LONDON, 22 April. - (ANA) - Fresh doubt has been cast on the English Court of Appeal’s ruling dismissing the appeals of former LIBOR trader Tom Hayes and EURIBOR trader Carlo Palombo on 27 March 2024 by a document leaked to the press.

 

The Court concluded that the LIBOR and EURIBOR definitions required the banks responsible for setting daily rates of borrowing to assess the rate at which they “could borrow” and that this “must mean the cheapest rate”.

 

The judges also said the rate at which a bank would have to borrow is the lowest rate at which it could borrow.

 

However, a draft of a document leaked to the Times shows that an executive director at the British Bankers’ Association (BBA), the trade body which oversaw LIBOR, deleted the word ‘lowest’ from a document called ‘Understanding the construction and operation of LIBOR’.

 

The document went through multiple drafts as various banks and institutions, including the Bank of England and the Federal Reserve were consulted.

 

The leaking of this document to the Times by a whistleblower comes just days after three of the founders of EURIBOR released a statement which said: “The courts in the UK have consistently and repeatedly ignored the professional views of the founding members of the Steering Committee in relation to the EURIBOR Code of Conduct, as well as their meaning and intention when drawing up the Code.”

 

Nikolaus Boemcke, Helmut Konrad and Jean-Pierre Ravisé said they “knew and were not opposed” to the fact banks could take their own commercial interest into consideration when submitting a quote for EURIBOR.

 

Mr Konrad also told the BBC that, if every bank would put in the lowest rate, the EURIBOR would be “biased” in favour of banks who would benefit from a low rate.

 

Tom Hayes commented:

 

“As we now know from the EURIBOR founders the rate which could be submitted was not limited only to the lowest rate.

 

“Since those founders based their rate on legacy IBORs, the shocking discovery of this document shows clearly there was no such intention for LIBOR submissions either.

 

“A lengthy consultation process encompassing the great and the good of global finance and multiple versions and drafts considered just such a proposition and rejected it.

 

“The title of the document is clear the construction and operation of LIBOR was not limited to the lowest rate.

 

“The UK Court declared that to suggest anything other than the lowest rate could be submitted was absurd.

 

“In so doing they created law decades after the event, using an interpretation of the LIBOR definition that is now demonstrably not what the governing body of the rate intended or meant.”

 

Tom and Carlo are currently seeking permission from the Court of Appeal to take their case to the UK’s Supreme Court. Their deadline is Tuesday, April 23, with a decision expected shortly afterwards.

 

There have been public calls for their case to be heard at the Supreme Court, including from David Davis MP and John McDonnell MP, and former Lord Chancellor Lord Mackay of Clashfern said he was “deeply concerned” about the basis on which they were convicted.

 

The cases of Tom Hayes and Carlo Palombo were referred to the Court of Appeal by the Criminal Case Review Commission (CCRC) and their appeals were heard on March 14th, 15th and 18th. 

 

When referring their cases, the CCRC concluded there was a “real possibility” the Court would conclude their convictions were unsafe, following a ruling by the US appeal court regarding the definition and proper operation of IBOR.

 

Tom, 44, was found guilty in 2015 of multiple charges of conspiracy to defraud by “rigging” the London Inter-Bank Offered Rate (LIBOR). 

 

He was jailed for 14 years, later reduced to 11 on appeal, and served five-and-a-half years mostly in high-security prisons before being released in January 2021.

 

Tom lost his job, his marriage and his incarceration took a serious toll on his mental and physical health.

 

Carlo, 45, was found guilty of conspiracy to defraud by rigging the Euro Interbank Offered Rate (EURIBOR) in March 2019 and was jailed for four years.

 

Lawyers for Tom and Carlo argued in court that the Court of Appeal should prefer the legal approach adopted by the US appeal court and overturn their convictions.   - (ANA) -

 

The Court of Appeal's ruling and press summary can be found here: https://www.judiciary.uk/judgments/r-v-tom-hayes-and-carlo-palombo/

 

 

AB/ANA/22 April 2024 - - -