JPMorgan to HSBC said to stall EU Euribor case amid bias inquiry
By Bloomberg
JPMorgan Chase & Co., HSBC Holdings Plc and Credit Agricole SA delayed by months the European Union's probe into Euribor rigging amid scrutiny of possible EU bias, according to three people familiar with the investigation.
The trio gained more time to respond to the EU's May antitrust complaint after demanding to see files necessary for their defense, said the people who asked not to be named because the issue is private. These requests have been taken more seriously since the EU's ombudsman started inquiring into Credit Agricole's bias allegations, two of the people said.
"The European Commission doesn't want to appear to have been too tough on Credit Agricole," Adrien Giraud, a lawyer at Willkie Farr & Gallagher LLP, said. "That might explain why they were more lenient on deadlines than usually."
The Euribor-rigging investigation has been strained since the three refused to join four other lenders including Deutsche Bank AG and Societe Generale SA who paid a total of 1 billion euros ($1.3 billion) to settle the case. The delays -- including the latest scrapping of a mid-September deadline for responses - - robbed Joaquin Almunia, the EU's antitrust chief, of the chance to impose another set of fines on the finance industry as he prepares to leave office at the end of next month, the people said.
Representatives for the commission, JPMorgan, HSBC and Credit Agricole all declined to comment on the Euribor investigation.
The EU ombudsman, the internal EU watchdog, opened a case on July 31 after Credit Agricole complained that public comments made by Almunia indicated he had already made up his mind about the conclusion of the Euribor probe, Bloomberg News reported this week.
'Fairness and Transparency'
Almunia's stance explains the banks' determination to try to delay the case until after his departure, said the people.
His successor, former Danish Economy Minister Margrethe Vestager, is scheduled to take over the EU antitrust brief and deal with the EU ombudsman's inquiry at the start of November.
Vestager said this month that all cases should be "treated with fairness and transparency."
JPMorgan, HSBC and Credit Agricole were accused on May 20 by the commission of colluding to rig Euribor rates.
The so-called statement of objections was the next step in the EU enforcement process after the banks dropped out of settlement talks last year. The EU procedure allows them to respond to the complaint in writing and request a hearing. If companies fail to deflect accusations in antitrust cases they are then usually fined.
The Euro Interbank Offered Rate, or Euribor, and Libor, the London Interbank Offered Rate, gauge banks' estimated cost of borrowing over different periods of time. Libor alone is the benchmark interest rate for more than $300 trillion of securities.
Banks Prejudged
While JPMorgan, HSBC and Credit Agricole haven't yet been found liable, the December settlements spell out their role in helping to manipulate Euribor, said another person familiar with the confidential EU documents. This suggested the EU had prejudged the three banks before they were given their full due- process rights, said the person who is familiar with the reasoning of a settling bank and raised the issue with the commission.
The commission shouldn't make "any allusion to the liability" of companies in a final decision -- such as the December Euribor settlements -- before the firms are given a chance to fend off charges, according to EU case law.
"The companies could argue their case has been decided before they had the chance to defend themselves," said Alfonso Lamadrid, a lawyer at Garrigues in Brussels who's not involved in the case. This would give them "new procedural ammunition to challenge an eventual sanction" in court.