Bashing the Bankers – Have we Reached Peak Prison?

Last week banker Tom Hayes received a record 14 year sentence for his role in fixing the benchmark LIBOR rate.  It turns out he submitted figures to suit his bank’s interests and to enrich himself via an enormous bonus scheme.

The judge who imposed the cracking 14 years was suitably scathing about Hayes behaviour “The conduct involved here must be marked out as dishonest and wrong and a message sent to the world of banking accordingly”.   However, a sentence of this length for white collar crime in the UK is entirely new.  It follows on last year’s new and prescriptive guidelines from the Sentencing Council .  A judge who departs significantly from these is likely to face appeal by either the prosecution or defence.  The most serious example of conspiracy to defraud (Category A) carries a starting point of 8 years.  When Hayes was convicted of 10 offences the total of 14 years consecutive was not so surprising.

Ironically, it was Hayes’ own signed admissions of guilt which sank his defence.  He made these admissions, he said, only to ensure he was not extradited to the United States.  US law enforcement claims jurisdiction over offences involving the slightest engagement with US banking or communication systems.  Using an  IT system which is routed through a US server is enough to make you liable to extradition for financial crimes.

Hayes’ terror of American justice was premised on the heavier penalties traditionally imposed on white collar defendants in the US.  Jeffrey Skilling, CEO of Enron, for example, received a 24 year sentence, reduced on appeal to 14 years.  Bernie Madoff got 150 years.  No-one wants to play by those rules if they can avoid it.

But ironically, just two months before the start of the Hayes trial, the US Department of Justice Sentencing Commission published their own fraud guidelines .   It was clear that fraud sentencing in the US was getting out of hand.  The new guidelines take account of the newly fashionable “harms” basis for sentencing.  These amendments “recognize concerns regarding double-counting and over-emphasis on loss,” said Chief Judge Patti Saris of the federal court in Massachusetts, who chairs the commission.  So the US will be a softer touch in future.

And the final terrible irony for Hayes is that Madoff now resides in “Camp Fluffy”, a prison that beats anything the Brits can offer in terms of comfort, amenity and prison privileges for the wealthy.

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