By Michael Holden
LONDON, Sept 14 UBS was not to blame for the
actions of a "rogue trader" who cost the Swiss bank $2.3 billion
as no system can prevent a dishonest employee abusing a trusted
position, the lawyer prosecuting former UBS trader Kweku Adoboli
said on Friday.
Sasha Wass told a London court that Adoboli knew how to
cheat the bank's control system, lied to his bosses and
falsified records to hide what he was doing.
She told the jury at Southwark Crown Court the bank should
not unduly be criticised for Adoboli's actions.
"They respected him and he abused their trust to cheat them
for his own eventual gain," she said. "He fooled his colleagues
but eventually the system caught up with him.
"Despite Mr Adoboli's back office knowledge even he was
eventually caught by the checks."
However, Wass told the jury that Adoboli, who denies two
charges of fraud and two of false accounting, would say UBS
managers were fully aware of what he was doing.
"As part of his defence during this case, he will now say
that the management of the bank were fully complicit in this
fraud," she said.
The British and Swiss financial regulators, the FSA and
FINMA, said on Feb. 3 they were launching enforcement
investigations into events at UBS. These are still going on.
Such investigations have sometimes resulted in fines and new
regulatory requirements on banks.
Adoboli began his career with UBS in their Operations
Department of the investment banking division. This meant he
learned about the bank's book-keeping structures and also the
system's weaknesses, Wass said.
So when he began making losses and carrying out unauthorised
trades to try to cover these up in 2008, he knew how to falsify
his records so the bank would be kept in the dark.
Wass told the court that in an email he sent to the bank on
Sept. 14, 2011 when he revealed the losses, he had clearly
admitted breaking the rules, lying to his supervisors and
fooling his colleagues.
"I will expect questions will be asked as to why nobody else
was aware of these trades," he wrote.
But during meetings later that same day, Wass said Adoboli
changed his story and asserted that three colleagues on his desk
were aware of his behaviour.
"The fact that some of his trading colleagues later may have
become aware of his fraudulent scheme many years after it was
devised cannot be a defence to this charge," Wass said.
"It was Mr Adoboli who was architect and manager of the
fraud and the bank, which was totally unaware of what was going
on, who was the victim of it."
She said the jury may wonder why the bank did not have a
system of double checks which would have thrown up what Adoboli
was up to.
To this she said there were three answers. Adoboli had
eventually been caught by the bank's system; he was a trusted
long-term employee; he had found a way of fooling UBS's
double-entry book-keeping methods by inventing a balancing trade
for each false deal so his "gambling" was concealed.
"There is no system in the world that can stop a dishonest
person in a position of trust abusing that trust," Wass said.