The Spider Network

by David Enrich

  * * *

  Preparations for the trial went down to the wire. Hayes continued to hunt for witnesses to testify on his behalf. He wondered if Roger Darin might be willing to appear—sure, the men hated each other, but “we now have mutual self-interest,” he explained to an acquaintance. “It’s like Superman and Lex Luthor teaming up. . . . Sometimes your enemies’ enemy is your friend.” His lawyers dismissed the idea.

  Hayes’s team, however, remained convinced that the SFO was engaged in a cover-up by refusing to hand over millions of internal UBS documents that had been dredged up in the Swiss bank’s internal investigation. (In fact, the SFO had never actually seen the documents, because UBS and its lawyers successfully argued they were subject to Switzerland’s bank secrecy laws.) In court, lawyers debated whether the defense could use Hayes’s Asperger’s diagnosis to explain why Hayes didn’t realize that what he was doing was wrong. The prosecution argued it was irrelevant. Cooke ruled for the prosecution.

  That wasn’t the only thing upsetting Hayes. He also was frustrated that his lawyers weren’t interested in using the spreadsheets he had constructed that showed that his trading partners were almost entirely other banks and that his brokers didn’t always adhere to his requests. (His lawyers doubted the spreadsheets would help convince a jury of his innocence.) In court one day, Hayes slipped a memory stick with the spreadsheets to one of Wilkinson’s lawyers; someone might as well put all his hard work to use. After all these years, Hayes still hadn’t figured out who his friends were.

  Chapter 18

  Charades

  Tighe wasn’t going to attend most of the trial. She had to work and, in any case, since she was likely to be a witness, British court rules prohibited her from showing up until after she had testified. But Sandy, back on speaking terms with her son, expected to be there every day.* She recently had purchased an apartment in London’s Maida Vale neighborhood, and Hayes decided to set up shop there for the duration of the trial. That way, he only had to hop on the Tube for a short train ride; he would return to Fleet on the weekends. To get a feel for things, Sandy showed up at the Southwark courthouse the week before the trial was set to begin and sat in on an accused Albanian drug peddler’s case. She was the only spectator; jurors stared at her, seeming to wonder what she was doing there.

  Hayes and Tighe decided that she would escort him into court the first day—her presence would be soothing and would give the photographers outside the courthouse an alternative to the usual fare of Hayes, alone and scowling, as he entered and left pretrial hearings. Hayes planned their itinerary in obsessive detail, allowing nearly two hours of extra time to absorb any unforeseen delays. Things went smoothly until they got in a taxicab outside Waterloo Station. They told the driver where they were going, but he misunderstood and took them to the wrong courthouse. It was only a mile or so away from Southwark, and they were running ridiculously early, but the detour threw Hayes for a loop. His pulse started racing. He broke into a sweat. He clutched a handle inside the cab so hard that his knuckles turned white. “We’re not going to make it,” he whispered to Tighe, over and over.

  As the taxi approached the correct courthouse, it missed the turnoff. On a narrow road clogged with rush-hour traffic, the driver pulled a risky U-turn. A couple hundred yards away from the court, Hayes and Tighe clambered out, relieved that their journey was over. Holding hands in the late-spring sun, they walked the rest of the way. As a crowd of photographers and cameramen trained their lenses on them, a gust of wind lifted Tighe’s knee-length turquoise dress. It was more than Hayes could bear. By the time they had made their way inside the courthouse, he was in a full-on panic. He sat in a waiting room, pulling out his hair.

  * * *

  Glittering glass-and-steel offices, hotels, and apartment buildings had fast been replacing Southwark’s beaten-down buildings. Among these modern arrivals, the Southwark Crown Court stood out as a particular eyesore. The dreary, brown brick structure seemed to have been designed by someone biased against natural illumination. Windows were few and far between, odd architecture for a riverside building overlooking a retired British warship, the City’s landmark skyscrapers, and a nearly thousand-year-old fortress, the Tower of London. Upon entering the courthouse, everyone—judges, jurors, lawyers, and certainly defendants—had to pass through a pair of hypersensitive metal detectors. To get to the courtrooms, people had to either navigate two sets of staircases, one of them a fire exit, or rely on small, rickety elevators whose doors had a tendency to crash shut on people’s limbs. The occasional mouse scampered along the cafeteria’s linoleum floors.

