The Spider Network

by David Enrich

  Why didn’t the brokers just say “no thanks” when Hayes sought their help manipulating Libor? Well, they answered, clearly the prosecution didn’t understand who Tom Hayes was. He was more than a giant presence in the market. He was an unreasonable, monstrous man. Cryan called him a psycho. Wilkinson gleefully recounted yet one more time the shepherd’s-pie-in-the-bath legend. Farr and Read both told the jury about the verbal abuse showered on them by their explosive client. Saying no to this guy was not an attractive option. And it was less bad to lie to Hayes than to actually, God forbid, lie about Libor.

  The truth was even more ironic. In maintaining that they had been lying and therefore hadn’t acted dishonestly, the brokers appeared to be, well, lying. A rich trove of documentary evidence showed the brokers not only telling Hayes that they were helping him, but also coordinating among themselves and with other traders to carry out Hayes’s requests. Of course, there were exceptions—such as when Read counseled his London colleagues not to tell Hayes about Goodman’s run-throughs or, if Hayes ever asked, to say that they had spoken to traders at rival banks when in fact they hadn’t. But there was little aside from the brokers’ testimony on the stand, which appeared to contradict the written record, to substantiate the idea that they hadn’t been participating in the scheme alongside Hayes.

  The SFO’s staff wasn’t helping Chawla this time. Under cross-examination, one of the agency’s investigators, Paul Chadwick, acknowledged that the SFO had screwed up some of the dates it had included in the charges against Goodman; it turned out he’d been on vacation on those days. Later, Chadwick admitted to Cryan’s lawyer that the SFO only got around to interviewing the guys on Tullett’s cash desk—whom Cryan would have asked for help on Hayes’s behalf, if he did in fact ask anyone for help—after the brokers’ trial was already under way. A couple of jurors shook their heads in disbelief.

  * * *

  Tighe handed in her resignation at Shearman & Sterling and landed a new job at a smaller law firm nearby, where she figured the workload would be lighter—a crucial concession to her new life as a single parent. (Another law firm refused to hire her because of her husband’s crimes.) One morning in January 2016, during a week off between jobs, she took the train into London and headed to the Hatton Garden jewelry district, where Hayes years earlier had purchased their wedding rings. This time, Tighe was getting their valuables—her diamond ring, both of their Rolexes—appraised before they were handed over to the SFO.

  Afterward, she decided to stop by the Southwark courthouse to check in on the brokers. A day earlier, the jury had been sent out to deliberate. Now the waiting game had begun, and she knew from experience how tense and miserable that process was. Tighe had been back to the courthouse a couple of times since Hayes’s conviction; the SFO’s proceedings seeking the confiscation of their assets had occurred just down the hallway from Courtroom 2. Every time she went there, it was like reentering a nightmare. Walking down the same street that she and Hayes had traversed, day after day, holding hands as the photographers tracked them, she would feel a lump rising up in her throat and would stifle a sob. On this January morning, Tighe went looking for Read, whom she still considered a friend. She found him in the cafeteria, reading. They had barely started talking when the courthouse loudspeakers barked, summoning the brokers back to Courtroom 2. After a day of deliberating, the jury had reached its verdict.

  The brokers shuffled into the dock. Farr managed a wan smile at his wife, Clare, and son Sam, then buried his head in his hands. Wilkinson had been at home (days earlier, he’d suffered a minor stroke and hadn’t returned to court since), pouring himself a glass of wine, when his wife called to say there was a verdict. He had rushed into London wearing an untucked short-sleeved shirt, his face a dark, sweaty red. Gilmour, too, felt beads of sweat forming on his scalp and neck as he waited for the jury to enter. Time seemed to stand still.

  Four guards, their keys jingling, entered the dock and locked the door. Tighe took a seat in the courtroom. The jury entered. Wilkinson’s mother grabbed Tighe’s arm. “My boy,” she murmured, over and over.

  And then came the verdicts: not guilty. One by one, each broker was acquitted.

  With a war cry, Farr tore out of the dock and embraced Clare and Sam, who both were sobbing. “That’s four and a half years” of my life, he murmured, choking on tears.

