The man in formerly in charge of overseeing the Libor benchmark lending rate took banks at “face value” when they said it could not be rigged, a jury has heard.
Testifying at the trial of five former Barclays employees accused of conspiring to manipulate Libor, the former British Bankers’ Association (BBA) director John Ewan said he had not been concerned that banks were trying to influence the rate.
The Serious Fraud Office has charged Jonathan Mathew, a former Barclays rate submitter, and his former colleagues at the bank – derivatives traders Stylianos Contogoulas, Jay Merchant, Alex Pabon and Ryan Reich – each with one count of conspiracy to defraud by manipulating US dollar Libor rates between June 2005 and September 2007. The five men have pleaded not guilty.
Ewan was asked about a meeting with senior Barclays employee Miles Storey at which the banker told him that it would “not be feasible” for banks to conspire to change the Libor rate.
According to minutes taken at the meeting, and submitted as evidence to the trial at Southwark crown court, this was partly a reaction to “rumblings” from other banks about the Libor rates that Barclays was submitting to the BBA.
Ewan said: “It’s very difficult to un-know what we now know. But at the time I didn’t think about it very much and I took it at face value when Barclays told me it wouldn’t be possible for them to get together and try to manipulate Libor rates.”
Asked whether he had received complaints from banks that they believed that rivals were submitting false Libor rates in order to make money, Ewan said: “I really don’t remember.”
The BBA oversaw Libor, a key financial benchmark underpinning contracts worth trillions of pounds worldwide, from the mid-1980s until it was stripped of responsibility for setting the rate in 2013. During the financial crisis, Ewan was in charge of producing a report on reforming Libor following allegations of abuse.
The jurors were told by the prosecution earlier in the trial that the defendants conspired to manipulate the Libor rate for US dollars. The court heard that the group were paid big bonuses and offered each other wine and coffee in return for favourable rates.
However, defence lawyers for the accused have told the court that they only did what they were told to by their Barclays bosses, without realising it was wrong, and that they did not benefit financially.
The trial is expected to last three months.
