THREE EX-BARCLAYS BANKERS CONVICTED OVER LIBOR SCANDAL

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12 NEWS TUESDAY 5 JULY 2016 CITYAM.COM Four years and three cases: How the Libor scandal has unfolded FOUR years ago, Bob Diamond sensationally quit as chief exec of Barclays as a scandal over Libor-rigging sent shockwaves through London’s banks. Three days after, on 6 July 2012, the Serious Fraud Office (known as the SFO) kicked off an investigation into the manipulation of Libor – the “London Interbank Offered Rate”, an interest rate benchmark used for everything from commercial loans to mortgages. Since then, banks have been fined billions by regulators on both sides of the Atlantic, for offences related to benchmark rigging, while three criminal cases have gone through the British courts. Here’s how they panned out: LIBOR 1 – VERDICT DELIVERED AUGUST 2015 The first court case was decided in the SFO’s favour, with a jury finding former UBS and Citigroup trader Tom Hayes guilty of offences related to manipulating yen-linked Libor. Hayes was initially sentenced to 14 years in prison on eight counts of conspiracy to defraud, although this was reduced to 11 years by the Court of Appeal in December. Hayes had intended to appeal to the Supreme Court but his application was blocked earlier this year. There is currently a crowdfunding campaign running on Fundrazr to cover the cost of taking his case to the Criminal Cases Review Commission and, at time of writing, it had raised £23,705 of its £150,000 target. Hayes has also been ordered to hand over £878,806 under a confiscation order. LIBOR 2 - VERDICT DELIVERED JANUARY 2016 In a bit of a blow for the SFO, six former brokers who were accused of conspiring with the already-convicted Hayes were found not guilty at the start of the year. The jury returned to deliver not guilty verdicts for five of the men – Colin Goodman and Danny Wilkinson, both ex-Icap workers; Noel Cryan, formerly of Tullett Prebon; and Terry Farr and James Gilmour, who both used to work for RP Martin – just one day after being sent out to consider its verdict. The sixth defendant, former ICAP broker Darrell Read, was also found not guilty of one charge against him on the same day the others were acquitted, before the jury returned the following morning to find him not guilty of a second charge. LIBOR 3 - VERDICT DELIVERED JUNE 2016 After a trial lasting just shy of three months, former Barclays traders Jay Merchant and Alex Pabon and former Libor submitter Jonathan Mathew were all found guilty on a charge of conspiracy to defraud relating to manipulating US dollar linked Libor. The jury was unanimous in its verdict for Merchant, but was split 11-1 for Mathew and 10-2 for Pabon. Meanwhile, the jury was unable to agree on a verdict for ex-Barclays traders Stylianos Contogoulas and Ryan Reich. The SFO went into the courtroom having secured a guilty plea from former Barclays submitted Peter Johnson around a year and half before the trial even began. HAYLEY KIRTON WHO WERE THE EX-BANKERS AT THE LATEST TRIAL? ALEX PABON Guilty, 10-2 majority verdict Pabon was a Barclays trader until the summer of 2006, having joined in 2004. He told the court that he had subsequently moved to Texas and turned his back on banking. RYAN REICH Jury did not agree on verdict Described by his lawyer as “the big bald one”, Reich was also a former Barclays trader and, essentially, Pabon’s replacement after he left the bank. Q&A WHAT IS LIBOR? The London interbank offered rate (Libor) is a benchmark rate which is set daily for five major currencies and for seven different borrowing periods, ranging from overnight loans to 12 months. HOW IMPORTANT IS IT? Libor is used to underpin numerous financial contracts worth hundreds of trillions of dollars. Uses for the benchmark rate include pricing interest-rate swaps in the derivatives market, calculating interest rates on mortgages and other loans and as JAY MERCHANT Guilty, unanimous verdict Merchant, who was line manager to both Pabon and Reich, was the highest paid of all the men on trial, pocketing £2.2m for his efforts in 2007. STYLIANOS CONTOGOULAS Jury did not agree on verdict Contogoulas