1
00:00:00,160 --> 00:00:03,760
Speaker 1: The foremost senior United Kingdom bank executives to face criminal

2
00:00:03,840 --> 00:00:07,400
Speaker 1: charges since the financial crisis, were in court in London. Recently,

3
00:00:08,000 --> 00:00:12,040
Speaker 1: Barclay's former City of Britain Serious Fraud officers charged Barkley's

4
00:00:12,080 --> 00:00:15,680
Speaker 1: former CEO, John Varley, along with Roger Jenkins, Thomas Collaris

5
00:00:15,720 --> 00:00:18,880
Speaker 1: and Richard both with conspiracy to commit fraud by false

6
00:00:18,920 --> 00:00:22,720
Speaker 1: representation in connection with fundraising from the Nation of Cutter

7
00:00:22,840 --> 00:00:26,600
Speaker 1: during the two thousand eight financial crisis. The bank itself, meanwhile,

8
00:00:26,880 --> 00:00:29,720
Speaker 1: along with Varley and Jenkins, was charged with providing unlawful

9
00:00:29,760 --> 00:00:34,560
Speaker 1: financial assistance. The executives have all pleaded not guilty. Here

10
00:00:34,560 --> 00:00:36,680
Speaker 1: to talk with us about the case today is Peter Henning,

11
00:00:36,720 --> 00:00:41,559
Speaker 1: a professor at Wayne State University. Peter um this is

12
00:00:41,840 --> 00:00:45,000
Speaker 1: a big case for the for the UK arising out

13
00:00:45,040 --> 00:00:49,319
Speaker 1: of the two thousand eight crisis. Explain what it is

14
00:00:49,360 --> 00:00:53,720
Speaker 1: exactly that the British authorities are charging these executives with. Well,

15
00:00:53,920 --> 00:00:57,240
Speaker 1: it's an interesting case because what they are accused of

16
00:00:57,320 --> 00:01:03,400
Speaker 1: doing is not making the opera disclosures about their dealings

17
00:01:03,440 --> 00:01:06,640
Speaker 1: with Cutter. That there was I guess about a three

18
00:01:06,720 --> 00:01:11,120
Speaker 1: hundred and thirty million dollar um payment that was made

19
00:01:11,200 --> 00:01:15,600
Speaker 1: and then a loan facility for the Cutter government or

20
00:01:15,640 --> 00:01:19,760
Speaker 1: one of its ministries was arranged through Barclays. And essentially

21
00:01:20,440 --> 00:01:23,959
Speaker 1: what the executives are being accused of is engaging in

22
00:01:24,480 --> 00:01:27,480
Speaker 1: more or less a quid pro quo arrangement to get

23
00:01:27,480 --> 00:01:31,280
Speaker 1: the investments to keep the bank afloat UM. But really

24
00:01:31,280 --> 00:01:34,160
Speaker 1: the underlying charges you didn't disclose it. You engage in

25
00:01:34,200 --> 00:01:38,800
Speaker 1: a fraud by misrepresenting UH. It's an interesting case because

26
00:01:39,560 --> 00:01:43,319
Speaker 1: that money kept Barclays afloat. It didn't go under like

27
00:01:43,520 --> 00:01:45,760
Speaker 1: we saw any number of banks in the United States

28
00:01:45,800 --> 00:01:49,080
Speaker 1: go under UH and even in the UK at that time.

29
00:01:49,160 --> 00:01:54,680
Speaker 1: So it's an interesting charge because Barkley survived. Yet now

30
00:01:54,720 --> 00:01:59,920
Speaker 1: these executives are accused of fraud. Joining us is Robert Hockett, Professor,

31
00:02:00,080 --> 00:02:04,360
Speaker 1: Cornell University Law School, Bob so the former chief executive

32
00:02:04,440 --> 00:02:07,840
Speaker 1: of Barclay's John Varley, is the most prominent and most

33
00:02:08,040 --> 00:02:11,040
Speaker 1: senior banker to be charged with crimes relating to the

34
00:02:11,080 --> 00:02:18,720
Speaker 1: global financial crisis nine years later. What message does that send? Well, um,

