Dishonest intent, not outcome, key in Libor trial: Prosecutor

By: |
Published: July 20, 2015 11:40:09 PM

The prosecution in the first trial of a defendant accused of rigging Libor told the jury on Monday that what mattered was the dishonest intent to influence benchmark interest rates for profit, not the outcome of the manipulation.

The prosecution in the first trial of a defendant accused of rigging Libor told the jury on Monday that what mattered was the dishonest intent to influence benchmark interest rates for profit, not the outcome of the manipulation.

The trial of Tom Hayes, a former yen derivatives trader who denies eight counts of conspiracy to defraud, is entering its final stages at London’s Southwark Crown Court with the closing speech by lead counsel for the prosecution Mukul Chawla.

“Essentially this case … boils down to issues of honesty and dishonesty,” Chawla told the jury.

“It is patently clear that in relation to these eight counts … you can be sure that his actions were dishonest.”

Hayes, 35, was working in the Tokyo offices of the Swiss bank UBS and later of the U.S. bank Citi during the indictment period, which runs from 2006 to 2010. Neither bank is a party to the case, which is a criminal prosecution brought by Britain’s Serious Fraud Office.

London interbank offered rates (Libor) are formed based on submissions from a panel of banks. Rigging the rates could potentially have far-reaching effects as $450 trillion of financial products worldwide are referenced to them.

The prosecution case is that Hayes persuaded brokers and fellow traders to seek to influence the Libor submissions made by his and other banks in ways that benefited his trading positions.

Hayes has not denied that he sought to influence submissions in commercially beneficial ways. His defence is that he was open about this, it was common in the industry, his managers encouraged the practice and had no reason to think he was doing anything dishonest.

“SMOKESCREEN”

During his cross-examination by Chawla, earlier in the trial, Hayes repeatedly complained that he had not been given access to trading records which would have demonstrated that his attempts to influence Libor did not benefit him over time.

In his closing speech, Chawla said this was an issue of “utter irrelevance and futility” because the key issue in a conspiracy to defraud case was whether there was a dishonest agreement, not what the outcome of the agreement was.

“A commercial setting of Libor in this context is merely a euphemism for cheating,” he told the jury. “This is not about the outcome but about the dishonest intent.”

He said the issue of whether or not the manipulation succeeded was “nothing more and nothing less than a smokescreen” designed to distract the jury’s attention from the real issues.

Chawla said that Hayes was highly intelligent and had sought to present himself as a lonely, junior figure who was simply “adopting the diktats of management”, but this picture was inaccurate.

“Mr Hayes acted with others including some that were in his management chain,” Chawla said.

“The fact that they were in the management chain does not make dishonest actions honest. It merely demonstrates their dishonesty as well as his.”

Hayes repeatedly said during his evidence that he felt UBS had “thrown him under the bus” and that he was a scapegoat who was being pursued in order to let other more senior people off the hook.

Chawla invited the jury to ask themselves whether that was true, telling them that several of Hayes’ alleged co-conspirators were awaiting trial.

“Mr Hayes is the first, but by no means the last,” he said.

After Chawla’s speech, lead defence counsel Neil Hawes will make his own closing speech, then the judge will summarise the case to the jury and give them legal directions before they are sent out to begin their deliberations. The speeches and summary are expected to last several days.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

FinancialExpress_1x1_Imp_Desktop