5 lessons on bouncing back from ultimate rogue trader Nick Leeson
26 February 2016 -
Nick Leeson’s illegal derivatives trading in Singapore led to the collapse of Barings Bank and ultimately ended up costing him his career and his freedom. He spoke to CMI as part of their Bouncing Back series of events to share what others can learn from his mistakes
Nick Leeson is famed for having caused the collapse of Barings Bank in 1995 after having racked up losses of £862m through illegal trading out of the Singapore branch of the City’s oldest merchant bank.
Having endured three and a half years in a Singaporean prison as a result of his actions, Leeson spoke to CMI as part of their Bouncing Back series of event to discuss the events leading up to his downfall, and how others can learn from his mistakes.
In conversation with Nick Leeson
Leeson says he has learnt a lot following the collapse of Barings and subsequent time spent behind bars and, through his remorse for the events leading up to February 1995, has moved on to forge a successful risk management consultancy business.
Here are five of the things Leeson has learnt most from his experiences.
Transparency is key
Having spent a number of years hiding his illegal trades from Barings’ senior leadership, national regulators and even his then wife, Leeson is no stranger to keeping secrets.
However, the fallout from his actions and his incarceration has led him to re-evaluate these values and honesty and transparency are now key to the way he conducts business.
“The important thing is transparency,” he says. “I don’t hide anything from anyone these days. It’s important to be honest with everybody – sometimes I might be too honest in that regard; I try to be polite about the very transparent honesty that I show people.
“That’s the key change I’ve gone through; making people aware of everything so they can make correct decisions. If you only have part of the information it’s impossible to make an appropriate decision.”
The importance of social skills
Leeson says the early success he enjoyed in his career was largely based on a natural ability to walk in different social circles and be able to mix with everyone. This not only helped him to secure his senior position in Singapore at such a young age and earn the trust of his peers, but it also helped survive the dangers of a Singaporean prison and the gang culture that is synonymous with the country’s penitentiary system.
“I come from a very working class background in Watford, but I was very socially adept from a young age, and that enabled me to move within the higher echelons of the banks I worked within and yet spend time at home with people who only went to a bank if they needed to draw money out; that served me very well in the industry.
“I had to survive prison as well, and I was equally socially adept in prison. Prison in Singapore is very structured; everybody is a triad gang member. There is a hierarchy that goes from general down to fighter and I was elevated to general level because I was able to play my way through that.
“It was bizarre but it worked in my favour. It’s a tough time trying to survive four years in a very gang infested prison. I was the only person in a Singaporean prison that never had to join a triad gang – I was the general of my own gang [with just me in it].”
As with many successful individuals who have fallen from grace, Leeson had to redefine his idea of success when Barings came crashing down around him. Now, he has a much more grounded idea of what success looks like, something that he says makes it easier to achieve success in his life.
“Success when I was working in the city was very exalted for me, it was being at the top of the organisation and making the important decisions,” he says. “I’ve always had the courage of my convictions and for a period those convictions were right – and that compounded that belief and courage. But there has to be limits, and I didn’t have those limits in terms of where I was going to get to and that ultimately backfired on me.
“You do go through a process, and for me that was in prison, where you rationalise things and you have to change the way you think about things and what motivates you. Some people gain success from putting food on the table for their people to eat – that’s two extremes of success.
“Success is still very important for me, but you measure it differently and if you do that it’s easier to achieve.”
Learn the lessons of your past
Being aware of the mistakes hidden in your past is something Leeson says is vital if you are not to fall victim to the same failings again in the future.
“There are piecemeal lessons that are learnt for a period of time,” Leeson says, “but it is a human failing: when things are good people quite easily forget. You need to be constantly reminded of the demons that exist in your past, otherwise they do have the capacity to occur again.”
Accept what you can’t influence, and focus on what you can
During his time in jail, Leeson learnt a key lesson that has shaped his life since.
Every morning, the water in his cell was turned on for just one hour before a guard came and turned it off until the next day. This was supposed to provide water for drinking and cleaning for the four inmates in the cell for that entire day.
In the early days of his incarceration, Leeson had to be held back by his fellow prisoners as his anger at the guard for turning off the water supply was sending him into a fit of rage.
But eventually he realised that this anger was not fulfilling any purpose in his life.
“Slowly it dawned on me that the only person I was upsetting was myself,” he said. “It became very clear, and these are values that I hold true to this day, there are things in your life that you can influence and there are things you cant.
“The only ones you should worry about are the ones that you can influence.”