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Philippe Moryoussef is on the run for a crime that might not exist. It's a scandal that leads back to the centre of the 2008 financial crisis

Philippe Moryoussef was convicted of what was to be a conspiracy to manipulate interest rates. But experts say there was no crime

Graphic of Philippe Moryoussef and Rigged book cover on green background

Philippe Moryoussef makes an unlikely fugitive from the law. He’s not hiding out in a cave in a mystery destination in Afghanistan or Bolivia. He lives in an apartment in the centre of Paris; if you walk around the corner you see the Eiffel Tower a short distance away, looming large. Sharing his home are his wife Karine, and their two sons who attend a local school. From the outside it looks like he leads a more-or-less normal life.  

But Moryoussef’s situation is anything but normal. No one will employ him. If he came to the UK, he’d stand a good chance of being handcuffed, bundled into a police van and sent directly to His Majesty’s Prison, Wandsworth. That’s because he’s been on the run from British justice ever since he was found guilty of ‘manipulating’ interest rates by a jury at a London trial – a trial at which he wasn’t present to defend himself because he chose not to turn up. 

But Moryoussef had his reasons for not attending. His supporters say that far from being a fraudster, he’s one of a number of victims of an international cover-up at the top of the financial system, that’s led to a series of miscarriages of justice.  

“I don’t want to criticise British justice as a whole,” he says. “But in this story, it has been frightening. You know, I believed in the justice system, I went through all the hearings before the trial. I spent a lot of money on lawyers, believing in my innocence. But I was trapped, at every stage of the process.” 

A former trader for Barclays Bank, Moryoussef was on a trading floor in the City of London in October 2008, when something extraordinary happened. At the peak of the banking crisis, central banks and governments swept away the normal rules. He can point to clear evidence that the UK government, Bank of England, the Banque de France, the Italian and Spanish central banks and the European Central Bank took part in a ‘manipulation’ of interest rates hundreds of times larger than what he and his co-defendants were accused of.

The biggest interest rate ‘manipulation’, in other words, was state-led. In Rigged, a newly published exposé of the scandalous secret history of interest rate rigging, the evidence is revealed in audio recordings of phone calls where crimes are allegedly committed, email chains, text exchanges and transcripts of FBI interviews. It proves regulators and banks’ legal departments knew all about it. (The ECB, Banque de France, Banca d’Italia and Banco de España declined to comment on detailed allegations put to them ahead of the book’s publication, as did the Bank of England. HM Treasury said it didn’t order individual banks to manipulate interest rates.) 

Yet when MPs inquired into it in 2012, Parliament was never told about the evidence pointing to central banks and governments, including our own. Instead, the US Department of Justice and the Serious Fraud Office went after 37 traders and brokers including Moryoussef, prosecuting them for something much smaller which no one at the time, including the regulators and central banks, had thought of as a crime.

After reading the book, senior MPs across the political spectrum have voiced concern that Parliament may have been misled, with crucial evidence withheld from MPs and the public, leading to a whole series of miscarriages of justice. Top TV journalist Michael Crick has called the story “one of the greatest scandals of modern times”. 

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I first saw Moryoussef behind bulletproof glass at Westminster Magistrates Court in January 2016, where he was sitting in the dock alongside five others who were being charged in what the SFO said was a conspiracy to manipulate interest rates. There were 11 defendants. But five of his fellow-accused, who lived in France or Germany, never turned up. 

“If we came to London to hear the charges against us, it was because we were convinced we could prove our innocence at a trial. In fact, we didn’t even expect it to get that far,” Moroccan-born Moryoussef says.

Unlike the absentees from the dock, Moryoussef put his faith in the English courts. To him, the SFO’s case didn’t make any sense. He was just doing a routine clerical chore that was part of his job. No one at the time thought of it as a crime. The charge was ‘conspiracy to defraud’. But there were no victims. No one could prove what you’d normally need to prove to jail someone for fraud: that he’d made money by making false or misleading statements.

