Former brokers were offered takeaway curry, beer and restaurant meals in return for helping to fix Libor rates, a jury has been told.
The six men on trial are accused of conspiring to manipulate the rate with former UBS trader Tom Hayes.
Hayes, who was convicted of conspiracy to defraud in August, repeatedly asked the men to manipulate Libor rates in his favour, Southwark crown court heard on the second day of a trial that is expected to run into next year.
Prosecuting, Mukul Chawla QC presented a series of conversations via email, messaging on Bloomberg terminals and telephone, between Hayes, who worked for UBS in Tokyo from mid-2006 and later joined Citigroup, and the former brokers who worked at other firms.
The conversations showed, Chawla said, that “each of the defendants was offering their enthusiastic assistance” to Hayes in helping set Libor rates in his favour. Libor is the benchmark interest rate that underpins hundreds of trillions of pounds of contracts around the world, from mortgages to corporate lending.
The six accused – Darrell Read, Colin Goodman, Danny Wilkinson, Terry Farr, James Gilmour and Noel Cryan – each deny the charges of conspiracy to defraud by rigging yen Libor between 2006 and 2010.
On 29 September 2006, his first trading day at UBS in Tokyo, Hayes used Bloomberg chat to ask Farr, who worked for the brokerage RP Martin on the forward yen desk in London: “do me a favour today and get libors right up? started trading today and am long of em.” Farr replied: “I’ll do what I can.”
Read, who worked for the rival broker Icap in London and later moved to New Zealand, received a similar request from Hayes, and replied: “Do my best, mate.” A few days later Hayes asked Read to persuade someone at another firm to alter the six-month Libor rate, saying he had a “fix” worth 350bn yen – then equivalent to about £1.75bn – depending on it, the jury was told.
Another time, Hayes told Read: “I’m getting absolutely done on this, I’ve lost a fortune”, and Read replied “Shite ... will push as high as I can.” Read, who was nicknamed Nog or Big Nose, moved to night shifts so he could be of more assistance while in a different time zone, the prosecution alleges.
On 20 October 2006, Read told his Icap colleague Goodman – nicknamed Lord Libor: “Can you please get 3 and 6-month [Libor rates] as high as is possible today. We’ll sort you out with a curry takeaway next week in recognition of your efforts. Thanks mate.”
In an internal UBS email at that time, the court heard Hayes expressed delight that Libor had gone up. “Well done Darrell and Terry [Farr]. I owe them a beer.”
In another email exchange, Read promised Goodman “copious amounts of curry” in return for fiddling Libor rates. Another treat offered was a meal at K10, a Japanese restaurant in the City.
Chawla, for the prosecution, told the jury: “It is small things like beers or a curry. The process is not so trivial.”
The jury was played two recordings of phone calls between Farr and another man in which Farr appears to ask him to lower the Libor rate as a favour for a “geezer at UBS, he’s a mate and he does us a lot of favours … anything above that [a certain rate] is going to fucking lose us a load of money so I said I’d have a word with you.” The other man agreed to mark the rate down a bit.
Presenting the evidence, Chawla said: “It has got nothing to do with the Libor definition and how Libor should be set. It is all to do with trader manipulation, to do with causing maximum advantage to his [Hayes’s] trading book to the disadvantage of others.”
In March 2007, Read wrote to Hayes: “I need to make up some ground on the average monthly brokerage fee to get myself a contract worth having in New Zealand … Good luck Tom hope you make us both lots of money!”
The trial continues.