Arab Today, arab today adoboli affair rocks london\s scandalhit financial hub
Last Updated : GMT 06:11:27
Arab Today, arab today
Arab Today, arab today

Adoboli affair rocks London\'s scandal-hit financial hub

Arab Today, arab today

Arab Today, arab today Adoboli affair rocks London\'s scandal-hit financial hub

London - AFP

The jailing of rogue UBS trader Kweku Adoboli, convicted of Britain\'s biggest ever fraud, is the latest damaging scandal to rock London\'s financial district and spark fresh concerns over its conduct. Adoboli was jailed last week for seven years after gambling away $2.3 billion (1.8 billion euros) of the Swiss bank\'s money in a spectacular fall from grace that highlighted the City\'s risk culture, analysts said. A jury in London found the Ghanaian-born banker, 32, guilty of two counts of fraud, though it cleared him of four charges of false accounting. \"Adoboli is very much a symbol\" of the City, or London\'s financial quarter, independent banking analyst Ralph Silva told AFP. \"He is an old school guy.\" Silva noted that London-based traders had been willing to take greater risks than their counterparts across the Atlantic in the run-up to the financial crisis beginning in 2008. \"London was far more risky than anywhere else, they (traders) took bigger risks even than the US because New York took risks only in America, (but) London took risks in the world,\" he said. Adoboli admitted losing the enormous sums but denied any wrongdoing. He claimed that senior UBS managers were fully aware of his activities and encouraged him to take risks and raise profits. \"There is a strong streak of the gambler in you,\" judge Brian Keith told Adoboli, as he sentenced him. \"You were arrogant to think the bank\'s rules for traders did not apply to you.\" Britain\'s coalition government is eager to crack down on so-called \"casino\" or high-risk banking that was partly blamed for the notorious global financial crisis, as traders pursued vast bonuses and excessive pay. Finance minister George Osborne has urged lawmakers to support his plans for costly structural reform of the country\'s banks -- which include ringfencing investment and retail activities -- to avoid a repeat of the devastating crisis. \"I would be very wary of unpicking a consensus that has been arrived at\" over reform of the nation\'s banks, Osborne told Britain\'s Parliamentary Commission on Banking Standards last week. The Commission, a scrutiny panel set up by Osborne, is looking into banking standards and culture in the wake of scandals that include Libor rate-rigging, product mis-selling and money laundering. Osborne\'s warning came as he appeared to back the creation of a potential professional standards body to oversee the behaviour of lenders like Barclays, HSBC and state-rescued pair Lloyds Banking Group and Royal Bank of Scotland. Bank of England (BoE) governor Mervyn King meanwhile told the Commission that the government\'s ringfencing proposals will \"certainly help\" drive further improvements in the industry\'s culture. Next year, the BoE will take over banking sector oversight from the Financial Services Authority (FSA) watchdog, as part of a major regulatory revamp. This year the City -- also known as the Square Mile -- has been plagued by problems, with banks facing huge compensation bills for mis-selling cover on credit products -- or payment protection insurance (PPI). British banks have ramped up the amount of cash they are setting aside to compensate clients who were mis-sold PPI to more than £10 billion ($16 billion, 12.4 billion euros), significantly slashing their profits. Meanwhile in June, the Libor (London Interbank Offered Rate) affair erupted when Barclays was fined £290 million by British and US regulators for attempted manipulation of interbank rates between 2005 and 2009. The episode sparked top-level resignations, while other banks remain under investigation. The Libor system was found to be open to abuse, with some traders lying about borrowing costs to boost positions or make groups seem more secure. The government subsequently launched plans to overhaul Libor and make it a criminal offence to manipulate the rate. HSBC was meanwhile thrown into a separate crisis in July when a US Senate report found it had allowed affiliates in Mexico, Saudi Arabia and Bangladesh to move billions of dollars in suspect funds into the US without adequate controls. The Asia-focussed lender has so far set aside $1.5 billion to cover potential fines and warned it could face criminal charges over the matter. Elsewhere, emerging markets-focused lender Standard Chartered was recently plunged into crisis when a US regulator accused the bank of hiding $250 billion in transactions with Iran. The Britain-based emerging markets lender -- which derives 90 percent of its profits across Africa, Asia and the Middle East -- denied the allegations but paid $340 million to settle the dispute. In the latest blow to London\'s finance sector, US tech giant Hewlett-Packard last week reported a massive quarterly loss and blamed deliberate financial misstatements from British software firm Autonomy, which it bought last year. However, the London office of audit firm Deloitte rejected claims by HP that it missed \"accounting improprieties\" at Autonomy ahead of the takeover. And Autonomy founder Mike Lynch has \"flatly rejected\" the accusations, according to various media reports. \"Just when one thought things couldn\'t get any worse for the reputation of the City of London,\" said the Wall Street Journal in an opinion piece. \"Hewlett-Packard\'s allegations ... that Autonomy \'used accounting improprieties, misrepresentations and disclosure failures to inflate the underlying financial metrics of the company prior to its acquisition by HP\' comes at the end of a terrible year for the UK\'s financial district.\"

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