0:00:02 > 0:00:05Tonight, the scandal at the top of Britain's banking establishment
0:00:05 > 0:00:06caught on tape.
0:00:14 > 0:00:16Interest rates were rigged.
0:00:16 > 0:00:20There are calls for an inquiry into whether Parliament was misled.
0:00:20 > 0:00:23That is shocking. We need an immediate inquiry
0:00:23 > 0:00:25to look into exactly who knew what, when.
0:00:25 > 0:00:29Last week, two Barclays bankers walked free from court.
0:00:29 > 0:00:31- How are you feeling?- Delighted.
0:00:31 > 0:00:35But what about the bankers accused of conspiring with them
0:00:35 > 0:00:36who've been jailed?
0:00:36 > 0:00:38Barclays, they just threw us to the wolves.
0:00:38 > 0:00:42They get off with their fine while we rot in jail.
0:00:42 > 0:00:45We ask, should they have been prosecuted?
0:00:45 > 0:00:48'You've got the Bank of England involved in the whole thing.'
0:00:48 > 0:00:51It's my opinion that if this was available last year,
0:00:51 > 0:00:53the result might have been very different.
0:01:01 > 0:01:04- Stylianos. How are you feeling? - Delighted.
0:01:05 > 0:01:08Last week, two former Barclays traders,
0:01:08 > 0:01:12Ryan Reich and Stylianos Contogoulas, walked free from court,
0:01:12 > 0:01:17cleared of conspiracy to defraud by rigging interest rates.
0:01:17 > 0:01:19It was the end of a long battle to clear their names.
0:01:19 > 0:01:23I am very happy, obviously, and this has been
0:01:23 > 0:01:25five and a half years of my life,
0:01:25 > 0:01:27and I just want to go back to my family now. That's it.
0:01:27 > 0:01:31- Thank you very much.- Thank you very much.- Thank you, thank you.
0:01:31 > 0:01:34Sometimes I look at it and I think I'm in a bad movie. It's like...
0:01:34 > 0:01:36It's just something completely...
0:01:36 > 0:01:39If you'd told me this ten years ago, I would say, "You're mad."
0:01:39 > 0:01:45It's destroyed big parts of my life, like my career, totally gone.
0:01:45 > 0:01:48I'm very sad that people are in jail when they shouldn't be,
0:01:48 > 0:01:49that's my opinion.
0:01:51 > 0:01:54The acquittals raised serious questions about the convictions
0:01:54 > 0:01:58of four other Barclays bankers who Stylianos Contogoulas
0:01:58 > 0:02:00was accused of conspiring with.
0:02:01 > 0:02:03They were convicted and jailed last June.
0:02:05 > 0:02:07Four ex-employees of Barclay Bank
0:02:07 > 0:02:09have been sentenced to jail for rigging Libor,
0:02:09 > 0:02:13the benchmark for how much it costs banks to borrow from each other.
0:02:14 > 0:02:18'I've been investigating this story for the last 18 months.'
0:02:20 > 0:02:22I just can't believe it, at this age, my son goes to jail?
0:02:24 > 0:02:26Jay Merchant, who's 45,
0:02:26 > 0:02:28he was sentenced to six and a half years.
0:02:28 > 0:02:33Peter Johnson, who's 61, was sentenced to four years.
0:02:33 > 0:02:35Jonathan, do you have anything to say?
0:02:35 > 0:02:39Jonathan Mathew, 35, was sentenced to four years.
0:02:39 > 0:02:41How are you feeling about it?
0:02:41 > 0:02:42- Not great.- Not great.
0:02:42 > 0:02:46And Alex Pabon, an American who worked for Barclays.
0:02:46 > 0:02:49He was sentenced to nearly three years.
0:02:49 > 0:02:51I don't know what you want, you want your Cheerios?
0:02:51 > 0:02:54- Oh, God!- Oh, yeah.- OK.
0:02:54 > 0:02:57Just two hours before he was jailed,
0:02:57 > 0:03:00he and his wife Julie agreed to speak to me.
0:03:00 > 0:03:02I never thought that what we were doing was wrong.
