Case No. CO-934-2005-&-CO-3620-2005

19.Now I may turn to the facts. The account which immediately follows of the circumstances of the alleged crime is largely taken from the case assembled by the American prosecuting authorities in support of the request for extradition, principally but not exclusively drawn from an affidavit sworn by Mr Hays, Special Agent of the Federal Bureau of Investigation (“the FBI”), on 13 January 2004. In fact much of the primary factual history is uncontentious, being as often as not established by contemporary documents. I should however make it clear that the defendants hotly dispute the accusation brought against them, notably its core element of fraud upon their employers. The later parts of the narrative, dealing with events after the period of the alleged crime, are mostly drawn from documents which I will identify and in many cases quote. The Circumstances of the Alleged Offence 20.The case is, to use an advisedly neutral expression, connected with the affairs of the American company, Enron Corporation (“Enron”). The defendants were not employees, officers or shareholders of Enron. They were at the material time in 1999 and 2000 employed in London by Greenwich NatWest (“GNW”), a division of National Westminster Bank plc (“the Bank”). They are British citizens, resident in the United Kingdom. They were part of a team responsible for a number of the Bank’s clients, including Enron in the United States. Enron’s headquarters were in Houston, Texas. GNW and the Bank had offices there as well as in London. During the relevant period a Mr Michael Kopper was employed as a managing director at Enron. His primary task was to assist Enron’s Chief Financial Officer, Mr Andrew Fastow with “special projects in the structured finance area” (as it was to be put in an affidavit sworn by Mr Hays. Kopper and Fastow play an important part in the history.21.In addition to his position at Enron, Kopper was managing director of a Cayman Island limited partnership called LJM. Fastow was also involved in supervising LJM’s operations, and indeed LJM was to be described by the defendant Bermingham as Fastow’s brainchild. In June 1999 GNW, after being approached by Fastow, invested $7,500,000 in LJM. The investment was channelled through a Cayman Island company called Campsie Ltd (“Campsie”), which was a vehicle of the Bank. The defendant Bermingham was a member of Campsie’s board of directors. Another bank, Credit Suisse First Boston (“CSFB”), also made an equity investment of $7,500,000 in LJM; and Fastow himself put in $1,000,000. 22.LJM created a subsidiary called LJM Swap Sub (“Swap Sub”). Its purpose (put shortly) was to act as a vehicle for the conduct of transactions by LJM and Enron. GNW invested in Swap Sub through Campsie, and came to own a 50% stake in Swap Sub, as did CSFB. Assets owned by Swap Sub included 3.1 million Enron shares. However the value of Swap Sub was problematic, because it was involved in hedging transactions by which it was committed to purchase shares in a company called Rhythm Net, in which Enron owned a large shareholding, at future dates at agreed prices irrespective of the market price of the shares at the transaction dates. In consequence GNW valued its interest in Swap Sub at nil. The accusation against the defendants is centred on the disposal, in the events which happened, of GNW’s interest in Swap Sub.23.The Bank of Scotland and the Royal Bank of Scotland (“RBS”) both made hostile takeover bids for the Bank in autumn 1999. Each indicated that if it were the successful bidder it would sell GNW, and the Bank itself sought buyers for GNW. Thus it is said that by early 2000 the defendants were aware that GNW was likely to be sold, and that would have implications for their continuing employment. In fact RBS was to acquire the Bank on 6 March 2000. 24.In the first two months of 2000 there was a marked increase in the value of the Rhythm Net shares and in Enron’s share price. The US prosecutor asserts that in consequence the defendants appreciated that Swap Sub possessed a significant value, in contrast with the nil figure which GNW had assigned to it. On 29 January 2000 the defendant Bermingham sent an e-mail to his colleague Darby which included this:“One last thing. An unexpected change of circumstances re LJM. We have always assumed that the swap sub assets have nil value, because of the mark to market value of the Rhythm Net Put. This was true up to about 10 days ago, when Enron became a virtual company, and its shares went through $60. I ran the numbers last night, and I would say there is quite some value there now. The trick will be in capturing it. I have a couple of ideas, but it may be good if I don’t share them with anyone until we know our fate!!!”25.So it was that in February 2000 the defendants travelled to Houston. The meeting which took place there on 22 February is at the centre of the case against the defendants. The prosecutor says that it was a secret meeting with Fastow, whose purpose so far as the defendants were concerned was to explore ways and means of unlocking the value in Swap Sub for their own benefit. Reliance is placed on material contained in contemporary e-mails as showing that the defendants concealed the meeting from Kevin Howard, who was the Bank’s manager with responsibility for the Enron account. 26.It is said that at the meeting of 22 February 2000 the defendants put a written presentation before Fastow, containing various alternative proposals whose implementation would be harmful to the Bank’s interest as a limited partner in LJM. However these proposals were seemingly not taken forward, and in the event Kopper formed a partnership to purchase GNW’s interest in Swap Sub. This was done, according to the prosecutor, at the instance of the defendant Mulgrew who shortly after the February meeting had called Kopper, told him that the Bank did not believe there was any value in Swap Sub, and asked him to form the partnership. It became known as