by David Enrich
Spooked, Hayes called his old Tullett broker Noel Cryan. “Have you heard anything?” he asked. “Apparently I’m being investigated.”
“Mate, yeah,” Cryan said. “I mean, obviously the rumors are rife.” Cryan mentioned that British regulators had been searching through the brokerage’s e-mails.
“I think they’re building a case and I could get a knock at the door any morning,” Hayes said. He added: “Can we meet up?”
Cryan paused. He had never liked Hayes much, and now, he knew, the guy was toxic. “To be quite honest, I’m not going to meet you, no.” Then he added: “I’d rather you didn’t call me either because I’m not comfortable with it.”
* * *
In early December, despite feeling put off by the British government’s foot-dragging with Justice’s interview requests, McInerney placed a courtesy call to the SFO in the interests of transatlantic harmony. He gave Green a heads-up that Justice planned to file criminal charges against Hayes and another person on December 12. (That other person was Roger Darin. Though the two men loathed each other, the United States had collected gobs of evidence that showed them working together to move UBS’s Libor submissions. Justice concluded it was important to charge more than one person in order to show that this was a conspiracy, not just a lone bad guy.) The charges would be filed under seal, before being unveiled roughly a week later, McInerney explained.
“OK, fine, thank you,” replied Green. Unless the SFO moved swiftly, it was about to lose one of the investigation’s easiest targets—someone who also happened to be a British citizen—to the Americans.
Chapter 16
A Crook of the First Order
Hayes, Tighe, and Joshua had finally moved out of the child-unfriendly Sugar House apartment over the summer. But the renovations of the Old Rectory were dragging on longer than expected, so they had temporarily relocated to Tighe’s parents’ home. Finally, in early December, the Old Rectory was ready to be occupied, more or less. Construction debris still littered the property, and some work was still under way, but it was better than living out of suitcases and feeling like nomads. Movers unloaded scores of boxes into various rooms, and over the next week, the couple got to work unpacking.
The night of December 10 was freezing, with temperatures dropping into the mid-20s—unusually cold for southern England. A thin layer of snow dusted the ground outside the Old Rectory. A little before 7 a.m. the following day, Tighe was starting her morning routine; there really was no hurry, as neither she nor her husband, who remained in bed, had jobs to go to. Just then, a loud banging on the front door startled them both. Hayes assumed it was construction workers showing up for work early. He got out of bed and looked out the second-floor window. It was still dark outside—the sun wouldn’t rise for another hour—but his curving gravel driveway was ablaze with floodlights. The snow and ice sparkled.
Tighe, maneuvering around the unpacked boxes in the foyer, made her way to the door. A crowd of uniformed and plainclothes police officers entered. Hayes padded downstairs in his underwear. An officer presented a warrant for his arrest, saying he was accused of manipulating Libor. The officer pronounced it “lee-bore.”
Hayes couldn’t help himself. “You mean LIE-bore?” he blurted, correcting the officer’s pronunciation. Tighe commanded him to return upstairs and get dressed. The police permitted him to eat a piece of toast and drink a cup of tea before they drove him the twenty traffic-choked miles into central London. Their destination was the Bishopsgate Police Station, a stout cement building directly across the street from the RBS offices where Hayes had started his banking career more than a decade earlier. In a custody suite while he was waiting to be booked, he was with two other arrestees: One, in handcuffs, was suspected of sexual assault. The other, slim and with short, graying hair, turned out to be Gilmour, who, along with Farr, had been picked up at his Essex home in a similar raid early that morning. Hayes had never before seen Gilmour, although he’d occasionally communicated with him in electronic chats, and had always pictured him as being fat and pink-faced, like Wilkinson. The surprise allowed for a moment of distraction, but not much more.
Hayes was escorted to a small cell, where he was left alone. There was a metal toilet and a bed with a thin mattress. Weak winter light filtered in through a small window. Hayes kept pressing a button on the wall, summoning an officer and asking for cups of tea. He spent the day pacing back and forth.