0:03:02 > 0:03:05We've been saying the same story for ten years.
0:03:05 > 0:03:08They didn't do anything wrong.
0:03:08 > 0:03:10I don't know what will happen from here, you know?
0:03:13 > 0:03:15It's just very scary and I feel like it could happen to anyone
0:03:15 > 0:03:16to be honest, you know.
0:03:22 > 0:03:26Alex Pabon and the other Barclays bankers were all prosecuted
0:03:26 > 0:03:30over rigging an interest rate called Libor.
0:03:30 > 0:03:34The London Interbank Offered Rate is meant to track
0:03:34 > 0:03:36the cost of borrowing money.
0:03:36 > 0:03:40It has a big influence on your mortgage and other loans.
0:03:41 > 0:03:44Libor is now more tightly policed,
0:03:44 > 0:03:48but until recently it used to be set by taking an average each day
0:03:48 > 0:03:52of what the big banks thought they'd have to pay to borrow money.
0:03:54 > 0:03:56Libors, if you like, are interest rates.
0:03:56 > 0:04:01That is THE major benchmark for global interest rates.
0:04:01 > 0:04:05350 trillion or so of financial products based on Libor,
0:04:05 > 0:04:08it is the major global benchmark for interest rates.
0:04:10 > 0:04:13The very same banks involved in setting Libor
0:04:13 > 0:04:17had big money staked on whether Libor went up or down.
0:04:17 > 0:04:22If a trader could influence the rate, the bank could make money.
0:04:22 > 0:04:25It's been called trader manipulation.
0:04:26 > 0:04:30The convicted Barclays traders say that what they were doing
0:04:30 > 0:04:32was encouraged by their bosses,
0:04:32 > 0:04:35a normal commercial practice dating back to the '90s.
0:04:40 > 0:04:44In the City, it was common knowledge for years that traders
0:04:44 > 0:04:47would try to secure tiny shifts in Libor rates every day.
0:04:49 > 0:04:53Pippa Malmgrem is a leading US financial expert,
0:04:53 > 0:04:55and was an economic advisor to President Bush.
0:04:59 > 0:05:01When you work on a trading floor,
0:05:01 > 0:05:03your whole job is to buy
0:05:03 > 0:05:06something for one price and you sell it for something a little higher.
0:05:06 > 0:05:09This is the way every trader on a trading floor thinks.
0:05:09 > 0:05:11So when they're asked to establish a rate,
0:05:11 > 0:05:13they're thinking in terms of the two sides,
0:05:13 > 0:05:16and so this is their attempt to create a little space
0:05:16 > 0:05:19because you always want to make money on the deal.
0:05:19 > 0:05:22The way I saw it was, it was perfectly OK to do it.
0:05:22 > 0:05:24It was almost like what we call a free option,
0:05:24 > 0:05:26you might as well do it. You can do it, it's perfectly normal
0:05:26 > 0:05:28and proper, you can do it.
0:05:28 > 0:05:31If it works, great, if not, that's it.
0:05:34 > 0:05:38In August 2007, the world changed.
0:05:39 > 0:05:42Global financial markets went into meltdown.
0:05:43 > 0:05:46British banking was on the brink.
0:05:46 > 0:05:47Tonight at Ten:
0:05:47 > 0:05:52Northern Rock appeals for calm and urges its customers not to panic.
0:05:52 > 0:05:55Banks became scared of lending to each other,
0:05:55 > 0:05:58worried they wouldn't get their money back.
0:05:58 > 0:06:02The market seized up. The economy was heading towards a crisis.
0:06:04 > 0:06:07Not since the beginning of the First World War
0:06:07 > 0:06:11has our banking system been so close to collapse.
0:06:11 > 0:06:15Whenever you have a major financial crisis, you always have what
0:06:15 > 0:06:19might be called the recrimination phase of the economic cycle
0:06:19 > 0:06:20which is when everybody goes,
0:06:20 > 0:06:23"Wait, how the heck did this happen and who is responsible for it?"
0:06:25 > 0:06:29The public and politicians on both sides of the Atlantic
0:06:29 > 0:06:33wanted to know what had gone on, and who was to blame.
