Libor trial: Libor fixed with £336,000 in bribes – prosecution

Former UBS and Citigroup trader Tom Hayes promised to pay hundreds of thousands to brokers through 'wash trades' in exchange for help shifting Libor rates

Tom Hayes

Former UBS and Citigroup trader Tom Hayes asked for Libor submissions to be doctored in hundreds of messages to his brokers in exchange for hundreds of thousands of pounds in "bribes", London's Southwark Crown Court heard on May 28.

Prosecution lawyer Mukul Chawla went through message streams, emails and telephone transcripts showing Hayes requesting Libor fixes at multiple banks from his brokers to benefit his trading positions. Hayes has pleaded not guilty to six charges of conspiracy to defraud.

On multiple occasions, Chawla said, rates submitted the day after these conversations exactly matched the figures Hayes and the brokers that "do his bidding" asked for.

"There are hundreds of these [Bloomberg] internal chats where Mr Hayes is asking to move [Libor] wherever he wants it to move," said Chawla.

After speaking to Hayes about what rate he wanted, his brokers would then contact individual bankers and ask them to change their Libor submissions, sometimes in return for the promise of future rate fixing in their favour.

After one banker agreed to doctor Libor, he reminded Hayes's broker: "Make sure [Hayes] knows. Scratch my back and all that."

Chawla told the court Hayes's brokers were motivated by the money they would make from brokerage fees through 'wash trades' – simultaneous buying and selling with no overall position impact, carried out purely to gain extra commission for the broker.

"That's the conspiracy at work being done by Mr Hayes, using [his broker]," said Chawla. "Getting them to speak to their mates at the banks to move their rates ... in order to help Mr Hayes's trading positions – and in exchange they are paid through these wash trades or bribes."

Chawla outlined the details of 14 wash trades – totalling more than £336,000 – made by UBS between September 2008 and August 2009.

"They were nothing more than kickbacks or bribes to reward [the] brokers," said the prosecution lawyer.

The court heard that in one exchange, Hayes offered a "humongous deal" to his broker if Libor turned out in his favour.

"I don't care right, just get me any trade which pays you, basically," Hayes said on a Bloomberg chat to the broker. "If you keep [Libor] fixes unchanged today I will fucking do one humongous deal."

"I need you to keep it as low as possible. If you do that I'll ... pay you $50,000, $100,000, whatever, OK?"

On another occasion Hayes promised a different broker: "Big effort on getting these Libors lower today. [Get the Libor three-month rate] down [and] you'll get a decent deal from me tomorrow."

In another conversation, Hayes gave his broker the names of some bankers he "might be able to lean on" to set the Libor in his favour.

Chawla showed how Libor rates changed, often exactly matching the numbers discussed by Hayes and his brokers. On several occasions conversations showed Libor rates being determined months in advance by Hayes and his co-conspirators, the prosecution said.

Chawla presented one set of messages to the court which he said demonstrated the complete chain of influence from Hayes, to broker, to Libor submission.

Hayes initially requested help fixing the Libor from his broker: "It's killing me mate. I am losing so much cash – then I can't pay you."

The broker then contacted the rate submitter at Rabobank, Paul Robson – who has already pleaded guilty to charges of wire fraud, and conspiracy to commit wire and bank fraud with the US Department of Justice – to ask Libor to be set to favour Hayes's position. A rate of 0.63 was agreed between Robson and Hayes's broker during their conversation, Chawla said.

"[Rabobank's] previous submission had been at 0.71 and on this day it dropped to 0.63, following that conversation between the submitter and [the broker]," said Chawla. "Cause and effect."

The trial continues.