Hayes cannot blame others for his Libor fraud, prosecution argues

Ex-UBS and Citi trader Tom Hayes was never forced to rig the London interbank offered rate (Libor), the prosecution said at Southwark Crown Court today as it summarised the case. Meanwhile the defence turned the jury’s attention to bank culture at the time of the offences.

Concluding the prosecution's closing speech in the Tom Hayes Libor-rigging trial, Mukul Chawla today (July 21) reminded the jury of the transcripts of phone calls, emails and instant chat messages that have been used as evidence throughout the proceedings.

The records also include over 80 hours' worth of interviews with the Serious Fraud Office (SFO) in 2013 in which Hayes admitted to dishonesty, a key element of a conspiracy to commit fraud case, Chawla said.

Hayes has told the court that he made the confession because he had also been charged in the United States by the Department of Justice and was seeking to avoid extradition. The co-operation agreement that led to the SFO charging him with eight counts of conspiracy to commit fraud was later torn up and he now pleads not guilty.

But Chawla rebuffed the defence's claim today.

"Mr Hayes says he had no choice. [He says] that he had to admit dishonesty because that was the only way he would get charged in this country. He says he was unable to say what he wanted to say [during the interviews]. He says he gave answers he wasn't qualified to give ... But he effectively set out to manipulate the SFO, to make them believe he was dishonest," he told the jury.

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Chawla continued that Hayes blamed everybody but himself for the activities that led to the charges made against him, including senior managers at all levels of both UBS and Citi, the Department of Justice and the lawyers who first convinced him to sign the agreement. "[But] no-one threw him under the bus. In blaming everyone else he was not taking any personal responsibility," Chawla said.

He urged the jury to consider the language Hayes used when making Libor requests between 2006 and 2010, which implies he knew what he was doing was wrong, such as when he begged a broker to suggest Libors as "high as he can get away with". In July 2009 Hayes said to another broker: "Mate you gotta help with HSBC please. If he only goes up 2bp [basis points] that brings them back 0.25. No-one will notice."

"This is all about making it justifiable [and] in an acceptable range," Chawla told the jury today. "It was all about not being detected."

Other conversations the prosecution included in the closing remarks show how Hayes orchestrated Libor movements by staggering changes over a period of time.

In one example, he was warned by a broker in July 2009: "If you drop your 6M [six month Libor] dramatically on the 11th mate, it will look very fishy." To which Hayes responded: "Don't worry will stagger the drop. I.e. 5bp then 5bp."

"Okay mate I don't want you getting in to shit," said the broker. Hayes explained: "us then Deut [Deutsche Bank] then HSBC then us then Deut then HSBC." The broker continued: "Great, the plan is hatched and sounds sensible."

Chawla said they knew if the drop was not staggered over a period of time it would have looked "conspicuous".

"It's obvious really," he said to the jury. "What they're doing is being dishonest" by covering their tracks so they can explain and "justify" any rate movements if asked.

Chawla also reminded the jury of occasions when Hayes would bribe the traders and brokers who helped him: "Make some efforts for me on the Libor, particularly when it goes over the turn, right? If you get that up I will fucking reward you," he said to one broker. Another time he said: "I want a massive effort on this from your guys today. I cannot keep bleeding money mate, if I'm winning your [sic] winning."

After Chawla concluded his speech, defence counsel Neil Hawes began to outline the defence's closing remarks, which will continue tomorrow.

"This is not an open and shut case like you, may I suggest, were led to believe," he said to the jury. He called the way the prosecution had chosen to present the evidence – mainly by reading out transcripts – "two-dimensional" because it was based on inferences and assumptions, and some of the "agreements" to rig Libor in order to suit Hayes's trading book could not be confirmed.

He signposted the defence's main arguments, such as contextualising Hayes's behaviour against the banking culture at the time of the offenses. Hayes has maintained throughout the trial that his senior managers were aware of his activities and had never reprimanded him. Hawes asked the jury to put themselves in Hayes's shoes: "You're doing something that your employers wanted you to do."

The defence has also said that prior to August 2010, no explicit internal documents set out the rules around Libor. And as such, it's important to consider Hayes's "lack of understanding at the time", said Hawes.

He showed the jury an email Hayes had sent to his senior managers during the internal investigation at Citi that led to his dismissal in September 2010: "I'm not a psychic," Hayes had written. "If Citi wishes employees to follow rules then the Citi legal department should write those rules and then publish them so that employees know what is required of them in the workplace."

In another complaint a few weeks later, he said: "I have been co-operative in this process to date because I'm committed to my career at Citi and to my knowledge, I have not done anything wrong."

Hawes said that the term "conspiracy" should bring up connotations of something "secret and quiet and discreet". But Hayes's requests to his contacts were "regular and routine".

"There was nothing covert, underhand or discreet" about his means of communication, said Hawes.

The trial continues.