In short
Nick Leeson recounts how he brought down Barings Bank in the 1990s, hiding mounting losses in the “5-8 account,” delaying disclosure, and ultimately triggering a collapse blamed on an extreme, leveraged futures/options position that grew to about £862 million (plus related FX discrepancies).
Guest backgrounds
The episode is primarily Leeson’s testimony. Other voices are the hosts/interviewers and references to real figures: Simon Jones (Singapore operations head), Andrew Bayliss (London trading head), and auditors/regulators including Deloitte & Touche and the Singapore Monetary Authority/Simex. Leeson also mentions other contemporaneous trader scandals (Hamanaka at Sumitomo, Iguchi at Daiwa).
Key claims
He says he knew from “day one” it was wrong, concealed errors to avoid escalation, and lacked a “stop mechanism.” He argues controls/reconciliation failures and systemic breakdown across trading, settlement, compliance, risk, management, auditors, and regulators allowed the concealment to persist for nearly three years.
Notable examples
Manual open-outcry matching caused frequent errors; he used error accounts to “unwind” discrepancies. He describes surviving the 1992 year-end audit by arranging a £5m intercompany discrepancy explained as FX. He describes a temporary recovery (millions back) followed by renewed mistakes, and later being squeezed by market makers as the position became “all-in.”
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Chapters
Tap a time to open that second in VOThe Initial Success and Downfall
0:45 to 3:20
Nick discusses his initial success in finance and the eventual catastrophic losses.
“the effect of it was just so big a bank collapsed.”
Public Perception and Personal Reflection
3:20 to 6:00
Nick reflects on public fascination with his story and personal feelings of failure.
“and they're really panicking looking at the board.”
The Dilemma of Concealment
6:00 to 9:40
Nick explains the psychological and situational pressures that led to his decisions.
“And I tell Simon, he doesn't really understand it.”
Common Practices and Market Errors
9:40 to 14:00
Discussion on common practices in trading and how errors were managed.
“And, you know, let me get off of this for now.”
Undetected Issues in Banking Operations
14:01 to 14:43
Learn about the importance of regular reconciliations in banking to avoid major discrepancies.
“So, you know, and it's a real simple reconciliation.”
Risky Personal Investments
15:34 to 16:10
Exploration of personal finance risks and the consequences of uninformed investment decisions.
“You can get 90 % off for six months by going to xero.com forward slash makingmoneypodcast.”
The Emotional Toll of Financial Risk
16:44 to 21:24
Hear firsthand accounts of the stress and fear associated with financial mismanagement.
“And you know yourself that these are simple things that expose you.”
The Complexity of Intentional Losses
21:24 to 27:41
Dive into the nuances of trading strategies and the thin line between mistakes and intentional actions.
Understanding LIBOR Rate Rigging
28:00 to 28:30
Learn about the complexities of LIBOR rate rigging and the importance of context.
“But I can accept that somebody could try to make that case with hindsight.”
The Documentary Footage Debate
28:30 to 29:15
Explore the confusion surrounding documentary footage and personal recollections.
“then it looks like they were rigging the rate.”
Show all 31 chapters
The Prison Experience and Freedom
29:15 to 30:07
Gain insights into the limitations and experiences while in prison.
“You know, I've always said for 20-odd years, I never spoke to Adam Curtis.”
Creating Illusions of Profit
30:07 to 31:18
Discuss the tactics used to create the illusion of profitability amidst losses.
“Was there ever this point of you knew you were burning money, essentially, to create the ruse?”
The Moment of Realization
31:18 to 32:34
Reflect on the moment of realization regarding the financial situation's gravity.
“I don't think that's a linear statement in that, you know, you have to – like there were days where I would have made money and that would have been genuine stuff going into the Tokyo accounts.”
Coping with Stress and Consequences
32:34 to 34:27
Understand the impact of stress and coping mechanisms during financial turmoil.
“or she was current wife at the time that everything was a lie and it needed to unfold.”
The Escalating Financial Losses
34:27 to 35:38
Examine the escalation of financial losses leading to a significant collapse.
“And the following day was going to be a little bit easier.”
A Journey from Success to Failure
35:38 to 38:13
Trace the rise and fall of a banking career from humble beginnings to collapse.
The Quest for Achievement in Banking
38:13 to 42:00
Explore the motivations behind a relentless pursuit of success in the banking industry.
“You know, a foundation school does very, very well for itself.”
The Drive for Success and Its Origins
42:00 to 43:19
Explore the speaker's early motivations for success and the fear of failure that accompanied them.
“starting out with Japanese futures and options based in London.”
Experiences at Barings and Impacts on Staff
43:20 to 45:29
Discusses the culture at Barings and the repercussions of its collapse on employees.
“and no perception of there being a barrier to the amount of success that I could achieve.”
Systemic Failures Leading to Collapse
45:30 to 49:45
Analyzes the systemic breakdown that led to the downfall of Barings and who was involved.
“been all right but do you ever know much about like the stories of the staff at the time or what the impacts were to them um i i did a radio program years ago called the reunion uh which i I think it's a Radio 4 program.”
The Ripple Effect and Charitable Trust Structure
49:46 to 53:14
Looks at the broader implications of the Barings collapse and the unique structure of the bank.
Bonuses and Short-Termism in Finance
53:15 to 55:49
Discusses the culture of bonuses in the financial sector and its consequences on decision-making.
“And they did pay big bonuses, if you want to get on to that.”
Audit Failures and Accountability
55:50 to 56:00
Examines the failures of auditors in the Barings scandal and the responsibilities involved.
“that I reckon a five-year-old would have caught it.”
Audit Confirmation and Mistakes
56:00 to 56:40
Discussion on the audit confirmation process and errors made by Deloitte.
“It was an audit confirmation that they needed from Spearley to Kellogg.”
Personal Accountability in Banking
56:40 to 58:10
Exploration of personal accountability and systemic failures in banking.
“So, no, I don't sort of back off from that statement.”
Culture of Compliance and Risk
58:10 to 1:00:00
Insights into banking culture and the consequences of ignoring red flags.
“You know, whatever part of the bank, and we don't know which part your dad worked in yet, but whatever part of the bank you look at, there was a breakdown.”
Reflections on Fraud and Consequences
1:00:00 to 1:02:30
Reflections on the personal impact of committing fraud and its aftermath.
“But if you look at a bank, you get a lot of people who get to a mid-management level and they're capped.”
Career Transformation Through Storytelling
1:02:30 to 1:06:00
Discussion of transforming past experiences into a career through storytelling.
“You know, it's not visual to everybody and you have to come to terms with what you did and you pull back the veneer and you accept that you did a lot of bad stuff.”
Nervous Moments in Legal Proceedings
1:06:00 to 1:09:40
Description of the anxiety surrounding legal proceedings after being caught.
Identity and Personal Growth
1:09:40 to 1:10:04
Reflecting on personal identity and growth after facing significant challenges.
Reflections on Transformation
1:10:04 to 1:12:10
The speaker discusses how personal experiences shape identity and perspectives.
“You said you threw a couple of lines in there as a trader, but I think we got through it.”
Transcript
Automatic transcript. May contain errors.0:00In 1995, Nick Leeson brought down the UK's oldest merchant bank. Everybody was buying into the success story. Bonuses were huge. I never got less than a year's salary.
0:09Nick Leeson:He served four and a half years in a Singaporean prison and his story was turned into a film, Rogue Trader, starring Ewan McGregor. You're waiting for the knock on the door every minute of every single day. And I don't have the skill set to deal with how big this position is. You know, I'm half the size of the market. The loss just got bigger and bigger and 862 million is the figure. If you hadn't been caught, what kind of man do you think you would be?
