Citi managers ‘low-balled’ Libor, Hayes defence argues

Treasury chief helped manipulate benchmark, court hears


The Citi senior manager who heard "alarm bells" over Libor scandal trader Tom Hayes's trading methods himself appeared to agree to manipulate the benchmark, a London court heard today (June 25).

Andrew Thursfield, head of Citi's European risk treasury business, went along with requests from a member of the US bank's New York office to alter the London branch's Libor submissions.

Thursfield is a witness in the trial of the former Citi and UBS trader Tom Hayes, who faces eight charges of conspiracy to defraud between 2006 and 2010. Hayes allegedly was at the heart of a network of brokers and bankers who conspired to manipulate the London interbank offered rate, or Libor, to benefit their trading positions, and has pleaded not guilty to all charges.


Southwark Crown Court was shown a number of email exchanges between Thursfield and Scott Bere – head of Citi's North American treasury unit at the time – which amounted to a "campaign" by Bere to get lower Libors, argued a lawyer for the defence.

In an email dated September 7, 2007, Bere said: "... given what we sourced today and the levels we (and Wells) sourced it at I think we are very justified in putting [three-month US dollar] Libor below 65. Obviously your call."

Thursfield replied: "We will continue to pressure the brokers to talk it down and generally press lower than all others." And on September 12, 2007, Thursfield wrote to Bere: "We are constantly on the offensive to talk down the broker indications and will continue to set lower ourselves."

Hayes's defence argued that these were examples of Thursfield going along with Bere's plan to artificially lower Citi's Libor submissions.

"What you did was accede to that request and over the next few days continue to lower your submission," the defence said.

However, Thursfield maintained that the words he used in his emails were "poorly chosen" and his intention was only to ensure brokers' estimates reflected the whole of the market.

In response to Thursfield's claims, the defence said: "Nowhere in any of those emails are you saying: 'I'm sorry, Mr. Bere, the brokers aren't reflecting the whole of the market'."

And in another email, dated September 13, 2007, Bere wrote: "I would appreciate it if we could be aggressive with our setting (ie 60 or ... lower)".

Thursfield replied the same day: "Will continue to push them down. There may be some noise from Northern Rock [the troubled UK mortgage lender which had received emergency support from the Bank of England that day]. Not sure yet on impact. Could help that the BoE is assisting. Or could cause concern that they have had to take this step."

The defence asked Thursfield: "It's a pretty plain request, isn't it? I'm afraid it's pretty hard to accept that as anything other than a request to lower submissions."

But Thursfield denied the defence's claims, saying: "I would say it is open to interpretation."

Alongside the email conversation between Bere and Thursfield, the court was shown a record of the steady decline in Citi's submitted Libor rates between September 12 and September 19 2007 - the week in which it was revealed that Northern Rock had received emergency assistance from the Bank of England.

Thursfield continually denied the defence's assertion that the drop in Libor rates was related to his email exchange with Bere.

Thursfield also admitted that he had not reported Bere's requests to compliance.

The court also heard of investigations by the US Commodity Futures Trading Commission (CFTC) and the UK's Serious Fraud Office (SFO) into Citi's dollar Libor submissions. The CFTC inquiry focused on the treasury desk where Thursfield was in charge during the period under investigation.

During its investigation, the court heard, the SFO asked Thursfield to explain the same emails presented to the court - he told them his meaning was obscured through poor word choice.

Citi hired Tom Hayes to trade in its Tokyo office in 2009, and the trader then met with Thursfield and his colleagues in London before starting his job; Hayes was subsequently dismissed in 2010 for misconduct over Libor rate-setting.

The trial continues.

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