Libor rate-rigging scandal ‘driven by state’, claims jailed City trader

A City trader fighting to clear his name after being jailed for rigging Libor rates urged officials to ‘do the right thing’ yesterday as allegations emerged about the role played by the authorities in the scandal.

Tom Hayes served five-and-a-half years after becoming the first Briton convicted of fixing the benchmark lending rates in 2015.

The Criminal Cases Review Commission (CCRC) – which has the power to refer miscarriages of justice to the appeal court – yesterday met to review Hayes’s case.

It came hours after claims emerged that central banks and governments pressured lenders to rig Libor and Euribor interest rates at the height of the financial crisis.

BBC journalist Andy Verity alleges in his book Rigged, which is published next month, that American and British authorities were told of the drive to suppress the rates. 

But jurors at the trials of those accused of rigging the rates were never shown evidence of the higher level manipulation, according to the book.

Hayes wrote on Twitter: ‘Today the CCRC meet to decide whether to return my case and by extension all Libor convictions back to the court of appeal. I hope they do the right thing.’

Libor – which is being phased out – was a London-based benchmark interest rate used to determine financial contracts around the world. Euribor is its European equivalent. 

The rate is based on banks submitting data about the rates at which they are prepared to lend to each other. 

A decade ago allegations emerged that traders were manipulating the rates for profit – a scandal that resulted in banks and financial firms paying billions to settle regulatory investigations.

Between 2015 and 2019, the Serious Fraud Office (SFO) secured nine convictions against nine individuals accused of Libor and Euribor rigging.

But there have been claims that, at the height of the financial crisis in 2008 when inter bank lending dried up, there was pressure from authorities to keep the rates down. 

Data showing banks were only prepared to lend to a business at high rates might have suggested doubts about its viability – at a time when authorities were desperate for calm. 

Verity’s book claims that central banks and the Bank of England pressured lenders over the benchmark rates. The Bank of England has described similar claims as ‘unsubstantiated’.

An FCA spokesman said: ‘Full disclosure of evidence was provided as part of criminal prosecutions brought in the UK and US.’

An SFO spokesman said it ‘secured the convictions of nine individuals for rate-rigging – all either pleaded guilty or were found guilty by a jury’, adding: ‘A number of those convictions have been reviewed by the Court of Appeal and all have been upheld.’

A Treasury spokesman said: ‘The Treasury did not seek to influence individual bank Libor submissions.’