Libor interest rate manipulation scandal: banker faces 14 years in prison

The Libor interest rate is used to move billions of euros around the world every day. A ring of bankers manipulated it for years. Now the first one has been sentenced.

Was found guilty of eight counts of interest rate manipulation: Investment banker Tom Hayes. Photo: reuters

In the scandal of billionaire manipulation of Libor interest rates at major banks around the world, the main suspect has been sentenced to 14 years in prison. A jury at Southwark Crown Court in London had previously found 36-year-old Tom Hayes guilty on eight counts that took place between 20. The man is considered to be the head of a manipulation network operating worldwide.

Hayes, a former investment banker, initially admitted the charges, but then denied them in a London court. He had pleaded guilty in police questioning only to avoid extradition to the U.S., where he would have faced significantly harsher penalties, Hayes said.

The jury at Southwark Crown Court found the police questioning credible. It saw pure greed as the motive. Hayes had also said, among other things, that the manipulations had been an industry-wide phenomenon and not an isolated incident. "I participated in an industry-wide practice that began before I came to UBS and continued after I left UBS," he said. The Libor rate governs the cost at which banks lend money to each other. It is also the basis for real estate loans, for example.

Hayes, who also worked at Citigroup after UBS, is the first of numerous suspects in the Libor scandal to be convicted. Numerous banks had to pay hefty fines to authorities in London, Washington and Brussels – including Deutsche Bank, the Swiss UBS and the U.S. CitiGroup.

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