* Whale's supervisor gains time to fight handover to U.S.
* Eventual extradition seen as likely
* Spanish government will weigh 'reciprocity' with U.S.
By Sarah White and Clare Hutchison
MADRID/LONDON, Aug 28 By getting arrested in his
native Spain rather than his former London workplace,
ex-JPMorgan Chase trader Javier Martin-Artajo has gained
time in his struggle to avoid being extradited to New York over
a $6.2 billion trading scandal.
But he may just be postponing the inevitable, extradition
Martin-Artajo, detained in Madrid on Tuesday and later
granted a conditional release, has said he will resist being
sent to the United States, where prosecutors accuse him of
hiding hundreds of millions of dollars in losses.
The Spaniard was the London supervisor of Bruno Iksil,
nicknamed the "London Whale" for the big derivatives bets that
led to last year's losses at JP Morgan.
The scandal dented the reputation of the bank, the largest
in the United States, which had weathered the global financial
crisis better than most competitors. Its problems have since
grown, and it is also embroiled in a federal bribery
investigation and is facing multi-billion dollar lawsuits over
Iksil is cooperating with U.S. prosecutors and has not been
charged, while Frenchman Julien Grout, a junior colleague, has
been charged but not arrested. Martin-Artajo is the most senior
figure arrested so far.
Lawyers expect the case to drag out, though in principle he
is eligible for extradition because the alleged offences are
also punishable in Spain.
"Whilst the extradition process is known to be slow and
tortuous .... it is difficult to see at this stage how
extradition can realistically be avoided," said James Carlton, a
partner at London-based law firm Fox Williams.
But lawyers say being arrested in Spain was Martin-Artajo's
best option, short of fleeing to a country like Cuba with no
diplomatic ties with the United States.
Spain, according to its extradition treaty with the United
States, is not obliged to hand him over. And any decision by
Spanish authorities is normally preceded by a detailed review of
whether there is a case to be answered.
That would not have been so in Britain, where authorities
first received a warrant for Martin-Artajo's arrest but were
unable to find him, according to a Spanish police source.
Having family ties in Spain has also helped his treatment by
the law so far, according to a Spanish lawyer who asked not to
be named. The lawyer added that the High Court might otherwise
have deemed him a flight risk and jailed him.
"We made it clear there were some advantages to being
detained in Madrid, ... he has family here, roots," said an
inspector at the Spanish police unit that contacted
Martin-Artajo's family to persuade him to hand himself in.
Some Spaniards have been successfully extradited to the
United States, court filings show, including in drug-related
cases. Other requests have been denied on medical grounds or in
cases eligible for the death penalty.
Ultimately, Spanish government officials and the cabinet
have the final say. They, rather than the High Court, will
consider reciprocity, the balance of whether the United States
responds to Spanish requests in equal measure, the Spanish
"This looks like it could end up being more of a government
decision," she added. A source at Spain's justice ministry said
the cabinet had not gone against court decisions in recent
If tried in Spain, Martin-Artajo could face lesser penalties
than the term of up to 25 years he risks in the United States.
New York prosecutors, however, have been buoyed by successes
in other European extraditions, and have been using one recent
case involving a former British trader at Credit Suisse as a
template for the "London Whale" one.
There the British citizen, one of three charged with fraud
for mismarking prices in their portfolio of credit-default
swaps, was extradited to New York and pleaded guilty.
While Martin-Artajo worked at JPMorgan in London,
prosecutors have been poring over communications between the
London team and U.S. regulators or bank employees, which they
believe give them jurisdiction in the case.
But the fact U.S., rather than British, authorities are
bringing the charges could be one weakness in the extradition
case, some lawyers said.
"It's foreseeable that the defence team will dispute...the
competence of the United States over this case," said another
Spanish lawyer, on condition of anonymity.
The United States now has just under 40 days to provide the
Spanish High Court with evidence to back up its request.
Martin-Artajo, who is not allowed to leave Spain, will also have
to formally declare his position on extradition before a judge.
A London lawyer for Martin-Artajo could not be reached for
comment. Earlier this month Martin-Artajo had said through
lawyers that he was away on a long-planned vacation and that he
expected to be cleared of wrongdoing.
Grout, the other employee charged, cannot be extradited if
he remains in France, although a source with knowledge of the
matter has said Grout would offer to face the charges in the
United States on condition he is granted bail.