  Inside the courtrooms, though, pomp and decorum prevailed. Lawyers authorized to speak in court—barristers—had to wear black cloaks with white neck scarves. On their heads sat light-colored horse-hair wigs—honeycombed on top, tight curls tumbling down the sides, and two tails dangling in the back, cinched off with string. The traditional eighteenth-century attire was even more elaborate for judges, decked out in outfits that resembled Santa costumes: red cloaks with white lining and thick, furry cuffs, red sashes across the chests, and flowing white wigs to top off the ensembles. Not only did everyone stand when the judge entered or exited the courtroom, but anyone who came or went while court was in session was supposed to bow.

  Courtroom 2 was a cramped, windowless room with blond wooden benches and harsh fluorescent bulbs embedded in the ceiling. A large metal seal on the wall at the front of the room, behind the judge’s raised platform, displayed a lion, a unicorn, a crown, and the monarchy’s motto, “Dieu et Mon Droit”—God and my right. The prior week, the court clerk had dispensed tickets to the press and public, trying to stave off a mad rush for limited seats, but before the doors opened that morning, a line of spectators snaked into an adjoining hallway. Spin doctors from Citigroup and UBS were there, as were lawyers for UBS, for Hayes’s former brokers, and for numerous other parties with interests in the case. Hayes sat in a middle row, biting his fingernails and sipping water from a white plastic cup. (In a rare victory, Hayes’s lawyers had argued that their client shouldn’t be penned up in the dock; they needed access to him during the proceedings. Cooke assented. The dock, with its two rows of bolted-down purple chairs, was henceforth occupied by journalists.) Sandy—her wispy white hair swept up in a loose bun and a thin, patterned scarf tossed over her left shoulder—sat in the front row of the spectators’ box, accompanied by her husband, Tim.

  The jury filed in for the first time. Seven men and five women, it was a young, ragtag bunch: Several wore jeans and T-shirts, another a hooded sweatshirt. They carted backpacks, coffees, water bottles, and containers of fruit into the jury box, two elevated rows of chairs and desks perpendicular to the judge and lawyers. Southwark juries, drawn from the area surrounding the courthouse, were notorious among London’s bar for being tough for prosecutors; jurors often harbored a distrust of law enforcement authorities. But this would be a fair fight—perhaps the only professionals less favored than such authority figures were bankers like Hayes. Cooke opened the proceedings by informing the jurors that the defendant had been diagnosed with Asperger’s syndrome and as a result would have a court-appointed aide, called an intermediary, seated next to him. The aide’s role, the judge explained, was to provide Hayes with emotional assistance. The jurors gawked at him like an animal in a zoo.

  * * *

  Mukul Chawla was born in Nairobi, Kenya, in 1961, but his parents immigrated with him and his sister to England when they were young, in search of a better education for the children. A lifelong Bruce Springsteen fan, Chawla flirted with a career as a record producer, but it turned out that loving music wasn’t a sufficient qualification. He had stints at a tobacco shop and a clothing store before deciding to follow in the footsteps of his father, a lawyer. The elder Chawla, who specialized in property law, was mostly deskbound, and his son was determined to avoid that fate. He wanted to be in a courtroom, not an office. Criminal law beckoned, and a decade into his career as a tri
al lawyer, Chawla—with an ample belly, bushy black eyebrows, and a lilting baritone voice—was taking on increasingly prominent cases.

  In the British legal system, barristers operate out of their own small, private practices and take both defense and prosecution work on a contract basis. Chawla made his name defending a police sergeant accused of unlawfully killing a black paratrooper and by representing one of six men charged with fraud and corruption in connection with a public transportation project. He also prosecuted complex commercial and drug cases for the government. Known for relentless preparation and a knack for winning the confidence of juries with his friendly, low-key demeanor, his peers regarded him as one of London’s finest trial lawyers. In July 2012, within a couple of weeks of the SFO deciding to open a criminal investigation into Libor manipulation, the agency came to Chawla with perhaps his highest-profile assignment: helping run the case. For the next three years, he had been deeply involved in every aspect of the investigation.

