Confirmation of a long sentence for rigging Libor is a flash of steel at a time when the political pressure on corporate wrongdoing seems to be easing.

The director of the Serious Fraud Office, David Green QC, is likely discovering that the old newspaper saying ‘two’s a trend; three’s a feature’ holds largely true. The fact that the Green-led SFO is having a ‘good run’ has itself become the subject of comment pieces.

An important episode in that good run was the heavy sentence handed down in August this year to former UBS Group AG and Citigroup Inc trader Tom Hayes for rigging Libor.

This was a significant moment for the UK, where regulators and prosecutors have looked with envious eyes to the ability of US justice to punish and deter corporate wrongdoing through the use of arrests and custodial sentences. Until Hayes was sentenced to 15 years for ‘conspiracy to defraud’, the jibe that no one here went to jail for the misdeeds associated with the banking crisis held true.

It was one of the longest sentences handed down in the UK for a non-violent crime. This week’s Court of Appeal decision to keep the sentence on the long side by cutting it to 11 years keeps the credit for securing this prosecution intact.

Hayes was granted leave to appeal this decision, but in the current political context it has an importance beyond Hayes’ own tariff.

Green QC’s tenure at the SFO was due to end shortly, and has been extended. The announcement followed the Hayes case and the SFO’s first ‘plea bargain’, and was just ahead of a guilty plea by Sweett Group for Bribery Act offences in the Middle East.

This is his ‘good run’, and other cases in the SFO pipeline may provide more such moments.

Being seen as effective makes it much easier for Green to defend the SFO against a proposed merger with the National Crime Agency. The idea had some traction. Governments like to merge public bodies, as it can be presented variously as a ‘bonfire’ of quangos, cutting red tape, or making cuts to bits of the state that have questionable value to fund more doctors and nurses.

And so, last October home secretary Theresa May seemed in favour of the NCA absorbing the SFO, which had received a bad press for, among other things, the ill-conceived Tchenguiz investigation into alleged secret payments to exit staff.

Results have increased Green’s legitimacy, just as the NCA copes with senior departures and the collapse of major court trials. Politicians only like to kill organisations that are failing or obscure in the public’s eyes.

Merger has to be off again, though an incoming NCA head will be keen to prove their own effectiveness inside two years of appointment. It’s a space to watch.

But the timing of this boost in the SFO’s standing is also important at a much broader level. It is a flash of steel at a time when the political pressure on corporate wrongdoing seems to be easing.

The chancellor and the Bank of England have said that there has now been enough ‘banker bashing’. In press briefings and in public documents, senior Bank officials express concern that the attention required by the demands of regulatory compliance is impacting on commercial activity.

And there have been Ministry of Justice and Treasury U-turns on proposals that would have increased personal and corporate liability for financial crimes.

Further, Green had argued for a corporate crime offence that the ministry quietly dropped in September.

Morale matters hugely to the performance of prosecutors and regulators, and confirmation of this long sentence will act as a counterweight to the expectation that ‘business as usual’ can be resumed.

The average trader may not read the whole judgment. But its gist will be noted – that dishonesty is not a relative concept. The defence that his conduct was normal for its time and place was run and a jury, and now the Court of Appeal, wouldn’t wear it.  

As the decision states: ‘The court must make clear to all in the financial and other markets in the City of London that conduct of this type, involving fraudulent manipulation of the markets, will result in severe sentences of considerable length.’

Eduardo Reyes is Gazette features editor