Having been in the finance, accounting areas all my life, I react with bewilderment to the storms that assail the big financial institutions, one after another, like waves in the sea. The latest is what is described as a rogue trader in a major bank causing some $2 billion losses. His actions will mean loss of thousands of jobs to save the institution.
It is reported that Kweku Adoboli, the trader accused of carrying out the financial fraud alerted his superiors on his own accord and the bank’s monitoring systems had not picked up the loss. This brings into sharp focus the many gray areas that still defy logic.
I have worked in factories, trading, investment and consultancy concerns lending support in finance area. Even in smaller outfits, the checks and balances are rigorous; even thousand dollar payments have to undergo layers of authorizations. Of course, it is different if they are within families or are closely held; still some accountability is in place. The yearly ritual of audits and frequent reporting, both internally and externally, is hardly relished but they fall within the ambit of my duties and responsibilities. At the end of the day, proper and systematic work assures peaceful sleep though bank balance hardly reflects a healthy picture unless one is savvy enough to negotiate the terms and put pressure at vulnerable times!
A bean counter one can be, but one who takes his job seriously can see to it that the concern stays healthy. He or she can put a proper system in place, monitor regularly and tweak and update it. Danger signs are easy to spot even with simple computer systems and then to warn the senior management on time to pursue a healthy course correction. It is just par for the course.
Then, few common sense issues that are not that common! I remember a young upstart putting pressure on me to collect his commission on sales made by him. I had to remind him and others that a sale is not complete till the proceeds are received. So one has to wait till the eggs are hatched to count the chickens! Then, other controls are put in place so that one individual cannot bring down the house through a rogue or careless action.
But in financial scandals that defy logic, still wet behind the ear greenhorns, but termed whiz-kids, bring down revered institutions by causing astronomical losses. On top, they are paid sums that defy logic for short term gains that generally cost long term fall-outs on the common man for no fault of his!
Again, we will be assured that corrective steps are put in place after huge bail-outs, but soon they will be back to their devises again! The bottom line is we are just addicted to making money out of thin air! The economic value of such businesses is negative and causes misery and repeated psychological blows on the fabric of society in general. A total review is called for. Stop the misplaced priorities and let us build brick and mortar businesses that survive the test of time!
When CEO’s of big corporations have to convince and answer many for their decisions, how can traders, just out of college, trade in billions and get way with millions clicking at keyboards? Even Chief Executives of countries do not have such seemingly unlimited open checks to play around! Urgent review is indeed called for to rein in the repeated financial storms and bring sense and stability to our lives.