Moryoussef was sentenced to jail for ‘manipulating’ an interest rate called Euribor. What does that mean? Bear with me: the homework is worth it. Each day at 11am, cash traders at 46 banks from Canary Wharf to Paris to Frankfurt answer a question, “at what interest rate could you borrow cash?” – in this case, euros. They publish their answers (eg Barclays says “3.43%”, Lloyds says “3.44%”) and an average is taken to get Euribor. Just like the FTSE 100 tracks the prices of shares, Euribor tracks the interest rates banks are paying to borrow cash from each other. Millions of mortgages and commercial loans have interest rates linked to it. 

The cash traders, who borrow and lend large sums all day, are supposed to base their published estimates of the interest rates they’d pay on the offers being made by other lenders. Now if you or I shopped around for a loan, the interest rates we’d be offered wouldn’t be at exactly the same rate. Sainsbury’s Bank might offer you a loan at 4.5% while Lloyds offers you one at 4.7%. If I then asked, “how much would it cost you to borrow?” then any of those rates would be an accurate answer to the question. There’s nothing to choose between them.  

It’s the same for the banks. Each day, the offers in the market differ from each other by tiny amounts – a hundredth of a percentage point or two (eg Bank of China Beijing offers to lend euros at 4.21%; JP Morgan at 4.23%). So how would you choose between those accurate answers to the Euribor question – at what interest rate could you borrow? Well, you could flip a coin.  

Traders like Moryoussef had big trading positions – investments which could make or lose money based on what happened to Euribor. If his position would benefit from a higher Euribor average, he’d send a request to the Barclays cash traders along the lines of: “Could I pls have a high today?” They might then agree to put in a higher, accurate estimate of the cost of borrowing – knowing they could borrow money at 4.23% with JP Morgan. Or if he asked for a low rate they might put in 4.21%. In other words, their published estimates of the interest rates they’d pay to borrow cash would be accurate, but also influenced by their bank’s commercial interests. Even if they agreed to his requests, it probably wouldn’t make any difference to the average when 46 banks were involved. But conceivably it might nudge it up or down by a thousandth of a percentage point, which might make the bank a small sum if his trade was a big enough bet. So it was worth sending an email. 

Everyone was doing this. We didn’t invent that practice

Philippe Moryoussef

He was among hundreds of traders in the City of London, Wall Street, Frankfurt, Paris, Zurich and Tokyo making requests like these. “Everyone was doing this from the time I started on the trading floor in the 1990s. All day long I was hearing, ‘I need a low’; or ‘I need a high’. We didn’t invent that practice!” Moryoussef says.  

The bank’s top bosses knew about it and approved of it. They even seated traders close to the cash traders publishing Euribor estimates to make it easier for requests to be made. But no bank bosses were prosecuted. Only traders. 

It was the US Department of Justice (DOJ) that first declared in 2012 that requests like Moryoussef’s were illegal, without fully understanding what it was looking at, sparking a huge uproar in Parliament where public anger towards banks for the 2008 banking crisis burst into the open, triggering tabloid demands that bankers be jailed. That uproar wrecked his life. Moryoussef, now at another bank, was sacked. Barclays handed much of the evidence to be used against him to the SFO.  

“The case against them was nonsense,” says Karine, who also worked in banking when they met. “I knew Philippe didn’t do anything wrong. But the shock was massive, because he lost his job in a second, his name was everywhere, in all the papers. We had to explain everything all the time – we lost friends – and Philippe was traumatised, not leaving the house for months. Every day, like a mantra, I repeated to him: remember who you are, remember who you are. Because what matters is that you are not lost inside. Because when you need to fight, you need clarity. And when something is too much of a shock, you lose clarity.” 

Top bank executives and lawyers from Lloyds to Deutsche Bank used shareholders’ money to pay nearly $9 billion in fines, going along with the DOJ view that any such requests amounted to dishonest ‘manipulation’ of interest rates. But much later, in January 2022, a US appeal court ruled that, actually, the requests didn’t break any rules let alone laws. Since then, the US Department of Justice has turned tail, asking the courts to overturn convictions, even when the defendants pleaded guilty. They’re that confident that the prosecution case was wrong all along. The UK is now the only country in the world where what Moryoussef did is regarded as illegal. 