35
00:02:18,760 --> 00:02:20,840
Speaker 1: I suppose it confirms the message. I think it's been

36
00:02:20,880 --> 00:02:23,919
Speaker 1: set many times and that many people have sort of

37
00:02:24,360 --> 00:02:26,360
Speaker 1: gleaned over the last number of years, and that is

38
00:02:26,400 --> 00:02:29,919
Speaker 1: that it's apparently rather easier to go after the banking

39
00:02:29,960 --> 00:02:33,480
Speaker 1: institutions themselves than to go after the individuals who make

40
00:02:33,560 --> 00:02:40,959
Speaker 1: the actual decisions ultimately that that get the banks into trouble. Well, Peter, so,

41
00:02:41,639 --> 00:02:47,720
Speaker 1: how I mean this did keep Barclay's afloat and that

42
00:02:47,760 --> 00:02:49,600
Speaker 1: would see, I mean, it would seem as though that's

43
00:02:49,639 --> 00:02:53,160
Speaker 1: kind of a success story given the nature of you know,

44
00:02:53,200 --> 00:02:55,480
Speaker 1: what happened with some other banks and what the government's

45
00:02:55,480 --> 00:02:58,480
Speaker 1: had to do for them, is it really appropriate to

46
00:02:58,480 --> 00:03:01,519
Speaker 1: be charging them here? Well, I think that the point

47
00:03:01,600 --> 00:03:05,760
Speaker 1: here that the Serious Fraud Office is making is that, um,

48
00:03:05,840 --> 00:03:08,280
Speaker 1: you know that the end doesn't justify the means, So

49
00:03:08,360 --> 00:03:12,119
Speaker 1: that if you're going to play fast and loose with

50
00:03:12,280 --> 00:03:16,880
Speaker 1: the disclosure rules and also make up a loan that

51
00:03:17,240 --> 00:03:22,040
Speaker 1: appears to have been based on just the fact that

52
00:03:22,080 --> 00:03:26,160
Speaker 1: Cutter made the investment, um, I think they're concerned about that.

53
00:03:26,280 --> 00:03:30,360
Speaker 1: But you know, if I'm looking at the pantheon of

54
00:03:31,360 --> 00:03:34,880
Speaker 1: bad bank conduct back in two thousand seven and two

55
00:03:34,960 --> 00:03:37,440
Speaker 1: thousand and eight, I'm not sure I would put this

56
00:03:37,520 --> 00:03:41,320
Speaker 1: at the top of the list, Bob. In recent years,

57
00:03:41,360 --> 00:03:46,320
Speaker 1: the UK Serious Fraud Office has failed to successfully prosecute

58
00:03:46,360 --> 00:03:50,760
Speaker 1: a number of high profile bribery and corruption cases. How

59
00:03:50,840 --> 00:03:54,920
Speaker 1: much is this a test for that office? Well, I

60
00:03:54,920 --> 00:03:56,480
Speaker 1: guess a couple of things I want to say there.

61
00:03:56,480 --> 00:03:58,600
Speaker 1: I mean, the first is that you know, we talked

62
00:03:58,640 --> 00:04:00,760
Speaker 1: about the Barkley's case before, or you might remember a

63
00:04:00,800 --> 00:04:03,600
Speaker 1: few weeks back, and I think there's potentially something more

64
00:04:03,640 --> 00:04:05,840
Speaker 1: serious going on here. I think one thing that the

65
00:04:05,840 --> 00:04:08,960
Speaker 1: Serious Fraud Office is worried about is that essentially what

66
00:04:09,040 --> 00:04:11,160
Speaker 1: Barkley's is said to have done is you know that

67
00:04:11,200 --> 00:04:13,360
Speaker 1: the significance of the quid pro quo is such that

68
00:04:13,760 --> 00:04:17,200
Speaker 1: the capitalization that Barkley's got in the midst of the

69
00:04:17,240 --> 00:04:20,520
Speaker 1: crisis could be argued to have been a kind of

70
00:04:20,560 --> 00:04:24,479
Speaker 1: bootstrapped capitalization, because if you're essentially lending money to the