Back at the Old Rectory, Tighe called her husband’s lawyers. Then she phoned Emma, who by then was at the school where she taught. When Tighe told her sister what had happened, Emma was floored. She had no idea things were so serious; ever since Hayes had been fired, the couple had downplayed the severity of the situation. The police who had remained after Hayes was taken away spent the next nine hours rifling through unpacked boxes and photo albums and carting away computers, Hayes’s phone, and other electronic devices. Trying to avoid scaring her fourteen-month-old son, Tighe managed to maintain her composure.
Hayes’s attorney Lydia Jonson arrived at the police station early that afternoon. She advised him not to answer any of the SFO’s questions.
At 5:30 p.m., Hayes was escorted into Interview Room 3 at the police station. Gilmour had already been brought into another room nearby and informed that he was suspected of conspiring with Hayes and Farr. He spent nearly three hours walking a pair of SFO investigators through eighty-five pages of evidence they’d gathered—e-mails, chat transcripts, phone recordings. Gilmour did his best to be helpful and insisted, over and over again, that he had just been doing his job. (Farr had declined to answer any of the questions during his three-hour interrogation.)
Two SFO investigators plopped an accordion file filled with 112 pages of documents on a metal table in front of Hayes. They explained that he had been arrested because he was suspected of conspiring with his RP Martin brokers to manipulate yen Libor. Jonson read aloud a brief statement saying that Hayes didn’t wish to comment at this stage, and then the agents outlined their case against Hayes. They quoted from electronic chat transcripts. They showed his trading records. They played recordings of him on the phone with other traders and brokers, the conversations peppered with what an SFO agent named Matt Ball apologetically described as “quite industrial language.” Each piece of evidence was followed by questions, and each time, adhering to Jonson’s advice, Hayes replied: “No comment.” The process ground on for hours. Hayes struggled to contain his frustration. “Still got another bloody 75 pages of this, yeah?” he remarked at one point.
“We’ll get through it as quickly as we can,” answered the tall, lumbering Ball, who had worked at the agency as an investigator for the past decade.
“You’re going to need a full day,” Hayes muttered. The interrogation wrapped up around 8:30 p.m. He was offered one last chance to speak before being released on bail, with his passport held in escrow. “Not at this stage,” he said. “I’m biting my tongue.”
* * *
The SFO issued a press release that morning announcing that it had arrested three British men as part of the Libor investigation—the first arrests, anywhere in the world, connected to the long-running case. The agency didn’t identify the men, but it listed their ages and the counties in which they’d been arrested. It didn’t take long for the media to figure out—and then publish—their names.
Inside the Justice Department headquarters and the Bond Building, word traveled fast about the SFO’s arrest of Hayes. The reaction was swift and unanimous: outrage. The British agency clearly was trying to mark its territory. It was all the more galling because Justice not only had done much of the legwork on the investigation but also had tipped off Green about the U.S.’s impending charges—which seemed to be the only thing that motivated the arrest. The consequences were significant: If Hayes was under criminal investigation in England, the likelihood of a British court agreeing to extradite him to the United States to face a similar case was small. And with his passport having been s
eized, there was no chance Hayes could come to the United States and cooperate with the prosecutors on his own volition. Just like that, their lead suspect—someone whom the fraud section and FBI had spent nearly two years building a case against, collecting evidence, interviewing witnesses, even placing entrapping phone calls—had essentially vanished.
McInerney left Green a blistering voice mail complaining about the SFO swooping in to steal Justice’s primary target. Green never called back. The U.S. State Department was enlisted to lodge a formal protest with the British cabinet secretary responsible for diplomatic affairs.
The next day, the fraud section filed its criminal charges against Tom Alexander William Hayes—as well as his old nemesis, Darin—under seal in a Manhattan court. The still-secret complaint included a long affidavit by an FBI special agent summarizing the evidence and attesting to the defendants’ alleged wrongdoing. Near the end, it quoted Hayes telling Alykulov not to talk to the feds.