He did turn up to all his pre-trial hearings in London – until it became blindingly obvious to him that he didn’t stand a chance of a fair trial. The SFO’s accusation was that any requests like the ones he made to influence his bank’s estimate of the cost of borrowing euros were dishonest, because they were against the Euribor code of conduct, which didn’t allow cash traders to take into account trading positions like Moryoussef’s. So he and his fellow defendants tracked down the founders of Euribor – Helmut Konrad and Jean-Pierre Ravisé – and the very same man who wrote the code of conduct, Nicolas Bömcke. “They all read our chats and said it was all fine – within the rules – it was how it was expected to work.” 

The founders of Euribor were shocked at what the English courts were doing and offered to be witnesses. They wrote statements testifying that requests like Moryoussef’s actually resulted in a fair Euribor average – because all the commercially influenced Euribor estimates, when averaged together, would offset each other. It was how the system was supposed to work. 

But the SFO argued it was down to the judge, Michael Gledhill, to decide whether traders’ requests breached the Euribor code of conduct. He didn’t need to hear the views of the man who wrote it. Gledhill agreed. (Gledhill was asked for his comments on passages in the book, but declined on the basis of the convention that judges don’t comment publicly on cases they’ve presided over.) 

It was at that point that Moryoussef and others threw up their hands. It looked to them like the judge was determined to keep them in the dock, regardless of what the experts said. There was no escape. He decided his lawyer would write to the judge saying he wouldn’t turn up to his trial and spelling out why he thought he didn’t have a fair chance to prove his innocence.  

“I felt so free in my mind when I decided not to attend the trial. It was like the best decision in my life. Actually, at that moment, for the first time in years I realised I was in control – not them. You understand that feeling? You are in control? Because everything had felt so out of control for so long. They were driving the bus. We hadn’t been in control. Now, I thought, ‘You’re not controlling me any more!’” 

Furious, Gledhill said Moryoussef’s decision was “an affront to justice”, ordering that he be tried in his absence. At the trial, all his requests were portrayed by prosecutors as wrong as a matter of law (as decided by Gledhill). The jury returned a guilty verdict. Gledhill sentenced him to eight years.  

In 2020 the Serious Fraud Office revived its attempts to have Moryoussef arrested. A Paris court was petitioned to execute a European Arrest Warrant and bring him to London. But then as he waited in a cafe ahead of the hearing that might send him to jail, his lawyer François de Castro arrived with a big smile, saying “Philippe, do you believe in God?” The SFO had just that morning decided to drop all charges against his co-conspirators who’d never turned up to face charges in the first place. Knowing that, the French court later refused to execute the warrant. Had he done the same as the absentees, and stayed away from the English courts in 2016, he’d have been free of any stain of criminality. His big mistake? He’d put his faith in the British justice system. 

On 6 July 2023, the body that reviews allegations of miscarriages of justice, the Criminal Cases Review Commission, decided after six and a half years to refer the conviction of Tom Hayes, the first trader jailed for ‘rigging’ interest rates, back to the courts, giving Moryoussef a slight, distant hope that maybe, possibly, justice might one day prevail. The same day, he received a text from Barclays International Banking:  

“Dear Mr Moryoussef,  

We wanted to take a moment to wish you a Happy Birthday from all the team at Barclays International Banking. We hope you have a wonderful day.”  

Clearly, no-one told the algorithm about his ‘criminal’ past. 

Rigged book cover

Andy Verity is a financial journalist and economics correspondent. His book Rigged is out now (The History Press, £25). You can buy it from The Big Issue shop on Bookshop.org, which helps to support The Big Issue and independent bookshops.

This article is taken from The Big Issue magazine, which exists to give homeless, long-term unemployed and marginalised people the opportunity to earn an income.To support our work buy a copy!

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