0:06:33 > 0:06:35Banks had to be called to account.
0:06:35 > 0:06:37Financial regulators targeted
0:06:37 > 0:06:39the so-called trader manipulation of Libor.
0:06:41 > 0:06:43Whee!
0:06:44 > 0:06:47Tom Hayes was the very first trader to be jailed for it,
0:06:47 > 0:06:50found guilty of conspiracy to defraud.
0:06:51 > 0:06:54He was working for the Swiss bank UBS.
0:06:54 > 0:06:57Tom Hayes is now in prison.
0:07:00 > 0:07:02- I feel angry about it.- Why?
0:07:04 > 0:07:07Because Daddy shouldn't be in his new place, should he?
0:07:07 > 0:07:09We call it Daddy's new place.
0:07:09 > 0:07:14That new place is Lowdham Grange Prison in Nottinghamshire
0:07:14 > 0:07:16where Tom Hayes is serving 11 years.
0:07:18 > 0:07:21The sentence is just inexplicable.
0:07:21 > 0:07:24What does it compare with? What are you talking about?
0:07:24 > 0:07:27I think you can get less time for killing somebody.
0:07:27 > 0:07:32Sarah, a lawyer, is fighting to get her husband released.
0:07:32 > 0:07:34All I really want is for the truth to come out,
0:07:34 > 0:07:37because if the truth came out, I think he would come out of prison,
0:07:37 > 0:07:39but the truth has never come out about this.
0:07:45 > 0:07:49Tom Hayes had a reputation as a trading superstar.
0:07:49 > 0:07:51He earned millions.
0:07:51 > 0:07:54From his base in Tokyo, he had a network of London brokers
0:07:54 > 0:07:59who he tried to use to make small changes to Libor.
0:07:59 > 0:08:01One of them was Noel Cryan.
0:08:05 > 0:08:06He was the biggest trader at the time,
0:08:06 > 0:08:08he had power over not only the brokers
0:08:08 > 0:08:10but other traders were scared of him as well.
0:08:10 > 0:08:12He would always take advantage of that.
0:08:14 > 0:08:17Tom Hayes started asking Noel to try to influence Libor.
0:08:34 > 0:08:37The requests Tom Hayes was making were tiny,
0:08:37 > 0:08:40but because his bank had billions staked on Libor,
0:08:40 > 0:08:43even a minuscule move could make big money.
0:08:45 > 0:08:48Everyone knew there is this very important benchmark out there,
0:08:48 > 0:08:51that the banks were in charge of setting and lots of traders,
0:08:51 > 0:08:54making their living was based on playing with that
0:08:54 > 0:08:58and no-one made any effort to stop that or impose order on it.
0:08:59 > 0:09:02Tom Hayes said he HAD tried to influence Libor,
0:09:02 > 0:09:06like the Barclays traders who later followed him into the dock.
0:09:06 > 0:09:09But they all said it was a day-to-day banking practice,
0:09:09 > 0:09:13something their bosses expected them to do.
0:09:13 > 0:09:16Tom Hayes says he should never have been prosecuted
0:09:16 > 0:09:19by the Serious Fraud Office, or SFO.
0:09:19 > 0:09:21There's e-mails, there are phone recordings,
0:09:21 > 0:09:23there are chat transcripts,
0:09:23 > 0:09:26that show that people up and down the organisational ladders
0:09:26 > 0:09:30knew about, condoned, in some cases participated in what was going on.
0:09:30 > 0:09:33Don't forget, Tom Hayes never made any secret of it.
0:09:33 > 0:09:36He was completely open. He never acted once like a man
0:09:36 > 0:09:39who thought he was doing anything wrong or illegal.
0:09:40 > 0:09:44Noel Cryan and five other brokers were later charged with
0:09:44 > 0:09:46conspiring with Tom Hayes.
0:09:46 > 0:09:49They told the court they hadn't done what he'd asked them to do.
0:09:49 > 0:09:51They were all acquitted.
0:09:51 > 0:09:53We've been scapegoated in the whole thing.
0:09:53 > 0:09:56They've gone to the bottom of the food chain, the brokers, six brokers
0:09:56 > 0:09:58answering the Libor question.