71
00:04:24,600 --> 00:04:27,680
Speaker 1: very people who are now investing in you to recapitalize you,

72
00:04:28,200 --> 00:04:31,000
Speaker 1: then you are in effect creating your own capital out

73
00:04:31,040 --> 00:04:33,400
Speaker 1: of thin air, as it were. Right, That's the concerns

74
00:04:33,400 --> 00:04:36,080
Speaker 1: as a kind of a bootstrapping there, And for that reason,

75
00:04:36,240 --> 00:04:39,599
Speaker 1: I think this particular case has some real teeth and

76
00:04:39,600 --> 00:04:41,960
Speaker 1: I think that the Serious Fraud Office might very well

77
00:04:41,960 --> 00:04:44,440
Speaker 1: succeed with this one. On the other hand, there are

78
00:04:44,440 --> 00:04:46,640
Speaker 1: other cases, and of course you might be alluding to

79
00:04:47,160 --> 00:04:52,360
Speaker 1: the UH Foreign Exchange scandal other cases where it's more difficult,

80
00:04:52,480 --> 00:04:55,000
Speaker 1: I think, to get the evidence that you need in

81
00:04:55,120 --> 00:04:59,240
Speaker 1: order to sort of make a criminal charge stick. Um,

82
00:04:59,279 --> 00:05:01,600
Speaker 1: that's of course what happened with the SFO in connection

83
00:05:01,600 --> 00:05:04,719
Speaker 1: with the currency manipulation scandals. They had lots and lots

84
00:05:04,720 --> 00:05:07,080
Speaker 1: of evidence, and they actually still maintained that they believe

85
00:05:07,160 --> 00:05:09,520
Speaker 1: that a fraud was committed, or that frauds were committed

86
00:05:09,920 --> 00:05:12,760
Speaker 1: in connection with the four X scandal, but they don't

87
00:05:12,839 --> 00:05:15,320
Speaker 1: think they have quite the right amount of evidence of

88
00:05:15,360 --> 00:05:17,680
Speaker 1: the quite the right quality of evidence to stay in

89
00:05:17,720 --> 00:05:20,840
Speaker 1: a criminal conviction, of course, because the the it's much

90
00:05:20,880 --> 00:05:23,559
Speaker 1: more difficult to do that, right, The burden of proof

91
00:05:23,600 --> 00:05:26,560
Speaker 1: that has to be met in order to deprive somebody

92
00:05:26,600 --> 00:05:28,760
Speaker 1: of their rights and put them in prison or find

93
00:05:28,800 --> 00:05:32,000
Speaker 1: them in in a criminal penalty sense of finding, is

94
00:05:32,040 --> 00:05:34,120
Speaker 1: just a very difficult burden to sustain. And so I

95
00:05:34,160 --> 00:05:36,080
Speaker 1: think this is this sort of connects up with your

96
00:05:36,120 --> 00:05:38,120
Speaker 1: first question to me a few minutes ago, and it's

97
00:05:38,120 --> 00:05:40,839
Speaker 1: just much more difficult, they think, to bring these cases

98
00:05:40,880 --> 00:05:42,479
Speaker 1: and prevail on them, and it is to prevail on

99
00:05:42,520 --> 00:05:45,880
Speaker 1: regulatory cases. In January, during the waning days of the

100
00:05:45,920 --> 00:05:50,080
Speaker 1: Obama administration, the United States government charged British foreign exchange

101
00:05:50,080 --> 00:05:54,600
Speaker 1: traders Richard Usher firmly of JP, Morgan Chase Rohan, Rom Chaddon,

102
00:05:54,680 --> 00:05:57,599
Speaker 1: who is with City Group, and Chris Ashton, firmly of Barclays,

103
00:05:57,640 --> 00:06:01,080
Speaker 1: with conspiracy. The three allegedly used a chat room they

104
00:06:01,080 --> 00:06:05,320
Speaker 1: called the Cartel to manipulate the price of currencies, and

105
00:06:05,360 --> 00:06:07,880
Speaker 1: now the three have flown to New York to face

106
00:06:07,920 --> 00:06:11,480
Speaker 1: the charges, even though British authorities had to had declined

107
00:06:11,560 --> 00:06:15,039
Speaker 1: to charge them under UK law. The traders pled not

108
00:06:15,080 --> 00:06:18,160
Speaker 1: guilty and were released on bail pending for their proceedings.

