A witness for the prosecution in an Australian case against Deutsche Bank and Citigroup Inc. involving aid to a criminal cartel testified that the two banks were not guilty of collusion. However, former market head for JP Morgan Chase & Co., Jeff Herbert-Smith, admits to helping prosecutors build their case in exchange for immunity.
The testimony from Herbert-Smith is a bit of a blow to the prosecution who need JP Morgan to help them prove that the banks were part of a scheme to aid the criminal cartel in an issue pertaining to $2.5 billion in shares in 2015. The alleged scheme also involved Australia and New Zealand Banking Group.
The charges were filed by the Australian Competition and Consumer Commission and allege the banks misrepresented the details of the share sale to inflate the price of the stock. JP Morgan enjoys immunity in the case due to their cooperation with authorities.
Three senior staffers for JP Morgan spoke at pretrial hearings and said their cooperation with prosecutors began in 2016. The three senior staffers went on record with written statements a short time later.
Herbert-Smith explains his first 2016 encounter with the ACCC took place a few months after the capital was raised for the shares. He agreed to give an honest account of his role in the incident. The former market head is adamant in his testimony, however, that he rejected the suggestion by an investigator who interrogated him that the three banks worked together on the issue.
Herbert-Smith told a full courtroom that he rejected the assertion by the investigator and stood his ground. In reference to a phone call that took place between officials from the bank, Herbert-Smith says no collusion took place.
None of the banks involved have been willing to speak to the media about the ongoing case. Herbert-Smith’s Linkedin page says he left JP Morgan in February of 2016.
Mark Dewar is the head of the Australian branch of JP Morgan. Dewar said at the hearing he spoke to the ACCC for more than a year before signing the witness statement he provided to the organization.
Dewar says he first began working on the draft he provided for the ACCC in October 2016 but did not sign the statement until April of the following year.
The ACCC formalized the charges against the banks in 2018. All three of the banks proclaim their innocence and say they will fight the charges.
Dil Bole Oberoi
