Libor ‘fixer’ struggles to understand the word ‘manipulation’

A former Barclays trader told a court that despite having three degrees and working in banking for five years he did not know what the word ‘manipulation’ meant when referring to the Libor rate.

Stylianos Contogoulas, 44, said he believed the word to mean the rate was moving ‘contrary to logic’ rather than someone intentionally rigging the system.

He also claimed that asking Libor submitter Peter Johnson – who has pleaded guilty to acting dishonestly – for next week’s lottery numbers was just ‘an expression’.

Contogoulas had a ‘bang bang bang’ approach to emails and didn’t think much about the meanings behind some of the words, he told Southwark Crown Court today (Thurs).

He, along with Jay Vijay Merchant, 45, Alex Julian Pabon, 37, Ryan Michael Reich, 34, and Jonathan Mathew is alleged to have been involved in a conspiracy to defraud between June 1 2005 and August 31 2007.

Contogoulas was asked by Emma Deacon, prosecuting about a chat on the Bloomberg system in  August 2007 – when he was working for Merrill Lynch – in which he appeared to be upset about the idea of making losses due to manipulation of Libor.

But he claimed he did not know what the proper definition of the word ‘manipulation’ in this context meant.

‘My understanding of the word manipulation at the time was manipulation meant that something moves contrary to what logic or what you might expect.’

He denied that he was insinuating that any unlawful activity was taking place.

Contogoulas was also asked about an email in which he asked Libor submitter Peter Johnson to tell him ‘next week’s lottery numbers’ after it appeared as though Johnson had helped fix the rate in his favour.

The trader said: ‘This is an expression that I use and clearly if you don’t know me it is very easy to make a mistake and not understand what I am talking about.

‘When I use this phrase I mean I have asked you for so many things I might as well ask you for something impossible.

‘I think if he could tell me what next week’s lottery numbers were he would not be doing this job.’

While trying to work out exactly how much money each basis point in the resulting USD Libor figure was worth Contogoulas needed to borrow a calculator.

‘It seems I am not good with maths,’ the trader joked.

He was asked about an email in which Johnson told Contogoulas his submission ‘should be 91’ but he was going slightly lower – which seemed to suit the request from traders.

‘I do not know what should refers to but he is saying that he is going to post 90.

‘It could be that he has the opposite position and based on that ‘should be going 91′ I have no way of telling.’

Contogoulas said these emails were not things that he had taken any substantial time thinking about – unlike the prosecution team.

‘You are spending months and years prying into these emails looking at every single word, every single date,’ he said.

‘From what I remember I didn’t even sit and think about these things – they just go bang bang bang.

‘As far as I am concerned every submission he makes is always in accordance to whatever proper and honest procedure there is.’

The five traders agreed to fix the US dollar Libor in a bid to ‘skew the benchmark’ and substantially increase their profits, the court has heard.

The London Interbank Offered Rate (Libor), the interest rate that banks charge each other for loans, is considered to be one of the most crucial rates in the finance world.

It is used as a benchmark for hundreds of trillions of dollars worth of contracts, from every day credit bills to more complex products and services.

Mathew, of Priests Lane, Shenfield, Contogoulas, of Athens, Greece, and Merchant, Pabon, and Reich, who all live in the US, deny one count of conspiracy to defraud.

The trial continues.