Sunday 25 June 2017

'Market maker' arrested after £1.3bn alleged fraud

Gordon Rayner, Andrew Hough and Victoria Ward

A City trader suspected of carrying out Britain's biggest banking fraud was arrested at his desk yesterday after posting an internet message saying: "I need a miracle."

Kweku Adoboli (31) is alleged to have lost £1.3bn (€1.5bn) before his bosses at the Swiss-based investment bank UBS discovered the rogue trades.

The scandal wiped £4bn off the value of shares in UBS, affecting thousands of pensioners whose funds had invested in the company.

It also stunned City workers who thought banks had eliminated such risks following the case of Jermome Kerviel, the Paris-based Societe Generale worker who lost £4bn in 2008.

Mr Adoboli was held at 3.30am yesterday at UBS's Finsbury Avenue office in London after the firm contacted City of London Police, led by Commissioner Ian Dyson, at 1am when the alleged fraud was uncovered.

Last night he was being questioned on suspicion of fraud and abuse of position.

The Ghanaian-born banker, a graduate of Nottingham University, works as a "market maker", advising clients on the prices at which they should buy and sell shares or other assets.

Exactly how he is alleged to have racked up such huge losses is unclear, but the bank's £1.3bn loss dwarfs the £827m lost by Nick Leeson in 1995, which caused the collapse of Barings Bank.

The diplomat's son is described as a "computer whiz" by friends. Neighbours said he had been working long hours recently, often at night, and rarely seemed to be at his home in east London.

Facebook

Before he was arrested, he had changed his status on his Facebook page to "I need a miracle".

The bank insisted none of its clients had lost money as a result of the rogue trades, but City analysts said UBS could suffer "significant reputational damage" as a result of the scandal. The bank, whose corporate logo is three keys representing "confidence, security and discretion", said the unauthorised trades could lead to it losing money in the third quarter of the year.

The bank's chief executive, Oswald Gruebel, described the loss as "distressing" and said he "will spare no effort to establish how it happened".

Mr Adoboli, who until recently lived in a £1,000-a-week loft apartment in the City, is described by friends as "a really relaxed, happy guy".

His former landlord described him as "a very nice guy, very polite. He would speak to anybody. I haven't got a bad word to say about him".

Recently, however, he had spoken to friends about the pressures of working in the City following the financial downturn, describing it as a "fight".

He began trading for UBS in 2006, and works on what is known as the Delta One desk, which trades in equities.

In a brief statement, UBS said: "UBS has discovered a loss due to unauthorised trading by a trader in its investment bank.

"It is possible that this could lead UBS to report a loss for the third quarter of 2011. No client positions were affected."

Mr Adoboli's arrest came on the third anniversary of the collapse of Lehman Brothers, seen as the pivotal moment in the worldwide banking crisis.

UBS was one of the banks which had to bailed out at the height of the banking crisis, accepting help from the Swiss government because of its "toxic" assets in 2008. (© Daily Telegraph, London)

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