FSA investigation In November 2001 the three bankers, having now moved to work at
Royal Bank of Canada, learned that the US
Securities and Exchange Commission (SEC) was investigating Fastow and voluntarily met with the British
Financial Services Authority (FSA) to discuss the deal. According to their own account, the Three initiated this meeting in order to "ensure transparency". Bermingham later claimed that "[w]e gave [the FSA] everything because we thought we had nothing to hide." According to a report in
The Times the FSA report was so detailed that it told the SEC whom to interview and what evidence would be needed to secure a conviction, and concluded that "there appears to be evidence that the three individuals were subject to a major conflict of interest". The warrants were among the first issued by Enron prosecutors; media reports speculated that their main purpose was to induce the Three into a
plea bargain whereby they would testify against Kopper and Fastow (seen as more important prosecution targets) in exchange for reduced sentences. During the long delay caused by the decision of the Three to fight extradition, however, Kopper and Fastow both pleaded guilty and entered into plea bargains themselves. Thus, in an ironic turn of events, Kopper and Fastow were likely to have been the key prosecution witnesses against the Three if the case had gone to trial. The indictment set out seven counts of wire fraud, each one corresponding to a document (fax, email or
wire transfer) that was transmitted electronically in the United States in furtherance of the alleged fraudulent scheme. In addition to the facts agreed to as part of the eventual plea bargain, the indictment alleged that the Three knew, at the time they recommended the sale of Swap Sub to NatWest, that its value was significantly greater than $1 million, and that the 22 February presentation to Fastow was part of the fraudulent scheme. The evidence against the NatWest Three included preparations for the 22 February presentation, which contained the phrase Problem is that it is too obvious (to both Enron and LPs) what is happening (ie, robbery of LPs), so probably not attractive. Also no certainty of making money ... They also cited the discrepancy between the amounts of money accepted by NatWest ($1 million) and Credit Suisse First Boston ($10 million) for their equal stakes in Swap Sub. In September 2004 a judge at
Bow Street Magistrates' Court ruled that the extradition could proceed. The Three responded by suing Britain's
Serious Fraud Office (SFO) in the
High Court of Justice, seeking
judicial review to force a prosecution in the UK which would have taken precedence over the US investigation. In response the SFO issued a statement defending its decision to defer to prosecutors in the US: After a significant delay, the extradition was endorsed by Home Secretary
Charles Clarke in May 2005. The Three appealed this decision also in the High Court. On 20 February 2006 both the appeal against extradition and the suit to force the SFO to prosecute (which were consolidated into one case) were rejected by the High Court. The bankers appealed further to the
House of Lords, but this appeal failed on 21 June 2006. On 27 June 2006 the Three lost an appeal to the
European Court of Human Rights. Rumours in the British press that the government would support the Three's case were rejected by
Attorney General Lord Goldsmith on 7 July 2006.
Initial court proceedings in the United States After all legal avenues of appeal against extradition had been exhausted, the Three arrived in Houston on 13 July 2006. They spent one night in that city's Federal Detention Center before being released into the custody of their attorney, under a requirement that they wear electronic monitoring devices. On 21 July, a judge ruled that the Three could go free on bond but could not leave the Houston area, could not meet with each other without their lawyers present, and were required to raise between $80,000 and $150,000 by the end of the month. US immigration services gave them permission to accept employment in the US for a period of one year, but, because of the judge's order, they were not permitted to leave the Houston area to seek or obtain work.
Trial date postponements On 2 August 2006 the trial date was delayed indefinitely from 13 September 2006, in order to allow two of the Three to secure legal representation. On 9 August 2006 the legal situation of the Three was complicated by
subpoenas served on them in an Enron-related civil suit against
Royal Bank of Canada. On 12 August 2006 all three informed the judge that they had retained attorneys. On 6 September 2006, the trial date was set for February 2007 if witnesses could be obtained in time, failing that for 4 September 2007. Until that time the Three were required to wear monitoring devices and were forbidden from leaving the Houston area. On 1 August 2007, the trial date was moved back yet again to January 2008. This was following another earlier postponement to 22 October. This further delay was a significant blow to the three, and their supporters stressed again the problems they were facing with the scale of legal fees and further separation from their families in the UK.
Witnesses controversy On 6 August 2007, the Three asked the judge in the case to order six former colleagues living in Britain to provide video testimony for their defence. In a court filing explaining this request, they alleged that "[s]everal individuals now refuse to travel to the United States to appear on defendants' behalf because they feel, or have been, threatened by the [US] government". Such a request would have required the co-operation of British authorities. and that "counsel for the purported victim in this case [RBS] has interfered with the ability of defence counsel to obtain relevant testimony". They concluded that the Three's ability "to mount a vigorous defence has thereby been severely compromised, if not eviscerated". In the plea agreement, the Three pleaded guilty to count four of the indictment, relating to the email from London to Houston of the final Swap Sub sale documents. A "statement of facts" was appended to the plea agreement as Exhibit A and was signed by all three defendants. Other British commentators agreed that this was a possibility. The
Telegraph piece went on to claim that the statement of facts did not state that the Three knowingly defrauded NatWest. Giles Darby said that he "fundamentally" disagreed with the claims made by Bermingham and Mulgrew in the video.
Sentencing and prison The NatWest Three were sentenced on 22 February 2008 to 37 months of imprisonment. They were also required to repay $7.3 million to RBS Securities, the successor bank to Greenwich NatWest, of which $1.25 million would be due when the men surrendered themselves to prison authorities. During sentencing, the Three each made brief statements to the judge. Mulgrew said that he had shown a "lack of integrity" and "exercised poor judgement", concluding that "I have no one to blame but myself". Mulgrew, Darby and Bermingham were assigned consecutive federal inmate numbers (66096-179, 66097-179 and 66098-179 respectively). They were later allowed to serve the remainder of their sentence in England. Bermingham was moved from Spring Hill
Open Prison to a
closed prison in Grendon Underwood in August 2009. The three were released in August 2010. ==Public relations campaign in Britain==