0:36Why do you think the world remains obsessed with it, the story? Just because it was so, you know, so calamitous that the, you know, the effect of it was just so big a bank collapsed. I mean, you've had Lehman's and stuff like that go on, you know, since or just before that sort of time. And there've been other episodes, but it's just, you know, Maybe it's just my charming character and, you know, good nature. I don't know. It is a weird one. It's, you know, I think if you work in the world of finance or the world of banking, it kind of, you know, there was a seminal change around that time when my story came to light.
1:18It wasn't the only one. You know, you've got Hamanaka at Sumitomo, which was around the same time, Iguchi at Daiwa, exactly the same sort of time. But they didn't have the same impact or the same calamitous effect. So it sticks in people's minds. And, yeah, it's just stood the test of time. I don't know why. You know, when I started doing after-dinner speaking and talking at conferences, I always thought it was going to be quite short-lived. But, you know, I'm still like, you know I'm going to one today. So it's a learning experience for a lot of people who might find themselves in a difficult situation.
1:56and don't want to mess up like I did all those years ago. I think people, when you tell the story, people can always like put themselves there and go, what would I have done, right? Yeah. And it's that kind of, you can imagine how you get over your head is like something. Yeah, and just dig and dig and dig. And I just dig, I dug a lot deeper than anybody else would have done and didn't have that, you know, that stop mechanism within me. And, you know, that all comes from fear of failure, wanting to succeed and all those sort of things that, you know, very working class background that generated a lot of those for me.
2:31And I could have put my hand up at any minute of any given day and said, look, you know, I want to get off. I'm not enjoying this ride type of thing. But that was too big a step for me just because the fear of failure was far bigger. And, you know, everybody was buying into the success story. and wherever you turned, whether it was at home or you're playing a game of football or you're in the pub and people are talking about how the markets have gone on that day, you've always got that bravado and face that you've got to put up to show that nothing bothers me, it's all going really, really well.
3:05Whereas you know the reality is that there's a pile of dog poo waiting for you around the corner. There's an image where you're on like a stock exchange and you're stood there with a load of traders and all the traders are looking at the board and they're really panicking looking at the board. I'm guessing the market's going wrong. And you're just stood there smiling, looking off into the distance. Is that an act at that moment? Yeah, look, it was all an act. It's one of those things, you know, facing out, you've got to present that nothing's bothering you and that you're strong and everything's going the way that you want it to go.
3:43But, you know, inside, everything's crumbling inside and around you. And, you know, but markets will eat you alive if you show any sign of weakness. I did a podcast a little while ago with a good friend of mine who worked on the markets on life at the same time. You know, we're still very good friends today. And, you know, as the market's going against you, you know, like everybody's pushing you further and further because that's what they're supposed to do. You know, if they know that you're caught, they're not going to let you out easy. you know that's they're going to make it make it as painful as they possibly can for you so that's why you get all that you know that dilemma between you know looking like it's not affecting you type of thing and really the markets and everything is crashing around you you know i can't remember what the phrase was that he said but you know it's their job to have your pants down in those sort of situations and and that's what happens in the market so um and especially when it was open outcry because it's more visual everybody can see you know I can see if you're you know if you're finding it difficult or you're having a bad day and I'm just going to squeeze you and you know rinse you that little bit harder um if I think I can um and you know it's down to you to to prove to me that that's not what's going to happen and you know maybe you take on a bit more size than you should but mine was just an extreme example of that what was the moment you first knew you were doing something wrong?
5:09Day one, minute one. You know, like we're all intelligent people. You don't work in the financial markets if you're stupid, right? So you know the difference between right and wrong. Your parents have taught it to you since an early age, and it's wrong. But you step over that mark, and, you know, you can come up with – I can come up with loads of reasons why I did it, and I wouldn't believe all of them, right, myself. So I'm not going to try and convince you guys either. But I think for me, you know, you find yourself in a difficult situation. You know that you've got to tell people and that you've got to refer it up the line of command.
5:49And there's various things within that when that happens that, you know, you've got to rethink it again. So the very next morning, I go into Simon Jones, who was the head of the operations department in Singapore. And I tell Simon, he doesn't really understand it. He doesn't, you know, has no real experience of futures and options. He knows there's a loss, wants me to quantify it. I say it's about 10 grand. And he says, refer it to London. So Andrew Bayliss is the head of trading in London. And Andrew's not going to be at his desk for another seven or eight hours. So then you're immediately into a dilemma.
6:25You know, the market's going to open up in five minutes. Maybe we'll get back to that level, you know, and nobody will know anything about it. And my chance of success and my not highlighting my failure is a possibility within that period. And when you're in that dilemma moment, I took the choice to see if the market would get back to that level. And the opposite's happened. It's got worse. And now I'm more complicit. I'm part of the concealment. And it's a much bigger situation than it was at 8 a.m. that morning by 3 o 'clock that afternoon. then you know you've got the dilemma do I call Andrew Bayliss and tell him it's a yeah a 90 grand or 100 grand error and it's kind of you know it's gone out of a realm with which you were comfortable with and you conceal it you put it into an error account and you know why did I do that I've seen many other people do it you know I think as human beings we're you know we're very much influenced by what we see and what we hear and I'd seen so many people do it in the past and it was only going to be for a day you know like you kid yourself it's only going to be for a day um maybe even only another couple of hours and you'll close the trade down and nobody will be any of the wiser and you can get on with the rest of your life you know that's the theory or that's the plan um but it didn't work out that way and you know as you go through the story there are times when I almost got all of it back there was one occasion where did get all of it back and you know you question why don't you stop and you know it's almost as if succeeding in getting it back is a bigger problem because now when you get back in that same situation you believe you can get out of it and you've got a genuine belief because you've done it that you're going to be able to get out of that situation again and it happens again fairly quickly there's a small loss and you know it gets bigger and then you you know the markets are collapsing and there's many different components to it but you know you know from day one anybody who tells you it's pressure to perform and it's all of this sort of stuff there's a small part of that that comes into play but you know the difference between right and wrong and you know I knew what I was doing I knew I shouldn't be doing it I continued all the same and therefore you know I'm fully accountable and responsible for my actions during that period there's you know there's there's no way to make it sound any better from my perspective you know as you said at the beginning lots of other people would say that they could have found themselves in a similar sort of situation but the bottom line is they didn't right because they would have stopped either they didn't get to that position to have that degree of control they worked in a better organization or they would have put their hand up sooner um you know i just you know i i stretched it to the absolute limit, I suppose, during that period.
9:17And, you know, like if the bank had more money and it could have gone on for longer, it probably would have done because I still didn't have that stop mechanism within me because it would have impacted everybody in my personal life, people who worked for me, people who I worked for. And, you know, as much as I didn't let them, want to let any of them down, I let them all down ultimately because I couldn't say stop and, And, you know, let me get off of this for now. So you said that a lot of people were doing this kind of, the account's called the 5-8 account, right? This is the notorious account where you were hiding losses, essentially.
9:55Is that the right characterisation of that? You said lots of people were doing that kind of activity, as in other traders around you were just sticking money in these accounts. Yeah, like it was a, you know, it was probably a weekly occurrence at that time. Somebody in Tokyo would have given a price to a customer, didn't quite get that price in the market. So there's an adjustment that needs to be made. There would be maybe an order that needed to be filled for a customer. Didn't get completed 100%. So it was only completed down to about 75%. Customer then didn't want it. So the 75 % goes in an error account and gets closed down as quickly as possible.
