Pabon [2018] EWCA Crim 420 – the LIBOR appeal

Amongst the complexities of the politically charged LIBOR trials, the shocking conduct of an expert witness was revealed.

The LIBOR trials concerned bank employees allegedly manipulating London Interbank Offered Rate (“LIBOR”), a global interest rate benchmark, to commercially benefit their own bank and improve their own chances of bonuses and promotions. Following a three month trial at Southwark Crown Court, a number of individuals (short term-traders and LIBOR submitters for various banks) were convicted of Conspiracy to Defraud. Their sentences ranged from 2 years 9 months to 6 years and 6 months. In short, the convictions were as a result of communications between the individuals prior to the LIBOR submission (to Thomson Reuters) to choose a figure which most benefitted them.

Mr Saul Haydon Rowe was instructed by the Serious Fraud Office as one of two expert witnesses. Mr Rowe was instructed by the SFO to provide an expert report “explaining the workings of an investment bank, inter-dealing brokerage and related financial instruments and trading terms used by individuals within these institutions.”

In accordance with Part 19.2 of the Criminal Procedure Rules, Mr Rowe had a duty to assist the Court. Part 19.2 states:

“(1) An expert must help the court to achieve the overriding objective –
(a) by giving opinion which is –
(i) objective and unbiased, and 
(ii) within the expert’s area or areas of expertise…
(2) This duty overrides any obligation to the person from whom the expert receives instructions or by whom the expert is paid.
(3) This duty includes obligations –
(a) to define the expert’s area or areas of expertise –
(i) in the expert’s report, and
(ii) when giving evidence in person
(b) 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…“

Mr Rowe produced an expert report which went beyond the scope of his expertise, in that he had no/limited knowledge of short-term traders and LIBOR submitters. The Judge at the original trial rejected an application by the defence to exclude (or restrict) Mr Rowe’s expert report on the basis that it was open to them to cross examine him as to his level of expertise. Mr Rowe’s evidence supported the SFO’s case that the defendants had acted dishonestly in their communication. Whilst the case has an extensive backdrop which is not relevant for the purpose of this article, it is worthy of note that the communication between the defendants was lawful and had been condoned by the banking world (even encouraged in certain aspects).

Mr Rowe’s examination in chief concluded on 13 April 2016 and, prior to exiting the witness box, the Judge gave him the warning not to discuss his evidence with anyone. On 14 April 2016, Mr Rowe was cross examined. Mr Rowe’s evidence covered his opinion that the short-term traders and LIBOR submitters had acted dishonestly and that his opinion was based on his expertise.

At a re-trial in March 2017, Mr Rowe was called as a witness for the SFO again. Following his evidence, the defence pushed for further disclosure and a number of emails and text messages were unearthed which were damning for Mr Rowe (and the SFO).

The emails and text messages demonstrated the following:

• Mr Rowe’s expert report was, in part, written by a colleague (Dominic O’Kane, a Professor of Pricing and Risk Financial Derivatives) which involved him sharing the SFO’s investigation and evidence with Mr O’Kane;
• Mr Rowe had ignored the Judge’s warning on 13 April 2016 to not discuss the case with anyone and sent 87 text messages and numerous emails to others, requesting help with his understanding of the issues in the case. Mr Rowe did not advise any of those people that he was an expert (mid-evidence) in a criminal trial and did not explain to them that their opinion was to be adopted by him for the purposes of cross-examination. Some of the messages sent by Mr Rowe stated “I don’t know the usual trades STIR people put on but I am learning” and “…it doesn’t help when I have to explain a few emails and look knowledgeable”.

Under cross examination at the re-trial, it was put to Mr Rowe that he had “sent out emails and texts to people, passing on the material [he] had been provided with by the SFO and saying to people: ‘can you help me to understand it because I don’t understand it'”.

He replied:
“So what else am I supposed to do as an expert?”.

It was put to him in response, which was endorsed by the Court of Appeal, that he (Mr Rowe) ought to have declared such areas as being outside the scope of his expertise.

Lord Justice Gross at paragraph 29 of his judgment states “The duty resting on an expert witness is so fundamental that where it is abused, the entire process is affected”.

During the re-trial, the Judge asked Mr Rowe whether he had read the declaration of truth on his expert report and Mr Rowe said “I don’t think I could have read them fully…”

In paragraph 58 of his judgement, Lord Justice Gross simplifies Mr Rowe’s failings as follows:

“Put bluntly, Rowe signally failed to comply with his basic duties as an expert. As will already be apparent, he signed declarations of truth and of understanding his disclosure duties, knowing that he had failed to comply with these obligations alternatively, at best, recklessly. He obscured the role Mr O’Kane had played in preparing his report. On the material available to us, he did not inform the SFO, or the Court, of the limits of his expertise. He strayed into areas in his evidence (in particular, STIR trading) when it was beyond his expertise … In this regard, he was no more than … an ‘enthusiastic amateur’. He flouted the Judge’s admonition not to discuss his evidence while he was still in the witness box. We take a grave view of Rowe’s conduct; questions of sanction are not for us, so we say no more of sanction but highlight his failings here for the consideration of others.”

Mr Rowe is now under investigation by the Metropolitan Police for misleading the SFO, the defence and the Court in four separate LIBOR trials. The report received by the police states:

“I hereby … request that you conduct an investigation as to whether or not Mr Rowe has committed criminal offences, including but not limited to perverting the course of justice, perjury, fraud by false representation, fraud by failing to disclose information and contempt of court”.

Mr Rowe has since resigned from acting as an expert witness but denies any intention to mislead.

Commentary

The considerations in the LIBOR trials are a stark reminder to all experts (and lawyers who seek to obtain an opinion from experts) that they ought to restrict their opinion to those areas with which they have sufficient knowledge and experience.

For Mr Rowe, his alleged wrongdoing goes even further than giving an opinion outside of his area of expertise. He produced a signed report which contained sections which had been drafted by someone else (arguably having the requisite expertise to give such an opinion). Furthermore, despite the clear (generic) warning from the Judge at the original trial not to discuss his evidence with anyone else, Mr Rowe communicated with a number of others in order to fill gaps in his knowledge on points which he was asserting himself to be an expert in.

We wait with anticipation to see what, if any, charges are brought against Mr Rowe. But what we do know for certain is that all experts must adhere to Part 19.2(2)(b) of the Criminal Procedure Rules to draw the Court’s attention to any question which the answer would be outside their area of expertise.

For lawyers who instruct experts (whichever side you are on), it is essential that you understand what your experts’ limitations are and ask yourselves whether they can give an opinion on the specifics of your case.