Accused UBS London "rogue trader" to begin defense
British prosecutors wrapped up their case against former UBS trader Kweku Adoboli on Thursday, opening the way for him to open his defense against charges of fraud and false accounting for trades that cost the Swiss bank $2.3 billion.
After listening quietly from the back of a London courtroom for six weeks as one after another of his former UBS colleagues took the witness stand, Adoboli was expected to begin giving evidence later on Thursday.
Prosecutors closed their case by reading out an email exchange from 2008 between Adoboli and one of his friends in which they discussed a 4.9 billion euro ($7.1 billion) loss incurred by France's Societe Generale that was blamed on trader Jerome Kerviel.
Sarah Moore told Adoboli she was struck by the similarities between his and Kerviel's activities.
"Please don't let me read about you in the papers in the same fashion," she wrote. "It would destroy my faith in human nature forever."
The 11 jurors had yet to hear the voice of the 32-year-old British-educated Ghanaian, who used to work as a senior trader on the Exchange Traded Funds (ETFs) desk.
Adoboli was arrested at UBS's London offices in the middle of the night on September 15, 2011, hours after he sent an email to a back-office accountant explaining that he had booked fictitious trades to conceal losses made on "off-book" trades.
He has pleaded not guilty to two charges of fraud by abuse of position and two of false accounting. The charges cover two periods, from October 2008 to the end of May 2011, and from May 31 to September 15, 2011.
Under British law, the prosecution must prove not only that Adoboli's actions amounted to fraud and false accounting but also that his intentions were dishonest.
Adoboli's evidence was set to begin with questions from his own counsel, followed by cross-examination by the prosecution.
Lawyers estimated that his testimony could last three days, although previous time estimates given in the trial have turned out to be short of the mark.
UBS STANDARDS SCRUTINISED
Prosecutors have portrayed Adoboli as a greedy, out-of-control rogue trader who recklessly gambled away UBS's money because he wanted to be a star of the trading floor and earn bigger bonuses.
They have described a "pyramid of fraud" in which he routinely exceeded his risk limits, concealed his positions by booking fictitious hedges and lied to the back office when asked about his trades.
In their cross-examination of the prosecution witnesses, the defense team have sought to show that others within UBS knew of and condoned some of Adoboli's methods, particularly his so-called "umbrella".
This was an accounting mechanism he used to keep some of the profits from his unauthorized trades out of the desk's profit and loss accounts, and then to drip-feed them back into the accounts to smooth out fluctuations.
They have also tried to demonstrate that supervision of the ETF desk was inadequate, risk management systems were sloppy, back-office staff complacent and chains of command unclear.
The defense have suggested that Adoboli was acting for the good of the bank, in line with management calls for greater risk-taking in pursuit of greater profits.
They have said that, if Adoboli's trades had resulted in profits rather than losses, he would not have got in trouble.
The long-running trial has been a public relations headache for UBS, which has had to remain silent while Adoboli's defense team have spent weeks highlighting evidence that they say reflects poorly on the bank's standards and practices.
The bank is not a party to the case, which means that under Britain's strict laws against prejudicing trials it is not allowed to comment publicly on evidence heard in court.
After Adoboli's evidence will come closing speeches from the prosecution and from the defense, then the judge's summing-up. Then the jury will retire to consider their verdict.
(Editing by Kevin Liffey)