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Jury considers verdict in UBS trader fraud trial

Jury members in the trial of a UBS trader accused of gambling away $2.3 billion at the bank's London offices retired on Wednesday to consider their verdict.

Published: 14 November 2012 18:40 CET

Jury considers verdict in UBS trader fraud trial

Photo: Martin Abegglen

Kweku Adoboli, 32, who stands accused of committing Britain's biggest ever fraud, has claimed senior managers were fully aware of his activities and encouraged him to take risks to make profits for UBS.

He denies any wrongdoing, saying he was pressured by managers to take risks.

But prosecutors claim that in a bid to boost his status and bonuses Adoboli exceeded his trading limits and faked records to cover his tracks.

Prosecution lawyer Sasha Wass told jurors that he was "a gamble or two away from destroying Switzerland's largest bank for his own gain".

"He did all of this by exceeding his trading limits, by inventing fictitious deals to conceal this and then he lied to his bosses," Wass said.

"Mr Adoboli's motive for this behaviour was to increase his bonus, his status within the bank, his job prospects and of course his ego," she said.

"Like most gamblers, he believed he had the magic touch," Wass said.

"Like most gamblers, when he lost, he caused chaos and disaster to himself and all of those around him."

Southwark Crown Court in London heard during the two-month trial that at one point he was at risk of causing the bank losses of $12 billion.

But Adoboli, the privately-educated son of a Ghanaian former UN official, told jurors that he had dedicated his life to benefiting the bank and viewed his colleagues at UBS's London offices as "family".

He was in tears as he gave evidence, saying what he had done was "not fraudulent — it is finding a way to do your job".

Adoboli is accused of two counts of fraud and four counts of false accounting between October 2008 and September 2011.

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Switzerland's UBS faces €3.7-billion fine as crucial court ruling looms

UBS denies charges it helped French clients evade tax and says it will defend itself "vigorously". Photo: AFP

The trial opened last autumn after seven years of investigations, launched when several former employees came forward with claims of unlawful conduct.

The move came as authorities across Europe cracked down on tax evasion and dubious banking practices in the wake of the global financial crisis which erupted in 2007.

The pressure eventually forced Switzerland to effectively end its tradition of ironclad bank secrecy, by joining more than 90 countries which agreed to automatically share more client account information among each other.

In the UBS case, French authorities determined that more than €10 billion had been kept from the eyes of tax officials between 2004 and 2012.

The National Financial Prosecutor's office urged a €3.7-billion ($4.2 billion) fine, the largest ever sought in France, saying the bank and its directors “were perfectly aware that they were breaking French law” by unlawfully soliciting clients and helping them evade French taxes.

They also sought a €15 million fine for UBS's French subsidiary, and fines of up to €500,000 for six top executives, including Raoul Weil, the former third-in-command at UBS, and Patrick de Fayet, formerly the second-ranking executive for its French operations.

In addition, lawyers for the French state, which is a plaintiff in the case, asked for €1.6 billion in damages.

UBS, which was ordered to post €1.1 billion in bail, has denied the charges and said its operations complied with Swiss law.

It also says that it was “unaware” that some French clients had failed to declare assets in Switzerland, and that prosecutors have not produced any proof, such as client names or account numbers, to back up their fraud claims.

The case is being closely watched by industry executives at a time when Paris and other European capitals are hoping to lure multinational banks from London as Brexit looms.

'Milk tickets'

UBS is accused of organising or inviting prospective clients to prestigious outings such as the French Open or luxury hunting retreats, where UBS's Swiss bankers would meet their “prospects” — something they were not allowed to do under French law.

UBS France directors then used notes called “milk tickets” to keep track of how many “milk cans” – amounts of money – were transferred to Swiss accounts.

They say the system was merely a way to balance out bonuses due to French bankers who were effectively losing a client to their Swiss peers, and the notes were later destroyed.

But investigators claim the “milk tickets” were proof that UBS had a parallel accounting system for keeping the transfers off its official books.

Only one “milk ticket” was found during the inquiry, prompting defence lawyers to argue there was no proof to justify claims of a massive fraud.

Yet prosecutors pointed to the roughly 3,700 French UBS clients who later took advantage of an amnesty offer to regularise their tax declarations with the French authorities.

UBS has been embroiled in a series of similar cases, most notably in the United States, where the authorities said the bank used Switzerland's banking secrecy laws to help rich clients avoid taxes.

In 2009 it paid $780 million to settle charges it helped thousands of American citizens hide money from the Internal Revenue Service, and agreed to turn over information on hundreds of clients, severely denting Switzerland's long tradition of shielding banking clients and their operations from prying eyes.

That case was also prompted by a former American UBS employee turned whistleblower, Bradley Birkenfeld, whose book “Lucifer's Banker: The Untold Story of How I Destroyed Swiss Bank Secrecy” was published in 2016.

Last November UBS was again sued by US authorities, who accuse the bank of misleading investors over the sale of mortgage-backed securities in 2006 and 2007, just before the financial crisis struck.

UBS has denied the charges and said it will defend itself “vigorously”.

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