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Has there ever been a more misconceived, ill-thought-through campaign than that to prevent the NatWest Three being extradited to the US?
A whole raft of UK Plc's supposed great and good took up their cause. We were led to believe that these were three ordinary, hardworking bankers being subjected to harsh and unfair treatment from the uncaring machine that is American justice. Leading the call to arms was Sir Digby Jones, then the director-general of the CBI.
Said Digby of the decision to extradite David Bermingham, Giles Darby and Gary Mulgrew: "There is no prima facie case against these three men." The US, said the voice of British business, was an "ignorant bully" and he warned: "It is going to take a long, long time for the business community to forgive the Government for this."
Behind all the rhetoric was the supposition that the men were innocent. They said so, their PR advisers said so, and plenty of people, including Jones, believed them
But last week in a plea bargin with the Americans to avoid a lengthy trial and possible 35 years in jail, they pleaded guilty.
What they were accused of was defrauding their former employer, NatWest. The leader of the three was Mulgrew. He headed a team at Greenwich NatWest, the NatWest's US investment banking subsidiary, that handled as one of its clients, the Texas energy corporation Enron.
Known for being fiercely competitive (he liked to refer to Enron as "hard on"), Mulgrew made it his business to get close to Andy Fastow, Enron's chief financial officer and the brains behind the off-balance-sheet deals the incredibly fastgrowing oil giant used to hide its true worth. After Enron collapsed, one of these transactions was seized upon by US investigators.
NatWest and another bank, CSFB, established a 50-50 offshore company called Swap Sub to help mitigate Enron's tax liabilities. In 2000, a year before Enron's £40 billion demise, Fastow made an offer to Mulgrew to buy out NatWest's stake in Swap Sub for £1 million.
Fastow accompanied his approach with another suggestion: that the three invest in another offshore company, called Southampton, that was buying Swap Sub. They put in £136,000 and then, soon afterwards, Southampton sold its only asset to Enron and the trio made a profit of £4.2 million.
Key facts that should have made their vocal supporters question their innocence were that they bought out the NatWest share of Swap Sub one day after leaving the bank's employ; the bank had no idea they owned a slice of Southampton; and CSFB, NatWest's 50-50 partner in Swap Sub was paid £5.4 million for its identical share versus the British bank's £1 million.
Other factors that Digby et al failed to consider or chose to ignore were that the US prosecutors were being assisted by Fastow who received a lighter sentence (six years) for his scams; that only one of 36 former colleagues asked to testify on behalf of the three agreed to do so; and that Royal Bank of Scotland which acquired NatWest singularly refused to help.
They and their New Best Friends argued the Americans were applying a new law for suspected terrorists to get them sent to the US. But as it happened, the case against them was so strong they would almost certainly have been extradited under the old law anyway.
The three and their pals maintained it would be preferable if they'd stood trial here in the UK. What, so their expensive lawyers could drag the case out for years and in the end, if it did reach court, they could bamboozle a jury into believing they were not guilty?
Now he's a Lord and in the same Government that business can't forgive (you really can't make it up), Digby might want to reflect on the real scandal of the NatWest Three - that if it had been left to the UK authorities and their lamentable record in dealing with fraud cases, they would have got away with it.
Reader views (2)
Chris Blackhurst's article is spot-on! Even those of us living out in the sticks could see beyond all the hype and special pleadings of the city on these gentlemen. It would be great to see an expanded version in one of next Sunday's broadsheets with a response from Sir Digby, now, of course, one of Gordon Brown's distinguished 'GOATS'!
- John, Minehead, Somerset, 05/12/2007 13:04
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You are so right. Having had the unfortunate experience of working with Mulgrew it was noteworthy that the ex NWM alumni exchanged 30 emails and phone calls when they were extradited and we all fervently wished that they had gone inside for 35 years not three. No one seems to have asked what they got up to when they went to Royal Bank of Canada after they left NWM.
Pity the UK taxpayer if they ever succeed-there will certainly only be a profit for them.
- Stephen, London, UK, 03/12/2007 14:53
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