  His salt-and-pepper hair peeking out from beneath a blond wig, Chawla stood up in court on the first morning of the trial and began his opening statement. He had written the speech in advance, and now he read it, frequently looking up at the jury, in a soft voice. He introduced himself and his fellow prosecution lawyers and then, to demonstrate that he was a man of fairness, he introduced the defense lawyers, too. This was a simple case, Chawla said, and it was all about greed. Hayes had been motivated by money, pure and simple, and he hadn’t let anyone or anything—certainly not the law—stand in his way. At times, Hayes had resorted to threats and bribes, paying out tens of thousands of pounds in corrupt fees to brokers who did his dirty work. The case would drag on for weeks, Chawla warned, and it would involve some pretty complicated financial arcana, but at its heart, it was a fundamental matter of right and wrong. Luckily, the defendant had made things easier: He had confessed to everything, on tape. To demonstrate, Chawla played a snippet of Hayes telling the SFO that he probably deserved to be sitting there. And if that wasn’t enough, there were reams of evidence in which Hayes wrote out his instructions to colleagues and brokers. Hayes, Chawla said, had even admitted that his Libor-moving efforts likely netted his employers several million dollars a year of profits—not a lot compared to the star trader’s overall haul, but more than enough for him to be guilty of fraud.

  Don’t be fooled, the prosecutor added. The defense will argue that Hayes wasn’t alone in his efforts. That was true—and irrelevant. “Because lots of people are doing it doesn’t mean it’s not fundamentally dishonest, does it?” he asked. And any argument that the British Bankers’ Association’s broken processes somehow justified Hayes’s behavior would be akin to claiming that burglary was acceptable because someone left a window ajar, he said.

  Hayes struggled to contain his emotions. He shook his head. He leaned back in his chair and stared at the ceiling, fists clenched. He scribbled notes. He urgently whispered to his intermediary. He angrily jabbed a finger in Chawla’s direction. “Calm down,” his aide mouthed.

  * * *

  Over the next few weeks, the trial, and Hayes, settled into a rhythm. Court ran from 10 a.m. until an hour-long lunch break began around 1 p.m., then resumed until shortly after 4 p.m. Hayes woke up at 7:30 a.m. and skipped breakfast. On important days, he donned a pair of lucky QPR socks. On the Tube ride to court, he played “Street Fighter” on his iPhone. At the courthouse, he bought a cup of tea from the small coffee shop in the lobby. Then he waited for the day to start, playing sudoku games that he tore out of a newspaper.

  During breaks, Hayes and his lawyers huddled in a tiny meeting room across the hall from Courtroom 2. There was barely space for a couple of chairs, a coatrack, and a small table. Neil Hawes and his colleagues would try to soothe their anxious, angry client. In the hallway outside, Chawla, who had quit smoking the year before, could be seen puffing on an electronic cigarette, vapor curling out of his mouth and nostrils.

  After court most evenings, Hayes and Sandy walked around a small, hedge-lined park near the Maida Vale flat; she mostly listened as he ranted. She cooked him a healthy dinner with lots of vegetables, he took a shower or bath, then climbed into bed to read or to watch a TV game show called Love Island. Then he popped a sleeping pill. Most nights, he tossed and turned.

  * * *

  In early June, Hayes’s lawyers finally were informed that the FCA appeals committee had invalidated the regulator’s punishment against Pete the Greek, concluding that his actions weren’t dishonest. At first, the defense team was ecstatic; this was a potentially game-changing piece of evidence. But then Cooke ruled that it wasn’t relevant to Hayes’s trial because the appeals committee wasn’t evaluating Pete the Greek’s actions from a criminal law standpoint. The defense wouldn’t be permitted to tell the jury about it. The lawyers were crestfallen. Hayes was just furious.

  * * *

  There was a consistent pattern when it came to testimony by prosecution witnesses: a remarkable lack of memory when it came to anything that might help Hayes.

  As Chawla questioned him, former BBA employee John Ewan claimed he had been completely oblivious to the warning signs that banks were manipulating Libor to benefit their trading positions. He said the first he learned of this despicable practice was when he read the CFTC settlement documents with Barclays in June 2012. “Did you have any suspicion that this type of activity was taking place?” Chawla asked.

