Fight: Tom Hayes maintains he is not guilty
Prisons are full of innocent people, as the saying goes.
Many observers will have no sympathy for Tom Hayes, the former bank trader who was sentenced to 14 years – of which he served four-and-a-half – for rigging Libor interest rates.
Unlike the sub-postmasters, who were very ordinary people living humdrum lives, Hayes was a high-octane multi-millionaire trader in Tokyo with five Mercedes cars.
In 2015, when he was sentenced, one of the harshest punishments ever for a white-collar crime, the financial crisis was still an open wound and anti-trader sentiment was running high.
But he was not on trial for having a flash lifestyle. After recanting an early confession he says was made under threat of a 200-year jail term in the US, Hayes has maintained he is not guilty.
He and another trader, Carlo Palombo, failed in an appeal last month. Tomorrow is the deadline for the two to seek permission from the Court of Appeal to take their fight to clear their names to the Supreme Court. Hayes and Palumbo were jailed for rigging Libor and Euribor respectively. These were benchmarks for rates used to set the price of trillions of pounds of loans and financial instruments.
They were set through a process where a group of banks made submissions of the rate at which they would lend to one another. During the financial crisis this obscure corner of the banking world exploded into the headlines. It went far beyond the conduct of individual traders.
There were allegations Bank of England officials had pressured commercial banks to push Libor rates down. Investigations were launched on both sides of the Atlantic into whether commercial banks had manipulated Euribor and Libor. The scandal claimed some high-profile scalps.
Barclays was hit with a £290m fine in 2012 for attempted rate manipulation. The then chairman Marcus Agius honourably resigned and former chief executive Bob Diamond was not far behind.
Paul Tucker, then a deputy at the Bank of England, had a controversial conversation with Diamond about submissions and did not achieve his ambition to become governor.
But no senior UK banker had gone to jail and there appeared to be a culture of impunity at the top of banking. Hayes believes he was made the scapegoat.
The case centred on this question: was it against the rules for traders to make Libor or Euribor submissions in the commercial interests of their bank? Or, should they always have submitted the lowest rate? The appeal court judges came down in favour of the latter.
But, in an extraordinary intervention this weekend, three eminent bankers who founded Euribor came out on the side of Hayes and Palombo. They issued a blistering statement, saying the UK court had a ‘deep misunderstanding’ of their intentions and the rules they had set.
The statement, they said, was made in the hope of bringing justice to traders ‘whose lives have been ruined by flawed convictions.’ Traders had acted ‘exactly as we, the founders of Euribor, had expected they could’.
Discretion is a way of life – close to an art-form – for eminent bankers like Nikolaus Boemke, Helmut Konrad and Jean-Pierre Ravise, so such outspoken words should carry weight. Their statement will not, however, be the basis of an appeal: the test is ‘a point of law of general public importance’.
It is far from a given that permission will be granted by the Court of Appeal. But whatever one’s feelings about bankers, this is a case that provokes deep unease.
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