$2.3bn UBS fraud trial begins

A trader accused of losing $2.3-billion at Swiss bank UBS in what is alleged to be Britain's biggest banking fraud appeared in court for the start of his trial yesterday.

Ghanaian-born equities trader Kweku Adoboli denies two counts of fraud and two of false accounting, alleged to have taken place between 2008 and September last year.

The prosecution case is expected to open later this week.

Adoboli is accused of dishonestly using his position for personal gain, and of causing UBS losses, or exposing it to the risk of loss.

The son of a Ghanaian former UN official, Adoboli worked for the global synthetic equities division at UBS in the City of London financial district.

Adoboli, who attended Nottingham University, was arrested in London on September 15 last year on suspicion of the fraud.

His work involved buying and selling exchange-traded funds, which track different types of stock, or commodities such as precious metals. Adoboli was granted bail on June 8 on condition he wore an electronic tracing tag.

"UBS is not a party to the case and therefore has no further comment," the bank said.

It has previously said the losses, initially estimated at $2-billion and revised to $2.3-billion, arose from allegedly unauthorised speculative trading in S&P500, DAX and EuroStoxx index futures.

The true magnitude of the risk exposure had been hidden by "fictitious" positions allegedly taken by the trader, the bank said, adding that the transactions took place over a three-month period.

Despite the losses, UBS's CEO at the time, Oswald Gruebel, refused to step down.

The bank's honorary chairman, Nikolaus Senn, however, said adequate checks had not been implemented and criticised Gruebel for his over-reliance on the controls system to uncover problems.

Gruebel left the bank after Adoboli's arrest.

The case has sparked debate in Switzerland about the future of investment banking, which was also at the root of UBS's losses in the US sub-prime crisis.

His replacement, Sergio Ermotti, told UBS staff this month that the case would be "uncomfortable" for the bank.

"Our reputation is more important than anything else and every one of us is a guardian of that reputation," he said.