  “No,” Ewan said.

  “Could you conceive of this kind of activity taking place?” the prosecutor asked.

  “It’s not impossible as a thought experiment,” Ewan allowed, in a great understatement.

  During cross-examination, Hawes went through the BBA’s notes from the visits Ewan paid to Libor-submitting banks in 2005 and 2006, showing clearly that one bank after another had voiced concerns about the practices of lowballing and of skewing Libor to benefit trading portfolios. Ewan insisted he hadn’t recognized the red flags. When banks raised these concerns, Hawes asked quietly, did Ewan ask for more information?

  “I can’t recall,” Ewan said. “It’s ten years ago.”

  What did the BBA’s Libor oversight committee do when it heard concerns like this?

  “I don’t remember,” Ewan said. The real answer, of course, was: nothing.

  Hawes asked Ewan about a letter the Chicago Mercantile Exchange had written in 2008, noting that a Libor submitter who inputs data from within a range of feasible numbers “commits no falsehood if she bases her response to the daily Libor survey upon the lowest of those (or the highest, or any other arbitrary selection from among them).” So, Hawes asked, adjusting his thick, black-rimmed spectacles, does that means it’s acceptable for banks to set Libor anywhere within a plausible range of numbers?

  Ewan considered that for a few moments, shifting in his chair. The courtroom was silent. “That is perfectly consistent with the definition,” he finally answered, although he added that “it would be unusual for there to be a notable dispersion between the highest and lowest rates at which a bank could borrow money.” Sitting in the back of the courtroom, Hayes pumped his head up and down in a vigorous, victorious motion. It was the most animated he’d been since the trial began.

  * * *

  On July 6, the Crown wrapped up its case, a twenty-seven-day onslaught that with breaks had extended over a month and a half. After the jury had been dismissed for the day, Hawes’s deputy Christopher Conway prepared Cooke for what to expect when the defense opened its case the following morning. Hayes, Conway warned, would be fragile and if, as expected, he would be testifying for the better part of two weeks, that would put an extraordinary strain on him. The discussions over Hayes’s mental state lasted nearly thirty minutes. Hayes sat in the back of the courtroom, listening. “I’m sorry that we’re talking about you as if you’re not here,” Cooke said at one point. Hayes smiled awkwardly.

  In the morning, Tighe took a seat in the courtroom, next to Sandy and Tim; Hayes’s team had decided not to h
ave her testify after all, so she was free to attend, and she had taken the week off work.

  For the first time since the trial began, the courtroom was full. London’s legal and financial communities were dying to hear what Hayes had up his sleeve; he must have something, given his seemingly crazy decision to fight the charges. Kweku Adoboli, who had just been released early from prison, was among those following the proceedings via Twitter and the media. “I wish him luck,” he texted an acquaintance in the courtroom. Hayes, clean-shaven, wore a blue, button-down shirt under a thin, navy blue sweater—and, of course, his lucky QPR socks. Before the judge entered, Hawes crouched in front of his client. “Are you okay?” the lawyer whispered. Hayes nodded. “Are you ready?” He nodded again.

  Cooke read a message to the jurors about Hayes’s Asperger’s diagnosis. Quoting loosely from Alison Beck’s report, he explained that “people with Asperger’s often don’t see shades of grey but often tend to see things in terms of black and white.” Hayes has a “pattern of prioritizing patterns and numbers over people” and “doesn’t perceive the world as people without Asperger’s syndrome do.” The judge concluded with a crucial caveat: “You’re hearing about Asperger’s because it relates to Hayes’s presentation as a witness. It’s not directly relevant to the case.” In other words, the jurors could take his condition into account as it related to any quirks in his testimony, but it shouldn’t influence their judgment about his guilt or innocence.

  As Cooke spoke, Hayes sat in the back of the courtroom, chewing on the sleeve of his sweater. Then he marched to the witness stand, walking past Tighe. They shared a smile; her cheeks flushed. Hayes swore to tell the whole truth and nothing but the truth. In his pocket, he carried a folded-up photo of a grinning Joshua lying on a furry white blanket. He planned to pull it out any time his stress levels spiked.