Whatever one’s views on bankers, the case of Tom Hayes, jailed for manipulating Libor interest rates, is causing deep concern, says RUTH SUNDERLAND

Prisons are full of innocent people, as the saying goes.

Many observers will have no sympathy for Tom Hayes, the former bank trader who was sentenced to 14 years – of which he served four and a half years – for manipulating Libor interest rates.

Unlike the sub-postmasters, who were very ordinary people living boring lives, Hayes was a high-octane multi-millionaire trader in Tokyo with five Mercedes cars.

When he was convicted in 2015, one of the harshest sentences ever for white-collar crime, the financial crisis was still an open wound and sentiment against traders was high.

But he wasn’t on trial for a flashy lifestyle. After recanting an early confession he said was made under threat of a 200-year prison sentence in the US, Hayes has maintained he is not guilty.

He and another trader, Carlo Palombo, failed on appeal last month. Tomorrow is the deadline for the two to apply to the Court of Appeal for permission to take on the battle to clear their names at the High Court. Hayes and Palumbo were imprisoned for manipulating Libor and Euribor respectively. These were benchmarks for rates used to set the price of trillions of pounds of loans and financial instruments.

They were led through a process in which a group of banks declared the interest rate at which they would lend to each other. During the financial crisis, this obscure corner of the banking world was in the news. It went far beyond the behavior of individual traders.

There were allegations that Bank of England officials had pressured commercial banks to cut Libor rates. Investigations were conducted on both sides of the Atlantic into whether commercial banks had manipulated Euribor and Libor. The scandal claimed a number of high-profile scalps.

Barclays was fined £290 million in 2012 for attempted interest rate manipulation. The then chairman Marcus Agius resigned honorably and former CEO Bob Diamond was not far behind.

Paul Tucker, then a deputy at the Bank of England, had a controversial conversation with Diamond over submissions and failed to realize his ambition to become governor.

But not a single British banker had been jailed and there seemed to be a culture of impunity at the top of the banking industry. Hayes believes he has been made a scapegoat.

The case turned on this question: was it against the rules for traders to make Libor or Euribor entries in the commercial interests of their bank? Or should they always have submitted the lowest rate? The judges of the court of appeal were in favor of the latter.

But in an extraordinary intervention this weekend, three eminent bankers who founded Euribor sided with Hayes and Palombo. They issued a blistering statement, saying the British court had had a “profound misunderstanding” of their intentions and the rules they had set out.

The statement, they said, was made in the hope of bringing justice to traffickers “whose lives have been ruined by flawed convictions.” Traders had acted ‘exactly as we, the founders of Euribor, expected’.

Discretion is a way of life – almost an art form – for leading bankers like Nikolaus Boemke, Helmut Konrad and Jean-Pierre Ravise, so such candid words should carry weight. However, their statement will not form the basis for an appeal: the test is ‘a question of law of general public interest’.

It is by no means self-evident that the Court will grant permission. But whatever one’s feelings about bankers, this is a matter that causes deep unrest.