In a move emphasising the increasing efforts of the Serious Fraud Office to overhaul its image, the body announced on Monday (18 February) that it had launched proceedings against three former Barclays employees over allegations they ‘conspired to defraud’ over the benchmark interest rate, Libor.
Charges against Peter Johnson, Jonathan Mathew and Stylianos Contogoulas relate to the manipulation of Libor between 1 June 2005 and 31 August 2007. The criminal proceedings began yesterday and all three will be expected to attend at Westminster Magistrates’ Court on 26 February.
The SFO previously brought Libor-related charges against Tom Hayes, a former trader at UBS and Citigroup, in June 2013, and against two former RP Martin Holdings brokers, Terry Farr and James Gilmour, in July 2013. This takes the total number of individuals facing criminal proceedings by the SFO over allegations linked to Libor-rigging to six.
The SFO said it continues to work collaboratively with the UK Financial Conduct Authority and the US Department of Justice on their ‘respective ongoing investigations.’
Barclays declined to comment on the most recent allegations. In the summer of 2012 it paid out £290m to US and UK regulators over its role in the Libor scandal, after which it announced the appointment of former FSA chief executive Hector Sants as global head of compliance, on a reported £3m pay package.
The SFO’s somewhat strained efforts to redefine itself and show its teeth by focusing on higher profile, higher risk, complex fraud, bribery and corruption cases took a decisive turn last Friday (14 February). SFO director David Green QC and the Director of Public Prosecutions, Alison Saunders, published a joint code of practice on the use of deferred prosecution agreements (DPAs).
Available to prosecutors from 24 February, important features of the regime outlined in the code are ‘judicial oversight and unequivocal corporation from the corporate’, an SFO statement said, while ‘prosecution remains the preferred option for corporate criminality’.
Saunders said DPAs ‘provide prosecutors with additional powers in the fight against fraud and economic crime. While the circumstances appropriate to the use of DPAs may be quite rare for the CPS, the guidelines published today set out our approach to this new legislative function in an open and transparent way.’
According to the code, which was established following a consultation last summer, conditions attached to a DPA may include disgorgement of profits; payment of a fine, compensation for victims and costs; co-operation in any prosecution of individuals; and implementation of a compliance programme – if necessary with a monitor appointed.
DPAs may also be appropriate where the public interest is not best served by mounting a prosecution, while entering into the agreement will be a ‘fully transparent public event and the process will be approved and supervised by a judge’.
Covington & Burling partner and former head of anti-corruption at the SFO, Robert Amaee, said the code of practice ‘makes it clear that a prosecutor cannot use the DPA mechanism as a means of resolving a case that has inherent evidential difficulties.’
The SFO’s punitive revamp also led the organisation to ask the Government for emergency funding of £19m in late January – a request for ‘blockbuster funding’ to help bankroll large international investigations into Libor, Barclays in Qatar and Rolls Royce, as well as the defence of a multi-million pound damages claim brought by the Tchenguiz brothers.