably, we have not made it a crime to run an institution in which you give a twenty-something wannabe billions and then turn your attention elsewhere. And despite all the international efforts to get a grip on banks, we do not seem to have any plans to do so.
The press coverage of Adoboli's trial has inevitably included passing reference to other rogue traders. Nick Leeson heads the list because he took his bank down with him. Jerome Kerviel usually gets a mention because he was a $7bn whopper. John Rusnak accumulated losses of £400m over five years before Allied Irish Bank knew anything about it. But focusing on these few colourful episodes is to fail to see the wood for the trees.
I suggest you consult an entry in Wikipedia entitled "List of trading losses". This lists nearly 50 instances of rogue traders losing $100m or more, most of them in the past 20 years, when the potential for running up such losses has expanded hugely. Their total losses are $70bn. They impoverished everybody. This list should be a ringing reminder to regulators and legislators that catching the small fry - the Leesons, Kerviels and Adobolis - is missing the point.
Adoboli's barrister, Charles Sherrard, said: "If there is one thing many of us have learnt as a consequence of 20-year-olds being put in charge of a $50bn book - it's that the industry needs to take a long hard look at itself." He was pulling his punches.
