Colleague of UBS accused rogue trader was interviewed as suspect

LONDON Wed Oct 3, 2012 3:45pm BST

Former UBS trader Kweku Adoboli arrives at Southwark Crown Court in London September 27, 2012. Adoboli is on trial accused of fraud and false accounting that cost the Swiss bank $2.3 billion. He has pleaded not guilty. REUTERS/Stefan Wermuth

Former UBS trader Kweku Adoboli arrives at Southwark Crown Court in London September 27, 2012. Adoboli is on trial accused of fraud and false accounting that cost the Swiss bank $2.3 billion. He has pleaded not guilty.

Credit: Reuters/Stefan Wermuth

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LONDON (Reuters) - A close colleague of accused UBS "rogue trader" Kweku Adoboli was interviewed by police as a suspect, a London court heard on Wednesday.

The detail is significant because the question of how much others within UBS knew of Adoboli's trading and accounting methods is central to his trial.

Adoboli, 32, denies two charges of false accounting and two of fraud. He is accused of unauthorised trades that cost the Swiss bank $2.3 billion.

The prosecution have portrayed him as a "plausible liar" and "master fraudster" who hid what he was doing from his colleagues.

But the defence have argued that Adoboli believed he was acting for the good of the bank and that his three fellow traders on the Exchange Traded Funds (ETFs) desk knew of and to an extent took part in his methods.

Simon Taylor, who was a junior trader on the ETFs desk, was cross-examined on Wednesday by Adoboli's lawyer Charles Sherrard.

It emerged during the hearing that Taylor had been interviewed by police in April 2012 under caution.

"The jury now know he was interviewed having been given the appropriate caution given to someone who is suspected of having committed a criminal offence, in case in due course they should be prosecuted," said judge Brian Keith, summarising a lengthy exchange with lawyers.

Prosecuting counsel Sasha Wass said Taylor had not been arrested and his police interview was voluntary. He has not been charged with anything.

Sherrard said other traders involved in the case had been interviewed under caution, but did not name them. No further details were given.

"RIHANNA" ACCOUNT

As with John Hughes, the previous witness, who was a senior trader on the ETFs desk, much of Sherrard's cross-examination of Taylor focused on what he knew of Adoboli's "umbrella".

This, according to the prosecution, was a hidden account in which Adoboli parked profits made from unauthorised trades to then leak back into the official accounts to plug losses.

Sherrard read out numerous transcripts of electronic chats from 2011 in which Adoboli, Hughes and Taylor spoke of the umbrella.

Taylor denied that he had known the exact nature of the umbrella or how it was being used. He said that as far as he knew, it was merely a different way of presenting the desk's profit and loss account to show an overall figure rather than the performance of individual traders and their deals.

"I thought it was the protection that the PnL (profit and loss) offered us as a desk," he was quoted as saying in his April 2012 police interview.

Sherrard disputed this and asserted that Taylor knew the true purpose of the umbrella and was one of the beneficiaries of it.

The umbrella was a subject of banter among the traders of the ETFs desk, evidence showed.

"You wait til I book some more umbrella," Adoboli told Taylor in an electronic chat in February 2011, to which Taylor answered "ella ella ella" in reference to a hit by U.S. singer Rihanna.

The umbrella itself was sometimes referred to as "Rihanna" by the ETFs traders, Sherrard said. Taylor said he had no memory of ever saying "Rihanna's hit 50" in a discussion about the amount of money in the umbrella.

(Editing by David Holmes)

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