0:09:58 > 0:10:00Really? If there's things to be answered,
0:10:00 > 0:10:01WE shouldn't be answering the questions.
0:10:01 > 0:10:04The SFO need to ask themselves, should they have wasted
0:10:04 > 0:10:06that much time and money bringing this case
0:10:06 > 0:10:08against six money brokers? I don't think so.
0:10:11 > 0:10:13UBS, Tom Hayes's employer,
0:10:13 > 0:10:19was fined 1.5 billion for allowing its traders to attempt to rig Libor.
0:10:22 > 0:10:26UBS told us, "Criminal and regulatory investigations..."
0:10:38 > 0:10:42But UBS wasn't the only bank punished for manipulating Libor.
0:10:44 > 0:10:49Barclays Bank was fined £290 million.
0:10:49 > 0:10:52A week later, its boss, Bob Diamond, was forced to resign.
0:10:52 > 0:10:55The bank's Chief Executive, Bob Diamond,
0:10:55 > 0:10:58has surprised the City by quitting with immediate effect.
0:10:59 > 0:11:03When MPs demanded to know what had been going on,
0:11:03 > 0:11:06Bob Diamond told them a handful of traders
0:11:06 > 0:11:08down the ranks deserved to be punished.
0:11:08 > 0:11:12Do you think a criminal prosecution of a banker...
0:11:12 > 0:11:16He was asked whether those bankers should be locked up.
0:11:16 > 0:11:18It's reprehensible behaviour,
0:11:18 > 0:11:22and if you're asking me should those actions be dealt with, absolutely.
0:11:22 > 0:11:23Thank you very much indeed.
0:11:25 > 0:11:29But throwing the book at a handful of bankers is not where this story ends.
0:11:37 > 0:11:40Hundreds of miles from the City in Cumbria,
0:11:40 > 0:11:44a family of caravan park owners were about to discover evidence of
0:11:44 > 0:11:48what looked like a cover-up at the top of the banking establishment.
0:11:49 > 0:11:53In 2005, Paul Holgate and his father Martin
0:11:53 > 0:11:57wanted to borrow £3.5 million to expand their business.
0:12:00 > 0:12:02We were recommended to move to Barclays.
0:12:02 > 0:12:05It was absolutely fine, it was very good long-term prospects.
0:12:05 > 0:12:09Barclays lent the money on condition the Holgates bought
0:12:09 > 0:12:13a financial product to protect them against rising interest rates.
0:12:15 > 0:12:18What Barclays didn't tell them was that if interest rates went down,
0:12:18 > 0:12:21they'd end up losing money. Lots of money.
0:12:23 > 0:12:27That's where the problems arose.
0:12:27 > 0:12:30Because the liabilities they put on us were incredible.
0:12:32 > 0:12:36Interest rates plummeted and in 2012, the business went under.
0:12:38 > 0:12:40I was thrown off the park that day,
0:12:40 > 0:12:43when the administrators were sprung upon us.
0:12:43 > 0:12:45I had some clothing in an overnight bag,
0:12:45 > 0:12:49and for the next 14 months I had to make do with the clothes in that bag
0:12:49 > 0:12:51because the administrators wouldn't even let me
0:12:51 > 0:12:52obtain my own clothes.
0:12:53 > 0:12:57After Barclays boss Bob Diamond resigned over Libor,
0:12:57 > 0:12:59the Holgates began investigating.
0:13:01 > 0:13:04If they could prove that senior people inside Barclays
0:13:04 > 0:13:07knew about Libor rigging, they might get compensation.
0:13:07 > 0:13:09During their legal case against the bank,
0:13:09 > 0:13:12they discovered thousands of confidential documents
0:13:12 > 0:13:14from inside Barclays.
0:13:14 > 0:13:17We've been fighting the bank for seven to eight years.
0:13:17 > 0:13:21You have to have...great tenacity
0:13:21 > 0:13:23to be able to carry this through.
0:13:23 > 0:13:25Most people can't do it.
0:13:26 > 0:13:30The documents revealed that senior managers within the bank
0:13:30 > 0:13:32had instructed staff to rig Libor.