109
00:06:18,560 --> 00:06:20,680
Speaker 1: With us. To talk about this case are Peter Henning,

110
00:06:20,760 --> 00:06:24,479
Speaker 1: a professor at Wayne State University, and Bob Hockett of

111
00:06:24,600 --> 00:06:29,359
Speaker 1: the Cornell University Law School. Bob, this case was a

112
00:06:29,400 --> 00:06:32,400
Speaker 1: big deal for the Obama administration, that kind of It

113
00:06:32,480 --> 00:06:34,160
Speaker 1: was one of the last things that they did they

114
00:06:34,240 --> 00:06:37,120
Speaker 1: charged these traders. Why was this case such a big

115
00:06:37,120 --> 00:06:40,000
Speaker 1: deal for them? Well, I think it was big for

116
00:06:40,040 --> 00:06:42,600
Speaker 1: a couple of reasons. One is that the Obama administrations

117
00:06:42,640 --> 00:06:45,520
Speaker 1: have been criticized quite roundly and quite frequently in the

118
00:06:45,520 --> 00:06:49,599
Speaker 1: wake of the crisis for not having gone after individuals

119
00:06:49,600 --> 00:06:51,159
Speaker 1: who were thought to have been at least in part

120
00:06:51,200 --> 00:06:53,640
Speaker 1: responsible for this scandal or that scandal, or for this

121
00:06:53,680 --> 00:06:56,400
Speaker 1: crash or for that crash. There has been plenty of

122
00:06:56,480 --> 00:06:59,960
Speaker 1: settlements reached with various banking institutions and other financial institution,

123
00:07:00,839 --> 00:07:04,640
Speaker 1: but no really serious convictions or even pursuits up to

124
00:07:04,720 --> 00:07:07,960
Speaker 1: that point of individuals. UM. And with the outbreak of

125
00:07:08,000 --> 00:07:10,760
Speaker 1: the London Whales scandal in and then the four X

126
00:07:10,760 --> 00:07:16,760
Speaker 1: scandal and under precious medals and other commodities scandals following those, um,

127
00:07:16,800 --> 00:07:19,520
Speaker 1: I think the Obama administration was probably really beginning to

128
00:07:19,520 --> 00:07:21,440
Speaker 1: feel that heat, thinking, you know, we really want to

129
00:07:21,560 --> 00:07:25,520
Speaker 1: charge at least some individuals here, given that finding the

130
00:07:25,600 --> 00:07:28,000
Speaker 1: finding the banks doesn't seem to do the job. So

131
00:07:28,040 --> 00:07:29,760
Speaker 1: I'm guessing that that's why they decided to kind of

132
00:07:29,800 --> 00:07:33,360
Speaker 1: go out with this particular bang, Peter. This follows months

133
00:07:33,360 --> 00:07:36,960
Speaker 1: of negotiations with prosecutors over the terms of their surrender

134
00:07:37,560 --> 00:07:39,640
Speaker 1: and the fact that they can return to the UK

135
00:07:39,800 --> 00:07:45,320
Speaker 1: until uh, there's a trial here. Could they have fought extradition, yes,

136
00:07:45,360 --> 00:07:49,320
Speaker 1: the answers, but could they have one if they fought extradition? Well, yeah,

137
00:07:49,680 --> 00:07:53,560
Speaker 1: you can always fight, but UM, the treaty, the extradition

138
00:07:53,600 --> 00:07:56,680
Speaker 1: treaty between the U S and the U k H

139
00:07:56,920 --> 00:08:00,720
Speaker 1: is really quite broad and permissive. And so there was

140
00:08:00,760 --> 00:08:04,280
Speaker 1: a fight back around two thousand four, two thousand five

141
00:08:05,040 --> 00:08:09,120
Speaker 1: related to three investment bankers from nat West UM and

