Hayes, R v (Rev 1)

Under the objective limb of the R v Ghosh test, dishonesty is assessed by the ordinary standards of reasonable and honest people. Market practice, professional ethos and an employer’s standards cannot alter that objective standard, even if such practices are widespread. Those matters may nevertheless be relevant to whether the defendant appreciated that the conduct was dishonest by those standards.

Disclosure under the Criminal Procedure and Investigations Act 1996 is confined to material reasonably capable of undermining the prosecution case or assisting the defence. A court need not require an impracticable or tangential exercise. Expert mental-health evidence is inadmissible where it offers no material assistance on reliability or comprehension beyond matters a jury can assess unaided.

Serious, sustained and sophisticated fraudulent market manipulation warrants deterrent sentences of substantial length, subject to individual mitigation and totality.

The appellant was convicted at Southwark Crown Court, before Cooke J and a jury, of eight conspiracies to defraud by manipulating Yen LIBOR while employed at UBS Japan and Citigroup Japan. He received consecutive sentences totalling 14 years’ imprisonment.

At trial, the prosecution relied substantially on admissions made during the appellant’s participation in the SOCPA process. The appellant maintained that the admissions were made to avoid extradition and denied dishonesty. His appeal challenged the judge’s direction on dishonesty, rulings on the LIBOR definition, evidence, disclosure and medical evidence. He also appealed against sentence.

The central issue was whether market practice could affect the objective standard of dishonesty, and whether the trial rulings or total sentence made the convictions unsafe or the sentence excessive.

1. Conviction appeal dismissed. The court granted leave only on the first ground, concerning dishonesty, and refused leave on the remaining conviction grounds. The objective limb of R v Ghosh asks whether conduct was dishonest by the ordinary standards of reasonable and honest people. There is no separate market, banking or professional standard. Market practice, even if widespread, cannot lower or alter that standard. Such evidence was instead relevant to the subjective question whether the appellant realised that his conduct was dishonest by ordinary standards.
2. The judge’s explanation of the LIBOR definition did no more than give effect to the prior interlocutory ruling. A submitting bank had to make a genuine assessment under the applicable definition. It could not take its commercial interests into account when selecting a submission, including from within an otherwise available range.
3. The refusal of further daily profit-and-loss, risk and trade disclosure was correct. Under the Criminal Procedure and Investigations Act 1996, disclosure is required only for material reasonably capable of undermining the prosecution case or assisting the defence. Daily reconstruction was irrelevant to the appellant’s motivation, impracticable and apt to obscure the real issues.
4. The proposed expert evidence of anxiety, depression and adjustment disorder was properly excluded. It did not suggest that the appellant lacked comprehension of the SOCPA process or capacity to make rational decisions. The jury could assess ordinary mental distress without expert assistance, and the diagnosis did not materially assist on the truth of his admissions.
5. Sentence appeal allowed. Consecutive sentences were justified by grave, sustained and varied conspiracies, high culpability, serious harm and the need for deterrence. But 14 years was longer than necessary after allowing for the appellant’s age, non-managerial position and mild Asperger’s condition. The court quashed that total and substituted 11 years: eight years concurrently on counts 1–4 and three years consecutively on counts 5–10.

The court stressed that fraudulent manipulation of financial markets will ordinarily attract severe custodial sentences.

• Court of Appeal (Criminal Division): Conviction appeal dismissed and sentence appeal allowed in part. The total sentence was reduced from 14 to 11 years: [2015] EWCA Crim 1944.
• Crown Court at Southwark: Before Cooke J and a jury, the appellant was convicted of eight counts of conspiracy to defraud concerning Yen LIBOR and sentenced to a total of 14 years’ imprisonment.