10:37So usually they would last for a couple of days or something like that. But it was, you know, it was quite rife at the time. And, you know, I was the person who was doing a lot of the settlement of those during that period. You know, the conduit between the people in Tokyo and London. So I'd see them go into the error account and get unwound. You know, maybe, you know, there would have been occasions where something would stay in the error account for a week or so. But everybody turned a bit of a blind eye to it. That's not an excuse, right? It's still, you know, the difference between right and wrong.
11:11More people would have been aware of what they were doing, whereas, you know, mine was direct and complete concealment during that period. Why did it take, if everyone was doing it, why did it go wrong for you and why did it take so long for people to discover something that was quite common practice? Well, it's an open outcry market, right? So you get errors all the time. You know, you've got 50 people. Is that why you're shouting at each other? When you say open outcry, you basically mean like a pit and you're all shouting. Yeah, and everything's being done with hand signals. So, you know, it's very noisy.
11:41It's quite aggressive. You know, there's always a bit of physicality to it. But everything's done by hand signals. So, you know, as much as I might be looking you in the eye, we're trying to do a trade with our hands. You might think you're trading with the person behind me or the person in front of me. So there's a matching process that needs to go on. So we both write out a quick trade ticket, give it to the runner. the runner runs around puts it into the the computer system and ideally or you know what should happen is within 30 minutes those trades match up if they don't match up then my runner has to go into your runner and see why it's not matching might be a price difference might be a quantity difference might be a complete you don't know the trade because you think you traded with somebody else type of thing and that's all got to be resolved within 30 minutes and when that doesn't happen then you have a problem so you're getting errors all of the time with within the market you know it's just natural everything's very manual um and then it's got to go into the pc um to to or the settlement system to try and um solve it as quickly as possible so that's where you know errors are commonplace now when everything's screen traded um you know you don't get that sort of stuff you might get a fat finger trade or or something like that um but you you're not going to or a misprice or a misquote or something but you're not going to get that degree of error because you know the trade is transacted in front of you on the screen and is immediate so you don't have this whole manual matching process so you know we've got we do have to remember this was in the you know early to you know it was 1992 so pre the internet in a big way you know yeah yeah look I think social media would have killed me if you think about what goes on on social media, that people would have been talking about what you're doing and, you know, it would have been, and I think that affords a level of transparency that wasn't around at the time.
13:37You know, everything's word of mouth and, you know, maybe an early form of email going back to London that takes about five days to get there or something. I mean, I don't know, but there wasn't that visibility or transparency, so it was all, you know, very manual and process-driven. In terms of why people didn't catch it any sooner, unfortunately they weren't good enough at their jobs you know I put myself at the forefront of that but everybody who had a support or control or management role within the organization at the time was not very good at what they were doing otherwise it wouldn't have gone undetected for as long as it did you know that you do simple reconciliations you look at the Singapore International Monetary Exchange and you've got 5 ,000 contracts you look at your traders books and you need 5 ,000 contracts.
14:25If you have eight, you have a problem. So, you know, and it's a real simple reconciliation. You know, we only had two accounts. You add them together, you compare them to Simix. And there was a discrepancy every single day for nearly three years. If you're a small business owner, freelancer, or sole trader, then I want to tell you about one of my favourite finance tools in the world, Xero. It's accountancy software, and we use it across all of my businesses. So this podcast, my channel and the newsletter. Xero is great because it makes accounting as easy as it can be. And I say that confidently because of my mom.
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15:34You can get 90 % off for six months by going to xero.com forward slash makingmoneypodcast. There's a link in the description for you as well and a QR code on screen. So T, tell me the riskiest thing you've ever done.
15:47Nick Leeson:Mate, the cameras are rolling. I can't do that. You're trying to get me cancelled. I mean, most of my risky things were probably my teenage years. But one thing I could say about finance risks, definitely invested in stocks with zero research, just because my friend told me to, his research was, trust me, it didn't go well. Wow. So clearly risk affects you in both your personal and business life. And that's why we're really happy today to be partnering with Vanta. They automate a lot of risk processes and help you see the risks in a centralized platform so you know what really needs your attention.
16:17Nick Leeson:Besides risk, the main thing Vanta does is automate compliance with security protocols that you need if you want to do business with larger companies or grow internationally. This is stuff like GDPR, HIPAA, ISO 27001 and SOC2. The beauty of Vanta is they make it easy to prove you're compliant with these standards, saving up to 90 % of the time it takes and on average half a million dollars. You can get started at vanta.com forward slash making money. There's a link in the description. how did you feel on the inside because obviously everyone's looking at you very cool very calm nonchalant always in control how did you actually feel like when you got home at night yeah how was it on the inside not the outwards yeah i think i think it gets um i think the easiest way to explain it is in the beginning you're you're kind of you're waiting for the knock on the door every minute of every single day so every time the phone goes you know you're scared to death because you think it's somebody who's going to expose what you're doing.
17:16And you know yourself that these are simple things that expose you. And you can't understand why nobody's bringing them to your door. There's very little that you can use to explain it away. You know, there were some superficial challenges over the years, and, you know, I'd give those, you know, quite nonsensical answers at the time. But nobody really investigated them. It's, you know, nobody wanted to ask the difficult questions. And, you know, I wasn't always the star trader, you know, in the early days. Everybody was very focused on the profit and how much money we were making. It was, you know, it was the mid-90s and everybody was trying to expand their business really quickly and make more money.
18:01And Barron's was probably the worst example of having, you know, great systems and processes and controls in place. So it always followed a bit later. So in the beginning, you know, I think I hated myself throughout. But you become a little bit more blasé about it over time. So you go through that initial period where you're really expecting to get caught every single minute of every single day. then by the end of week one you know there's a big sigh of relief that you've managed to get to that point and you always believe that you're going to get this back right you're going to solve the situation so now I'm starting to think well you know rather than expecting a call every minute of every single day you know maybe I'm not going to get a call today so I can look forward I can look, not look forward, but I can see as far ahead as the next 24 hours.
18:59And then over time, you know, the weeks turn into months. Then the accountant comes down and looks for the balance sheet, and she doesn't see anything in the balance sheet. And you're able to conceal what's going on in the 5 8s account. And, you know, that's the first real challenge. Then you get to the end of the year, which wasn't far away. It was only about another month away. and the auditors come in and, you know, it's Deloitte and Touche. It's one of the big four. You're expecting them to really expose what's going on. There's a$5 million loss at that time. You've got no way to hide it. I phone up the Treasury Department in London and ask them for$5 million and they pay it out to me, which is, you know, and the explanation I gave was, you know, fairly absurd at the time, but they paid the$5 million.
19:46The$5 million comes in on the 1st of October. I post it on the 30th of September. So when Deloitte's come in and they're doing their audit, there's a discrepancy in the intercompany balances of$5 million. Deloitte's put that down to a foreign exchange discrepancy, and that's how I survived the 1992 year-end audit. So there's lots of contributory factors within it. If there was a decent auditor who'd investigated that a little bit further, it wouldn't have got past that point. But what happens from about that point on is you're very contemptuous of people then, because the accountant's never going to find it.
20:26The auditors aren't going to find it. The Monetary Authority of Singapore have come in and they've done an audit. They never found it. The Singapore International Monetary Exchange have been in and did an audit and they haven't found it. And every time I ask the Treasury Department for money to fund the illegal position, they send me the money. So you believe or you live in the belief that you're going to, you know, you're going to reach that Hail Mary moment where you get all of the money back and you can get on with your life. And then you get these really small positives where something turns in your favour and you get close to that.