0:13:34 > 0:13:38This wasn't about the tiny shifts of Libor made by the traders.
0:13:38 > 0:13:41This was massive rigging, ordered from the top of the bank.
0:13:46 > 0:13:50As the banks started running out of cash during the financial crisis,
0:13:50 > 0:13:54most of them started doing something called low balling.
0:13:54 > 0:13:58Deliberately submitting artificially low Libor rates
0:13:58 > 0:14:01so they'd look in better shape than they really were.
0:14:04 > 0:14:06If I asked to borrow £1,000 from you,
0:14:06 > 0:14:09and you'd heard my finances were in a mess,
0:14:09 > 0:14:12you might want to charge me more in interest
0:14:12 > 0:14:14to cover the risk that you don't get your money back.
0:14:14 > 0:14:18But, if I admitted I was paying higher interest rates,
0:14:18 > 0:14:20people might think I was in trouble,
0:14:20 > 0:14:26so I might lie and pretend I was paying no more than anyone else.
0:14:26 > 0:14:29That's what many banks did during the financial crisis.
0:14:35 > 0:14:39The Bank of England had warning signs about this certainly in 2007.
0:14:39 > 0:14:42It's not just like little whispers they were hearing.
0:14:42 > 0:14:43There were unequivocal signs
0:14:43 > 0:14:46that there was something very wrong with this rate.
0:14:49 > 0:14:53In October 2008, the Government launched emergency measures
0:14:53 > 0:14:56to get stricken banks lending again.
0:14:56 > 0:14:57It's been a tumultuous day,
0:14:57 > 0:15:00it started with the announcement of a giant rescue package
0:15:00 > 0:15:02for the British banking sector.
0:15:04 > 0:15:09The Government pumped £37 billion of capital into the troubled banks.
0:15:09 > 0:15:11It was part of a huge rescue plan.
0:15:11 > 0:15:14If it worked, Libor would fall.
0:15:14 > 0:15:16But it stayed frozen.
0:15:18 > 0:15:22The problem for the Bank of England was even with a huge bailout,
0:15:22 > 0:15:24the banks knew they were all in trouble.
0:15:24 > 0:15:27It still wasn't getting any cheaper for them to borrow money from
0:15:27 > 0:15:33each other, and Barclays kept their Libor rate high to reflect that.
0:15:33 > 0:15:36The Bank of England wasn't happy.
0:15:36 > 0:15:41On 29th October, 2008, its then executive director Paul Tucker
0:15:41 > 0:15:44phoned up the Barclays boss, Bob Diamond.
0:15:44 > 0:15:46A conversation was had.
0:15:46 > 0:15:48That conversation was interpreted by Barclays,
0:15:48 > 0:15:50by senior people within Barclays,
0:15:50 > 0:15:52as an instruction to lower their Libors and they acted on that.
0:15:52 > 0:15:55This leads to a flurry of phone calls and e-mails between
0:15:55 > 0:15:58senior people, traders, Libor submitters at Barclays.
0:16:02 > 0:16:04Bob Diamond has said he was misinterpreted,
0:16:04 > 0:16:07but an instruction to lower Libors
0:16:07 > 0:16:10was passed down to the bank's submitters.
0:16:10 > 0:16:12One of those submitters was Peter Johnson.
0:16:13 > 0:16:16He pleaded guilty to manipulating Libor
0:16:16 > 0:16:19and is now serving four years in prison.
0:16:20 > 0:16:22During the Holgates' investigation,
0:16:22 > 0:16:25they found the transcript of a phone call
0:16:25 > 0:16:28between Peter Johnson and his boss, Mark Dearlove.
0:16:28 > 0:16:32It also happened on 29th October, 2008.
0:16:35 > 0:16:38I've got hold of the actual recording,
0:16:38 > 0:16:42crucial evidence that Barclays was setting false Libor rates
0:16:42 > 0:16:45on instructions from above.
0:16:45 > 0:16:47It's never been broadcast before.
0:17:18 > 0:17:22Mark Dearlove didn't respond to our questions.