142
00:08:09,200 --> 00:08:12,000
Speaker 1: they were got the nickname the Thatt West three related

143
00:08:12,040 --> 00:08:15,560
Speaker 1: to Enron, and they fought all the way to the

144
00:08:15,640 --> 00:08:19,120
Speaker 1: highest court in Britain and lost and ended up getting

145
00:08:19,120 --> 00:08:22,400
Speaker 1: extradited into the US. I think what these three traders

146
00:08:22,440 --> 00:08:26,320
Speaker 1: figured out was and their attorneys figured out, was, look,

147
00:08:26,440 --> 00:08:30,120
Speaker 1: let's work out an accommodation, will come, will surrender, and

148
00:08:30,160 --> 00:08:32,440
Speaker 1: then maybe we'll be allowed to return to the US.

149
00:08:32,880 --> 00:08:35,920
Speaker 1: Then that West three had to go find apartments in Houston,

150
00:08:36,480 --> 00:08:39,280
Speaker 1: UM and sit around there and wait for their trial.

151
00:08:39,880 --> 00:08:43,439
Speaker 1: So this is really UM, if you're not going to

152
00:08:43,520 --> 00:08:45,800
Speaker 1: win the fight, try to work out the best deal

153
00:08:45,920 --> 00:08:49,720
Speaker 1: that you can. And I suspect that's what they did, Bob.

154
00:08:50,000 --> 00:08:51,960
Speaker 1: This was as we were discussing a big deal for

155
00:08:52,000 --> 00:08:55,480
Speaker 1: the Obama administration in this case. And you know now

156
00:08:55,559 --> 00:09:00,480
Speaker 1: the Justice Department has negotiated these voluntary array tachments for

157
00:09:00,520 --> 00:09:03,560
Speaker 1: the defendants to come and appear in US Court, which

158
00:09:03,559 --> 00:09:06,480
Speaker 1: they now have. But you know, a lot of people

159
00:09:06,520 --> 00:09:10,120
Speaker 1: have wondered if the Trump administration would take the same

160
00:09:10,440 --> 00:09:13,960
Speaker 1: sort of approach to these kinds of issues as the

161
00:09:14,040 --> 00:09:17,240
Speaker 1: Obama administration did, at least at the end. Um, can

162
00:09:17,280 --> 00:09:19,800
Speaker 1: we expect that the Trump administration is going to prosecute

163
00:09:19,800 --> 00:09:24,160
Speaker 1: this as vigorously as the Obama people would have done. Yeah,

164
00:09:24,240 --> 00:09:26,240
Speaker 1: that's a great question, and I honestly think it's a

165
00:09:26,280 --> 00:09:29,240
Speaker 1: tough call in this particular case for several reasons. Uh.

166
00:09:29,640 --> 00:09:32,360
Speaker 1: One is that the traders in question or not American,

167
00:09:32,440 --> 00:09:34,760
Speaker 1: and so it could be one could imagine at least

168
00:09:34,760 --> 00:09:37,960
Speaker 1: the Trumpet administration being a little bit less solicitous of

169
00:09:38,040 --> 00:09:41,600
Speaker 1: non American defendants. Another reason is that Mr Trump of

170
00:09:41,640 --> 00:09:44,280
Speaker 1: course campaigned on at least partly a sort of anti

171
00:09:44,320 --> 00:09:47,360
Speaker 1: Wall Street platform, and while that's turned out to be

172
00:09:47,760 --> 00:09:51,400
Speaker 1: somewhat let's say questionable, or let's say, well, his commitment

173
00:09:52,080 --> 00:09:55,200
Speaker 1: to that particular aspect of his platform Wall campaigning has

174
00:09:55,360 --> 00:09:58,240
Speaker 1: has come into question, of course, in recent months, it's

175
00:09:58,280 --> 00:10:01,280
Speaker 1: not clear that it's been entirely a bad So my

176
00:10:01,400 --> 00:10:04,080
Speaker 1: guess would be that they'll prosecute this, maybe not with

177
00:10:04,240 --> 00:10:08,400
Speaker 1: quite the same vigor that the Obomba administration seemed to

178
00:10:08,480 --> 00:10:10,920
Speaker 1: want to do at the end of its time, but

179
00:10:11,000 --> 00:10:15,079
Speaker 1: that it will still probably try to treat this fairly seriously, Peter.

