BANKERS RIGGED RATES TO BOOST BONUSES
A FOURTH banker has been convicted of rigging interest rates at the height of the financial crisis.
Colin Bermingham, 62, conspired with three other bankers to manipulate the market to boost the value of their bets and their multi-million-pound salaries, a jury found.
Enormous sums were at stake as even a small change in the rate could significantly increase profits, the prosecution said.
Christian Bittar, 47, a star trader at Deutsche Bank, earned more than £57m in salary and bonuses between 2005 and 2009, when the crimes were committed.
Carlo Palombo, 40, earned £5.4m in the same period at Barclays, while Bermingham – who joined the bank straight after leaving school – took home £3.5m.
The Serious Fraud Office said: ‘The defendants made substantial profits as the rate was sent upward or downward.’
Bittar and former Barclays director Philippe Moryoussef, also part of the conspiracy, were sentenced to a total of 13 years in prison in July.
Moryoussef, 50, was convicted in his absence after he fled to France, where he remains.
Bermingham and Palombo will be sentenced on Monday at Southwark Crown Court.
Sisse Bohart, 41, a senior manager at Barclays, was acquitted.
The four guilty bankers made false or misleading submissions on Euribor – a euro interbank lending rate – to change the rate and boost their bets on the markets, the court heard.
Prosecutors said that they were ‘gaming the financial system’. ‘It’s big business,’ James Waddington QC added.
The bankers regularly discussed preparations to manipulate the rate and spoke of the importance of successfully rigging the rates. In one telling email, Moryoussef urged Palombo to raise the rate, writing: ‘We have 2 billion on that date. We definitely have to make one basis point on that fixing. Good luck.’
Waddington had told the court Bittar had boasted about what he was doing, and told Moryoussef to ‘ keep it to himself’ after the system was deliberately flouted on a day- to- day basis, jurors heard.
Employees at up to six banks were involved in the conspiracy, the court was told, to increase the chances of Euribor being successfully manipulated. The prosecution described the fraud as a gamble and compared it to betting on rigged sport. ‘As by way of analogy, last March the Australian cricket team were caught cheating in Cape Town South Africa,’ said Waddington. ‘The traders were already successful and well- paid and did not need to run the risk for what was for them a small or relatively small advantage. ‘ Like the Australian Cricket team, these traders did not think that they would be caught.’
Euribor, a key euro benchmark borrowing rate, underpins about £140trillion of financial products, and the accuracy of the rate is important to maintaining trust in the financial system.
The case represents a muchneeded victory for the Serious Fraud Office which faced criticisms after a high-profile case against Tesco directors collapsed.
Director Lisa Osofsky said: ‘By manipulating Euribor, these bankers damaged trust in a critical system that supports $180trillion worth of financial products, including personal loans, pension investments and mortgage repayments.’