The fall guy: Tom Hayes, Libor and a miscarriage of justice

In August 2015, Tom Hayes, then aged 34, was sentenced to 14 years’ imprisonment after being found guilty on eight charges of conspiracy to commit fraud when working as a yen derivatives trader in Tokyo. Hayes was alleged by the Serious Fraud Office to be the grand ‘ringmaster’ of a group of traders who sought to enrich their banks and themselves by rigging Libor, the rate charged for interbank loans. His sentence was reduced to 11 years on appeal but it is still one of the longest–ever jail sentences handed out by a British court for a white-collar crime. A subsequent court hearing ordered the seizure of assets worth more than £800,000, while legal fees consumed the remains of his personal wealth including the proceeds from the sale of his family home.

Hayes, who worked for UBS and later for Citibank, was released in February last year after five and a half years in jail, having spent part of that period in high-security prisons, on several occasions sharing cells with convicted murderers. While in Lowdham Grange prison he was taken hostage by a fellow inmate seeking to obtain better medical attention. Hayes himself suffered serious mental and physical health problems and contemplated suicide.

In 2013, at a hearing of the Banking Standards Commission, the former chancellor Nigel Lawson described Hayes as ‘a crook of the first order’. But there is a growing conviction among those who have studied the evidence in depth that Hayes was engaged in normal commercial activity, that no rules were broken and no crime was committed.

To understand how such an egregious miscarriage of justice could have occurred, it is necessary to recall the public mood in the aftermath of the 2008 financial crash. It was one of outrage. As economies slowed, banks failed or teetered on the brink and unemployment rose, the desire to identify those responsible became intense.