UBS culture was tolerant of Libor abuse, Hayes told police

Court hears UBS never warned Tom Hayes for his conduct related to Libor, which is why he was so open about his tactics to enlist help from others in moving the rate

Hayes Libor fixing: UBS bosses 'failed to intervene'

Ex-UBS and Citigroup trader Tom Hayes told investigators from the Serious Fraud Office (SFO) in 2013 that it had not occurred to him that he or his seniors could lose their jobs over asking other submitters of the London interbank offered rate (Libor) to move their fixes, as he was always open about his tactics and had not been reprimanded for them.

"I never got held up once and someone said 'look, should you be doing that?' Never, not once," he said, according to a transcript shown in Southwark Crown Court today (June 18).

Hayes has pleaded not guilty to eight counts of conspiracy to commit fraud, in which the prosecution says that he attempted to manipulate the Japanese yen Libor on a near-daily basis between 2006 and 2010. The defence will lay out its argument later in the trial, which is expected to carry on into August.

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A transcript was shown to the jury today of Hayes saying "there's no way I could have done it all on my own". He was explaining to SFO investigators in the months after his 2012 arrest that because Libor submitters were often also traders, they could enter a rate that suited their own trading books too.

"How do you classify someone who sits on a cash desk, who is trading, who has some derivative positions, who sets Libor every day? Do you say that person is involved? Because as far as the evidence is concerned he's not involved ... he's just doing his job," he is recorded as saying. The court has heard throughout the trial that Libor submitters did not need to keep records of how they came to their decision on what their bank's borrowing rate should be, and often the decisions were made verbally.

"The only difference [between a submitter and me] is that they got what they wanted and I only occasionally got what I wanted," Hayes continued.

"And I left 2,000 emails in my wake, or however many."

The prosecution, led by Mukul Chawla, also showed the jury an email sent from ex-UBS trader Roger Darin, who had oversight of the bank's daily Libor submission, to a colleague on July 3, 2008: "Personally I find it embarrassing when he [Hayes] calls up his mates to ask for favours on high or low fixes. It makes UBS appear to manipulate others to suit our positions – what's the legal risk at UBS asking others to move their fixes?" The court did not see the response, but was told of Hayes's retort to the evidence, which was that Darin and he didn't get along.

When Hayes joined UBS in 2006 the rigging of Libor already occurred within the bank, Chawla has said, but there was no "external manipulation" just yet. That scheme began when Hayes enlisted his brokers to either talk directly to submitters at other banks or adapt their email-distributed "run-throughs" – which contain a recommended Libor rate, supposed to be based on accurate market feedback – to reflect Hayes's wishes.

The prosecution presented the jury with a copy of UBS's compliance rules concerning Libor supervision at the time. The document stated that managers Panagiotis Koutsogiannis and Gaspare Lasala had "overall responsibility for the integrity of the process and for oversight and monitoring of the rates submitted by UBS on a daily basis", and as part of the bank's regulatory reporting obligations, the Libor process would need to be signed off on a six-monthly basis. If a submission ever jumped by 10 basis points, an explanation would need to be given.

The court heard that when Hayes was shown the report by the SFO he called the rule "crazy" because a 10 basis points discrepancy was "massive". He said had only ever tried to move Libor "one basis point higher or one basis point lower", but the UBS rule effectively allowed a submitter "to move [a] submission 10bp higher than the published rate or 10bp lower before compliance needs to know".

Citigroup appeared to have a different culture when he joined the bank in 2010, Hayes said in the SFO interviews. He pointed out that his new boss Andrew Thursfield distributed an email saying that traders weren't to have any influence on the Libor submissions, but "nobody at UBS ever said such a thing".

The trial continues.