* * *
Hayes was confident that his arrest was just a big misunderstanding. (Always superstitious, he blamed it on the mysterious disappearance of a lucky T-shirt emblazoned with the words Destined for Glory and the QPR logo.) Tighe, uncharacteristically, was similarly sanguine. Everything would be cleared up, they told themselves, once Hayes presented his side of the story. Sure, the things he was accused of doing might look bad to an untrained eye, but there were legitimate explanations. Everyone in the industry was doing more or less the same thing. Hayes was following orders. His bosses knew what he was up to. They didn’t object; in fact, they were doing it, too.
The day after the arrest, Tighe discovered a small round hole in the ceiling of the master bedroom. And she noticed that their baby monitor had started producing lots of noisy feedback. Hayes went out and bought a disposable phone. From his yard, he called Jonson and told her that he was going to scour the house for electronic bugs and destroy any he found. Don’t do anything of the sort, Jonson warned. (It turned out that one of her colleagues, when he arrived at the Old Rectory following Hayes’s arrest, had spotted a police officer placing what he thought might have been a bug on one of their Mercedes cars.) She told him and Tighe not to talk about the case on the phone or in the house or car. At Jonson’s suggestion, they paid a former British intelligence officer £3,500 to sweep the house for eavesdropping devices. He blasted classical music to trigger sound-activated devices while he walked from room to room, scanning the house with eavesdropping detection equipment. The search came up empty. Hayes, feeling better, mugged for a goofy photo wearing the ex-spy’s headphones and other equipment.
The relative calm was reinforced a few days later. Hayes had hired a hotshot attorney to represent him in the United States: Steven Tyrrell, who was McInerney’s predecessor as the chief of Justice’s fraud section and now was a high-priced criminal defense lawyer. Tyrrell set up a meeting with his former colleagues, whom he described as his “old friends.” On the night of December 18, he reported back to Hayes and Jonson with good news. The U.S. prosecutors were furious with the SFO for not giving them a heads-up on Hayes’s arrest. But, Tyrrell said, he “would be very surprised” if Justice was poised to take action against Hayes. It “just doesn’t seem that they would be at a point where they would be ready.”
* * *
The next day, Hayes and Tighe stayed home working on his defense. They went through all the questions the SFO had asked him at the police station, which provided a helpful glimpse of the case prosecutors were assembling. Sitting together at the kitchen table, the couple pulled together answers and explanations to each query. Then, in early afternoon, big news landed: UBS had agreed to pay an enormous $1.5 billion to settle the Libor manipulation case. The deal—which made UBS the second bank, following Barclays, to resolve the investigation—was the product of weeks of frenzied negotiations between the Swiss bank and U.S. and British authorities, who wanted to announce a settlement before the Christmas holidays. UBS’s punishment was more than three times larger than the one imposed on Barclays, and the bank’s Japanese subsidiary had agreed to plead guilty to criminal charges. That represented a minor breakthrough for American prosecutors, who had managed to overcome some of their fears of charging a company—albeit only a very small part of a very large company that wasn’t based in the United States.
UBS’s spin doctors described the episode as the work of a few bad apples, not the latest devastating indictment of the entire company’s practices and culture. In a briefing session with journalists before the deal was even announced, a senior executive branded Hayes as the entire Libor scandal’s “evil mastermind.” It was just UBS’s bad luck to have hired such a criminal genius.
When the settlement was announced, Tighe shifted gears. She printed out a copy of the documents detailing the U.S. and British governments’ cases against the Swiss bank. With Joshua balanced on her lap, she went through the files, marking them up with a yellow highlighter. She was relieved. They made it clear that Libor-rigging was widespread. Her husband wasn’t even named. The reports from various regulators were sprinkled with vague references to the involvement of unnamed higher-ups at UBS. It seemed like a get-out-of-jail-free card for her husband. After all, who could blame Hayes for doing something that everyone, including his superiors, knew about? For a few happy hours, the family’s crisis seemed to be easing. She and her husband had no idea that UBS was already presenting Hayes as a master con man who manipulated not only the market but also his own innocent employer.
