Prosecution witness in Australian bank cartel case tells court there was no collusion

1 BUSINESS

Business News - Opportunities - Reviews

 

 

SYDNEY (Reuters) – A prosecution witness in an Australian criminal cartel case against Citigroup Inc (C.N) and Deutsche Bank AG (DBKGn.DE) testified he had just 30 seconds notice about an underwriting conference call and that there was no collusion.

FILE PHOTO: The Citigroup Inc (Citi) logo is seen at the SIBOS banking and financial conference in Toronto, Ontario, Canada October 19, 2017. REUTERS/Chris Helgren

The testimony from former JPMorgan Chase & Co (JPM.N) markets head Jeff Herbert-Smith appears to be at odds with the prosecution’s case that the three banks and their client Australia and New Zealand Banking Group (ANZ.AX) agreed to withhold details about a A$2.5 billion ANZ share sale in 2015 to support the stock.

The case, in which JPMorgan has been given immunity in exchange for cooperating with the authorities, is being closely watched by investment banks around the world because it could influence how they are allowed to conduct capital raisings.

Prosecutors have argued the banks struck up an agreement to not tell investors that underwriters were buying some of the stock on two conference calls that took place in August 2015.

But Herbert-Smith, who was on the calls, told a Sydney court in a pre-trial hearing that the staff of the three banks decided to withhold information about the share sale independently and there was no agreement.

“I had 30 seconds’ notice, and three seconds to make up my mind,” Herbert-Smith said of one of the calls.

“I was flying blind on the phone call.”

Seven months later, in March 2016, when he was told the ACCC wanted to speak to him, Herbert-Smith said, “I couldn’t believe it, I was somewhat surprised”.

Herbert-Smith’s lawyer, Philip Strickland, asked: “You didn’t consider that you were involved in cartel behavior, is that correct?”

“That’s correct,” Herbert-Smith responded.

According to his lawyer, Herbert-Smith told other bankers on the call that “we are comfortable with our risk position (and) we are going to stand on it”.

“There was no prior agreement … relating to those lines you’ve just recited,” Herbert-Smith said.

Herbert-Smith said that when he met an ACCC investigator in March 2016, the investigator found it hard to believe three people on the same call made the same decision independently.

“I disagreed. Maybe it was familiarity with capital markets,” he said.

Herbert-Smith met the ACCC about six times before signing a statement that would be used to prosecute the other banks, he said.

The banks and their staff and former staff have declined to comment on the case outside of what is said in court. All of the accused have said they will defend the case, which is yet to go to trial, but none has entered a formal plea.

Reporting by Byron Kaye; Editing by Edwina Gibbs

1 BUSINESS

Business News - Opportunities - Reviews

 

 

Leave a Reply