12:34 AM on 16th September 2011
A suspected rogue trader accused of a staggering £1.3billion fraud told friends he needed ‘a miracle’ days before he was arrested.
Kweku Adoboli, 31, posted a desperate last message on Facebook as he tried to recover enormous losses he had run up through illegal trading.
Detectives detained Adoboli, who works for Swiss banking giant UBS, during a 3.30am raid yesterday at his luxury London flat.
The Ghanaian, who was privately educated in Britain and is the son of a retired UN worker, is accused of being responsible for the biggest loss ever accrued by a single trader based in London.
The £1.3billion figure easily dwarfs the £827million lost by rogue trader Nick Leeson, the man behind the collapse of Barings bank in 1995.
It equates to about the same amount UBS is seeking to save by cutting 3,500 jobs worldwide.
Speculation was mounting that he may have been caught out after the Swiss Central Bank unexpectedly devalued the franc last week, producing mammoth losses on one of his currency trades.
It was then that Adoboli’s final Facebook message, believed to have been left on Tuesday, September 6, read: ‘Need a miracle.’
Adoboli’s boss John Hughes is reported to have quit his job in the aftermath of the scandal. Sources said he would have faced serious questions about supervision of staff. He could not be reached for comment last night.
UBS is understood to have discovered the huge loss late on Wednesday afternoon. City of London Police commander Ian Dyson said the force was tipped off by UBS at 1am yesterday.
Within three hours, detectives had entered the HQ of UBS and had also arrested Adoboli, who according to sources was a ‘work-hard, play-hard’ trader who enjoyed the company of a series of attractive women at his flat in Whitechapel, East London.
Sources said he earned around £200,000 a year, plus up to £400,000 more in bonuses.
Adoboli was formally arrested on suspicion of fraud by abuse of position, and was still in custody last night. Police are liaising closely with the Crown Prosecution Service and a decision on charges could be made over the weekend.
He was detained on the third anniversary of the collapse of U.S. investment bank Lehman Brothers, and just three days after an independent report called for tighter regulation of British banks, to stop potentially catastrophic ‘casino’ banking.
His arrest stunned the City and there were calls last night for recommendations made by the Independent Banking Commission, chaired by Sir John Vickers, to be implemented more quickly.
Lord Oakeshott, a leading Lib Dem peer and a professional investment manager, said: ‘This reminds us how much toxic banking risk remains in the system, and how urgent radical reform is. The problem is that big investment banks are full of rogue traders: It is what they do.’
Rogue traders act independently of colleagues (often recklessly), harming both clients and the firm they work for. In most cases this type of trading is high risk and can create enormous losses.
As police questioned Adoboli, it was unclear how he was allegedly able to lose such eye-watering sums without being detected by UBS’s risk management team.
Sources said he would have had to exercise ‘considerable criminal energy’ to conceal his ‘unauthorised’ dealings.
Instead of confessing immediately, he might have concealed the catastrophe from his bosses and doubled his bets in an attempt to re-coup the losses.
Sources confirmed that inquiries are focusing on the Delta One trading desk that Adoboli worked on.
Bank busters: Nick Leeson was arrested in Frankfurt in 1995 after going on the run following his rogue trading at Barings Bank, left, while Jerome Kerviel, pictured in June last year, was jailed for three years after French bank Societe Generale lost £3.7billion in 2008
It is believed the team took bets on tiny movements in equity trades using a complex mathematical formula.
The type of trade is the same as the one used by Jérôme Kerviel, the rogue trader who amassed losses of 4.9billion euros at Société Générale in 2008.
THE CURSED WEEK IN SEPTEMBER: HOW MAJOR BANKS HAVE FALLEN ON SAME DATE
The scandal broke in what has been a jinxed week for the banking world in recent years.
Four years ago, Northern Rock’s dire financial situation was exposed as details of the bank’s request for an emergency loan from the Bank of England were leaked by the BBC’s Robert Peston on September 13.
As the crisis deepened, the Government stepped in to rescue the bank – which remains under State control to this day.
A year later – on September 15 2008 – global investment bank Lehman Brothers filed for bankruptcy – the largest in American history – triggering a panic which brought the global economy to its knees.
In a brief statement UBS said that no client positions had been affected. But the company, which has 6,000 staff in the UK, saw its shares slide 10 per cent.
