Abstract
The Appellant P, together with co-defendants Johnson, Mathew, Contogoulas, Marchant and Reich, all employees of Barclays Bank PLC, faced a single count of conspiracy to defraud, alleging that they dishonestly rigged The London Inter-Bank Offered Rate (LIBOR).
Johnson pleaded guilty. P, Mathew and Marchant were convicted. The jury were unable to reach verdicts in respect of Contogoulas and Reich and they were subsequently re-tried (the retrial) and acquitted.
The Serious Fraud Office (SFO) prosecuting, alleged that P as a trader (with his co-defendants) dishonestly agreed to procure or make false or misleading LIBOR submissions in order to increase profits or decrease losses, leading in turn to increased bonuses and enhanced status and prospects of career advancement. P’s defence was that he acted in the commercial interests of his trading book and in a way that would benefit his team and the bank but did not agree to procure or make submissions of rates that were false or misleading. The central issue for the jury was therefore the question of dishonesty, which on the basis of his conviction, they decided against P.
P appealed on the ground that fresh evidence arising out of the retrial in respect of the conduct of Rowe, an expert witness called by the SFO, rendered his conviction unsafe.
At trial Rowe was instructed to provide an expert report ‘explaining the workings of an investment bank, interleafing brokerage and related financial instruments and trading terms used by individuals within these institutions’ generic to the forthcoming series of anticipated LIBOR trials. As background, Rowe was informed that the SFO was investigating allegations that ‘between 2005 and 2010, LIBOR was dishonestly manipulated across a number of different currencies and tenors’ (at [32]). Included among the areas Rowe was instructed to cover were an overview of the trading floor and an explanation of the different types of traders within an investment bank and their functions. The letter of instruction drew specific attention to the duty of an expert ‘to give objective unbiased opinion on matters within their expertise’, together with the relevant provisions of the Criminal Procedure Rules (CrimPR).
The defence made an application to exclude or restrict Rowe’s evidence on the ground of lack of expertise. While the defence accepted that Rowe had some general banking experience he had never worked as an interest rate derivatives trader, a cash desk trader or a LIBOR submitter and had no direct knowledge of these areas, he had not worked as a trader of any kind since 2000 and, from 2005 onwards, had acted as a professional expert witness on general banking disputes. The defence submitted he should therefore be prevented inter alia from giving ‘inadmissible evidence as to the permissible approach to the LIBOR-setting process, the permissible extent of communications between traders and LIBOR submitters, or whether conduct of any kind is or could be regarded as being dishonest’ (at [34]).
The submission was opposed on the basis that Rowe had demonstrated by the declaration in his expert’s report that he understood his duty to the Court, including restricting his opinion to matters within his expertise, he had given expert evidence in two previous LIBOR trials, apparently without challenge to his expertise, there was no challenge from the defence to the accuracy or reliability of the evidence proposed to be adduced by Rowe and it was open to the defence to cross-examine Rowe at the trial on his alleged lack of expertise.
The judge ruled the evidence to be admissible, subject to specific items and the agreement by the SFO not to adduce any presentational slides by Rowe which addressed the question of whether the defendants were acting dishonestly. He observed that there was no real dispute as to the principles governing the admissibility of expert evidence and that the essential question was whether the witness was skilled rather than the way he came by his skill. Any deficiencies in the expert’s knowledge would be exposed during cross-examination at trial. An agreed glossary of banking terms was thereafter produced. An addendum to Rowe’s report was excluded.
At trial, Rowe gave evidence concerning various banking terms and concepts. He was asked to comment upon e-mails sent between the defendants and the terms used in those e-mails. He utilised slides to demonstrate concepts such as the interrelationships and functions of various desks in banks and the categories of trader and the financial instruments within which they were concerned. According to P’s grounds of appeal the principal reason Rowe was called was to explain banking to the jury at increasing levels of sophistication. A secondary, and more focused, reason was to provide assistance with STIR [Short Term Interest Rate] trading and the e-mails between the defendants relating to it. In the course of this exercise, many technical topics were covered, including the importance of tiny movements in LIBOR. Rowe’s evidence did not form the basis of any cross-examination of P. At the end of the first day of giving evidence, Rowe was warned by the judge in the usual way not to discuss his evidence with anyone while his evidence remained in progress.