That evening, Tighe was in their shiny new kitchen preparing a joint of roasted lamb for dinner. Hayes sat in what he had already designated as his favorite chair, in the breakfast nook just off the kitchen, puttering on his Apple laptop. A news alert popped up. He clicked the link. A video of the U.S. attorney general at a press conference in Washington started playing. Hayes watched for a few moments, a horrified lump rising in his throat.
“Sarah, I’ve been charged by the U.S.,” he announced.
It didn’t compute. “What did you say?” she asked. “What did you say?” she asked again, her voice rising to a shriek. “What did you say?”
“I’ve been charged by the U.S.,” he finally repeated. His face went gray. His eye started twitching.
Tighe’s legs wobbled. Then she vomited.
* * *
Late that afternoon, Roger Darin was at home in a Zurich suburb when his phone rang. On the line was Bruce Baird, his UBS-appointed lawyer in Washington. Baird was best known for his time as a federal prosecutor in New York, when he led the criminal prosecution of Michael Milken. He subsequently became a white-collar defense attorney. Baird had known that Darin was in legal jeopardy in the Libor case, because Justice had refused to grant him immunity; in fact, the investigators hadn’t even interviewed him. That couldn’t be a good sign. But Baird had doubted his client would actually be charged anytime soon, at least not without someone placing a courtesy call to the well-connected lawyer. But when Baird tuned in to Justice’s press conference, he heard the prosecutors announcing that they were charging two men: Hayes and Darin. Baird was stunned and angry. He took a deep breath and called his client, bracing for an awful reaction. To the lawyer’s surprise, though, Darin’s response was muted. He seemed to take it in stride. Perhaps, Baird figured, it was just his unemotional Swiss-German nature? Or maybe he was in a state of shock. Baird had learned over the years that it was nearly impossible to predict how people would react to horrible news. And this certainly was horrible news.
* * *
The next day, Hayes traipsed into London for a noon meeting with his lawyers. A soft rain was falling. The American charges called for an immediate pivot in the team’s legal strategy. Notwithstanding the SFO’s arrest, the United States planned to seek Hayes’s extradition in January. The top priority became avoiding being shipped off to the United States, where he figured he would inevitably be convicted and spend decades rotting in a violent prison, thousands of miles from his family. Now, his lawyers told hi
m, the key was to lay the groundwork for being charged by the SFO before he could be extradited to the United States; under British double jeopardy rules, that would largely take extradition off the table.
Already that morning, Pearce had called Ball at the SFO. He said the Hayes camp was eager to set up a meeting as soon as possible to discuss the possibility of cooperating. “We don’t want there to be a tug-of-war over Tom,” Pearce said, adding that he agreed with the SFO that his client should face the charges against him in London. “SFO want you here and not going anywhere else,” Pearce reported to Hayes a few hours later, framing this as “[g]ood news in a bad situation.”
* * *
Despite the criminal charges, the settlement with UBS was not met with relief or acclaim by the public; indeed, it seemed yet another example of a big bank buying an indulgence. In early January, a British parliamentary committee held hearings on the deal. A number of past and present UBS executives were called to testify, and following the playbook, they pointed the finger at one former employee in particular. A British lawmaker, Nigel Lawson, blasted Hayes as “a crook of the first order.” A top UBS executive at the hearing, Andrea Orcel, smiled and nodded in agreement. UBS’s head of compliance, Andrew Williams, said that “clearly his conduct was reprehensible. I think it’s fair to say we were all disgusted by it.”
Alex Wilmot-Sitwell, who had helped persuade Hayes not to jump to Goldman back in 2008 and had now become a top executive at Bank of America, was another witness. “I don’t recall him,” Wilmot-Sitwell said of Hayes. “I never met him.” For good measure, he added that he wasn’t even sure Hayes worked at UBS at the time that Wilmot-Sitwell was co-head of the investment bank. Hayes watched the testimony on TV, not believing the dissembling he was hearing. Carsten Kengeter—Wilmot-Sitwell’s counterpart who had played such an active role convincing Hayes that he was a star and shouldn’t defect to a rival—wasn’t even summoned to the hearing.