Ex-Deutsche Bank traders seek to depose former LIBOR Director of BBA

Maria Nikolova

John Ewan is expected to provide exculpatory evidence to counter the US Government’s argument that the Deutsche Bank USD LIBOR submissions were false.

Matthew Connolly and Gavin Campbell Black, former derivative product traders at Deutsche Bank who are accused of LIBOR-rigging, are seeking to depose John Ewan, a former LIBOR Director of the British Bankers’ Association (BBA). The respective motion was filed with the New York Southern District Court on Tuesday, July 3, 2018.

Let’s recall that, according to the indictment, the defendants were part of a scheme, carried out between 2004 and 2011, to cause Deutsche Bank, their employer-one of the sixteen “Submitter” banks whose estimated borrowing costs were used by the BBA to set LIBORs in USD – to submit “false and fraudulent USD LIBOR submissions” to BBA. The Indictment charges that the LIBOR submissions were “false and fraudulent” because they were not “unbiased and honest,” as they took into account considerations other than the true cost for Deutsche Bank to borrow from other banks at some future date certain-most notably, the trading positions of the defendants and their co-conspirators.

The defendants are now seeking a Court order permitting them to take a deposition in a foreign country.

Mr Ewan’s expected testimony would be relevant and material to key issues in this case, the defense argues, as he was first the BBA’s LIBOR Manager, and then the LIBOR Director. Also, his role entailed looking after the day-to-day operation and publication of the LIBOR benchmark, working on preparing material for the committee that oversaw LIBOR, as well as conducting annual relationship meetings with contributor panel banks and having discussions with others in the financial community.

Mr Ewan is expected to offer material testimony concerning the considerations and flexibility allowed by the BBA in the interpretation of the LIBOR definition, including providing testimony that:

  • the BBA permitted rates submitted contrary to the written definition of the LIBOR question where the submissions were made in the spirit of the definition;
  • a LIBOR submitter commits no falsehood if the submission falls within the wide range of offered rates for the bank, whether the submitted rate was the lowest of these or the highest of these or any arbitrary selection among them; and
  • Mr Ewan was informed that rate setters are obviously setting to suit their underlying positions to some extent. “If they’re long, they will set below. If they’re being aggressive, they will set above”.

Put otherwise, Mr Ewan is expected to provide exculpatory evidence to counter the Government’s argument that the Deutsche Bank USD LIBOR submissions “were false precisely because they did not conform to the BBA’s definition.”

The US Government does not oppose the defendants’ request to take a Rule 15 deposition of John Ewan.

The case, captioned USA v. Connolly (1:16-cr-00370), continues at the New York Southern District Court.

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