One of the five former Barclays bank employees standing trial for manipulating Libor interest rates only did what he was told to by his boss and received no financial reward, a court heard today.
Junior banker at Barclays' Jonathan Mathew, who joined at the age of 19 after achieving three A-levels, did not stand to gain from the profit made by the New York swaps desk, the jury was told.
William Clegg QC, representing Mathew, told Southwark Crown Court:
He did what his boss told him to do. He made nothing out of doing this and was promised nothing. He was never dishonest.
Former Barclays traders Stylianos Contogoulas, Jay Merchant, Alex Pabon and Ryan Reich, along rate setter Mathew, have been charged with conspiracy to defraud on allegations of conspiring to manipulate US-dollar linked Libor between June 2005 and September 2007.
The jury heard that Mathew's usual job was to look after the Canadian dollar book and was only tasked with setting the US dollar Libor rate when his boss was away.
Over the period there were 500 days of Libor trading, with Mathew setting the rate for the US dollar book on 30 of those days. There were 26 “where it is said that the rate was adjusted by him to comply with a request from a trader”.
Mathew, who has been interviewed by Barclays lawyers and US authorities from 2009, faced extradition to the US before making a deal with the US Department of Justice (DoJ) to give an "honest account" of what had occurred.
In the statement to the US DoJ Mathew said he had changed the rate on 26 occasions, as per trader requests. He originally told the Serious Fraud Office (SFO) this but changed his story after being told to by his boss, Peter Johnson, his counsel Clegg argued.
Hugh Davies QC, the defence counsel representing Merchant, argued the process for setting Libor, overseen by the British Bankers’ Association (BBA), was already distorted.
Davies also argued Barclays did “nothing to educate the traders about what could be allowed in the submitting process”.
“The only pathway to dishonesty is if Merchant understood what he was doing was illegal, which you can see he did not,” he told the jury.
The defence counsel for Ryan Reich told the court that the BBA knew Libor was biassed by the commercial interests of the banks. He alledged the BBA told the Bank Of England the libor rate was biased by 3-4 basis points.
“These traders are being thrown under the bus. They did not set out to cheat anyone,” he told the court.
Yesterday Merchant alleged that his bosses must have known about the rate-rigging scandal.
It was reported by Bloomberg that prosecution lawyer James Hines QC yesterday said that Merchant had told the SFO in a 2014 interview that the operating chief of the investment bank Mike Bagguley, former global head of fixed income Eric Bommensath and executive Harry Harrison all must have known about the alleged activities.
The trial is expected to last 12 weeks.