Former UBS trader John Hughes covers his face as he is driven from Southwark Crown Court in London
Former UBS trader John Hughes covers his face as he is driven from Southwark Crown Court in London on 27th September (Photo: Reuters)

Former UBS trader John Hughes has testified that he conducted the same type of unauthorised trades as his former colleague, Kweku Adoboli, the alleged 'rogue trader' who is pleading not guilty to allegations of fraud and false accounting.

In the first time another colleague admitted to using a fund set up in 2008 by Adoboli, dubbed the 'Umbrella fund' because it "could be tapped on rainy days," Hughes said he made trades that benefited the defendant's account.

Adoboli is standing trial in London for fraud and false accounting, which resulted in losing $2.3bn for Swiss bank UBS.

As part of Adoboli's defence, his lawyer Charles Sherrard presented evidence that Hughes had made his own off-book trades, knew of the umbrella account and "at times controlled it." Sherrard also said that Hughes "abandoned" Adoboli, when the scheme started to unravel and thus allowing the defendant to take the fall.

His key piece of evidence that relates to this line of defence comes in the form of at least five transactions on the 'umbrella' fund made by Hughes while Adoboli was on vacation in Greece in June 2011.

Sherrard added that major accounting firm KPMG has evidence of other such trades.

Adoboli's lawyer asked Hughes why, after Adoboli's arrest last year that "you hadn't played a part in anything," even though the last trade Hughes personally made was executed "just six weeks earlier."

Hughes responded by confirming that he had made the trades, which were real transactions on the bank's books tied to fake hedges that hid risk from the desk's regular trading book.

However, he emphasised that he didn't control the 'umbrella fund' as he didn't know how to directly access it on Adoboli's computer and he did not know of the account's existence until January 2011.

Hughes also agreed for the first time in court that he repeatedly when asked by the ETF desk's manager to report on their daily profits and losses when he had a supervisory role over Adoboli.