  On the way out of the courtroom, two jurors pumped their fists in the direction of the defendants, a motion of solidarity. On the courthouse steps, a juror hugged one of the broker’s wives. “Thank you,” she whispered.*

  * * *

  And so it was. In November 2015, two Rabobank traders, Anthony Allen and Anthony Conti, were tried in federal court in New York for their roles allegedly manipulating Libor. Their colleague—Paul Robson—had testified against them. The trial lasted a few weeks, and the jury eventually convicted the two Brits. Allen was sentenced to two years in prison; Conti’s sentence was one year.

  But of all the other former traders who would come under the legal microscope—including David Nicholls, the Deutsche Bank manager who’d brushed away suggestions that Libor could be manipulated and who, as of 2016, was under investigation by the Justice Department—none of them were accused of being part of Hayes’s vast ring. Tom Hayes had never fit in; now, as always, he was the outsider.

  * * *

  Tighe called Hayes’s lawyers and delivered the news. As it happened, they were at Lowdham Grange, about to sit down with her husband. They met in a cubby-size room off the main visitor’s area, where tearful wives and squealing children were being reunited, temporarily, with their husbands and fathers. Guests were allowed to buy treats for inmates at a small canteen, and Hayes sipped a bottle of strawberry milk as his lawyers talked him through some paperwork. They didn’t tell him of the acquittals until they’d completed all their other business. Hayes was engulfed with emotions when he heard. Here he was, locked up in jail, with most of his worldly possessions being confiscated by the government, and in London his supposed conspirators had just been let off the hook. On the other hand, their acquittals were a token form of vindication; after all, these were many of his alleged confederates. It felt good knowing that the SFO and David Green and Mukul Chawla had suffered an embarrassing defeat. And by not sticking with his original plan to cooperate with the SFO and testify against his former brokers, he had helped these men remain free. “I can look at myself knowing six families are complete, in a small part because of me,” Hayes wrote to an acquaintance. He described the brokers, despite their occasional dishonesty, as basically “good guys.”

  Hayes still didn’t grasp what had really happened. These friends who were not friends, these bosses who now claimed not to be bosses, together they had just engineered their greatest trade of all: Hayes for their own freedom. He was the genius, the university man, the millionaire, the star. And he was the fool. Most of them had their money; his would be seized. They had their liberty; he was in prison. Yes, there had been a spider network. Hayes still didn’t realize that in the end, he’d been the fly.

  The brokers and their families and lawyers decamped to a nautical-themed pub, the Shipwrights Arms, down the street from the courthouse. The mood was giddy. The fastidious, upper-crust barristers shed their wigs and loosened their collars and before long were slurring their words. They gleefully recounted the trial’s highlights: how the SFO investigators had looked foolish under cross-examination, how Wilkinson on the stand had angrily denounced the SFO’s tactics, the look on Chawla’s face as the verdicts were announced. An instant consensus among the lawyers had formed about the trial’s crucial turning point. It was when the jurors learned of Hayes’s fourteen-year sentence. Surely, the lawyers reasoned, the jurors had rejected the idea of sending these six men to a similar fate.

  Cryan had his own theory: The jurors could tell that the defendants were just working-class guys, not dudes who went to exclusive schools and drove fancy cars and quaffed expensive champagnes. He paused
, thinking about that for a moment. “We actually did drink quite a lot of champagne,” he blurted. “And we’ll be drinking more tonight!” He tilted his head back and laughed maniacally.

  But the reasons didn’t matter. It was finally over. Gilmour, standing alone and looking dazed, fantasized about the vacations he would take once he got his confiscated passport back. Forget about all his other problems, such as his precarious finances. A huge weight had lifted.

  Above the pub’s blue-painted entrance, a coat of arms displayed the establishment’s motto: “Within the Ark, Safe Forever.” Not even the fickle gods of the sea, the menacing forces that Alykulov had warned about when he recited Hector’s line in the movie Troy, could touch these guys now.

  Before long, Farr was drunkenly shouting and spilling Guinness on the slick wooden floor. Then Wilkinson waddled in. “Freedom!” he thundered, his arms hoisted above his head in a V. The brokers roared, and someone handed him a pint of beer. The party was just getting started.

