Westpac denies rigging key bank bill swap rate

Westpac’s Col Roden was not talking about rate-rigging when he said ‘I may as well f..k it’, the bank’s counsel has said.

Westpac has refuted rate-rigging charges. Picture: Hollie Adams

Westpac’s star trader, Col “The Rat” Roden, was not talking about rate-rigging but merely ­expressing frustration when he said “I may as well f..k it” in relation to the benchmark bank bill swap rate, the bank’s counsel has told a court.

Matthew Darke, SC, yesterday began closing arguments in a Federal Court rate-­rigging case brought against the bank by the corporate regulator.

Mr Darke told the court that phone calls and emails in which Westpac traders appear to be boasting of moving BBSW do not establish that they traded to fix the benchmark. The Australian Securities & Investments Commission has accused Westpac of market ­manipulation by trading to rig the BBSW on 16 days between 2010 and 2012.

Much of ASIC’s case has hinged on phone calls in which Mr Roden said he was going to “f.. k the rate set” and talked about the bank’s coming big ­exposure to the BBSW in what counsel for the regulator Philip Crutchfield QC told the court was a “conspiratorial” tone.

Mr Roden has denied using a conspiratorial tone.

Mr Darke took the court to a phone conversation on the afternoon of April 6, 2010, between Mr Roden and his junior colleague, Sophie “The Perfumed Steamroller” Johnston, who was stationed at the time in London.

He said a statement by Mr Roden about having “made about 12 million bucks today” ­referred to an increase in profit after the Reserve Bank raised the cash rate and was nothing to do with setting the BBSW.

And when Mr Roden said he “pushed the one-month rate down”, he was merely describing the effect of his trading — which he had exaggerated — rather than its purpose, Mr Darke said.

During the call, Mr Roden also told Ms Johnston he “knew it was completely wrong but f. k it, I may as well, I thought f. k it”.

“We’ve got so much money on it, we just had to do it, right,” Mr Roden continued.

Mr Darke said the uses of “f..k it” were “explanations reflecting Mr Roden’s state of mind at the time of trading”. “ ‘What the hell, to hell with it,’ expressions of that kind,” he said. “ ‘Eff it’ is not being used, in our respectful submission, as a verb.”

He said Mr Roden was trying to hedge against risk, not drive down the BBSW.

Mr Darke said it was not open to ASIC to claim Westpac’s trading could not have been to hedge its positions because this was not put to Mr Roden or his boss, head of treasury Curt Zuber, during cross-examination. “Even if your honour viewed it as open to ASIC to run a case Westpac didn’t use prime bank bills for hedging, the vast weight of evidence is against that. Your honour would have to find Mr Zuber and Mr Roden were ­untruthful when they said that Westpac did use prime bank bills to hedge.”

Mr Darke said hedging might look a lot like fixing, and talk about hedging might also look like talk about fixing.

“A lot of the communications are explained as references to hedging rather than trying to manipulate the rate. A lot of these communications don’t purport to set out in detail the reasons for trading on any given day. Indeed, very few of them, if any, actually do.”