21:05And that kind of, I think it's human nature, engenders a belief that maybe you are going to be able to solve it. And there was always that sort of belief. And I don't think that really ran away from me until towards the end of 1994 when the position was just so big. the market makers are squeezing me wherever they they possibly can because they know what my position is because they've got the other side of it it's not really a difficult computation for them um and the market is continuing to crash so it's going further and further against me my position's increasing dynamically and i don't have the skill set to deal with how big this position is you know it's i'm half the size of the market you know so you can't unwind this you know this is you know excuse me for the phrase but you know there's a point where it becomes shit or bust because you know if i'm long the market and i'm 50 even if i'm 20 of the market i can't flip that around yeah i'm just i'm i'm all in and unfortunately i was allowed to keep putting the chips on the um on the all-in bet and it kept going that way and you know as i said a lack of skill as well within that that particular period you um you say like you you were hopeful that you could get it to a point where it you know you could get back to zero essentially and it stopped there was a point where you did that right so you you got back six million i got a quote from your book i want to read to you because i think it i haven't read it in a long time no no but you it's your word so it's it's like a beautiful bit of emotion of probably what you were going through there you say i was so happy the night that night i didn't think i'd ever go through that kind of tension again i'd pull back a large position simply by holding my nerve but first thing on monday morning i found that i had to use the account again it became an addiction so the at that moment you know did why did you have to use the account again um i mean i think that does sum it up quite well i think it's it's probably the ghost writer's words a little bit more than mine um there might be a touch too flowery but um and and genuinely that friday i remember it you know like i can picture it now we we went out to the hard rock cafe and you know the you know the the younger people on the floor up on the you know the younger people who worked for me were up on the tables dancing and whatever else and it really was a celebration the you know the girl who made the initial error she'd she was long gone um you know because she knew she made the mistake and she couldn't you know she couldn't really deal with that but she was put in a you know and in in a really difficult situation and um she um she just made a mistake right uh and we all do that and um you know I felt a degree of loyalty to her but you know she left on the back of that mistake fairly soon after so she wasn't there at this particular point and then you know lots of drinking uh as there was most of the time in Singapore and everybody was, you know, enjoying themselves.
24:11It was a Friday because that was the day that the options expired. I think it was in, I think it was in May of 93. I think it was bigger than 6 million. I think it'd been up to as much as 20 at that stage. So I managed to get it all back just because the settlement of the options was almost perfect for the strategy that was on, which was just being short options, really. It's not really a strategy. On the Monday morning, the order fillers that I had came back into the trading floor and they made mistakes again. Maybe one or two of them were mine. I can't really remember on that day, but it would have been Din or one of the guys who was filling the orders would have sent the tickets back.
24:58And we were trading big size at that time or by that time. So it might have been a 500 lot trade and the tickets come back and he's bought 550. So the 50 goes back into the five-eighths account. And then you've got that belief that you've done it. It's not such a big deal now, whereas it was a major panic before. You've solved the situation once. I don't think it's a conscious thing, but subconsciously immediately goes into that frame where you think, I can bring myself back from this again. do you um so does does within the documentary that was made about you they implied at that moment that basically you were selling at a discount to some of your clients so essentially what they imply and i would like to hear from you is that you were creating losses and then putting them in the five-eighths account so basically you were always going to lose and it wasn't a mistake It was at this point intentional.
25:57I don't think it was intentional, but we, you know, the one thing that you've got to think about that time. And again, you know, the volume hides everything else that's going on behind. So you kind of need the volume in order to make sure that you're hiding what's happening behind it. So, you know, I don't think we were intentionally, you know, going out. We certainly gave clients good feels, but the clients were. When you say we, sorry, what do you... Well, me. Okay. Let's say me. So, you know, I would be giving better feels to Tokyo. So like at the end of every three-month period with futures, you have to roll them over.
26:39So there'd be a spread. So the spread might be 120 to go from March to June. And if you were a buyer, if you could get it lower than 120, then that was advantageous rather than just going into the market and buying the spread or selling the spread. So we tried to leg, or I would try to leg into those so that you buy one side first and then sell into the other. And that's where a lot of it came from. So whether that was intentional, the intention was to do it at 115. But if you got caught and you ended up buying it at 135, you still gave it to the client at 115. So I accept what's being said, but the process was a little bit different.
27:23in the time. So like in the example, you said we were deliberately, it wasn't you, but the documentary said that we were deliberately doing that. It wasn't the intention, but it did happen from time to time. I'm not going to back away from that. It certainly did. But the intention was to get a better feel than was available in the market. And then that volume, I would admit with hindsight was beneficial in hiding what was going on behind the 5-8s account. But did I create the volume so that I could increase the business that was going into the 5-8s account? Absolutely not. But I can accept that somebody could try to make that case with hindsight.
28:08But if you don't, it's like most things, if you look at LIBOR rate rigging, you know, there were 20, 30 people who were accused of libel rate rigging. And it was all done off of the serious fraud office, you know, getting transcripts of the calls that were made between the guys who were involved in it. And if you look at the transcripts, and you take the transcripts with no context, then it looks like they were rigging the rate. You add context into it, and you listen to it, you add the audio into what you're reading, and then you can see they're just messing around half the time so if you look at anything without context you can present a very very different situation so you know I have the context whether or not you believe me is up to you but you know I have the context whereas I don't know if that documentary was an Adam Curtis one I don't even remember meeting Adam Curtis but there's some footage apparently of us having a conversation I think it was just before I left Frankfurt.
29:14And I still don't, I can't remember it to this day. You know, I've always said for 20-odd years, I never spoke to Adam Curtis. But everybody says that when they look at the document, like I obviously don't. There's footage of you giving an interview, whether it's with him or not, I'm not sure. But, you know, you're having a conversation. The one I remember is with Sir David Frost, right, which was earlier on. It was for breakfast with Frost. Adam Curtis could have been one of the researchers or the producers, I don't know. My own agents have tried to convince me that I saw Curtis just before I went back to Singapore, but my mind was definitely in a different place then.
29:53Nick Leeson:This is when you were in jail in Frankfurt before you went to Singapore. Yeah, no, I didn't see anybody when I was in Singapore. So they wouldn't have allowed it. But in Germany, there was a bit more sort of freedom around that sort of thing. um so the adam curtis the only thing and just to give you the uh my agent's perspective on the adam curtis thing apparently and i because i haven't watched it i can't prove this to you but what i was wearing in the frost one was different to the adam curtis one okay so that's why they believe i did see adam curtis but i have no recollection of it they interviewed some of the other members of the bank some of the senior management or um yeah but they wouldn't have They wouldn't have been in prison with me.
30:35No, no, no, no, they weren't in prison. What I mean was they basically said that they believed there was a point in this situation, let's call it that, where it got to a point where you basically had to make losses in order to make it look like you were making profits. Was there ever this point of you knew you were burning money, essentially, to create the ruse? Make that statement. Look, I don't disagree. This is good. I don't disagree with the statement, to be honest with you. I wasn't very clear. There was someone within the documentary that essentially said that in order to create the fake profits, you had to create real losses.
