Guilty, Barclays bankers who made millions in Libor rate fix
CORRUPT Barclays bankers were facing jail yesterday after pocketing millions of pounds rigging global interest rates like bookmakers trying to nobble a horse in the Grand National.
Jonathan Mathew, 35, Jay Merchant, 45, and Alex Pabon, 38, earned more than £5million in bonuses and salaries while they manipulated the crucial Libor rate, which determines the cost of lending between banks.
The Libor scandal has rocked the financial world and led to billions of dollars in fines for major banks, including Barclays, Royal Bank of Scotland and Deutsche Bank.
In June 2012, Barclays became the first bank to admit its involvement in manipulating benchmark borrowing rates which led to fines of £290million from regulators.
During the two-month trial at Southwark Crown Court – which cost taxpayers £5million – it was alleged that senior bosses at the world’s biggest banks were also well aware that Libor numbers were being rigged.
Jurors heard that senior employees at Barclays received ‘multiple emails’ about the practice of skewing the global interest rate.
Libor (London Interbank Offered Rate) is used as a benchmark for hundreds of millions of pounds worth of contracts, from everyday credit card bills, car loans and mortgages to complex overseas financial transactions. The bankers working in London and the US exchanged emails to deliberately skew the US dollar Libor rate between 2005 and 2007, involving ‘eye-watering’ sums of money to rake in profits on top of their hefty bonuses. James Hines, QC, prosecuting, compared their scam to cheating at roulette by getting a croupier to place the ball where you bet or asking a Grand National jockey to slow down in a race. He said the operation was like ‘very large scale executive gambling’.
US traders Merchant and Pabon insisted their bosses knew what was going on.
Pabon told jurors: ‘You definitely followed instructions from your boss. It’s not really an organisation where you can decide, “Well I’m going to do this” or “I’m not going to do this”.’ Merchant said: ‘Everybody knew the banks set Libor to their own commercial interests.’
He claimed it was ‘difficult to believe’ Barclays’ former global head of fixed income Eric Bommensath, chief operating officer Mike Bagguley and executive Harry Harrison didn’t know what the traders were doing. But all three denied any knowledge during the trial.
Merchant and Pabon, who were working for the bank in New York would email rate requests to Mathew in London. He was one of those tasked with submitting the Libor rate each day, along with his boss Peter Johnson, 61, who previously pleaded guilty to conspiracy to defraud.
Jurors concluded that Mathew, from Shenfield, Essex, and Merchant and Pabon, who both live in the US, acted dishonestly and convicted them of conspiracy to defraud. They will be sentenced on Thursday.
‘Followed instructions’