The role of the Serious Fraud Office (SFO) with regard to prosecuting misconduct related to benchmark rate manipulation has once again attracted the attention of lawmakers, as the Chancellor of the Exchequer was asked to provide information on how many (a) individuals and (b) organisations have been charged with rigging LIBOR since 2010; and what the outcome was of those charges.
On Thursday, June 28, 2018, John Glen – Economic Secretary (HM Treasury), replied that the Serious Fraud Office began an investigation into the manipulation of interbank lending rates in 2012.
- In relation to EURIBOR, 11 individuals have been charged, five of whom are currently at trial. One defendant has pleaded guilty to the charges. There are currently European Arrest Warrants issued in respect of the remaining five suspects.
- In relation to LIBOR, 13 individuals have had criminal proceedings brought against them. Four trials have concluded, which includes a retrial. These trials have resulted in five convictions and eight acquittals.
- No organisation has been charged as part of the SFO investigations, but the FCA has fined seven banks a total of over £757m for LIBOR and EURIBOR related misconduct. There have also been enforcement proceedings in other jurisdictions.
The SFO’s role in the prosecution of LIBOR manipulation has come under fire several times. In March this year, when the Court of Appeal nixed an appeal by former Barclays Bank trader Alex Pabon from a ruling from 2016 that convicted him of rigging LIBOR, Lord Justice Gross starkly criticised the lack of expertise of the expert used by the SFO during the trial and retrial of Pabon.
During the proceedings, Rowe turned to actual experts for advice. Overall, between the conclusion of his evidence on April 13, 2016 and resuming his evidence on April 14, Rowe exchanged some 26 texts or e-mails with these real experts. When questioned on April 14, 2016, however, he made no mention of his contacts with these experts.
In the Judgement, the Court of Appeal noted that “expert evidence must be expert; it can only be such if it is within the expert’s area/s of expertise; if the so-called expert witness gives evidence outside of his area/s of expertise it is both of no use to the jury and corrosive of the trust placed in such witnesses”.
Rowe has failed to comply with his basic duties as an expert. He signed declarations of truth and of understanding his disclosure duties, knowing that he had failed to comply with these obligations alternatively, at best, recklessly. He also did not inform the SFO, or the Court, of the limits of his expertise. He strayed into areas in his evidence (in particular, STIR trading) when it was beyond his expertise.
Let’s recall that there had been plans to fold the SFO. In November last year, Baroness Williams of Trafford from the Conservatives, commented on the future of the SFO:
“The Government is committed to strengthening the UK’s response to bribery, corruption, money laundering, fraud and other forms of economic crime. The Government is continuing to review options to improve the effectiveness of the UK’s response to economic crime, and any measures resulting from this work will be announced in due course.”
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