31:13So there was this downward spiral that you were never going to recover at that point because it was a negative profit cycle. I don't think that's a linear statement in that, you know, you have to – like there were days where I would have made money and that would have been genuine stuff going into the Tokyo accounts. You know, there would have been days where, you know, a certain number of the trades would have been profitable and either a smaller amount or a bigger amount were loss-making. Yeah. So, you know, on those days, I would agree with the statement. Okay. But it wasn't sort of a linear...
31:52It wasn't like a doom spiral every day. No. Okay. No. I mean, the position was a doom spiral because it was long. You in the moment felt like it was salvageable. You were never at this point where you were just like, this is going to go, I'm just going to keep this going as long as I can. No, I don't think I ever got to that. Like by the end of 94, I didn't want to go back. Was that the moment where you knew it was over? When you came back to London? Yeah, but I went back. Because again, it comes into that scenario of letting people down. and, you know, there were people visiting early in 1995 and that's the reason why I went back because I couldn't tell my ex-wife at the time or she was current wife at the time that everything was a lie and it needed to unfold.
32:45You know, I'm back in, I went to Ireland with some friends from life to a place called Middleton and we hired a house there and we're just spending the new year there. And I've made no attempt to conceal the loss in the 5-8 account, so it's going to be exposed. But, you know, one of the girls in the office phones me on the last day and says, what shall I do with the 5-8 account? And, you know, just in the last minute, just to continue for another day and postpone or avoid the fact that I've got to tell people what's gone on, pass a one-sided journal entry to the 5-8 account, which immediately throws out the balance sheet, which is going to cause lots of problems.
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33:29But it's just a case of extending it for another day, then missing flights back to Singapore. So, yeah, I mean, I suppose by the end of 94, I wanted it to end. Psychologically, I must have been so tough. Yeah, look, Jekyll and Hyde type of, look, and I also had cancer whilst I was in prison in Singapore. so I think you know that's a consequence of the stress and everything else you were young yeah cancer died young yeah I had colon cancer when I was 31 and it you know you can probably predate it by two or three years so I was probably 28 at the time but a consequence of lifestyle drinking too much you know eating too much fine food and the stress levels and you know it was all about avoidance and postponement you know it's far easier to go out on a Wednesday night and get absolutely obliterated so that you didn't have to face what had happened that day.
34:27And the following day was going to be a little bit easier. So really bad coping strategies that were only making it worse. You know, drinking alcohol doesn't solve the problem. Whatever your problem is in life, you know, you've got to solve the problem. And alcohol, you know, doesn't go any way to doing that. But that was, you know, a common bedfellow throughout my time in Singapore. and it kind of increased during that period as the situation was getting worse and worse and worse. I mean, when I first arrived in Singapore, I was playing semi-professional football. I was boxing most days. But then when the stress starts to ratchet up and the drinking starts to really take hold, all of that goes and it all has a negative impact on you personally.
35:15I think, you know, if you had a copy of the book here, if you looked at pictures of me when I arrived in Singapore and pictures of me when I was arrested, you know, I look like I'm stressed, you know, like the face is bloated and there's a definite consequence or price to have paid for the previous three years. So you spoke about the numbers and the losses and they got pretty big, didn't they? Yeah. Yeah. So, you know, as I said, the initial loss was quite small, probably in the 10 to 15 ,000 pound range by the end of 1992, the year end audit was 5 million pound and or five million dollars and that's the summer money that I needed to get from London May of 93 which is the period when I got all of the losses back it'd been up to 20 million and then by you know I can't I can't think what they were by the end of 93 but by 94 they'd accelerated the market's collapsing the position's getting bigger and I need more money to conceal those losses so by the end of 94 i've got 500 million pound with me in in singapore and then between then and february of um of 1995 you know i've probably got in the region of 625 650 000 pounds with me uh six million pounds sorry not thousands um and then the number that's ascribed to the collapse is 862 million pound when you add in all the foreign exchange discrepancies and everything else that uh that kind of added on to my my bill if you like yeah because a lot of that was added afterwards as well because the trades went worse and yeah some of it is i mean the trades as happens with all big financial stories the trades are given to or the position is given to somebody uh they unwind it it's usually goldman sachs they're not going to give you the best possible prices when they're unwinding it there was some foreign exchange that wasn't hedged correctly so the loss just got bigger and bigger and 862 million is the is the figure you you said before at the start it was like a fear of failure and i think one thing that people might confuse is all this money that you talk about the number like a billion this was not your money this was the bank's money and correct at large parts of this obviously there was bonuses involved and we'll maybe talk about that stuff but was this really just this like image thing more than it was about cash um the two are interrelated um but you can you can lose some of the value of the cash the problem for me was right i was i was an overachiever from a young age um you know came from a very working class background grew up on a council estate in watford not the easiest council estate in Watford either um and but I did very well uh at junior school so up to the age of 11 I was always kind of two years ahead of the rest of the class can't remember what the tests were called that we were doing but um I was always ahead of them so I was very driven and I was very driven um you know I think my mum was probably the motivating force there because you know she was always a bit a little bit upset with her lot she she thought she could have done more she was quite clear you know quite academic herself um but she fell into a lifestyle that she really didn't want to want at that particular time so she she was always the driving force behind the kids and i was one of the you know i was probably the one that was doing academically the best at the time so i got a bit more of that went to a very good school a grammar school that moved down from the East End of London to Hertfordshire, probably the leading school around Watford these days.
39:00You know, a foundation school does very, very well for itself. Things started to go a little bit wrong there. You know, I did very well at O levels. The guy that got an A in maths and, you know, a number of other things. I can't remember how many O levels I've got I think I've got 10 12 something like that um and then a level so I'm 16 17 um and the maths teacher is is ill he's the deputy head of the school so we get a relief teacher and I just don't bother going and I think I can catch up and you know I'm kind of you know common team yeah yeah I'm kind of uh yeah I kind of believe in some of my own press at that time that I will be able to catch up i've got an a o level what how difficult is it to get up to a c at a level but it's all applied maths and uh you know you it's not so easy to catch up which i proved um so ultimately failed my maths a level um you know got got maths a levels in uh in history and english english literature um and the plan was always to go to you know to go to university um but the universities that I wanted to go to with only two A-levels, I wasn't really going to get in.
40:16So applied to Coots and Company. And, you know, there was always a success element in everything that I did. You know, so at the age of 18, I'm at Coots. You know, 50 people from my school applied, two people were given interviews, and I got the job. So I started to work at Coots. Big bang era. So there was lots of opportunity, far more opportunity than you see these days. and people are changing jobs on a regular basis with not much knowledge of the job that they were doing because demand was so far outpacing supply. So did well at Morgan Stanley. Sorry, did well at Cootes. Moved to Morgan Stanley, one of the big American investment banks.
40:59Did well at Morgan Stanley. Started work in one of the bond settlement areas. Then moved into futures and options in the West End where that was based at the time excelled at that found it quite easy you know dealing with reconciliations and and solving problems was a was something that i could do um very easily but got bored so you know i was offered a job on the trading floor at morgan stanley on the london traded options floor again very successful um the guy who was working there was only one person working on the trading floor for morgan stanley at the time um he wanted me uh the person that I was working for at Morgan Stanley wouldn't let me move so um you know had a look around and bearings had been approaching me a few times over that period so eventually was headhunted to bearings um because we'll get on to the bonuses in a sec I'm sure um but yeah nice uplift in money working for an English firm renowned for paying big bonuses um and promise of opportunity but starting out with Japanese futures and options based in London.
