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Libor issues: the US versus the UK

Will fresh Libor charges in the USA be the first major test for the extradition forum bar? Thomas Garner reviews the evidence.

The US is exerting its muscle over Libor Maksim Kabukou

On 13 January 2014 it was reported that three former Rabobank employees including one UK national had been charged in the USA in connection with a conspiracy to manipulate the Yen Libor rate since 2006. If convicted the three men could face 30 years in prison. Initial reports were unclear as to whether the three men, who are all foreign nationals residing outside of the USA, would face extradition in connection with the charges.

This new case must be placed into context. The charges stem out of an extensive investigation in the USA into Libor manipulation. A similar investigation has taken place here in the UK. Tom Hayes, a former trader with UBS and Citigroup has already been charged following an investigation by the SFO. He is due to stand trial next year and two former brokers from RP Martin are due to be tried separately after the conclusion of his case.

Controversial

The move to prosecute Hayes here was considered controversial by some in the USA where prosecutors were in the process of filing charges against the former trader when he was arrested here. The move was significant because by prosecuting Hayes for identical offences here it would effectively provide him with a defence of ‘double jeopardy’ to any future extradition request from America. The case rekindled the debate regarding the extradition relationship between the UK and the USA. Some saw the move to prosecute Hayes here as an attempt to fend off overzealous US prosecutors whereas others questioned the ability of the SFO to prosecute the case as effectively as their American counterparts.
Before Hayes pleaded not guilty, a court heard that the SFO considered a further 22 individuals to be co-conspirators with Hayes. As of yet though no charges have been brought.

The case against Hayes was narrowed in late 2013 to focus only on the Yen Libor manipulation and remove reference to “other interbank offered rates”. At the time there was speculation as to whether this increased his vulnerability to extradition to the USA. These new charges in the USA open up the potential for more tension between the UK and US prosecutors and any potential extradition proceedings are further complicated by developments in the law since October 2013. It remains to be seen if the SFO will bring charges against the individual themselves in an echo of the Tom Hayes case.

The forum bar

Alongside ‘double jeopardy’ though, UK extradition law now also operates what is known as a ‘forum bar’. It is open for defendants facing extradition for allegations abroad to argue that the offences should properly be tried in the UK. Extradition will be barred if a judge finds that “extradition would not be in the interests of justice”.

The bar was widely criticised when it was introduced for being overly prescriptive and unlikely to provide an effective defence for those facing extradition. Nevertheless it will almost certainly be heavily litigated in the coming years.

The judge is directed to consider firstly whether a “substantial measure” of the defendant’s alleged conduct was performed in the UK and secondly whether the “interests of justice” weigh in favour of refusing the extradition. In considering the “interests of justice” the judge must consider the following factors:

• the place where most of the loss or harm caused by the extradition offence occurred or was intended to occur
• the interests of any victims?
• any belief of a prosecutor that the UK is not the most appropriate jurisdiction in which to prosecute
• the availability of evidence in the UK
• any delay that might result from proceeding in one jurisdiction rather than another
• the desirability and practicability of all prosecutions relating to the extradition offence taking place in one jurisdiction, having regard to the jurisdictions in which witnesses, co—defendants and other suspects are located, and the practicability of the evidence of such persons being given in the UK or elsewhere
• the defendant’s connection to the UK

However, regardless of the strength of any defence arguments to try the case here, if the judge receives a certificate from the UK prosecutor stating that they have considered the alleged offences and have taken a decision not to prosecute then that will be held to be conclusively determinative of the issue. The judge is then required to decide that extradition is not barred by reason of forum.

Clearly there is the potential for substantial argument on many of the above considerations in this and similar cases involving complex financial crime. The superficially simple issues to be considered by the judge could become incredibly involved in cases involving numerous jurisdictions, numerous co-conspirators and indeed numerous potential prosecutors.

It will be interesting to see whether an extradition request is made in this or any other related case as it could lead to a full examination of the new ‘forum bar’. In any event though, it illustrates the increasingly international nature of crime and the tensions that can exist between differing prosecutorial bodies across the globe.
 

Posted by:

Thomas
Garner

20 January 2014

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