Adoboli joined UBS in 2006 as a trainee investment adviser. He took on a more senior role as a trade support analyst in 2007 before assuming his present role in one of the banking world’s most esoteric trading areas.
He is listed as director of Exchange Traded Funds (ETF) and Delta-1 Trading at UBS Investment Bank in his profile on LinkedIn, the social networking site for professionals.
ETFs are an investment fund traded on stock exchanges, much like stocks, which holds assets such as stocks, commodities, or bonds.
Last night, speaking at his home in Ghana, Adoboli’s father John, a retired UN worker, told the Daily Mail: ‘It’s an unfortunate situation and we’re worried because we’re a decent and hardworking family, and so is Kweku.
‘My utmost desire at this time is to get an opportunity to speak with him. I’d like to find out from him what happened and how he found himself in this situation.’
Oswald Grübel, the UBS chief executive, said that he would ‘spare no effort to establish how it happened’.
In a memo to staff, the German-born banking boss said: ‘The matter is still being investigated, but we currently estimate the loss on the trades to be around 2 billion US dollars. It is possible that this could lead UBS to report a loss for the third quarter of 2011. No client positions were affected.
‘We understand that you have already had to contend with unfavourable, volatile markets for some time now.’
He added: ‘We want to reassure you that we, together with the rest of the management, are working closely with the Investment Bank’s management and risk and controlling to get to the bottom of the matter as quickly as possible, and will spare no effort to establish exactly what has happened.’
Champagne, girls and an obsession for making money
Kweku Adoboli has always believed life is about winning and losing. He certainly knew how to win. At his desk in the City of London, at home and into the early hours, he dreamed up every conceivable way of making money.
They ranged from scouring the internet to make a few quick pounds buying and selling some online bargain, to pulling off a spectacular deal that would net him and his superiors at UBS profits they could count in millions.
But long before detectives arrived to arrest him at 3.30am yesterday, he had also discovered what it felt like to lose – in his case a staggering £1.3billion.
A highly educated young man from a respectable background in Ghana, in some respects Adoboli lived the free-wheeling lifestyle of the archetypal City trader.
He mixed champagne with takeaway pizzas, and his parties were notoriously riotous. But he also frequently worked through the night, doing what his bosses paid him to do – take risks.
ROGUE TRADER WHO BROUGHT DOWN A BRITISH BANK
If previous rogue traders are anything to go by, notoriety and possibly even a Hollywood film await Kweku Adoboli if it is proved he is behind the £1.3 billion UBS fallout.
Nick Leeson, pictured in his trading days, hit the headlines in 1995 when he single-handedly destroyed the 233-year-old Barings Bank, which proudly counted the Queen as a client.
A Watford schoolboy-turned-City whizzkid, Leeson’s early career was a success, quickly making an impression with Barings and being promoted to the trading floor.
He was appointed manager of a new operation in futures markets on the Singapore Monetary Exchange (SIMEX) and was making millions for Barings Bank by betting on the future direction of the Nikkei Index, his website says.
But things began to unravel when he started making losses and set up a secret account to hide them.
The trader began taking more risks to recoup his losses but problems spiralled out of control and he fled, leaving behind a devastating financial hole and a note on his desk saying: “I’m sorry.”
He was eventually arrested in Frankfurt, Germany, where he tried to escape extradition to Singapore.
He failed and was sentenced to six and a half years by a Singapore court.
Leeson eventually wrote a book about his experiences which became a Hollywood film starring Ewan McGregor and Anna Friel.
According to colleagues, Adoboli – the ex-public schoolboy son of a retired senior United Nations executive – was more than a flash trader motivated purely by conspicuous consumption. They said it was making the money that drove him, not spending it.
He worked under extreme pressure, making instant decisions with fortunes at stake and taking bets on tiny movements in equity trades. He also gambled on which way currency would move, studying trends and collating information through the night and predicting what would happen when the markets reopened. What appears to have happened is that the Swiss Franc moved quicker than he did, and downwards.
Born in the thriving Ghanaian coastal city of Tema to affluent parents, his talent for solving mathematical puzzles was clear from an early age.
His father – a much respected UN official who has since retired – decided to send his talented son, along with his other children to boarding schools in the UK.
Adoboli adapted well to live in one of the boarding houses at Ackworth School, a fee-paying school in Pontefract, West Yorkshire, set up by Quakers in 1779.