  A Note on Sources

  The text message I received from Hayes that evening in January 2013 was the start of a years-long relationship. At first, we pinged texts back and forth—him cautiously, me gently trying to pry information out of him or, even better, get him to sit down with me. (During that first exchange of texts, he’d agreed to meet at London’s Victoria Station the following morning, but before he could slip out of the house, Tighe got wind of his plan and forbade him from going.) Before long, though, he loosened up. Unbeknownst to his lawyers or Tighe, Hayes began texting me constantly, at all times of day or night, and regularly meeting me at run-down pubs and train station cafes. I typically would buy him a sandwich and an orange juice and then listen as he delivered detailed, stream-of-consciousness explanations about trading, Libor, his former colleagues, the criminal justice system, and, every so often, isolated fragments about his personal life. Aside from a piece of the very first text message he sent—“this goes much much higher than me”—I agreed to treat everything he said as off the record. I could use it as a guide in my reporting, but that was all.

  After more than a year of this, in which Hayes oscillated between dark depressions and manic overconfidence, I persuaded him to get Tighe to meet me. We sat down alone, in a quiet restaurant on the south side of the Thames. By the end of the evening, we had consumed an unhealthy amount of red wine, and I had gleaned a much fuller picture of Hayes and his environs. Tighe filled out the personal side of her husband, his colleagues, and even their family life in a way that the binary-thinking, mildly autistic Hayes simply wasn’t capable of doing. Going forward, I maintained separate relationships with Hayes and Tighe, meeting and corresponding regularly with each individually.

  In early 2015, several months before Hayes’s trial was scheduled to begin, I asked each of them what I figured was a stupid question: Upon the conclusion of the trial, would they be willing to retroactively put everything they’d told me on the record so that I could tell their story, in full cinematic detail, in the Wall Street Journal? I braced for a swift, unequivocal rejection. Instead, they both agreed. Suddenly I had in my possession a trove of thousands of text messages, and rough notes from hours of phone calls and scores of meetings featuring the central figure in a global scandal—a man who, aside from his one text message (which I’d quoted in a February 2013 Journal story) and his not-guilty plea, had never uttered a word in public. And from that point on, everything Hayes and Tighe said or did in my presence would be fair game for me to write about once the trial was over. Hayes also provided me with his school and medical records, as well as reports prepared by psychiatrists who interviewed him, and introduced me to a number of family members. The result, in September 2015, was a five-part series in the Journal titled “The Unraveling of Tom Hayes.”

  Meanwhile, I came upon another journalistic gold mine. In the course of its three-year investigation, the Serious Fraud Office had amassed tens of thousands of pieces of evidence: e-mails, electronic chats, text messages, phone call recordings and transcripts, trading documents, personnel records, and voluminous transcripts of interviews the SFO and other regulators had conducted with suspects and witnesses. By then, the antifraud agency had filed charges against Hayes and his six former brokers. Because all seven men were pleading not guilty, their lawyers had received the evidence from the SFO to allow them to prepare for trial. Now I found myself in possession of this hard drive’s worth of primary source materials, well over a hundred gigabytes. They included blunt trading room dialogue, captured over instant-message chats and e-mails; recordings of phone calls that traders and brokers placed on their work lines, sometimes to their colleagues, other times to family members; the interviews that brokers and traders gave to authorities, which delved with surprising regularity into the suspects’ difficult personal circumstances; and traders’ and brokers’ personnel records, documenting their compensation, disciplinary histories, and even sick days. I went through every piece of evidence. It was a mind-numbing task—most of what traders talk about, it turns out, is disappointingly dull—but what emerged was a high-definition, unfiltered snapshot of the intersecting careers and lives of the men at the center of the Libor scandal.

  This book also is based on scores of interviews I conducted with past and present traders, brokers, and executives and their lawyers; past and present government investigators, prosecutors, and law enforcement authorities; and the litany of other characters—researchers, academics, journalists, lawyers, and others—who populate this book. I gleaned further information from the months of testimony and evidence presented at the trials of Hayes and the former brokers, as well as from the reports and settlement documents of various government panels and enforcement agencies.