42:11And then, you know, I got bored at Bearing, said I was going to leave, and they offered me a job in Sydney, Australia, on the futures floor. It wasn't quite ready, so they sent me to Hong Kong and Indonesia to work out there, solving a problem for them for about 15 months, which I did. So there's always a success part about it. And so I always had a need for success, but there was also running alongside that I was successful. And for me, I suppose, with that massive need for success, there was no barrier to where I was going to go. So I would have had a very elevated opinion about where I was going to get in the bank and all the important decisions that I was going to be making.
43:01I was going to the top. and then you combine that with a fear of failure and not being able to enunciate that failure and bring it to anybody's attention. So I think the two, you know, they run side by side. But I think it's born out of a massive need for success and no perception of there being a barrier to the amount of success that I could achieve. And you think that stems all the way back to your mum and how you were raised? Which stems back all the way to being at school when I was, you know, between the ages of five and 11 because I was trouncing everybody in the school in terms of the achievement.
43:42It was very visual. Like you guys are younger than me, right? So we'd all sit. Please not. We'd all sit around in a classroom, right? And I can't remember what these were called. It was like SRAs or something like that. Somebody will be able to tell you exactly what it was. but they would be given out and you know you would be given out like a different color or a different year so i'd be in year three but i'd be doing the year six exams type of thing so it's quite visual again yeah i think it kind of happened uh from there and you know i found exams easy apart from the maths one um because it was just a memory test so my memory was quite photo photographic i think uh still probably is and uh although it's getting a bit older i think i'm using the wrong type of camera these days that's what i think it is yeah it's a bit blurry when i when i tried to call upon it so i do make a few few mistakes as you know we're turning up at the airport without a passport yesterday thinking i'm the biggest idiot on the plane no i did the same
44:50Nick Leeson:thing i turned up with an expired passport and at least it was at least it was a passport i sat there had dinner getting ready really relaxed thinking it'll be great i'll be at the yeah i'll be at the podcast early in the morning properly refreshed and then had to panic and go to dublin and get a flight a flight over to attend today so no yeah it's not as photographic as it once was we'll we'll rest there well i'm interested because obviously yours is the story that everybody focuses on but bearings was a massive organization filled with other employees staff people it was the bearing family is that correct it was like a family owned and i know that whoever said it was like i'm not i'm never getting into finance again and kind of i'm sure they might they might have been all right but do you ever know much about like the stories of the staff at the time or what the impacts were to them um i i did a radio program years ago called the reunion uh which i I think it's a Radio 4 program.
45:44And so that was with some people from Barons at the time. Not all Barons people. There was a guy there that I'd never met in my life. He was quite vociferous, which is okay. Don't have a problem with that, but he had no... Skin in the game, he wasn't? No, he had some skin in the game. He worked for Barons, but I don't know if he worked for Barron Brothers or Barron Securities. I have no idea. I'd never come across him before. Although he does pop up from time to time when somebody wants a comment. um there but peter norris was there who was the cio of bearings um there was a guy there called john gapper who was the financial times journalist he's written some books um about bearings as well so john was there there was a guy called alan bloom who was the liquidator um i can't remember it was david dimble dimbleby or one of those who was bringing it all together might not have been him but it was somebody like that of that sort of stature um and there was uh andrea ledson was there who um went on to run for the conservative party leadership a number of years later but she was there because she used to work for um uh barclays desote web bz uh yeah bzw i think so um so she had some context from the city at that particular time but the thing that was striking for me to answer your question is peter norris right because through not through what he said but through the conversations that other people had about what was going on at the time he was very much front and center for all of the grief and the you know the sensationalist stuff that went on at the beginning and it really took its toll on him and you could see that and you know I apologized unreservedly to him, but it's not going to change anything.
47:33You know, he went through those times and you can't get them back. Now, he's gone on to be, you know, supremely successful as he always would have done, but you could see the pain that he went through. And it wasn't him who was trying to get at me. It was more the conversations that John Gapper and Alan Bloom would have about what was going on at that time. And, you know, like, I'm not going to say I was a coward, but um you know i was in prison in in germany and then in singapore so i never really had to deal with any of that massive glare that existed at the beginning and you know that's probably been of benefit to me personally um over the years um but yeah no you could definitely see the toll that it took on him i i speak you know at many different events as i've said and you always come across somebody who worked at bearings or tells you that they worked at bearings my dad
48:29Nick Leeson:worked at bearings i'm not sure yeah yeah yeah yeah what proof have we got it's in the five eights account do you do you blame bearings or because i mean you said deloitte came in as auditors obviously bearings were an institution this seems like there should have been someone should have stopped this along the way 100 but i don't blame anybody you know it was all me right the fact that there were poor controls poor systems and whatever else is a contributory part of what went on your dad's to blame joking i am only joking um but the you know everybody had a part to play you know it was a systemic breakdown so from settlements through to compliance through to risk management to the directors of the bank to the senior management of the bank you know you've got the auditors you've got the regulators um everybody had a failure during that period so it was a real systemic breakdown and anybody could have stopped it at any given time i mean you know i'm sure there's animosity in parts you know the bearings family they own a little island uh just to the side of dublin so when i'm flying home and you know fly landing in dublin you know i do worry that every now and again they might shoot the plane out of the sky but maybe that's not a good joke at the moment but the um yeah i think it's called uh lambe island or something so i think that's where maybe there was there was something in the documentary with kangaroos they got three wallabies from london or something around i think they're on that island so that the bearings family still own that island yeah it's funny that the other crisis that bearings had was also facilitated by someone called nick a hundred years before i believe yeah this was in the documentary but what about like say the little people i hate that term but like the secretaries and you you mentioned a lot of the heavy hitters and understandably you're only going to be exposed to the people that are kind of like the big names yeah what was the ripple effect down the chain of people that had normal jobs i did and i don't want to i don't want to downplay it but um ing took them all on so the only people who really lost their jobs at the time and this this is where some of the reporting gets a you know gets gets a little bit far-fetched um the only people who lost their jobs at the time were the senior managers who were responsible for me so people like ron baker mary waltz um the guys who worked for me in bearing futures singapore that no longer existed so they I think pretty much all of those lost their jobs so that would have been about 10 or 11 in number but everybody else would have moved over to ING and you know years later I don't know how many years later maybe 18 years later I'm doing a job in Amsterdam and you know the financial times in Holland whatever it's called I should remember but You know, they were doing an interview with me and they said, we've done a study of everybody that moved over to ING from Barings and there's only one of them left.
51:45Are you surprised? And I said, no, because they weren't brilliant when they were at Barings. So why would ING keep them on? You know, they took them on and they had a chance to prove themselves. Not that that deflects or any way from me. um but you know you do see stories in the newspaper from time to time that and i still get people who say this to me oh my granddad lost all of their money in in bearings no they didn't right bearings wasn't a retail bank that would have taken money from your granddad they dealt with other financial institutions and so that story is one that's regularly were they a listed company at all bearings no it was a charitable trust okay so bearings was a charitable trust and you know somebody who worked for Berians at a very senior level a number of years ago explained to me why that is.
52:34They weren't a charitable trust because they wanted to give to charity. The reason you set up a charitable trust is you can pay more than 50 % of the bank's profits to the staff. There is no limit. Whereas if you're a listed company, you can only pay a certain amount of the bank's profits to the staff. Is this this big bonus culture then? That facilitated the big bonus culture? Part of it at the top end. At the top end. But, you know, like I didn't know that at the time. And there are people that definitely benefited from the charitable trust because you do have to give a certain money to charity.
