LONDON, 19 April. - (ANA) - Following the judgment of the English Court of Appeal dismissing the appeals of former LIBOR trader Tom Hayes and EURIBOR trader Carlo Palombo on 27 March 2024, the founding members of the Euribor Steering Committee – Nikolaus Boemcke, MPA, Helmut Konrad, and Jean-Pierre Ravisé – have released a statement [Link] criticising the interpretation of EURIBOR employed by the Court of Appeal.

 

Tom and Carlo are currently seeking permission from the Court of Appeal to take their case to the UK’s Supreme Court. Their deadline is Tuesday, April 23, with a decision expected shortly afterwards.

 

The founders, all highly experienced and eminent in the financial industry, argue in their statement that “The courts in the UK have consistently and repeatedly ignored the professional views of the founding members of the Steering Committee in relation to the EURIBOR Code of Conduct, as well as their meaning and intention when drawing up the Code”.

 

They state that “it was acknowledged that such domestic interbank rates were inextricably linked to the commercial interest of each contributing Panel Bank”, and that “The Steering Committee acknowledged and welcomed this, knowing that the average of 64 different commercial interests would counterbalance each other and come in the end to an effective, credible and robust rate”.

 

The founders also state that the Court of Appeal’s finding that there is “one true rate” for EURIBOR, based on an interpretation of the Steering Committee’s use of the idea of a “best” rate, “is misguided and incorrect”. Instead, they write in favour of multiple different rates being possible and legitimate EURIBOR submissions. The letter notes “Since the money market is not a monolithic rock but rather an abundance of different interests, those differences are real and legitimate and not criminal”.

 

The letter concludes that “We regret that the Judiciary of England and Wales, has ignored that commercial interest of each quoting bank was intrinsic to the daily process of the fixing of the EURIBOR”.

 

 

“We, the founders of EURIBOR, when creating its Code of Conduct, knew and were not opposed to the fact that banks, by submitting a quote for EURIBOR, could or even would take into consideration their own commercial interest - not only for cash transactions, but also for derivatives trading.

 

“We deeply regret that, due to a deep misunderstanding by the UK courts of the rules we have set up for EURIBOR, traders have been convicted and given long jail sentences, even though they acted exactly as we, the founders of EURIBOR had expected they could.

 

“We have issued this statement in the hope of bringing justice to these traders, whose lives have been ruined by their flawed convictions.”

 

 

“Those who established the Euribor rate based on legacy IBOR rates are clear, commercial motivation was neither against the rules nor criminal.

 

"The UK courts through legal construction decades after the event have decided otherwise and persist in the belief that they better understand the meaning and intention of the those who wrote the very rules they seek to interpret. This case must now be heard by the Supreme Court.” 

 

 

“This statement from the founders of EURIBOR shows that the English justice system has so far failed to properly engage with how EURIBOR actually operated.

 

"Such a fundamental error in reasoning has left England and Wales as the only jurisdiction in the world in which these industry-standard practices are criminalised, without any senior figures that implemented the practices having been held accountable.”

 

The cases of Tom Hayes and Carlo Palombo were referred to the Court of Appeal by the Criminal Case Review Commission (CCRC) and their appeals were heard on March 14th, 15th and 18th. 

 

When referring their cases, the CCRC concluded there was a “real possibility” the Court would conclude their convictions were unsafe, following a ruling by the US appeal court regarding the definition and proper operation of IBOR.

 

Tom, 44, was found guilty in 2015 of multiple charges of conspiracy to defraud by “rigging” the London Inter-Bank Offered Rate (LIBOR). 

 

He was jailed for 14 years, later reduced to 11 on appeal, and served five-and-a-half years mostly in high-security prisons before being released in January 2021.

 

Tom lost his job, his marriage and his incarceration took a serious toll on his mental and physical health.

 

Carlo, 45, was found guilty of conspiracy to defraud by rigging the Euro Interbank Offered Rate (EURIBOR) in March 2019 and was jailed for four years.

 

Lawyers for Tom and Carlo argued in court that the Court of Appeal should prefer the legal approach adopted by the US appeal court and overturn their convictions.

 

The Court of Appeal will have to certify that the case raises a point of law of general public importance in order for an appeal to be heard by the Supreme Court.

 

The Court of Appeal's ruling and press summary can be found here: https://www.judiciary.uk/judgments/r-v-tom-hayes-and-carlo-palombo/

 

 

 

 

Nikolaus Boemcke, MPA (Harvard) is the former Secretary General of the European Banking Federation, former Chairman of the EURIBOR Steering Committee, and drafted the Euribor Code of Conduct 1997 with the experts from ACI.

 

Helmut Konrad is the former President of ACI Germany (Financial Market Organization of Foreign Exchange and Money Market Traders), a former member of EURIBOR Steering Committee, and assisted in the drafting of the EURIBOR Code of Conduct. Mr Konrad also worked at HypoVereinsbank Munich as Managing Director, Head of Foreign, Exchange, Money Market, Emerging Markets, Security Lending, Precious Metals.

 

Jean-Pierre Ravisé is the former President of ACI France (Financial Market Association). In cooperation with the European Banking Federation (EBF) he created the new reference rate EURIBOR, and is a former member of EURIBOR Steering Committee. Mr Ravisé received the National Order of Merit from the French Minister of Finance in 1995. He also worked at Credit du Nord France as Director in charge of the monetary and financial operations. He is formerly a member of the board of Clearnet SA as an independent Director and a member of Audit Committee.   - (ANA) -

 

AB/ANA/19 April 2024 - - -