  I read a number of books—fiction and nonfiction—in preparation for writing The Spider Network. I reread some of the classics of the business genre, especially those that Hayes had mentioned to me were influential to him. Those included Barbarians at the Gate: The Fall of RJR Nabisco by Bryan Burrough and John Helyar, and When Genius Failed: The Rise and Fall of Long-Term Capital Management by Roger Lowenstein, as well as a smattering of Michael Lewis books. I also read a number of fascinating books related to Asperger’s syndrome. They included the sublime The Curious Incident of the Dog in the Night-Time by Mark Haddon; Look Me in the Eye: My Life with Asperger’s by John Elder Robison; and The Rosie Project by Graeme Simsion.

  In many cases, the dialogue and quotes in this book come directly from phone recordings that I have listened to or transcripts I have read—or conversations, text messages, and scenes that I witnessed or participated in. In other cases, they are from e-mails or other electronic communications that I’ve reviewed; occasionally, in messages jammed with typos and abbreviations, I have translated them into English and cleaned up punctuation and capitalization. (For example: “gr8” becomes “great,” “6m” becomes “six-month,” “lbior” becomes “Libor,” and so on.) In the case of nondocumentary materials, I have tried to confirm information with at least two sources. When confronted with conflicting evidence or testimony, I have presented what I believe to be the most credible version of events; at times I have noted disagreements in footnotes.

  For further information on the provenance of specific items, the Notes section of this book provides a chapter-by-chapter description of where some of the information came from. Because of the repetitive nature of much of the sourcing, as well as the need to maintain some sources’ anonymity, the section doesn’t individually identify the source of every fact in the book.

  Since Hayes was sent to prison, I have stayed in frequent touch with him and Tighe. I’ve mainly settled for writing him letters, something I hadn’t done with any regularity in probably twenty years. (I also visited him.) To my surprise, Hayes, who had such trouble communicating with people in person and seemed painfully out of touch with, even oblivious to, normal human emotions, has proven to be a thoughtful, articulate, even introspective letter writer. His letters come scrawled in
ballpoint pens on thin, lined pages (often with footnotes scribbled in the top and bottom margins). They are laden with detailed memories from his life before prison, descriptions of his prison routines and friends, angry rants about what he sees as the injustice of his plight, and admissions that he badly misread situations, over and over and over again. The letters have provided me with another fascinating glimpse inside Hayes’s unique mind.

  Acknowledgments

  This book never would have happened without the help of a bunch of people. Near the top of that list is, without question, Tom Hayes. Back in 2013, he took a massive—arguably reckless—leap of faith by deciding to open up to a journalist. And then, against the urgings of his lawyers and wife, he doubled and tripled down on that gamble, over and over. I am enormously grateful that he, and eventually Sarah Tighe, came to trust me and put up with my endless questions about their personal and professional lives.

  Dozens of other sources—bankers, traders, brokers, investigators, lawyers, prosecutors, journalists, researchers, academics, family members of accused criminals, and even a psychologist or two—were generous with their time as I sought to reconstruct and explain the Libor odyssey. Many of them are characters in the book. Some were more helpful than others; you know who you are, and I thank you.

  I never would have dived down the Tom Hayes rabbit hole were it not for my mentor and friend, Bruce Orwall. A few days into 2013, Bruce, the Wall Street Journal’s London bureau chief, told me to write a detailed profile of Hayes, who had recently been arrested in Britain and charged in the United States. I resisted, arguing that there was no chance that Hayes or his friends or family would talk to a journalist and that I had better things to do with my time. Bruce insisted. I threw a minor tantrum. Bruce still insisted. I finally relented—and stumbled into what would become the best story of my career. Over the next three years, as my relationship with Hayes progressed, Bruce was by my side every step of the way. He counseled me on how to manage Hayes as a source, no easy feat. He advised me on what stories should be our top priority, and then masterfully edited those pieces. He helped me navigate tricky interactions with the British legal system. And he always forced me to aim higher, deflecting my impatient tendencies and pushing for me to advance things a step or three further than I had initially thought possible. The culmination of this was the Journal’s “The Unraveling of Tom Hayes” series. The stories carried my byline, but Bruce made them happen.