0:17:22 > 0:17:26Chris Philp is a member of the House of Commons Treasury Select Committee.
0:17:26 > 0:17:28We played him the recording.
0:17:45 > 0:17:49- What do you think?- If what Dearlove is saying is true, that is shocking.
0:17:49 > 0:17:54This tape suggests that in fact the Bank of England knew about it
0:17:54 > 0:17:57and indeed were encouraging or even instructing it.
0:17:57 > 0:18:02So we need an immediate inquiry to find out exactly what is going on,
0:18:02 > 0:18:04given what we've just heard on this tape.
0:18:06 > 0:18:08The banking system was on life support
0:18:08 > 0:18:12and the Bank of England wanted Libor down.
0:18:12 > 0:18:15If it dropped, it would look like things were on the mend.
0:18:17 > 0:18:20Banks were so unwilling to lend to each other...
0:18:20 > 0:18:24But when Mervyn King, the then Governor of the Bank of England,
0:18:24 > 0:18:27was called to answer questions before Parliament in 2012,
0:18:27 > 0:18:32he said there was no instruction to doctor the Libor rate.
0:18:32 > 0:18:35This is like the temperature, when a patient is sick,
0:18:35 > 0:18:38you want to bring the temperature of the patient down.
0:18:38 > 0:18:40But there's a world of difference between trying to think of
0:18:40 > 0:18:43what measures you could adopt to bring the temperature
0:18:43 > 0:18:47of the patient down and actually tampering with the thermometer.
0:18:47 > 0:18:50That was nowhere near anyone's thoughts at the time.
0:18:50 > 0:18:53But tampering with that thermometer, Libor,
0:18:53 > 0:18:56is exactly what the Bank of England had ordered.
0:18:56 > 0:18:58We were not aware...
0:18:58 > 0:19:02Mervyn King's second in command at the Bank of England was Paul Tucker.
0:19:02 > 0:19:08Despite making that call to Barclays boss, Bob Diamond, back in 2008,
0:19:08 > 0:19:11he told MPs he'd only just found out about low balling.
0:19:11 > 0:19:15In your recollection, when was the first time that Libor was raised
0:19:15 > 0:19:18as an issue in relation to low balling?
0:19:18 > 0:19:21- To...?- Low balling.- Erm...
0:19:21 > 0:19:23The...
0:19:25 > 0:19:29I mean, I wasn't aware of allegations of low balling
0:19:29 > 0:19:32until the last few weeks.
0:19:32 > 0:19:34Ditto Bob Diamond.
0:19:36 > 0:19:38For the third time, what month did you discover
0:19:38 > 0:19:42- the low balling was going on? Just give me a date.- This month.
0:19:44 > 0:19:47'It sounds to me like those people giving evidence,
0:19:47 > 0:19:52'particularly Bob Diamond and Paul Tucker, were misleading Parliament.
0:19:52 > 0:19:53'That is contempt of Parliament.'
0:19:53 > 0:19:56It's a very serious matter and I think we need to urgently
0:19:56 > 0:20:00summon those individuals back before Parliament to explain
0:20:00 > 0:20:03why it is they appear to have misled MPs. It's extremely serious.
0:20:03 > 0:20:08Bob Diamond told Panorama, "I never misled Parliament.
0:20:08 > 0:20:10"And I stand by everything I have said previously."
0:20:12 > 0:20:16Mervyn King says that his evidence was clear and he stands by it.
0:20:16 > 0:20:18And that there is "a world of difference
0:20:18 > 0:20:22"between dysfunctional markets and criminal behaviour".
0:20:22 > 0:20:25Paul Tucker didn't respond to our questions.
0:20:30 > 0:20:33But Panorama has discovered evidence that the Bank of England
0:20:33 > 0:20:36was involved in Libor rigging even earlier.
0:20:36 > 0:20:40We found a confidential US Department of Justice document
0:20:40 > 0:20:44that shows Paul Tucker began pressuring Barclays
0:20:44 > 0:20:48to lower its Libor rates from September 1st, 2007.
