The NatWest Three, the British bankers whose fight against extradition to the United States became a cause celebre last year, have agreed to serve a three-year prison sentence after admitting to Enron-related fraud charges.
After five years of protesting their innocence, rallying a string of prominent businessmen to their cause and enjoying a public petition on their behalf by a national newspaper, the trio's fight ended with a guilty whimper in a Houston courtroom last night.
Stiff-backed and clear-voiced, one by one David Bermingham, Giles Darby and Gary Mulgrew responded to a plea inquiry from judge Ewing Werlein. "Guilty, your honour."
The three men were each facing seven charges of fraud, but the US government dropped all but six in return for securing their guilty pleas, heading off what promised to be a lengthy, costly and complex trial due to start in January. The recommended 37-month sentences are less than the five-year maximum allowed by law, and both sides said it was likely the trio would be allowed to serve at least some of the time in a UK jail. If found guilty on all seven original charges, the maximum jail term would have been nine years.
As part of the deal, the men will also now be returning the $7.3m they have admitted defrauding from NatWest bank, now part of Royal Bank of Scotland.
"It was time to accept responsibility, get this past them and move forward," said David Bermingham's lawyer, Dan Cogdell. The men "absolutely" felt remorse for what they had done, he added. "These past 17 months [since their extradition to the US], they have had plenty of time to consider the things they should have done differently and the things they will do differently in the future."
Bermingham, Darby and Mulgrew admitted defrauding their then employer, NatWest, in 2001 when they persuaded it to sell its stake in an Enron subsidiary for just $1m to a company in which they had a secret financial interest. That company then sold it back to Enron just days later for $20m. The trio pocketed $7.3m of the difference, and Andrew Fastow, Enron's disgraced chief financial officer, and another Enron employee shared in the remainder. Mr Fastow is serving six years in jail and had been slated as a prosecution witness against the NatWest Three.
Judge Werlein is not obliged to accept the plea deal. He ordered a probation report and scheduled a decision on sentencing on 22 February, but Mr Cogdell told him that, for the first time in his professional career, he would be asking the court to bring forward the sentence. The sooner the men begin their US prison time, the sooner they can apply to move to a UK jail to be nearer to their families.
The trio will remain free on bail and on an electronic tag until then, and the judge refused a request to allow them to travel beyond the Houston area to which they have been confined since being brought to the US in July 2006. "They already have generous terms of release," he said. "Some of us live our entire lives within that territory."
The case of the NatWest Three threatened to cause ructions between the UK and the US last year. They were extradited under a controversial treaty which meant the US was not required to provide evidence of a case against them, which at the time only the UK had ratified. The brouhaha kick-started the ratification process in the US.
The business community had been alarmed that a treaty ostensibly aimed at smoothing terrorist prosecutions was being used by the US to pursue white collar crime, and the Daily Telegraph threw its weight behind a campaign to keep the trio in Britain, turning three millionaires into unlikely poster boys for international fairness. Even Bermingham observed at the time that "we are fundament-ally unsympathetic people... ex-bankers who made a lot of money out of doing a deal that turns out to look really smelly."
"Today's guilty pleas demonstrate that the extent of the fraud at Enron went well beyond US borders," said Kenneth Kaiser of the FBI's criminal investigative division. "The FBI remains committed to bringing to justice those responsible for corporate fraud, no matter where our search may lead."