Indeed, he was so well regarded by teachers that he was eventually made head boy. In a profile on the school website a teenage Adoboli wrote of his obsession with ‘sport, music, good reading and material things, (and girls as well).’
He also set out his ambition to be an athlete, writing: ‘If life is all about winning and losing then how can sport not be about winning and losing.’
After school, Adoboli toyed with becoming a chemical engineer before accepting an offer from the University of Nottingham to study a degree in E-commerce and digital business.
While at university he helped plan drunken nights out for new students, which he described as ‘an amazing opportunity for hundreds of students to meet at a jamboree of parties’.
After graduating in the summer of 2003, he lived in Nottingham for a while before moving to London where he relished the high life of the capital.
It was in March of 2006 that he joined UBS as a trainee.
In London, Adoboli threw himself into his work. He spent hours at his computer looking for minor investments and bargains, often Tweeting his triumphs so others could cash in on his research. ‘Check out this article!’ said one Tweet, giving an internet link. ‘I made $360 today!’
He also slipped easily into the cultural and social life of his adopted home in London’s East End. He was a familiar figure at the trendy Boundary complex of restaurants and bars in Shoreditch – yet also a big fan of KFC and Pizza Hut takeaways.
FIVE TRADERS WHO BET THE BANK.. AND LOST
- In 2002 John Rusnak, a currency trader at US bank Allfirst, based in Baltimore, and then a subsidy of Allied Irish Bank, pleaded guilty to fraud amounting to $691million (£345million). He was jailed for seven-and-a-half years.
- Toshihide Iguchi, a former car dealer, lost more than $1billion (£500million) at Japanese bank Daiwa, in fraudulent trading over an 11-year period from 1984 onwards.
- In 1991 the Bank of Credit and Commerce International (BCCI) was seized by regulators, after auditors reported huge losses from illegal loans to corporate insiders and trades. The bank collapsed with debts of more than $16billion (£8billion) and about 250,000 savers lost money.
- Yasuo Hamanaka, a trader at Sumitomo Corporation, one of Japan’s largest banks, lost the company $2.6billion in unrecorded copper market trades. Known as ‘Mr Five Percent’ for the share of the global copper market he controlled, he was jailed for eight years in 1996.
- In one of Britain’s biggest banking scandals, 90,000 investors were left out of pocket after Morgan Grenfell fund manager Peter Young, who controlled £1.5billion of funds, broke City rules by investing in high-risk unlisted European securities.
According to former landlord Philip Octave, he was a good tenant. He paid £1,000 a week for a ground floor and basement flat in a former Jewish soup kitchen in Spitalfields, less than a mile from his office.
Mr Octave said: ‘He’s a very nice guy, very polite, he would speak to anyone. No one had a bad word to say about him.’
However, a neighbour said Adoboli had regular and noisy parties towards the end of his time there. ‘I would sometimes scream out in the middle of the night to tell him to turn it down,’ he said. ‘He would get DJs for his parties to play house music – they were really extravagant affairs. There would be 50 to 100 people with some even spilling out on to the street.’
Four months ago Adoboli moved to a gated modern development in nearby Whitechapel.
Neighbour William Pitt, 39, an Australian banker, said he worked nights, ate fast food and had a string of glamorous female visitors.
‘He was always tired,’ he said. ‘He was coming in when I was going out. He was obviously doing the night shift. He always had plenty of women around his apartment. They were all beauties.
‘Recently we were talking about the markets and I asked if he was getting a pasting. He replied, “It’s a s*** fight”.’
A few weeks ago Adoboli lent Mr Pitt a copy of The Wolf Of Wall Street, by Jordan Belfort. It tells the story of a young trader who makes piles of money … loses it … and ends up on the wrong side of the law.
using the number/letter grid:
1 2 3 4 5 6 7 8 9
A B C D E F G H I
J K L M N O P Q R
S T U V W X Y Z
A = 1 J = 1 S = 1
B = 2 K = 2 T = 2
C = 3 L = 3 U = 3
D = 4 M = 4 V = 4
E = 5 N = 5 W = 5
F = 6 O = 6 X = 6
G = 7 P = 7 Y = 7
H = 8 Q = 8 Z = 8
I = 9 R = 9
25523 1462639 48
his path of destiny = 48 =
“Pursuing pleasure. Having fun.
Not much thought for anyone.”
find out your own numerology at: