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Libor: Investigation closed but still questions to answer

Service Area: Fraud

Member: Roger Isaacs

The Serious Fraud Office (SFO) has announced that it is closing its investigation into the alleged rigging of the Libor benchmark rate after a seven-year investigation.

According to the SFO, there will be no further charges brought against the 13 individuals charged currently with conspiracy to defraud.

However, it appears that the agency was still considering whether to bring other charges this year and witnesses were being interviewed as recently as March 2019.

The Libor scandal first made headlines in the Summer of 2012, after Barclays paid $290 million to US and UK financial regulators to settle claims that its traders had manipulated Libor – the key rate at which banks will lend to each other in the short-term money markets – during the financial crisis.

However, rather than being treated leniently for reaching a settlement, Barclays’ Chief Executive was sacked and the SFO launched its investigation, which found that the scandal had not been confined to Barclays.

As in all forensic investigations, investigators pored over not only financial transactions but also transcripts of phone calls, which uncovered what then Chancellor, George Osborne, called a “shocking indictment of the culture at banks”.

Despite amassing a considerable amount of evidence, the SFO said it “had not met the threshold needed” to bring further Libor prosecutions.

Critics claim that the SFO should have dropped the case much sooner and one commentator remarked that considering the number of individuals charged, the SFO achieved a “limited amount of success”.

A forensic investigation hinges on robust evidence gathering from as many sources as possible and, most importantly, helps to build the foundation of a case on which all the elements can be pieced together. The SFO’s case does not appears to have done that.

One of the few to be convicted is now arguing that the fact that he was jailed in 2015 on eight counts of conspiracy to defraud, in circumstances in which his alleged ‘co-conspirators’ were acquitted, suggests that he was “conspiring with nobody”.

Roger Isaacs, Forensic Partner at Milsted Langdon, said: “Investigations by the SFO of this scale and over many years, are often controversial. They typically cost millions of pounds of tax-payers’ money and the public often expect the SFO to find someone to blame when things go wrong. However, especially in complex cases such as the Libor enquiry, it is very difficult to find evidence that meets the threshold of proving wrongdoing beyond all reasonable doubt.

“Even when the SFO believes that it has found sufficient evidence, it does not necessary mean that it can be simplified and distilled into a narrative that convinces a lay-jury that might well have no experience of the technical financial issues that often arise in cases of alleged financial crimes”.

Author: Roger Isaacs
28 October 2019

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