Ex-Rabobank Trader Complained to BBA About Libor in 2006

  • Rigging made Libor ``a joke'' trader wrote to colleague
  • E-mails shown to jury in first U.S. Libor prosecution

A former Rabobank Groep trader complained to no avail to the British bankers trade group in 2006 that other banks were rigging a benchmark interest rate, according to e-mails shown a New York jury at the first U.S. prosecution of alleged manipulation of the London interbank offered rate.

Officials at the British Bankers’ Association didn’t understand his concerns, Paul Robson, the former trader, wrote to a Rabobank colleague in Tokyo. The rigging was making Libor “a joke again,” he said.

The e-mails took center stage Wednesday in the trial of Anthony Allen and Anthony Conti, former Rabobank traders who are accused of taking part in a four-year scheme to manipulate Libor, the benchmark tied to more than $350 trillion of loans and securities.

Allen’s lawyer presented the chats to try to show that he and Conti didn’t scheme to manipulate Libor and in fact did their best in setting the benchmark leading up to the 2008 financial crisis. They’ve also argued that Libor became meaningless by 2008.

Pleaded Guilty

Robson, who was the bank’s yen Libor submitter, will continue testifying Thursday. He and Takayuki Yagami, his Tokyo colleague, have pleaded guilty in the case and agreed to cooperate with the U.S. in bids for leniency. Yagami will be the next witness.

In his chat on May 9, 2006, Robson told Yagami about his discussions with the officials at the BBA, including John Ewan, the executive who at the time was responsible for managing the process by which Libor was set.

“They said that there was no problem because if they were too low they would drop off,” Robson wrote, adding, “they didn’t understand.”

Robson also complained to a friend who worked at another bank about his discussions with the BBA, writing, “I spoke to John Ewan (at bba) about it yesterday so guess it will be a topic at the meeting,” he said, referring to the group’s Libor director. Robson added, “god what a snitch I am.”

Libor is based on what each participating bank says it would have to pay to borrow money from another bank. Defense lawyer Michael Schachter asked Robson why he and Yagami were concerned about perceived manipulations by other banks. 

‘Completely Broken’

“By 2007 and 2008, did you believe the Libor process was completely broken?” Schachter asked.

“Yes,” Robson said. “We felt it was completely inaccurate as to the yen.”

‘Did you feel that the BBA was forcing you to set a rate that was not in reality?” Schachter asked.

“In essence, yes,” Robson said.

The case is U.S. v. Allen, 14-cr-272, U.S. District Court, Southern District of New York (Manhattan).

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