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Ex-Barclays trio charged over Libor allegations

Three former Barclays bankers have been charged over allegations of a conspiracy to manipulate interest rates, signalling the Serious Fraud Office’s determination to bring prosecutions in relation to a second alleged Libor fixing plot.

The men were charged in connection with an allegation of conspiracy to defraud between 1 June 2005 and 31 August 2007.

The criminal charges come almost two years after Barclays was fined GBP290 million by US and UK regulators for a “serious, widespread” role in trying to manipulate Libor rates. The UK’s Financial Services Authority, as it then was, said misconduct “encompassed a number of issues involving a significant number of employees”.

There was no admission of criminal liability in 2012 but the scandal sparked outrage and brought Libor - the London inter-bank offer rate, at which banks lend to one another - into common parlance.

The affair ultimately led to the departure of the bank’s chief executive, Bob Diamond, and there have followed regulatory settlements over alleged Libor fixing by fellow City firms Rabobank, Royal Bank of Scotland, UBS and Icap.

Although Barclays was the first of several banks to reach a deal with regulators over Libor allegations, neither existing nor former employees had been named in criminal proceedings until 17 February.

The focus of criminal proceedings until now has been a former Citigroup and UBS trader, Tom Hayes, who has pleaded not guilty to an alleged conspiracy to fix Libor with 22 former employees at eight other financial firms including Royal Bank of Scotland, JP Morgan Chase, Deutsche Bank, Icap, Tullett Prebon, Rabobank, RP Martin and HSBC.

It is thought that the latest charges brought against former Barclays staff relate to a separate alleged conspiracy, concerning dollar Libor, wholly unrelated to the alleged plots between August 2006 and September 2010 involving Hayes and said to concern yen Libor.

The three former Barclays bankers charged by the SFO are Jonathan Mathew, who worked in the bank’s treasury unit in London and left this position in September 2012, Peter Johnson, who is thought to have been a senior dollar Libor submitter in London, and Stylianos Contogoulas, a former trader at Barclays who moved to Merrill Lynch in July 2006 and left there in September 2011.

Barclays declined to comment. A lawyer for Contogoulas told reporters his client “intends to defend [himself against] the allegations”. Lawyers for Johnson and Mathew reportedly declined to comment on the charges. The three men must appear before magistrates on 27 February.

Two years ago, the FSA penalty notice in relation to Barclays’ misconduct over Libor submissions included a finding relating to a period from September 2007 to May 2009 - immediately subsequent to the period for which Contogoulas, Mathew and Johnson have been charged. The regulator found senior management at Barclays became concerned over negative media perception of the bank’s Libor submissions in September 2007. That, the FSA found, led to instructions being given by less senior managers directing Libor submitters to lower their submissions during the financial crisis in order to avoid a bad press. “The origin of these instructions is unclear”, the FSA found.

As well as looking at former Barclays staff involvement in alleged Libor fixing, the SFO is separately investigating a GBP 322 million deal for “advisory services” struck between Barclays and Qatar during the bank’s emergency cash calls at the height of the banking crisis in 2008. Last September the Financial Conduct Authority said the primary purpose of the arrangements was not to obtain advisory services but to make additional, undisclosed payments for Qatari participation in the capital raising. Barclays has declined to comment on this matter but is helping the authorities with their inquiries.