53:08But the real reason for it was, you know, to be able to pay bigger bonuses than they would have done otherwise. And they did pay big bonuses, if you want to get on to that. Well, I mean, the bonuses are well documented. And the problem is that the numbers are 30 years ago. So you've got to inflation adjust them. I heard you saying once that your starting salary was 50K and you were hoping to get a 50k bonus. And obviously this is a good, I mean, 100 % of your yearly salary, but you're talking in the 90s, right? So this maybe would be like earning hundreds of thousands of pounds potentially now.
53:39Yeah, yeah. Look, I mean, the bonuses promote short-termism and that's definitely a problem of the financial services industry. But yeah, bonuses were huge. I never got less than a year's salary, even working in settlements. and obviously it's geared off of what the profits are for bearing securities which is you know the very new part of the bank that was formed in 1985 and was making all of the money through that period through expanding into the tiger economies so yeah I got a three-year bonus one year there were people that were you know this is a period of time as well where you know when banks were trying to grow you wouldn't just go and recruit two people you'd go and take the whole equity desk from JP Morgan.
54:26So there'd be a huge deal organized for that desk to come over to bearings or wherever they were going at that time. And that would incorporate guaranteed bonuses. During that time, I know one guy who was working in London, can't think of his name, but he was guaranteed a£2 million bonus. Again, in the 90s, early 90s. Yeah, in 1991, 1992. So huge numbers. So I don't know what that is, inflation adjusted. Well, I mean, it's a lot more, yeah. Because I do get that, you know, like sometimes it's hard to compute just how much inflation's been since then. We'd have to inflation adjust it. But millions is a lot any time.
55:06But it's a lot, lot more back in the late 80s, early 90s. Sure. I mean, like, you know, just to give you an example, you know, one of my bonuses would have been£130 ,000. That would have bought me a flat in Greenwich. Yeah. So, you know, I know you don't watch the content that you're in, but I watched the interviews of you afterwards and you were kind of in Singapore and stuff and Frankfurt maybe, wherever they were. And you had quite like a bullshit attitude at the time, whereas now you seem to be a little bit more apologetic. You called your co-workers at that point or your managers idiots. You're a bit kinder now.
55:44They are still stupid. And none of them could stand in front of me and try and convince me otherwise, right? because you missed stuff that was so glaring that I reckon a five-year-old would have caught it. Well, you had on one letter where you faked a loan to a bank. At the top, it said, from Nick and Lisa, which was your partner. It was an audit confirmation. Yeah, so you created an audit. You created some kind of loan. No, it was an audit confirmation. It was an audit confirmation that they needed from Spearley to Kellogg. But it had your private letterhead on the top, and they approved it. And that went to Deloitte.
56:18Yeah. So one of the big four.
56:20Nick Leeson:So, you know. You don't expect Deloitte to make those kind of mistakes. Well, they did. Yeah, yeah. And do you think, you call them idiots, but do you think it's more a case of they wanted to believe it because they wanted the bonuses? No. You have to, whatever industry you exist in, you have to have some professional scepticism, right? And an auditor needs to have more than anybody else. So when you're accepting, you've given, like you've given me a task of delivering a audit confirmation from Spearley to Kellogg, and it's faxed from my apartment in Singapore, you know, like it couldn't be so far, it couldn't be any more wrong.
57:03So, no, I don't sort of back off from that statement. No, no, that's fine. I just wanted to know, like at age, because, you know, I look at some of the things I said when I was 25, and I'm like, bloody hell, Damien. Yeah. So, you know, I wondered if you're a bit more kind of measured in it or you see it differently now. No, not really. No, like it's black and white, right? You know, like the reconciliation should have been done any time anybody steps into that office from an accounting, an audit, a regulating perspective. And if Treasury were worried about how much money I had in Singapore, like the amount of money I had in Singapore just defies belief.
57:40Yeah, 350 million or something. No, I think the capital base of the bank was 250 million. The legal limit you can lend to a subsidiary is 20 % of the bank's capital, so 50 million. I had 650 million pound with me at the end of 1994. So I'm 13 times in breach of the Bank of England's own legal limit. I'm two and a half times the capital base of the bank. They're just astronomical, nonsensical numbers. Yet a treasurer with 30, 40 years of experience has allowed that to happen. You know, so it was systemic. You know, whatever part of the bank, and we don't know which part your dad worked in yet, but whatever part of the bank you look at, there was a breakdown.
58:24Would you call yourself an idiot at that time? Yeah. Yeah. Like I put myself, like genuinely, I put myself at the forefront of everything that I say, you know, incompetent, negligent. And, you know, I reached my own level of incompetence during that period. You know, I can give you reasons why that happened, as I have here today, but it still happened. And, you know, it would have been so much easier to stop and, you know, maybe change industry or go to a different bank with better controls. even within bearings you know there was a guy who was working in hong kong at the time who who got caught for marked marking his trades incorrectly so that they looked a bit more profitable than they were he got found out in hong kong and lost his job went to work for somebody else a different bank in singapore he's now one of the biggest volatility traders in the world because he learned his lesson that's why systems and controls and procedures are in place you know they keep people in line unfortunately there was no guardrails for me and there were no controls that kept me in line and there was no people that i was scared of you know like i often say when people are looking at what goes on within financial markets i think nobody wants to be exposed or fail you know unless it's a very deliberate um attempt at fraud uh which this wasn't so if you you know when you're looking at controls and surveillance and whatever else if there's somebody strong and good who's looking over your shoulder you wouldn't take the chance the problem was you know there wasn't anybody strong or good asking those difficult questions
1:00:02Nick Leeson:during that time do you think there was any aspect of people like no seeing red flags and looking the other way people look the other way in the world of banking all the time yeah right and the reason is is that you know what happened we've spoken about a little bit about bonuses and how that promotes short-termism. But if you look at a bank, you get a lot of people who get to a mid-management level and they're capped. They can't go any higher, right? They're probably pulling down a six-figure salary, probably a high six-figure salary. So they might be, you know, quarter of a million in this mid-management role, but they've got nowhere to go.
1:00:38So if they see something wrong within the bank, what do they do? They turn the other eye, right? There is no way that they're going to rock the boat and cause themselves a problem there've been books written about it joris van lewendyk who looked at the banks after the collapse global financial collapse in 2000 and 2000 2007 to 2008 10 whenever it lasted until you know he went and interviewed a lot of people who worked in banks and and people just get to a level where they just comply get along don't rock the boat yeah and and it happens to this day and it will continue to happen right because and then you get a lot of people who get very quite agitated and you know because they can't go up they might become a bit of an agitator but the majority of the people don't want to rock the boat you know and if you ask yourself how many whistleblowers have there been in the world of banking and there've been a few where are they now they don't work in banking so it's the end of your career so you know unless you're getting a big payout like you might in the us these days for whistleblowing on something it's it's not worth doing and there's just no um i just don't see that there's any appetite for people to um to do that sort of stuff what do you think are some of the other kind of rogue traders or people in your position where basically they've maybe committed like a fraudulent act and then have become famous for it so jordan belfort frank Like Abagnale, you know, catch me if you can.
1:02:06Leonardo DiCaprio. You had Ewan McGregor, which I'd say is like a world-class person to play you in a film. What do you think of these guys? I don't really have any empathy or sympathy. I don't really think about them, to be honest with you. You know, it's hard enough dealing with myself. So, you know, you go through a process, certainly in prison, you know, you go through that remorseful process. You know, it's not visual to everybody and you have to come to terms with what you did and you pull back the veneer and you accept that you did a lot of bad stuff. You don't particularly like yourself.
