R v Hayes and R v Palombo - Conspiracy to defraud convictions quashed by the Supreme Court of the UK

LIBOR was the abbreviation for the London Interbank Offered Rate. Money market traders found themselves able to earn money for their bank (and, through their personal pay structure, for themselves) by subtle manipulations of the rate.  Very small alterations in the rate equated to considerable sums of money.  The process was well described by Alex Bailin QC (now KC) in The Guardian 4th July 2012 The Law catches up with LIBOR

 

 

In 2015, Mr Tom Hayes 

was convicted on 8 counts of conspiracy to defraud - (Sentencing remarks of Cooke J). The activities of Hayes concerned LIBOR rates set for the YEN (¥).  Cooke J said that the case had shown the "absence of integrity which ought to characterise banking." 

A central issue at trial was whether Mr Hayes had acted 'dishonestly' according to the test in R v GHOSH [1982] 1 QB 1053 which then applied. 

In December 2015, the Court of Appeal (Criminal Division) dismissed Mr Hayes' appeal but reduced the sentence to 11 years imprisonment - R v Hayes [2015] EWCA Crim 1944. 

On 26 March 2019, Mr Carlo Palombo was convicted (by a majority of 10 to 2) following a retrial and he was sentenced to 4 years' imprisonment. His case was concerned with the  'Euribor' ('Euro Interbank Offered Rate'. His appeal was dismissed in December 2020 -  R v Bermingham and Palombo - [2020] EWCA Crim 1662 (09 December 2020) (bailii.org)

The cases of Hayes and Palombo recently returned to the Court of Appeal (Criminal Division) - R -v- Tom Hayes and Carlo Palombo - Courts and Tribunals Judiciary or on Bailii at Hayes & Anor v Rex [2024] EWCA Crim 304 (27 March 2024) (bailii.org). The Criminal Cases Review Commission had referred the Appellants' convictions because the United States Court of Appeals had adopted a different construction of LIBOR from that adopted by the Court of Appeal in London.

Both appeals failed. One reason for this was that previous Court of Appeal decisions had treated the interpretation of LIBOR as a question of law and therefore a matter for the trial judge and not the jury. The Court was bound by those previous decisions.

The cases reached the Supreme Court of the UK which allowed the appeals and quashed the convictions. 

Judgments are at .....

R v Hayes (Appellant)

R v Palombo (Appellant)

Lord Reed, Lord Hodge, Lord Lloyd-Jones, Lord Leggatt, Lady Simler