Three British bankers whose extradition to the United States caused a political storm last year are on the brink of a plea agreement that could involve an admission of wrongdoing over an alleged $20-million fraud related to the collapse of Enron.
David Bermingham, Giles Darby and Gary Mulgrew were dubbed the ”NatWest Three” when they were sent from London to Texas under a controversial treaty which, according to critics, allowed the US to seize British citizens on scant evidence.
After 16 months on bail in Houston, they are due to appear before a judge on Wednesday for a re-arraignment hearing — a process required in cases where the charges have significantly changed.
In a statement emailed to the media, a spokesperson for the trio said: ”It is possible that by then [Wednesday] they may have a case put to them against which they can enter a new plea.”
She said there would be no further comment from the defendants, although she added that their families wanted the men to be ”back home soonest”.
The three former senior bankers at NatWest’s capital markets arm were involved in a deal with an Enron off-balance-sheet venture in 2000 that culminated in $7,3-million flowing from Houston through the Cayman Islands and into their personal bank accounts.
They are accused of recommending that NatWest sell its stake in an Enron-related investment at a knockdown price — and of making a profit on the side through a conspiracy with Enron’s chief financial officer, Andrew Fastow, who is now serving a six-year prison sentence for fraud. Prosecutors allege that the transaction defrauded Enron’s shareholders to the tune of $20-million.
Under the US government’s original indictment, each of the trio faced seven charges of wire fraud and up to nine years in prison. Legal experts say that unless the government’s case has unexpectedly weakened, any plea agreement is likely to involve a prison sentence.
Sam Buell, a former Enron prosecutor who now teaches law at Washington University in St Louis, Missouri, said: ”If it looks anything like it did when it was initially charged, this is a significant fraud involving millions of dollars. For a fraud of that size, it’s likely to involve some time in prison.”
Lawrence Barcella, a white-collar crime expert at the Washington DC law firm Paul Hastings, said: ”The government is likely to argue that everybody who’s entered a plea, everybody who’s been convicted of a crime [related to Enron], has served some prison time and that these men were part of a massive fraud too.”
Lawyers for the three bankers have struggled to persuade former colleagues in Britain to travel to Houston as defence witnesses. Supporters of the trio have accused Royal Bank of Scotland, which owns NatWest, of shielding past and present staff with uncooperative corporate lawyers.
But there has also been a setback for the US government through a recent decision by an appeals court to overturn Enron-related convictions against three former Merrill Lynch bankers. The appeals judges decided that prosecutors had overstretched the definition of theft of ”honest services” — a technicality which, lawyers say, could damage many other prosecutions tied to Enron.
At the time of the three bankers’ extradition, the British government was pilloried over the inequality of a treaty weakening the criteria for evidence required to send British citizens to trial in the US.
Among those signing a letter of support for the bankers were British Airways’ chairperson, Martin Broughton; the retail tycoon Philip Green, GlaxoSmithKline’s chairperson Christopher Gent, and the London Stock Exchange’s chairperson, Chris Gibson-Smith.
Critics of the treaty said on Monday that the NatWest Three’s innocence or guilt had little bearing on the underlying debate.
Catherine Wolthuizen, chief executive of the pressure group Fair Trials International, said: ”It’s important to bear in mind that views of the fairness and appropriateness of the extradition arrangements between the US and the UK are entirely separate from how individual cases may play out over time.
”Just because the subjects of one case may decide, for whatever reason, to plead guilty doesn’t make the extradition arrangements any less one-sided or any more fair.”
Case history: Extradition was bitterly contested
Britain’s business elite cried foul when the Natwest Three were dispatched by the courts to face trial in the United States last year.
Among those protesting at Britain’s extradition treaty with America were the retail entrepreneur Philip Green, the CBI director general Richard Lambert, former Asda boss Archie Norman, venture capitalist Jon Moulton and Next chairperson John Barton.
Backed by the shadow home secretary, David Davies, the ”fair trials for British business” campaign argued that the treaty was one-sided because America had failed to ratify it for application to US citizens. The government replied that the evidence against the Natwest Three would have been sufficient for extradition under a previous, more stringent treaty.
Gary Mulgrew declared that he had been ”royally shafted”. Top City figures were among those who helped raise $2-million surety to secure the three bankers’ bail.
Campaigners argued that the trio orchestrated their controversial financial transactions from London and therefore ought to be tried in Britain. The bankers are well connected. David Bermingham is a neighbour of the Conservative MP Boris Johnson, who has spoken up on his behalf, while Mulgrew’s mother is Trish Godman, deputy speaker of the Scottish Parliament. – Guardian Unlimited Â