0:20:49 > 0:20:53You've now got two separate bits of evidence,
0:20:53 > 0:20:55one dating from October 2008,
0:20:55 > 0:20:58one dating from September 2007, over a year before,
0:20:58 > 0:21:02where there's clear evidence, audio evidence and written evidence,
0:21:02 > 0:21:05that the Bank of England were pressuring Barclays to lower Libor.
0:21:05 > 0:21:09It suggests that it was part of a more systematic
0:21:09 > 0:21:12and ongoing attempt by the Bank of England
0:21:12 > 0:21:14to put pressure on Barclays.
0:21:15 > 0:21:18But the trials of the Barclays bankers didn't get to hear this,
0:21:18 > 0:21:21and much of the other evidence of low balling,
0:21:21 > 0:21:25because the Serious Fraud Office said their Libor conspiracy
0:21:25 > 0:21:29had come to an end on 1st September, 2007.
0:21:31 > 0:21:35That's the thing, in these trials that we went through,
0:21:35 > 0:21:36they separated everything.
0:21:36 > 0:21:39Separated trading requests and low balling.
0:21:39 > 0:21:42So anything that has to do with this did not go in.
0:21:42 > 0:21:46So you're asking me, do I think if all this was in,
0:21:46 > 0:21:48would it make a difference? Erm...
0:21:48 > 0:21:50Probably, is the answer.
0:21:58 > 0:22:00- SHE SNIFFLES - OK.
0:22:01 > 0:22:04Alex Pabon was one of the Barclays bankers jailed last summer.
0:22:11 > 0:22:15He was released from prison three weeks ago and immediately
0:22:15 > 0:22:17deported to his home in Texas.
0:22:17 > 0:22:20He still thinks he didn't get a fair trial.
0:22:21 > 0:22:25What effect do you think it had on your case that they didn't bring in
0:22:25 > 0:22:28what we know about your bosses and the Bank of England doing that?
0:22:28 > 0:22:30The failure to
0:22:30 > 0:22:33not put in front of the jury specific evidence
0:22:33 > 0:22:37really hamstrung the defence on how we could respond to
0:22:37 > 0:22:39what the prosecution was saying.
0:22:39 > 0:22:42What's the scale of the difference between what you might have achieved
0:22:42 > 0:22:43by making a Libor request
0:22:43 > 0:22:46and what your bosses and the Bank of England might have achieved?
0:22:46 > 0:22:49We were asking for an eighth of a basis point
0:22:49 > 0:22:54and they were asking for 50 basis points, so about 400 times more.
0:22:56 > 0:23:00The Bank of England says Libor was not regulated in the UK
0:23:00 > 0:23:03or elsewhere during the period in question.
0:23:03 > 0:23:06But it's been assisting the criminal investigations
0:23:06 > 0:23:10into Libor manipulation by employees at commercial banks.
0:23:14 > 0:23:18The Serious Fraud Office says it's still investigating low balling.
0:23:18 > 0:23:19It says it follows the evidence
0:23:19 > 0:23:21and aims to charge the most senior people,
0:23:21 > 0:23:25where there is a realistic prospect of conviction.
0:23:25 > 0:23:29The prosecution period, which ended on 1st September, 2007,
0:23:29 > 0:23:33was led by the evidence and material dated after this point
0:23:33 > 0:23:34was provided to the defence.
0:23:38 > 0:23:41The 2008 recording was disclosed to the defence
0:23:41 > 0:23:43but it wasn't admitted into court.
0:23:46 > 0:23:50Barclays, they just threw us to the wolves. They were happy, I think.
0:23:50 > 0:23:52Because they get off with their fine
0:23:52 > 0:23:56and then they get some low level guys that go to jail
0:23:56 > 0:23:59and they just continue to work and make millions of dollars a year,
0:23:59 > 0:24:03while we sit there and rot in jail.
0:24:06 > 0:24:09But there is one more twist in the Libor tale.
0:24:09 > 0:24:12Back in Cumbria, the campsite sleuths
0:24:12 > 0:24:15came across another extraordinary piece of evidence.
0:24:15 > 0:24:18At the height of the financial crisis,
0:24:18 > 0:24:20Barclays sensed an opportunity.
