September 18, 2013 7:30 pm

Former Barclays staff sign DoJ probe deal

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Two former employees of Barclays have signed deals with the US Department of Justice as part of its probe into alleged Libor manipulation, underlining the thrust of the worldwide investigation that is expected to yield more criminal charges against individuals over the next month.

One of the ex-employees, Jonathan Mathew, was employed in Barclays’ London office, which not only highlights the global nature of the probe but also raises questions about how authorities on either side of the Atlantic are co-operating.

Mr Mathew and a former US-based derivatives trader for Barclays both signed non-prosecution agreements, or NPAs, with the DoJ in 2012 before the bank paid £290m to settle investigations with American authorities and the UK financial regulator, people familiar with the situation told the Financial Times.

Under an NPA, a person agrees to co-operate and potentially provide testimony, and thus avoids any criminal charge.

The political and public furore that surrounded the bank’s settlement pushed the UK’s Serious Fraud Office to open its own criminal investigation into Barclays and other banks over whether they manipulated Libor, a key benchmark rate that helps determine the price of $350tn of products worldwide, from complex derivatives to mortgages.

Mr Mathew had originally been a person of interest to the SFO in its probe, two people familiar with the investigation said. The NPA’s impact on the SFO’s investigation is unclear. He has not been arrested or accused of wrongdoing by the authorities in either country.

The SFO and DoJ have already fallen out over the fate of Tom Hayes, the former UBS and Citigroup trader who has been charged in the US and the UK. He is expected to enter an indication of his plea to the UK charges at a court hearing scheduled for next month.

While the two Barclays’ agreements are more than a year old, they shine a light on the direction of travel of the criminal investigations that are ongoing into the bank and individuals, even after last year’s corporate settlement.

Mr Mathew worked in Barclays’ treasury unit in London and reported to Peter Johnson, a former London-based rate submitter, who is under scrutiny by US and UK authorities. The second former Barclays’ employee who is co-operating with authorities is an ex-interest rate trader based in the US.

Mr Mathew’s London-based solicitor at Herbert Smith Freehills declined to comment, as did a lawyer for Mr Johnson.

The DoJ has also sought extensions of so-called tolling agreements with several former Barclays individuals to prolong the statute of limitations for potential charges, people familiar with the matter say. That indicates the DoJ is continuing to investigate individuals in the rate manipulation probe and people familiar with the matter say charges against some former Barclays traders could come before the end of the year.

David Green, the SFO’s director, has also said that he hopes to bring charges against more individuals as part of the agency’s Libor probe by October. The SFO has charged two former RP Martin brokers in addition to Mr Hayes.

Both Barclays’ co-operators and Mr Johnson are among a list of 25 names of individuals whose communications have been of particular interest to authorities during their Libor investigation. The list became public in January during civil litigation in London between the bank and a care home after intervention by the Financial Times and other media organisations.

Both the bank and DoJ had pressed for the list to remain private.

The US-based trader and Mr Johnson have not been accused of wrongdoing by the authorities in either country.

Barclays, the SFO and the DoJ declined to comment, citing ongoing investigations.

Additional reporting by Daniel Schäfer in London

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