David Bermingham, 44, Gary Mulgrew, 45, and Giles Darby, 44, the so-called “NatWest Three” were sentenced to thirty-seven month prison terms. The three former British investment bankers for NatWest Bank who were charged for their role in helping former Enron CFO Andrew Fastow dress up the company’s balance sheet.
According to a BBC article, they admitted conspiring with ex-Enron staff to defraud NatWest of $19m and then split $7m between themselves. The men they conspired with – Andrew Fastow and Michael Kopper – who are already in jail. According to the charges brought by prosecutors, the three men advised their former employer, NatWest, to sell part of a firm owned by Enron for less than it was worth. The three men then left the bank and bought a stake in the Enron-owned company, before selling it on at a higher price for a profit.
Enron, once the nation’s seventh-largest company, crumbled into bankruptcy in December 2001 after years of accounting tricks could no longer hide billions in debt or make failing ventures appear profitable. The collapse wiped out thousands of jobs, more than $60 billion in market value and more than $2 billion in pension plans according to reports by the Houston Chronicle.
Attorneys for the men asked that they be ordered to a federal prison in Allenwood, Pennsylvania. Allenwood has experience in the Department of Justice’s International Prisoner Transfer Program. If confined in the United States, they would be required to serve at least 85% of their sentence. However, if transferred to a prison in Great Brittain their sentence might be complete at the 50% point. Either way, all three will have direct time in federal prison.
According to the White Collar Crime Prof Blog ( a great source for white collar crime information): Among the criteria considered for authorizing a prisoner transfer are acceptance of responsibility, criminal history, seriousness of the offense, and ties to the two nations. Also considered is whether the prisoner will remain in the home country or return to the United States — rest assured, the NatWest Three are unlikely to darken our shores again any time soon. In addition, according to the Bureau of Prisons Policy Statement on transferring foreign prisoners, the transfer cannot be authorized until the prisoner pays any outstanding fine. In addition to the sentence in this case, U.S. District Court Judge Ewing Werlein ordered the three to repay the $7.3 million they received from the transaction that triggered the charges. While not a fine but restitution, I suspect there won’t be a transfer until that money is repaid. Even then, the application process will take at least a few months to complete ,once they begin their prison terms, as the bureaucracy processes the requests.
Every choice has a consequence! As an ethics and white collar crime speaker, I share that simple five word statement with groups nationwide. So often you find people – from all walks of life – make choices that, to them, seem right at the time – only to find out that the consequences of their actions are far worse than they ever imagined. I imagine this has been true for these three Brits! Not only have they been stuck in Houston for the past three years, but it looks like they will surely taste federal prison for a while.
What did they gain? Nothing! And, that is often the case when it comes to poor choices. The consequences of the choices we make can be far more significant than the short term benefit that one might think you’ll receive.