LIBOR sentencing may herald a tough approach for financial crime such as bribery
Posted on 5th August 2015
It has already been well documented that the 14 year sentence imposed yesterday on trader Tom Hayes, for manipulating LIBOR is higher than many of the sentences imposed on other financial wrong-doers.
For example, infamous rogue trader Nick Leeson – the man who brought down Barings Bank received 6 and half years in the 1990s. Jérôme Kerviel, who lost Societe Generale nearly 5 billion euros, was given 3 years and UBS rogue trader Kweku Adoboli was jailed for 7 years in 2012. (At that time, it was regarded as the largest fraud in British history.)
Bribery has its own statutory regime, though, and section within the sentencing guidelines for financial crime. As set out in Bribery: A Compliance Handbook, (chapters 4.6 and 7), the maximum sentence is 10 years’ custody, and the sentencing guidelines are comprehensive.
The most serious cases are those where a defendant had a leading role with a sophisticated mechanism of conducting the bribery and probably significant planning. There would tend to be other factors present, such as substantial financial gain to the individual or serious loss to others. Such cases would be regarded as ‘Category 1a’ cases, where the sentence could range between 5-8 years in prison.
The sentencing guidelines, at their lowest level, are for those with a limited involvement, a ‘one-off offence’ where the consequences or harm are limited and where prison can be avoided.
Corporate offenders beware
Nevertheless the LIBOR sentencing follows closely the Court of Appeal case of R v Thames Water Utilities EWCA Crim 960. This was in the separate field of environmental crime rather than financial, but the court examined what should be done when a corporate offender’s turnover is so large that it falls outside the scale set down in the relevant sentencing guidelines. The court said that fines levied against very large companies ‘had to bring home the appropriate message to directors and shareholders of the company’. The Court upheld a £250,000 fine and said that such penalties could go as high as 100% of pre-tax profits.
Whilst it is accepted that neither of these cases were in the field of corruption, it does mark, in my view, a clear direction by the courts that individuals accused of financial crimes or corporations failing to comply with regulations, are in for a tougher ride than they used to be.
This blog first appeared on Bloomsburylawonline.com.