was a former Barclays trader and, to a certain extent, a de facto IT guy. He studied computing at Imperial, and completed an MBA at Manchester Business School. a general barometer for confidence in the banking sector. WHO IS RESPONSIBLE FOR SETTING THE RATE? At present, the Intercontinental Exchange (ICE) is responsible for collecting rates from the contributor banks, of which there are between 11 and 18 depending on which variant of Libor is being set, which are then put through an averaging process to calculate the final published rate. The rate has previously been set by the British Bankers’ Association. WHAT IS THE LIBOR QUESTION? Libor submitters at the contributor banks are asked to submit their rate based on their answer to the Libor question: “At what rate could you borrow funds, were PETER JOHNSON Pleaded guilty before the trial Johnson pleaded guilty in October 2014, making him the first person to be convicted for Libor-related offences as part of the Serious Fraud Office’s investigation. JONATHAN MATHEW Guilty, 11-1 majority verdict Mathew was the only Libor submitter to be standing trial, his boss Peter Johnson having pleaded guilty before the case started. He joined the bank at the age of 19. you to do so by asking for and then accepting interbank offers in a reasonable market size just prior to 11 am London time?” WHAT’S THE SCANDAL ABOUT? In a very basic nutshell, those involved are accused of breaking so-called Chinese Walls put in place to avoid conflicts between traders and those submitting the rates. The FCA has previously fined a number of institutions, including Barclays, Deutsche Bank and UBS, over attempts to manipulate the rate. In total, the City watchdog has levied over £757m in fines for Libor and Euribor – the Euro Interbank Offered Rate – manipulation to date. Other regulators in other jurisdictions have also dished out fines of their own. HAYLEY KIRTON “THE HYPE IS JUSTIFIED IED - BRAVO!” Evening Standard Best Use ofTechnology (Shortlisted) The Cateys 2016 Best UK Sommelier, Zack Charilaou Harpers Awards Best New Restaurant Harpers Awards Top 15 UK Healthiest Restaurants Men’s Health ‘Epicure’ MRESTAURANTS.CO.UK | 020 3327 7770 ‘Diner Choice’ Award 8 times Winner Open Table Best for Steak and Seafood Tatler Restaurant Guide M, 2 & 3 Threadneedle Walk, 60 Threadneedle Street, London, EC2R 8HP M, Zig Zag Building, 70 Victoria St, London, SW1E 6SQ BestYoung Chef UK & Ireland 2016, George Kataras San Pellegrino egrino Awards
13 NEWS TUESDAY 5 JULY 2016 CITYAM.COM THECAPITALIST Got A Story? Email thecapitalist@cityam.com THE BEACHES ARE BACK Brace yourself for the sandy scrum coming to London DYSON BLOWS HOT AIR ON OXFORD STREET Vacuum cleaner and electronics-maker extraordinaire Dyson is back in the news today as it launches a “Demo space” on Oxford Street. Dyson has been very clear that this is not a store in the way most customers would understand. Instead its “space” will offer blow dries to curious hair owners who want to experience its hair dryers, while anal tidiers will be able to try vacuum cleaners with “64 different varieties of dust and debris on four different floor surfaces”. It can’t just be The Capitalist that finds that a morbidly fascinating prospect. However, Dyson’s new Demo zone sounds like it will be the latest in a line of exhibitionist retail galleries, like the cavernous and over-the-top Nespresso store on Regent Street, or the very worst of the thinking behind Apple stores. QUOTE OF THE DAY I know I’m older than God... Square Mile veteran David Buik, who began his City career in the 1960s, says that his age is not responsible for an inability to hear the BBC’s Wimbledon commentary. “John Inverdale needs to speak up! He’s mumbling!” Buik blasted yesterday. LONDON Beach Rugby 2016 is back for a fourth year. Using 250 tonnes of sand, the five-aside tournament will take over Finsbury Square on 29 and 30 July. Corporate teams are encouraged and losing sides can drink it away on the pitch at the after-dark parties.
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THREE EX-BARCLAYS BANKERS CONVICTED OVER LIBOR SCANDAL

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