Ex-Barclays Trader Had Underlings Do Dirty Work, Lawyer Says

  • Jay Merchant accused of having co-defendant talk to cash desk
  • ‘What you are suggesting is ridiculous,’ Merchant says

The most senior of five former Barclays Plc bankers accused of manipulating Libor rates forced junior traders to do his dirty work for him, prosecutors said.

James Hines, a lawyer for the Serious Fraud Office, said that Jay Merchant didn’t directly contact the London cash desk to ask for Libor to be fixed at a specific number until March 2006. Instead, he had another defendant in the case, Stylianos Contogoulas, communicate the preferred rate for the benchmark to the desk.

"You were getting them to do your dirty work for you,” Hines said. "You believed that Mr. Contogoulas was making the requests face-to-face. You didn’t think that e-mails containing the requests existed at all.”

Merchant, Contogoulas and three of colleagues are on trial in London, and deny accusations that they conspired to rig the London interbank offered rate, a benchmark tied to trillions of dollars in securities and loans, from 2005 through 2007.

"There was no dirty work: everyone was doing the job they were supposed to," the 45-year-old Merchant said in an increasingly testy exchange on his fourth day in the witness box. "What you are suggesting is ridiculous, Mr. Hines."

Contogoulas passed the requests to Jonathan Mathew, another defendant in the case, and his boss, Peter Johnson, Hinds said. The jury was told earlier this month that Johnson had pleaded guilty to rigging Libor in 2012.

Prosecutors said that Merchant started the practice of making the requests to other traders despite him claiming that a number of his managers knew and approved of the process.

“You were responsible for them, you were the one that owned the book," Hines said to Merchant.

"Before the summer of ’05 there was no established practice going on at Barclays that you describe," Hines said to Merchant. "You bought in Alex Pabon and Stylianos Contogoulas into the agreement -- and later you bought in Ryan Reich."

"It was dishonest, and you knew it," the prosecutor said.

"There was no dishonest agreement," Merchant said. "I have answered every single question truthfully from day one. I have nothing to hide."

Contogoulas, 44, Merchant, the 37-year-old Pabon, Reich, 34, and Mathew, 35, all deny conspiracy to defraud charges dating from June 1, 2005 to Aug. 31, 2007.

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