UBS internal probe focused only on accused trader

By Michael Holden

LONDON, Oct 10 (Reuters) - The head of an internal UBS

probe into "rogue trader" Kweku Adoboli, accused oflosing the Swiss bank $2.3 billion, did not consider whetherothers at the bank might have been involved, a London courtheard on Wednesday.

However, Ruwan Weerasekera, chief operating officer of UBS'sinvestment arm, said two other independent inquiries had lookedinto all aspects of the bank's involvement and had found nocomplicity among the bank's managers.

Adoboli, 32, is on trial at London's Southwark Crown Courtaccused of two charges of fraud and false accounting, which hedenies.

The prosecution say he routinely exceeded his trading limitsand hid his illegal activities from the bank with fictitioustrades, using an illicit "umbrella" slush fund to disguiseprofits from unauthorised deals.

His defence team argue he believed he was acting for thegood of the bank and colleagues were aware of his activities.

Weerasekera, who led UBS's in-house investigation afterAdoboli was arrested on Sept. 15 last year, told the court hisfocus had been solely on the accused trader.

He said this was because an email Adoboli sent on Sept. 14,confessing to making illegal trades and hiding his riskexposure, stated others were unaware of what he had been doing.

"My remit was to find out what happened," he said,explaining his inquiry, named Project Bronze, was to look at howthe loss occurred.

But he said he would have extended his investigation had hebeen aware of chatroom exchanges between Adoboli and JohnHughes, a senior trader on the Exchange Traded Funds desk, inwhich he appeared to refer to the umbrella fund.

"If I had seen these at the time I would have looked at itfurther," he said.

However, Weerasekera said two other inquiries, one by thebank's Group Internal Audit unit which reported directly to theUBS board and another by accountancy firm KPMG, had been askedto look at "everything everyone did".

"Did you find any evidence that the management of UBS werecomplicit in any way for the loss?" prosecutor Sasha Wass askedWeerasekera, who had acted as liaison for both probes.

He replied: "I did not find any information" that managerswere complicit.

Adoboli's lawyer Paul Garlick told the court some fictitioustrades appeared to have been cancelled when the trader was awayon holiday in Greece during June 2011.

Weerasekera said even if that were the case, he could notcategorically exclude Adoboli from being responsible for them.

The trial continues.(Editing by Andrew Roche)Keywords: UBS TRIAL/