Last updated: June 9, 2012 12:07 am

Spirited away

The case of the NatWest Three highlights the urgent need to reform Britain’s extradition laws

A Price to Pay: The Inside Story of the NatWest Three, by David Bermingham, Gibson, RRP£8.99, 384 pages

David Bermingham was working for a division of NatWest Bank when, in February 2000, he and two colleagues travelled to Houston for a meeting with Andrew Fastow, chief financial officer of the energy trader Enron. Over the course of that meeting the British bankers cobbled together a complex deal with their US counterpart, the upshot of which was to allow the three to make a personal profit of $7.3m. So was born, unwittingly, the case of the NatWest Three, the subject of Bermingham’s occasionally engrossing book A Price to Pay.

 

It was in the aftermath of Enron’s spectacular collapse in late 2001 that the deal came to the attention of US prosecutors, who went after Bermingham and his colleagues – to describe them as minnows in the whole Enron debacle is probably overstatement – asserting that the three had “devised and executed a scheme to defraud NatWest”. The heart of the fraud allegation, as put in Department of Justice filings, was that Bermingham and his colleagues had failed to disclose to NatWest that they had obtained a personal interest in an investment from which they then profited at the expense of their employer.

NatWest, now part of Royal Bank of Scotland, did not seem too bothered by the question of whether it had been subject to a fraud, and the three were never charged with any criminal act under English law. This has allowed Bermingham and his colleagues to argue with some force that no fraud was intended or perpetrated. Their difficulties arose, however, because of the confluence of the US criminal investigation, a request for their extradition to the US and, most unhappily for them, new UK extradition rules (incorporated into the Extradition Act 2003) that reflected what might be described – mildly – as the then prime minister Tony Blair’s desire to curry favour with President George W. Bush.

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IN Non-Fiction

These new rules introduced significant changes, and did so without imposing reciprocal commitments on the US. They removed the pre-existing discretion of the home secretary as to whether an individual should be extradited, without replacing it with any power for the courts to insist on a UK trial. With no dispute that the relevant alleged acts occurred in the US, and the disappearance of any requirement that the US prosecutor should have to establish a case to answer, English judges faced with Bermingham’s legal arguments had little option but to reject them and apply the law as parliament apparently but ill-advisedly intended. He and his colleagues were soon off to Texas to face US justice. This culminated in a guilty plea in return for a reduced sentence (of 37 months), a period of imprisonment, and eventual return to the UK.

Bermingham got himself caught up in a modern morality tale. It’s hard to feel much sympathy for someone who was not motivated by any principle other than the desire to make a large sum of money quickly, and who had already encountered Fastow’s disdain for the niceties of the rules preventing conflicts of interest. Bermingham’s dealings with Fastow in another matter, a few months earlier, should have alerted him to the fact that Fastow was willing to run “a company which would be doing a commercial supposedly arms-length deal with the company [Enron] of which he was the CFO”. When Bermingham raises the conflict issue in that earlier case, Fastow goes “completely ballistic”, causing the Brit to back off. Alarm bells should have rung, but the pursuit of a deal seems to have trumped any reasonable exercise of judgment. “I should have told the bank details of exactly what happened,” Bermingham writes with some contrition, “and let them decide whether I should be allowed to do it.”

Yet there is a bigger story, and this book raises it squarely. Blair’s 2003 agreement with Bush is an arrangement that was intended to foster co-operation in the “war on terror”. In fact, the human traffic of extraditions has flowed in a westerly direction only, while the treaty has been marshalled in areas that were never intended, including financial wrongdoing and hacking. Its very existence reflects the inequalities of power that have been allowed to define Britain’s relationship with the US.

Two UK parliamentary committees – the Joint Committee on Human Rights and the Home Affairs Select Committee – have called for urgent reform of the extradition rules. Calls for reform focus on the right of a judge, rather than prosecutors, to decide on the appropriate forum for the investigation and prosecution of a particular crime.

That is surely right. In a world of uneven power, the citizens of smaller countries need protection from the legal systems of the more powerful. The very least that any legal order must do is protect the basic rights of an individual, irrespective of nationality or the nature of any crime they are alleged to have engaged in. The current extradition arrangements with the US do not meet that standard. This book, uneven as it may be in the apparent absence of some necessary editorial input, makes a powerful case for immediate change.

Philippe Sands QC is professor of law at University College London and author of ‘Lawless World’ (Penguin)

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