Sigrún Davíðsdóttir's Icelog

I had a free morning on Friday and went to Southwark Crown Court, Court 3, to listen to the Adoboli case. Not many people there – a handful of journalists, roughly as many from UBS, two men I reckon were Adoboli’s father and brother, lawyers from both sides and Kweko Adoboli, the UBS trader who lost $2.3bn by trading out of sight of his superiors.

What Adoboli’s defenders have been very good at is to show that far from the UBS version of the story, the trader being racking up losses out of sight from everyone, there were at least – according to the defence version – several people who knew. The evening before Adoboli sent the email to his UBS superiors, resigning and telling them what he had done three collegues met with Adoboli and told him they would burden him with the losses. One of those he allegedly met with, John Hughes, said in court he did not remember that meeting nor does he remember visiting Adoboli’s girlfriend later. A visit the defence team think Hughes made to find out if she knew of his connection to Adoboli.

So good has the defence team been at drawing out this story from the witnesses that witnessed have been reduced to tears when questioned.

The defence team – from Furnival Chambers Barristers – is clearly trying to make it clear to the jury that the story is far more complicated than the charges indicate. Adoboli wasn’t a rogue trader in the sense that he was doing something unhinged and out of bound. His line manager and others around him knew he traded far beyond the bank’s agreed limit but because he was making profit he wasn’t disciplined. The Crown Prosecution is picturing Adoboli as a “master fraudster” who was good enough at fraud to hide it from his superiors.

I watched Paul Garlick questioning John Ossel who said he had not known about the hidden fund, called the “umbrella,” that Adoboli seemed to have used to cover his losses. Ossel was the trader who executed most of Adoboli’s trades.

Today, Garlick has been questioning Darren Bailey, another UBS trader, still working for the bank. In an online chat in March last year Bailey asked Adoboli if he had used the “slush account.” When asked about this comment Bailey said he was shocked to see a transcript of the chat but couldn’t remember what it referred to. – Bailey has been working for UBS for thirteen years. Last week he told the court that he has once been banned for three months from trading futures after he asked Adoboli to book a trade for Bailey and keep it on his book overnight, instead of having the trade on Bailey’s book.

It will be interesting to see the outcome of this case. So far, the defence team has done a good job of painting a picture of a banking culture where things are not what they seem to be. The witness statements indicate that some of Adoboli’s colleagues knew of a hidden fund used to cover losses. As long as Adoboli was making money for the bank it seems his superiors weren’t too worried or upset about his way of trading. The Prosecution argues that Adoboli was a rogue trader – but others at UBS seem to have known of the off-book funds he used to hide losses he didn’t want to appear on the books.

The case offers an interesting insight into banking, such as common spread betting among traders, as practiced in the years following the crunch time in October 2008 – when bankers were expected to have learnt from what happened. That, in addition to Libor fiddling and HSBC cavalier attitude to US anti money-laundering regulation. When will banking again be in the hands of unadventurous clerks who work on behalf of shareholders and clients and not against the interests of these two groups?

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