0:24:20 > 0:24:24Having been instructed by the Bank of England to lower its Libor rates,
0:24:24 > 0:24:26it hatched a top-secret plan,
0:24:26 > 0:24:29involving something called the Ricardo Master Fund.
0:24:33 > 0:24:35The goal of Ricardo Master Fund, like all such funds,
0:24:35 > 0:24:37was to make money for the bank.
0:24:37 > 0:24:41They were investing in financial instruments whose performance
0:24:41 > 0:24:43was based on the movement of interest rates.
0:24:46 > 0:24:51Barclays put 100 million of its own money into the secret fund.
0:24:52 > 0:24:55If you look at this, Andy, this is what we've been shown.
0:24:55 > 0:25:00It is a transcript of a telephone conversation at Barclays.
0:25:00 > 0:25:03More evidence that the Bank of England's Paul Tucker
0:25:03 > 0:25:05had told Barclays to get its Libors down.
0:25:08 > 0:25:11"I've been told to get Libor rates down.
0:25:11 > 0:25:12"It's political from very, very high,
0:25:12 > 0:25:14"so it's Tucker calling the tune."
0:25:16 > 0:25:19Because Barclays knew that interest rates would fall,
0:25:19 > 0:25:23the Ricardo Master Fund made 100 million for the bank
0:25:23 > 0:25:25in a matter of months.
0:25:25 > 0:25:29And who was in charge of the Barclays company that ran the fund?
0:25:29 > 0:25:31Bob Diamond.
0:25:31 > 0:25:35The man who told MPs he knew nothing about low balling until 2012.
0:25:36 > 0:25:37For the third time,
0:25:37 > 0:25:40what month did you discover that low balling was going on?
0:25:40 > 0:25:42- Just give me a date.- This month.
0:25:43 > 0:25:46As the Holgates' caravan business was being destroyed
0:25:46 > 0:25:50by falling interest rates, Barclays was making a killing.
0:25:55 > 0:25:58Barclays didn't answer our questions about the Ricardo Master Fund
0:25:58 > 0:26:01but told us it remains committed to fundamental change
0:26:01 > 0:26:04in its culture and operations.
0:26:06 > 0:26:09The bank reached a financial settlement with the Holgates
0:26:09 > 0:26:12but insisted that the amount of compensation they received
0:26:12 > 0:26:15be kept confidential.
0:26:16 > 0:26:21You just would not think in a country that has the reputation,
0:26:21 > 0:26:24prides itself on being a very, very upstanding,
0:26:24 > 0:26:29honest nation, allows these things not only to happen,
0:26:29 > 0:26:32but they aren't sorted out, just ignored and swept away.
0:26:32 > 0:26:36I think that's the biggest shock, not just what's gone on,
0:26:36 > 0:26:38but the way it's been dealt with afterwards.
0:26:44 > 0:26:47Tom Hayes, the first banker to be jailed, has lost an appeal
0:26:47 > 0:26:51against conviction and is now in his second year behind bars.
0:26:56 > 0:27:00His son Joshua will be eight by the time his father's due to be released.
0:27:03 > 0:27:06It is hard because, you know, when we go to the field,
0:27:06 > 0:27:08I have to kick the football with him
0:27:08 > 0:27:10because his dad's not around to do it.
0:27:12 > 0:27:16Tom Hayes sends his wife and son video messages recorded from prison.
0:27:17 > 0:27:21Hello again, Josh. Hi, Mummy. I hope you're both OK.
0:27:21 > 0:27:24Love you loads, both. See you soon, bye.
0:27:32 > 0:27:36No senior banker in the UK has ever been prosecuted for fixing Libor.
0:27:39 > 0:27:43I think that they don't want to go after the guys at the top,
0:27:43 > 0:27:45so they come for the low guys
0:27:45 > 0:27:48and then just leave the top guys to float away.
0:27:51 > 0:27:53To the bankers who've been prosecuted,
0:27:53 > 0:27:57there's a huge double standard in the Libor blame game.
0:27:59 > 0:28:04It's now clear the scandal of the big bank fix goes far higher than
0:28:04 > 0:28:06the banking establishment ever wanted us to know.