$2-bn UBS fraud scandal could see forced resignations

Pressure mounted on bosses of Swiss bank giant UBS to quit for failing to prevent a $2-billion trading loss, as the father of the broker accused of fraud said his son is a “man of integrity”.

The bank’s honorary chairperson Nikolaus Senn told Swiss German television on Friday that he doubted that chief executive Oswald Gruebel could stay after the debacle.

Senn said that adequate checks were not implemented and criticised Gruebel for his over-reliance on the controls system to uncover problems, instead of going to get a proactive grip on the situation.

“I don’t know how many times Oswald Gruebel flew to London in order to understand from the managers on site what was going on,” Senn said.

Gruebel, a German who was previously at the helm of Credit Suisse, took over the reins of UBS at the height of the financial crisis when the bank was struggling to recover after losing billions of francs and turning to state aid.

He helped to steer the ailing bank from record losses back to profit in 2010.

Forced resignation
Analysts and media reports suggested that Gruebel and investment bank chief Carsten Kengeter would be forced to resign due to the fraud.

Gruebel, nicknamed “Ossie”, voluntarily renounced his bonuses for 2010, while taking home about three million francs in salary for the year.

Kengeter was the bank’s best paid member of the group’s executive board, making 9.3 million francs in salary and bonuses for 2010.

The Financial Times noted that there are now questions raised about Gruebel’s style of leadership. It quoted an unnamed trader saying that the problem was that “no one questions Ossie”.

Swiss tabloid Blick demanded, “why are the UBS bosses staying silent if they have the situation under control?”

Ongoing investigations
In a report published on Saturday, it quoted an unnamed trader from a private bank saying that UBS may be keeping mum because some of the unauthorised trades have yet to be wound up.

“Whoever knows these open positions can destroy UBS,” claimed the trader.

The father of equities trader Kweku Adoboli (31) who was charged in London Friday with fraud and false accounting, pleaded with the world not to rush to judgement about his son.

“The whole family is shattered, devastated and surprised at the same time,” John Adoboli said in an interview from Ghana broadcast on Sky News television.

“I wish to assure the whole world that Kweku Adoboli is a man of integrity. I want the world to have an open mind, I don’t want the world to judge him before he reaches the court,” said the retired United Nations official.

“I am readying myself to get a visa to travel to London as soon as possible in order to give him moral support,” he added.

The bank announced the massive loss through unauthorised trading just hours after the trader was arrested at UBS’s London offices on Thursday. — AFP

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