Conservative MP Sir David Davis has said the judicial system “needs a shake-up” after describing the convictions of two former financial market traders as a “major scandal”.
Tom Hayes and Carlo Palombo were found guilty over benchmark interest rate rigging in 2015 and 2019 respectively, but had their convictions quashed at the Supreme Court on Wednesday.
The former UBS trader and the ex-vice president of euro rates at Barclays bank were said to have manipulated the London Inter-Bank Offered Rate (Libor) and the Euro Interbank Offered Rate (Euribor).
Speaking at a press conference following the Supreme Court judgment, Sir David described the two men as “scapegoats for the sins that led to the financial crisis”.
He said: “The implications are far-reaching and of course have been devastating for those caught up in it.
“There were several other people convicted of rate rigging, dozens of others who were either prosecuted, acquitted or not prosecuted. Their lives were upended too.
“This scapegoating exercise happened as a result of collusion between the banks and government agencies, including the SFO (Serious Fraud Office) and FCA (Financial Conduct Authority) and we’re not done with that.
“This scandal also highlights the need for urgent reform within our justice system on a range of issues – the handling of expert witnesses right through to the rigidity of the appeals system.”
In an 82-page judgment, with which Supreme Court president Lord Reed, Lords Hodge and Lloyd-Jones and Lady Simler agreed, Lord Leggatt said judges’ misdirection to the juries had led to the men’s wrongful convictions.
He said: “The history of these two cases raises concerns about the effectiveness of the criminal appeal system in England and Wales in confronting legal error.”
Sir David said the Supreme Court justices “did not unpack” why the appeal system fell into error in these cases.
He said: “I think the judicial system needs a shake-up, and this is the latest demonstrator of it, and we will be returning to it in the future.”
Mr Hayes said he believes the trials of the two men became caught up in the politics of the financial crisis, adding that there was a “big desire from institutions and politicians, acting in their own interest largely”, for traders to go to prison.
Asked about his thoughts on what role juries play in cases like his and Mr Palombo’s, he said it was a “dangerous idea” for complicated fraud and financial cases to be heard only by a judge.
The former trader added: “The jury is the last defensive barrier that every citizen in this country has between them and a wrongful conviction.
“And are juries perfect? No, they’re not. Do they make mistakes? Yes, they do. And you know, it’s the best of a whole load of options, none of which is perfect.”
Ben Rose, part of Mr Palombo’s legal team, said Wednesday’s Supreme Court judgment is “likely to offer a route” by which others who have been convicted in similar circumstances “can right the wrong that has been done to them”.
He also said there was a “fundamental error” in the way the case was prosecuted and that the role of the jury was “overridden and usurped” by the judges.
The lawyer added: “That should not happen in a country that abides by the rule of law.”
