Deutsche Bank Euribor Traders May Avoid Both U.K., German Courts

  • German prosecutors dropped local probe over Euribor-rigging
  • Frankfurt top prosecutor still weighs U.K. extradition request

Four traders charged in the U.K. and investigated in Germany for rigging interest-rate benchmarks at Deutsche Bank AG may avoid courts in both countries as Frankfurt prosecutors cleared them a month after the U.K. sought their extradition.

German prosecutors said the traders’ actions in relation to the Euribor benchmark didn’t violate local laws at the time, prompting them to drop the probe in April, Nadja Niesen, a spokeswoman for the investigators, said this week. The decision may cloud prospects for the U.K., which issued European Arrest Warrants in March after the men failed to appear in a London court to face charges.

The case is part of a long-running investigation into the manipulation of the London interbank offered rate and related benchmarks used in more than $350 trillion of securities including student loans and mortgages. A dozen banks and brokerages have been fined about $9 billion for the activities. The Deutsche Bank traders were among 11 men charged over Euribor, the euro counterpart to Libor, by the U.K. in November.

Germany can refuse an extradition request if the same action is being looked at locally or if the investigation is dropped. Any extradition decision by authorities must be approved by a court.

Same Offense?

"The point is whether we have the same offense here,” said Otto Lagodny, professor of comparative criminal law at Salzburg University. “If we don’t, the rules allowing the extradition to be blocked don’t apply."

The extradition request is being handled by the Frankfurt General Prosecutor’s Office which is separate from the prosecutors responsible for the local probe. The office is reviewing whether the German case was looking at the same set of facts as the U.K. investigation, said Alexander Badle, spokesman for the office.

When the U.K. request arrived in Frankfurt, the four suspects weren’t arrested because there was no danger that they would dodge or obstruct the proceedings if left at liberty, Badle said at the time.

The four traders who live near Frankfurt were targeted by German prosecutors after U.S. law enforcement agencies asked them for assistance in their rate-rigging case in 2013. The U.K.’s Serious Fraud Office obtained European Arrest Warrants against five men who didn’t appear at a London court in January to face charges. In addition to the four Germans, a warrant was issued for a French national who used to work for Societe Generale SA.

The suspects can’t be named due to German privacy rules. The SFO declined to comment and lawyers for the traders couldn’t be reached.

German Holidays

Even if Germany blocks the request, life may not be easy for the four if the arrest warrants remain in place. They are valid throughout the 28-nation bloc and, if the individuals leave their home country, any other EU member state can and is likely to arrest them, according to Lagodny.

"The four would be pretty much trapped between the Alps and the North Sea," he said. "For someone working in a truly international industry, that’s a deadly situation."

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