London: A prosecutor told a London court on Friday that “naked gambling” by UBS trader Kweku Adoboli nearly brought down the massive Swiss bank as he wagered up to $12 billion, cooked the books and lied to bosses until his “pyramid of fraud” collapsed.
Adoboli is on trial by jury accused of fraud and false accounting that in the end cost UBS $2.3 billion. He has pleaded not guilty. Opening the case against him, prosecuting lawyer Sasha Wass said Adoboli’s reckless and unhedged investments had been concealed by fictitious positions entered into UBS systems.
“At one stage, Mr. Adoboli was in danger of losing the bank nearly $12 billion of unhedged investments,” she said, before concluding: “He was a gamble or two away from destroying Switzerland’s largest bank for his own benefit.”
Losses in the double-digit billions could have been fatal to UBS at a time when it was trying to recover from previous colossal losses during the financial crisis of 2008. Wass said Adoboli’s motives were to increase his annual bonus, his status within the bank, his job prospects and his ego. She said his fraudulent deals had wiped 10%, or about $4.5 billion, off the Swiss bank’s share price.
“Like most gamblers, he believed he had the magic touch. Like most gamblers, when he lost, he caused chaos and disaster to himself and to all of those around him,” Wass told the jury.
“He was risking the very existence of the bank by gambling its resources, ultimately for his own benefit. In effect, Mr. Adoboli had ceased to act as a professional investment banker and had begun to approach his work as a naked gambler.
“He had become what is sometimes referred to as a rogue trader.”
After a summer internship at UBS in 2002, when he was still a student, Adoboli had joined the bank in 2003 in the Operations Department, or back office, of the investment banking arm.
Wass said that Adoboli had been a respected trader who appeared set for a stellar career. His total pay had risen from £36,000 in 2006 to 10 times that amount in 2010. But she said that from 2008, when he lost $400,000 on a legitimate trade and concealed that loss by booking a false trade against it, he got into the habit of carrying out unauthorized trades masked by fictitious positions.
Anticipating a defence case that may question the bank’s control systems, she said Adoboli had lied to ensure managers were unable to stop his actions earlier: “They respected him and he abused their trust to cheat them for his own eventual gain,” she said.
“There is no system in the world that can stop a dishonest person in a position of trust abusing that trust.” Reuters