No sooner had the cell doors clanged shut on the hapless Tom Hayes at Southwark Crown Court, then a whole group of City apologists was queuing up to protest that his sentence was too long!
I suspect that much of the angst being felt by what are clearly a lot of over-paid suits with City connections, has been caused by what appears to be the inordinate length of the prison sentence meted out to this dysfunctional man.
The message being relayed by them is that such sentences contain far too Draconian a content for offences of mere dishonesty. In making this distinction, these uninformed observers demonstrate their own ignorance of the law, but also amplify the fact that to their class and milieu, they think that dishonesty is a lesser crime than say rape, or murder.
They seek to make these fine distinctions because they have for too long, been imbued with the cultural sensibility that cheating and stealing, as long as it takes place within the elevated environs of the Square Mile, and within the private rooms of the financial elites, is to be treated somehow differently from crimes committed in the back streets of Peckham or Mile End!
I was interviewed on Radio 2 yesterday afternoon together with just such a person, a barrister who felt that the sentence was far too long; who tried to draw distinctions with crimes of violence, and who started wittering on about whether Hayes would be rehabilitated by such a sentence.
I once interviewed under caution and on tape, a City solicitor whom I had arrested for his part in creating and running a complex derivatives fraud. He said to me that he had always believed that what he was doing would be treated more leniently and with greater discretion because it was carried out in the name of a commercial exercise, and that he had always expected the City Fathers to be generally more responsive and understanding to men of his class and social status.
I was delighted to disabuse him of that perception.
Tom Hayes has been the architect of his own lengthy prison sentence. His criminal actions put him firmly in the main arena for such a sentence by the egregious nature of his trading activities, the length of time during which he had been engaged in such dishonesty, the amounts of money involved and the criminal proceeds generated, and his subsequent conduct. He fits the sentencing guidelines perfectly!
A good friend of mine writes and disagrees with me that the sentence might be a deterrent. He too is a barrister, (we studied together many years ago) and he states;
“...I can find no evidence that supports the notion of deterrent sentencing. My understanding of criminology was that criminals do not fear the sentence they fear getting caught. In the case of Libor fixing it was clearly endemic but I doubt that many are quaking in their boots about 14 years or being caught. The next step surely is to get Hayes to convict others through his testimony with the inducement of a reduced sentence...”
In some respects, he is correct, so I am going to spend a little time trying to demonstrate why I believe this sentence will operate as a deterrent. First, however, we need to examine the behaviour of Tom Hayes himself, because it is from that direction, much of his present predicament has emanated.
As I enunciated yesterday, Tom Hayes thought he could game every system that prevented him from getting his own way. He succeeded with LIBOR, but he failed dismally with the legal process. His supreme arrogance in believing that he could hoodwink the SFO and the Courts into giving him his own preferred outcome, could have come straight from the pages of ‘The Bonfire of the Vanities’!
In his own admissions in court, Hayes was faced with two alternative options. He could wait to be extradited to the US where he would face an appalling choice of being sentenced to over 90 years in gaol, or trying to find a way of getting the SFO to charge him in London.
He worked out that the best way of getting charged in the UK, and thus being tried here, was for him to make a full cooperating agreement with the SFO.
By offering to co-operate, Hayes could have expected a third off any sentence if he had pleaded guilty at the earliest possible opportunity. It certainly looked as if that was what he was planning to do when, in the spring of 2013, he made a series of admissions as part of what is now called a SOCPA – Serious Organised Crime and Police Act Agreement, or what was, in effect, a plea bargain in which Hayes agreed to give evidence against alleged co-conspirators.
By entering into this agreement, Hayes was formally informing the SFO of his willingness to co-operate and give evidence against others. In turn this was an early encouragement to the SFO to charge him in the UK, thus effectively pre-empting his extradition to the US.
So far, so good, but what the SFO could not have known was that Hayes had no intention of keeping his side of the bargain. He had got what he wanted, a trial in the UK, and he must have been congratulating himself on the effectiveness of his plan and his superior intelligence in hoodwinking the prosecutors.
For the purposes of clarity, I am quoting (in italics) from selected extracts of the “...SOCPA Agreements: Practical Note For Defence Advocates...”
The process for accepting an offer of co-operation in complex and convoluted.
The decision is not just made after any old casual conversation with an accused but only after a complex series of procedures have been entered into.
The decision whether it is appropriate to offer a formal written agreement in any particular case is entirely that of the specified prosecutor.
The criteria to be considered in determining whether it is appropriate to grant immunity to a witness are as follows:
- Whether, in the interests of justice, it is of more value to have an offender as a witness for the Crown rather than as a possible defendant;
- Whether, in the interests of public safety and security, the obtaining of information about the extent and nature of criminal activities is of greater importance than the possible conviction of an offender;
- Whether it is very unlikely that any information could be obtained without an offer of immunity and whether it is also very unlikely that any prosecution could be launched against the offender to whom the immunity is offered.
Formal notices and agreements will usually only be signed after the offender has been interviewed under caution and provided at least a version of the information available.