In summing up the case to the jury, Rowe’s evidence received limited attention, potentially reflecting the judge’s perception of its relative importance. The standard direction in respect of expert evidence was given.
At the retrial, upon a defence request for disclosure the following fresh evidence was revealed: O’Kane, a partner at Rowe’s firm and a part-time Professor of Pricing and Risk Financial Derivatives had drafted part of Rowe’s report. Rowe had sent excerpts of the case papers to two other individuals – Biddle, an interest rate derivatives trader and financial consultant at RBS and Zapties the Head of Rates Trading at HSBC. Rowe communicated with Biddle and Zapties by e-mails, telephone calls and a total of 87 text messages to obtain their assistance with his evidence. Rowe did not advise Biddle or Zapties that he was acting as an expert witness in a criminal trial or that they should exercise caution in expressing opinions on the matters they assisted him with. Rowe also communicated with Van Overstraeten by e-mail to obtain his assistance with his evidence. The exchanges included reference to STIR trading, a technical area Rowe purported to cover when giving evidence. Within an hour of the first day of his evidence ending Rowe texted Biddle: ‘30 minutes (paid!) work tonight’, for an ‘interpretation of a STIR/OIS [Overnight Index Swap] email’. In the subsequent exchange Rowe stated ‘I don’t know the usual trades STIR people put on but I am learning’. Biddle emphasised the importance of context, to which Rowe agreed but added ‘…it doesn’t help when I have to explain a few emails and look knowledgeable’ (at [48]). Rowe exchanged 26 texts and e-mails with Biddle and Zapties between the end of the first day of his evidence and the commencement of the second day of his evidence. At the end of the first day of his evidence Rowe also communicated with O’Kane stating that he would not do any more STIR cases but would engage a STIR specialist, ‘as the mission has crept beyond where it was meant to for me’. In cross-examination he explained this as meaning he was ‘at the edge’ of his expertise (at [48]). Rowe made no reference to any of these communications in his evidence. In an exchange with the judge Rowe gave the following answers (at [50]): Q: Are you really saying that when you signed off the declaration which I suspect is in standard form, you hadn’t in fact read either the CPR or the booklet? A: I don’t think I could have read them fully…. Q: Did you read them at all? A: I’m pretty sure that I glanced at something. In cross-examination, Rowe provided the following answers (at [51]): Q: What you did in 2016 was to start pinging out emails and texts to people, passing on the material you had been provided with by the SFO and saying to people: can you help me to understand it because I don’t understand it? That’s what you did isn’t it? A: So what else am I supposed to do as an expert? Q: Say it is not my field; I cannot give you an expert opinion; you the SFO should go and speak to someone else. A: I think I have had conversations with the SFO to check that they know that I am not a STIR expert.’
The SFO’s principal investigator subsequently gave evidence that he had not been present at any discussion in which Rowe had stated he was not qualified to express an opinion on any issue in the case.
Commentary
As set out in the standard judicial direction expert evidence is adduced to assist the jury with matters likely to be outside of their experience and knowledge. In order to give expert evidence a person must be peritus (Silverlock [1894] 2QB 766 [771]), that is he or she must be an expert in the areas in which he or she proposes to give evidence, however, that expertise is acquired. There are clear duties placed upon an expert, not disputed in this case, including by CrimPR Part 19 (Part 33 at the time of the proceedings). Part 19.2 requires an expert to assist the court in achieving the overriding objective of dealing with cases justly by giving opinion which is objective and unbiased and within the expert’s area or areas of expertise. This duty overrides any obligation to the person from whom the expert receives instructions or by whom the expert is paid and includes obligations to define the expert’s area of expertise (in their report and when giving evidence in person) and also when giving evidence in person, to draw the court’s attention to any question to which the answer would be outside the expert’s area or areas of expertise.