180
00:10:15,280 --> 00:10:19,200
Speaker 1: They've frequently pointed to the fact that the Serious Fraud Office,

181
00:10:19,360 --> 00:10:22,960
Speaker 1: which we were talking about, decided in to close its

182
00:10:23,040 --> 00:10:27,480
Speaker 1: investigation into this without filing any charges, and they've pointed

183
00:10:27,520 --> 00:10:30,320
Speaker 1: to that as evidence that they did nothing wrong. Is

184
00:10:30,320 --> 00:10:33,520
Speaker 1: it any kind of evidence. Well, it's certainly a good

185
00:10:33,559 --> 00:10:37,800
Speaker 1: talking point. Whether it comes in at trial is another issue.

186
00:10:37,920 --> 00:10:43,480
Speaker 1: I can't see an American federal district court judge allowing

187
00:10:43,520 --> 00:10:46,640
Speaker 1: defendants to argue, well, the British authority said what we

188
00:10:46,679 --> 00:10:50,240
Speaker 1: did wasn't a crime, therefore you shouldn't prosecute us, or

189
00:10:50,320 --> 00:10:54,559
Speaker 1: even that that's somehow a defense. So I think that's

190
00:10:54,679 --> 00:10:58,400
Speaker 1: more of something that they can try to use in

191
00:10:58,440 --> 00:11:02,800
Speaker 1: the media rather than having any real impact on the trial.

192
00:11:03,440 --> 00:11:07,560
Speaker 1: This is going to be a case about um, the

193
00:11:07,559 --> 00:11:10,680
Speaker 1: the I M s and talking back and forth, and

194
00:11:10,720 --> 00:11:14,280
Speaker 1: then looking at how they were able to nudge Libar

195
00:11:14,520 --> 00:11:16,360
Speaker 1: up a little bit, down a little bit to help

196
00:11:16,400 --> 00:11:19,680
Speaker 1: their positions. So that's really going to be the focus

197
00:11:19,720 --> 00:11:23,079
Speaker 1: here in the case. Bob in about thirty seconds. Given

198
00:11:23,120 --> 00:11:25,880
Speaker 1: that that's the focus of the case, how strong is

199
00:11:25,880 --> 00:11:29,360
Speaker 1: the government's case here? I think it's actually quite strong.

200
00:11:29,400 --> 00:11:31,679
Speaker 1: I mean, when you call yourselves the cartel and when

201
00:11:31,720 --> 00:11:36,520
Speaker 1: you're acting definitely to manipulate foreign foreign exchange rates, Uh,

202
00:11:36,600 --> 00:11:38,800
Speaker 1: it doesn't get much better than that. And it's important

203
00:11:38,800 --> 00:11:41,160
Speaker 1: that the SFO in Britain didn't actually decide that there

204
00:11:41,160 --> 00:11:43,360
Speaker 1: was no wrong doing. They just decided they said, actually,

205
00:11:43,360 --> 00:11:45,000
Speaker 1: we think the fraud was committed. We just don't have

206
00:11:45,120 --> 00:11:47,599
Speaker 1: enough evidence to prevail in trial. With a burden of

207
00:11:47,640 --> 00:11:50,000
Speaker 1: group is quite heavy, the American Justice Department might be

208
00:11:50,080 --> 00:11:53,800
Speaker 1: more competent. Well. Our thanks to Bob Hockett of Cornell

209
00:11:53,920 --> 00:11:57,199
Speaker 1: University Law School and Peter Henning of Wayne State University

210
00:11:57,200 --> 00:11:59,360
Speaker 1: for being with us here to talk about all this

211
00:11:59,440 --> 00:12:02,280
Speaker 1: legal news coming out of the UK and and British

212
00:12:02,280 --> 00:12:04,079
Speaker 1: traders on Bloomberg Law