The investigator will seek to obtain sufficient information to assist a specified prosecutor to decide if an agreement is suitable; this will either be through the offender's legal representative or through direct contact with the offender.
Having obtained a provisional view from the prosecutor, investigators will proceed to conduct a "scoping interview" interview to ascertain, among other things, the reason(s) for the offender requesting or agreeing to be interviewed and the extent to which the offender can give evidence or intelligence.
The scoping exercise will need to identify what areas the offender can assist with, and what, if any, un-prosecuted criminal activity needs to be addressed. It will enable senior officers in consultation with the prosecutor to decide whether the offender should be admitted to the full debriefing procedure.
The offender should ideally be legally represented through recruitment, scoping and debriefing and there should be full engagement with the prosecutor, who can provide assistance.
The investigator will gather the required information confidentially in order to reduce any perceived threat or risk to the offender.
The debrief unit will then refer the matter to a specified prosecutor who will consider if a full debrief should be undertaken in pursuance of a SOCPA contract.
In order to benefit from immunity, a restricted use undertaking or a witness agreement an offender must:
- fully admit their own involvement in the crime or crimes under investigation;
- provide the investigators with all information available to them regarding the matters under investigation and those involved;
- agree to maintain continuous and complete co-operation throughout the investigation and until the conclusion of any criminal or other proceedings arising from the investigation, including giving evidence in court where appropriate.
Those offenders who are to give evidence for the prosecution and who wish to benefit from a written agreement will be required to admit their criminality fully. This process, often called "cleansing", should be part of the de-briefing process carried out by the investigating agency in the process of obtaining the evidence of the offender.
Hayes would have gone through all these processes before appearing at Court, hence the reference to the 82 hours of formal de-briefing interviews he undertook with the SFO.
Throughout this process, it appears that Hayes was always intending to go back on his agreement with the SFO, and plead ‘Not Guilty’ and try and game the Court proceedings as well. This is what I call really ‘dumb’, because Hayes could not have ever argued that his admissions were solicited from him by a trick or cheat, and by entering into this agreement and by talking to the SFO, he was laying out his guilt for everyone to see.
The SFO must have been incandescent with rage when they discovered his real intentions at the last minute, and it is all credit to them that there was no leak of this grotesque breach of legal process.
However, the Judge would have been fully aware of the behaviour of the defendant, and no doubt this cavalier behaviour might well have coloured His Honour’s views of Tom Hayes and his credibility.
So why do I disagree with my old barrister friend when he says that “...My understanding of criminology was that criminals do not fear the sentence, they fear getting caught. In the case of Libor fixing it was clearly endemic but I doubt that many are quaking in their boots about 14 years or being caught...”
When it comes to ordinary criminals (and I am referring here to those who might frequent the back streets of Peckham or Mile End), my friend is right when he says the greatest deterrent is the likelihood of getting caught. This amplifies the truth and wisdom of the old villain’s adage, ‘...If you can’t do the time, don’t do the crime,,,’
But in White Collar cases, and particularly in these recent City banking scandals, the accused generally share the same view as the bent solicitor I referred to earlier in this piece.
They never, at any time, ever thought they would be prosecuted or otherwise dealt with in any manner, which remotely approached the working-class deterrent of prosecution.
They considered themselves above the law, and they had been allowed for years to get away with that very view, because the State and the regulators had simply ignored their wrongdoing. They had seen others getting away with the most appalling criminal conduct and they had formed the view that such behaviour was somehow fair game in the City.
Hayes himself at some point in evidence made reference to the fact that LIBOR was an unregulated market sector (as if that made any difference)!
No, these people do not share the same qualities as ordinary criminals, and where they have never had to fear the consequences of getting caught, there has been nothing to deter them from engaging in wholesale criminal conduct.
Now they know different.
These men and women are the arch risk/reward calculators, they examine every trade to establish its risk/reward ratio, and they now know that if they continue to behave in the hitherto thoroughly criminal ways they have been used to adopting, they have the Hayes sentences to contend with as a benchmark. Of course, if they think they will still not get caught, then they may continue, but with this conviction, the SFO has bought itself a new lease of life. Government will now be keen to cash in on this conviction and I expect that the SFO will get bigger budgets in future to go after City crime. They have proven that it can be done, and we will now see a lot of guilty pleas being entered by outstanding defendants, because they are all in the same leaky boat as Tom Hayes.
The most important lesson they will learn is not to try and game the Criminal Justice system because agreements once given to the Court are not some dodgy dealer’s word of mouth deal, they are writ in tablets of stone, and you break them at your peril.
Tom Hayes left it too late to learn that lesson. He had got away with the most egregious conduct for years. He had made millions, and he must have thought himself immune from any form of intervention. How he must have sneered at the young lawyers and investigators from the SFO as he sat in their interview rooms, pouring out his crimes and misdeeds, knowing in his own mind that he was going to break his word as soon as it suited him.
If ever a man was hoist with his own Petard, it was Tom Hayes. He will spend every minute of his time inside as a marked man whose word is not to be trusted!