1:02:41And, you know, slowly over time, you put yourself together again and you move on. What those guys have done in their lives thereafter or they did at the time isn't of great interest to me. It's, you know, for me, that period of my life will always be defined as the most embarrassing period of my life because it's the complete opposite of what I wanted to achieve um and and you know that's the genuine context of of what it means to me you know the other guys have I think I did watch Abagnale's bit I have watched Wolf of Wall Street uh the other guys didn't have movies um yeah I don't really have any I don't have any statement I mean you know people like Jerome Curvial, Quaker Adaboli who blame some of their activity on that pressure to perform they're just lying they're kidding themselves you know I would imagine that they haven't gone through the process which really makes them recover and move forward from what they did but yeah no look it's easy to come out with cliches and say it was pressured to perform you know like the worst the one that i hate most is you know people say to me when just in case you were going to ask it but the people say to me when you were in arrested in frankfurt was it a massive sense of relief absolutely not you know i'm going to prison yeah you know in germany with a load of gun runners from the the uh yugoslav states a load of kurds and you know loads of other dangerous people in in a prison in germany i'm thinking about how I'm going to survive tomorrow.
1:04:23I'm not thinking, oh, this is great. I'm glad that's happened. I'm thinking, shit, what am I going to do tomorrow? How bad is this going to be? You know, how am I going to defend myself? How am I going to circumnavigate this next period? Singaporeans have turned up to take me straight back to Singapore. You know, I mean, you never stop worrying in terms of what's about to happen. Over time, it gets a little bit easier. But when you're in that immediate sort of you know fight or flight type of situation um you're just trying to survive uh and get by do you um you said there it's like your most embarrassing moment yeah is it is it hard for you that like your career now is just to constantly relive that moment no i i mean i think you know you you reframe the way that you look at things over the years you know success was always that huge motivation for me you know I wrote a book with a well-known psychologist years ago and he talks about status and needing all these status relationships but he also explained that you can get status and success from putting food on the table for your kids to eat so you know I'm not going to say it's the easiest way to earn a living but I do earn well out of it.
1:05:38I think because I've been doing it for 27 years I must be quite good at it. You know I get called back to certain places to give you know to give regular speeches so yeah it's a career now there's a lot of humor in it that is candid it's very honest it's self-deprecating but for me it's just a story right so I'm a storyteller I don't go there to lecture or teach you know if people ask me the a specific question i'll give as honest answer as i possibly can um but it's not a case of you know there's a lot of americans who will do go down the line of you know self-improvement and you know do a self-improvement class or give master classes on risk management and compliance how to sell yeah jordan yeah but even though like you know he was he was selling scams but you've got like i couldn't do that because you have to believe what you're doing right and if you're just regurgitating some you know some stuff that got you into trouble years ago and you're you're feeding off of that okay i think if i you know if i took you back to the year 1999 when i was released from prison you know i always had a very uh very short time frame of what i was going to be doing so it was always the next month and things like that so when i started doing it i was asked to do an after dinner in tavistock square or somewhere like that and you try to be a little bit too funny and then i did another one in zurich or geneva for a big room of fund managers i think there's probably 800 fund managers in there and one of them stood up and a bit like you said at the beginning when you saw the early interview somebody said oh you came across as a bit i know he actually stood up in the middle of the room and called me arrogant now he did used to work for bearings which you know again is his prerogative so you know the job of an after dinner speaker is to be engaging and to tell good stories so you i've developed that over the years so you know maybe that gives you a bit more insight into what you know maybe some of that change that's happened over over some of the years in in terms of like you don't want to admit at first that you're quite as bad you have to go through that process you know those those early interviews i would have been you know going back to singapore you know the book is deliberately you know the book was written before i left for singapore so there's nothing about prison in singapore you know it's written in a way where i'm deliberately not attacking singapore singapore singapore or singaporeans um because i'm going there to serve a prison sentence it would have been pretty stupid if i did um and i probably would have ended up with a few more charges.
1:08:21But, you know, when I arrived in Singapore, I'm in the boardroom with the Commercial Affairs Department, and I'm having to flesh out my own charges because they didn't understand what had happened. So I'm there from 10 o 'clock in the evening to six o 'clock in the morning, fleshing out my own charges, explaining to them what happened so that I can be charged in court the next day. And they've been investigating this for, you know, nine months prior to that. um you know i've often said like i went you know i went i i went to jail on 12 specimen charges i think it was you know literally there could have been a hundred thousand of those because i did it every single day multiple times but you know they just went now i did get nervous during those conversations because i'd already agreed a deal before i went back and when i'm sat in that boardroom and i'm looking at all of these people and they've got no idea about what went on i'm like do you guys know i've done a deal and then they all got a little bit panicky and they exited the room and the senior guy exited the room and i said look i've got to call my lawyer it was about three o 'clock in the morning so i phoned stephen pollard and john co who was the the lawyer in singapore i said these guys know we've done a deal and they said no they're at too low a level to know the deal is done with the head of the commercial affairs department so it was a maximum of eight years that I was facing although the charges were for 12 um and yeah that was probably my most nervous moment because you know I could have been going back and you know getting 50 or 60 years in jail one last question if you don't mind quickly because you've got to go we've got to get you to the next thing no it's all right don't worry you don't need to apologize what's that for
1:10:03Nick Leeson:that's if you say anything we don't understand anything okay you've explained it well yeah yeah You said you threw a couple of lines in there as a trader, but I think we got through it. Good. If you hadn't been caught, what kind of man do you think you would be?
1:10:20That's a great question.
1:10:24Yeah, I mean, I wouldn't be the person I am today. You know, I think at the time, you know, the image comes across that, you know, a lot of traders would have stepped on each other to get where they wanted to get. I was never like that. You know, I think, you know, you do get a couple of snide comments every now and again over the years. But the people who were genuinely there and knew what was going on at the time, but knew me, you know, would put those comments down fairly quickly. You know, I was very loyal, still very loyal. But I think, you know, you are the sum of your experiences. So, you know, as I sit here today in front of you, I am the sum of those experiences.
1:11:06So I would have been very different.
1:11:12I genuinely don't know. I mean, you know, I think one of the things that probably has stood me well over the years is that, you know, I did unfortunately have colon cancer in prison. You know, I probably would have had a heart attack before now, a long before now, if I'd continued in the same vein that I was. You know, the alcohol, just getting by, the stress and everything else. you know I think I was on a um you know a a um live fast die young type of um route at the time and you know like I was 59 last week I know I don't look it but um yeah I'm still here and uh you know 28 years post cancer as well so um yeah I think I would have blown up myself as opposed to the bank.
1:12:05I don't know if that's appropriate to say, but yeah, probably. Normally, this is where we'd say this isn't financial advice and it really isn't. But if you want to speak to a good financial advisor, then we might be able to help.
1:12:19Nick Leeson:We've partnered with a few advisors to offer a range of services from one-off flat fee guidance to ongoing advice. I'm actually using the guidance service to sort out my finances. If you'd like to understand your options, there's a link in the description where you can answer a few questions and then book a free call with my colleague, Will, so you can figure out what might be right for you. This episode was produced by Ruth Edwards and it was filmed and edited by Ben and Jack at Flow Spire. See you next week.
From the publisher
In 1995, Nick Leeson brought down the UK’s oldest merchant bank, Barings, with £862 million in hidden losses. The final hit to Barings was £827 million, triggering one of the biggest financial collapses in history. He explains how it really happened and how things spiralled over time. Was it fear of failure, the pressure to succeed, or something deeper that kept him going?
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