The trial of six former Barclays traders for alleged Libor manipulation has been delayed due to “disclosure failures” by the bank and its lawyers, litigators close to the case have claimed.
Clifford Chance is handling Barclays’ involvement in the matter, which sees the Serious Fraud Office (SFO) pursue the traders through the criminal courts. Barclays is understood to have instructed a second, unnamed law firm to run the bulk of the disclosure process.
Prosecutors pushed back the trial last month after it emerged Barclays provided “further material” to the Serious Fraud Office (SFO) that the agency might need to review.
Now it has emerged Clifford Chance made the prosecutor aware of an extra 500,000 documents “just weeks” before the trial was due to begin on February 15, according to sources.
A source said: “In January Clifford Chance wrote to the SFO on behalf of Barclays saying the bank had unearthed 490,000 documents after an error in the search process.
“The court and the defence have sought to get to the bottom of the scale of the failure to disclose the documents and the degree to which that may impact the trial date. Around 200,000 further documents have been discovered since January,” the source continued.
Contractors handling the disclosure are understood to be interrogating the material to determine whether it needs to be handed over to the SFO or disclosed to the defence.
The document dump resulted in the case being pushed back until 4 April. The SFO has charged Barclays traders Peter Johnson, Jonathan Mathew, Stylianos Contogoulas, Jay Merchant, Alex Pabon and Ryan Reich over the alleged rigging of Libor.
A number of litigators close to the dispute claimed the disclosure failing “fits a pattern” and the bank “has form” for making regulators aware of previously unseen documents on the brink of a trial or following it.
In late 2013 it emerged Barclays had discovered thousands of fresh documents related to its legal battle with Guardian Care Homes that were not made available to regulators before its £290m settlement the year before.
The Financial Conduct Authority was alerted to the existence of the new documents by its lawyers, Clifford Chance. The claimant said at the time the documents “showed Barclays’ misconduct goes further and wider than the regulatory findings”.
A source close to the Guardian Care Homes case said there was a “pattern of non-disclosure” by the bank and its lawyers that saw it initially claim “explosive documents” were “legally privileged”, that were later discovered not to be.
Herbert Smith Freehills and its client, the Royal Bank of Scotland (RBS), faced major criticism from the High Court last November for their “unfocused”, “unsettling” and “less than compelling” approach to disclosure in the bank’s £4bn battle with shareholders.
RBS’s claim it was struggling to cope with reviewing around 25 million documents resulted in a five-month delay to the trial, which will now be heard next March.
Quoted in Mr Justice Hildyard’s ruling on RBS’s application to postpone the case, the claimants said: “The defendants have adopted a process of disclosure which, though it has already taken many months, is now said, without any sufficient explanation, to require a re-review of every single one of the disclosure documents by the ‘subject specialists’.”
Hildyard J said the disclosure process was “confused by the vast armies without any sufficient focus”.
It has also recently emerged that UBS could face questions from the regulator over its release of documents relating to Libor following the trial of former trader Tom Hayes, who was sentenced to 11 years in prison for manipulating the rate last year.
Meanwhile, Lloyds Bank could also face a battle over disclosure in a case brought by Guardian Care Homes subsidiary Wingate. A source close to the case said the claimants were currently seeking further disclosure of documents relating to a BBA meeting in 2008 that could prove key to proving when senior managers at the bank knew about Libor manipulation. The case, which sees Hogan Lovells face Hausfeld, is currently in the CMC stage.
In non-banking disputes, a headline criminal case brought by the Office of Fair Trading (OFT) in 2010 against four British Airways executives over alleged price-fixing famously collapsed after a “disclosure car crash”, said a source close to the litigation.
A judge acquitted the defendants after it emerged 70,000 documents from the computer database of BA rival and Herbert Smith Freehills client Virgin Atlantic had not been disclosed to the defence in what was a major blow to the OFT.
Clifford Chance and Barclays declined to comment.