Part 19.4 dictates the content of an expert’s report. Of particular relevance are the requirements to include details of the expert’s qualifications, relevant experience and accreditation, any literature or other information which the expert has relied upon, identification which of the facts are within the expert’s own knowledge, such information as would be required by the court to determine whether the expert’s opinion is sufficiently reliable to be admissible as evidence and confirmation that he or she understood the duty to the Court accompanied by the statement of truth.
Called by the Crown, this expert was bound also by duties of recording, reporting and disclosing to the prosecution the material in the expert’s possession contained within the Guidance Booklet for Expert’s Disclosure: Experts’ Evidence, Case Management and Unused Material.
Rowe possessed only a general expertise in banking and finance. Despite the emphasis that is placed upon the care to be taken to ensure an expert does not stray beyond this, Rowe did do, and knowingly. This is particularly clearly demonstrated in respect of his evidence on STIR trading, a matter he was unable to address without extensively consulting Biddle, Zapties and Van Overstraeten. In these areas he was no more than an ‘enthusiastic amateur’ (R v Robb [1991] 93 Cr App R 161 [166]). It is unclear whether, or to what extent this particular area was addressed in his report in compliance with CrimPR 19.4, to set out clearly qualifications, experience and areas of expertise, intended to assist the Court in in determining competence and ensuring that an expert does not stray beyond the realms of his expertise.
Despite giving evidence in three trials Rowe’s shortcomings were not revealed. It might be expected that they would become apparent in the initial consideration of his competence as an expert, and the application to exclude his evidence on the basis of a lack of expertise, in an assessment of reliability (particularly given the identification by Criminal Practice Direction 19A (at that time 33A) of the indicators of reliability, including the extent to which an expert’s opinion is based upon material falling outside of his area of expertise as a specific factor likely to undermine reliability) or in cross-examination. However, cross-examination, so far as it occurred, was limited, a fact only partially explained by the fact that much of Rowe’s evidence was agreed.
Obviously Counsel, including for P, was deprived of the opportunity to cross-examine on the fresh material revealed at the re-trial. No doubt in P’s trial cross-examination on that material could have been equally devastating to Rowe and the SFO case but only if it was revealed in the same way. Had it been available prior to the trial the most likely outcome would have been that Rowe would not have been called or that he would have been restricted to his specific area of expertise. The Court adopted an appropriate approach in not attempting to transpose the outcome of the retrial into the trial and therefore conclude that the conviction was unsafe. What the court did, in maintaining what it described as a sense of perspective, was turn its mind to the question of whether, in the light of the accepted fresh evidence P’s conviction was unsafe. This question was considered against the backdrop of a strong prosecution case and in the context of the key single issue of P’s alleged dishonesty, the lack of relevance of the technical details of STIR trading to P’s defence and the limited importance of Rowe’s evidence as demonstrated via the summing up and the fact that there were other witnesses available to whom detailed questions about derivatives and STIR trading could have been put. Ultimately, the Court determined Rowe’s evidence did not impact sufficiently or at all on the key issue of dishonesty and the conviction was safe.
The judgment is clearly sensitive to the facts of the case and turns on a consideration of the entirety of Rowe’s evidence evaluated in the context of the trial as a whole. It provides, however, a startling example of how, despite the requirements of a determination of competence, the clear and extensive obligations placed upon an expert witness (by their profession and/or Part 19) and the traditional safeguard of cross-examination, the duties of an expert are capable of being successfully circumvented by those sufficiently lacking in integrity to ignore them to the extent demonstrated by Rowe, and be revealed, in this case only by a defence request for disclosure.
Notwithstanding the SFOs explanation that this ‘debacle’ arose from a failure of integrity on Rowe’s part rather than a failure of SFO policies and procedures there is as the Court pointed out, a lesson to be learned for those instructing expert witnesses and a specific lesson for the SFO here. It is surprising (and disappointing), given the complexity of the anticipated series of cases, their high profile and their implications for banking that an expert with clearly demonstrable experience and expertise in the full breadth of areas likely to be canvassed at trial was not identified – however difficult that may have been.