LONDON Former Barclays bankers standing
trial on charges of conspiracy to manipulate financial benchmark
interest rates earned substantial bonuses in jobs in which money
"was the name of the game", a London court heard on Wednesday.
Britain's Serious Fraud Office (SFO), the agency in charge
of prosecuting complex financial crime, has charged rate
submitter Jonathan Mathew, and traders Stylianos Contogoulas,
Jay Merchant, Alex Pabon and Ryan Reich each with one count of
conspiracy to defraud by manipulating U.S. dollar Libor rates
between June 2005 and September 2007.
Merchant, who was the line manager of Pabon and Reich, was
paid 2.21 million pounds ($3.1 million) in 2007, most of which
came from a bonus of 2.12 million pounds, James Hines, counsel
for the SFO, told Southwark Crown Court.
"Making money was the name of the game," said Hines. "These
men were paid well. They got substantial bonuses at the end of
The SFO alleges the men dishonestly agreed to procure or
make submissions of rates into the dollar Libor-setting process
which were false or misleading. The men have pleaded not guilty.
Each count carries a maximum jail sentence of 10 years.
London interbank offered rate (Libor) is a benchmark for
about $450 trillion of financial contracts worldwide, from
complex derivatives to student loans.
Pabon, who left Barclays in July 2006, was paid a salary of
$125,000 and a $200,000 bonus in 2005. Contogoulas, who also
left the bank in July 2006, earned a 60,000 pound salary and a
140,000 pounds bonus in 2005, Hines told the court.
Reich earned $110,000 in salary and a $690,000 bonus in
2007. Mathew was paid six-figure sums in 2005, 2006 and 2007,
with his total pay package rising to 280,750 pounds in 2007 for
his role as a Libor submitter, Hines added.
HORSE RACING ANALOGY
The SFO alleges the bankers intended to "create an
advantage to the trading positions of employees of Barclays; and
deliberately disregarded the proper basis for the submission of
those rates, in moves that prejudiced the economic interests of
others", according to court documents.
Defence lawyers have declined to comment and are expected to
lay out their case following the prosecution's opening
statement. The high-profile trial, the third rate-rigging case
brought by the SFO, is expected to last around 12 weeks.
On the opening day of the trial on Tuesday, the prosecution
outlined the relationship between traders and Libor submitters
at the bank for the 12-person jury, using the analogy of horse
"Just as with the horse race, if you could control, or if
only influence the Libor rate, you have the capacity to make big
money on trades and that's what these defendants agreed to do
and tried to do," Hines said.
Barclays declined to comment on the proceedings on
The bank became the first bank in 2012 to settle allegations
in Britain and the United States that it manipulated key
interest rates. It paid British and U.S. authorities 290 million
pounds in fines and accepted responsibility for its misconduct.
($1 = 0.7028 pounds)