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Tom Hayes Libor trial: trader thought he was operating in a 'grey area' Tom Hayes Libor trial: Trader changed his mind on deal, jury told
(about 9 hours later)
Tom Hayes believed he was working in a 'grey area' in which there were 'no rules', Southwark Crown Court has heard. Hayes is the first trader in the world to face trial over the London Interbank Offered Rate scandal in which interest rates banks use to lend money to one another were fixed. The former Libor trader Tom Hayes has been accused of using “smokescreens and red herrings” after he had second thoughts about a deal where he agreed to help the prosecution.
"I knew I was operating in a grey area and I know I was trying to move the rates up and down," said Hayes. He is accused of leading a conspiracy among 25 other traders and brokers to rig rates to profit from derivatives trades. Prosecutor Mukul Chawla QC said Mr Hayes had told the Serious Fraud Office in 2012: “It was a dishonest scheme and I was part of it, so obviously I was being dishonest.”
The court heard that Hayes, 35, a former trader at UBS and Citigroup, allegedly worked with a French contact at Deutsche Bank called Guillaume 'Gollum' Adolph to fix Libor in his favour. Mr Chawla said: “Mr Hayes’s position then is very different from his position now. Is the reality that he simply changed his mind and now needs to supply an explanation to justify it? Was he lying then to the SFO? Is he lying now? Or is the reality that he is just a man out for himself, thoroughly dishonest, manipulative and prepared to do whatever it takes to save his own position?”
In return Hayes, who has been diagnosed with mild Aspergers, promised to share his earnings. He protested that he had been given no compliance training and that there were 'no rules' that governed Libor. Mr Hayes is the first trader in the world to face prosecution over the London Interbank Offered Rate (Libor) scandal in which interest rates banks use to lend money to one another were fixed.
During investigations, Hayes admitted there was one occasion when his discussions with 'Gollum' about Libor did amount to price fixing. Prosecutors claim that the 35-year-old, a former UBS and Citigroup trader, was motivated by “greed” and acted as the “ringmaster” in an enormous fraud to rig Libor.
"You can't call someone up every say: 'Mate can you do me a favour, can you set Libor high or low' because it is just taking to p**s," Hayes said. "There was one occasion where there was a very deliberate attempt by me and the guy at Deutsche (Bank) called Guillaume Adolph to align our positions and make the arrangement to keep Libor high and then low. And that was probably for me the most dishonest thing." Mr Chawla said yesterday: “When you consider those issues you will see them for what they are – smokescreens and red herrings.
Hayes said he knew he was doing something wrong at the time of the incident, but that he was participating in an industry-wide practice that predated his arrival at UBS and post-dated his departure. The prosecution say these are not the actions of an honest man conducting his business in an honest way. It is the action of someone who is prepared to cheat the people.”
In an online chat, Hayes compared Libor fixing to war veterans in The Sun's annual 'Millies' awards, which honour the armed services. The jury at Southwark Crown Court were played a recording of a call from May 2009 in which Mr Hayes appears to tell a contact that he will give him a lucrative payback. He says he will “f***ing reward you” if he helps to get the numbers up, and says: “Any favours you can call in, make sure you take the guys out for like a strip club or whatever the night before.
"If you are a hero I will tell The Sun, you will be one of our boys. Your boys need to be heroes like in The Sun. I can't promise them a single like Simon Cowell but they would be heroes just like our boys," Hayes said. “You know I am always good to my word when I say I’ll make sure I will share the lump, okay.” With regard to that “lump”, Mr Chawla told the jury to “look at what is being suggested”.
"Make sure they are heroes, even if it is just for one day," he added, in a mocking reference to David Bowie. The jury had earlier heard claims that Mr Hayes tried to draw a junior colleague into the plot, suggesting that they might have a word with one of the traders about changing the rate. But the attempt was rebuffed after the trader said “he could not consider any such request, that the request contravened compliance rules and that he should not make any such requests in the future”.
He instructed brokers to entertain his contacts on the cash desk by taking them to a strip club and buying them dinner, the court heard. Mr Hayes, of Fleet, Hampshire, denies eight counts of conspiracy to defraud between 2006 and 2010.
Hayes, who is from Hampshire but worked in Tokyo, denies eight counts of conspiring to defraud between September 2006 and September 2010 - offences that carry a maximum jail term of 10 years. The trial, which is expected to last for between 10 and 12 weeks, continues.