Click here for the full story of the NatWest Three

Three NatWest bankers who fought extradition from Britain to answer a multimillion-dollar fraud charge face 37 months in jail after dramatically pleading guilty last night.

Gary Mulgrew, David Bermingham and Giles Darby had fiercely maintained their innocence since September 2002 against charges of defrauding the NatWest-owned bank where they had worked out of $7.3 million through a suspect deal. They are believed to have agreed to pay this sum as restitution to the Royal Bank of Scotland.

The trio had each been charged with seven counts of wire fraud – illegally gaining money through international banking systems – that left them facing a maximum prison sentence of 35 years each.

All three men were extradited from Britain to Houston, Texas, on July 13 last year under a controversial treaty after a high-profile campaign.

In a hearing before District Judge Ewing Werlein in the Southern District of Texas Court in Houston last night, they agreed to a plea bargain in which they admitted their guilt for the first time, but pleaded guilty to only one of the seven counts of wire fraud against them.

Prosecutors said that the three bankers had advised Greenwich NatWest, the subsidiary of NatWest where they worked, to sell off its stake in an Enron business in 2000 at well below its market value. The men admitted that they had quit the bank and bought a $250,000 stake in the Enron unit, which they sold on at a higher price to make a total of $7.3 million.

All three men pleaded guilty to being involved in an e-mail sent from London to Houston on March 17, 2000. The e-mail contained the final sale documents for the company Swap Sub, which is at the centre of the allegations.

The remaining six counts of wire fraud are expected to be dismissed when the three bankers are sentenced formally in Houston on February 22.

The eleventh-hour change of plea may have something to do with the length of time that the men have been apart from their families.

Standing next to the three defendants outside the court, Reid Figel, Mulgrew’s lawyer, said: “By changing their plea today, Gary, Giles and David have fully accepted the responsibility for the significant lapse of judgment that led to the signing of these charges and which has caused them to be separated from their family and friends in the UK for more than 17 months.”

Mr Figel went on: “We look forward to working with the UK and the US governments to promptly transfer Gary, Giles and David back home to serve their sentence.”

Earlier in court, Dan Cogdell, defending Bermingham, urged the judge to consider bringing forward the defendants’ sentencing date. “They can’t get out until they get in,” he said.

The terms of the plea deal have not yet been accepted by the US court.

The extent to which the agreement watered down the original charges will raise questions over the length and expense that the US Justice Department has gone to during the five years that it has spent pursuing the case. In particular, critics will want to know why the US Government pursued this case so doggedly on the basis of a new extradition treaty that was already highly controversial.

It will also reignite the debate as to why Tony Blair, the Prime Minister at the time, defended their extradition.

The trio became a cause célèbre in 2004 as the most prominent target of a new extradition treaty between Britain and the US, which allowed America to extradite criminal suspects from the UK without prima facie evidence. The treaty was signed by David Blunkett in 2003 and came into effect in 2004. The treaty – and the ruling in September 2004 that the NatWest Three’s extradition should go ahead – was greeted by protests from British politicians, business people and human rights campaigners.

The NatWest Three were accused of persuading Greenwich NatWest, the investment bank that is now owned by Royal Bank of Scotland, of selling a stake in a Cayman Islands investment company at a fraction of its real market value to a small company controlled by Andrew Fastow, the former chief financial officer of Enron.

The stake was then sold to Enron for its true value and Mr Fastow shared the profits with the trio, who made about $2.4 million each.

The cast of characters

Gary Mulgrew, 45, was a bouncer at a Scottish nightclub before entering the world of finance. He was immortalised as Braveheart in the novel The Pursuit of Happiness, a thinly veiled account of the world of banking written by a former colleague at Greenwich NatWest, where Mr Mulgrew ran the structured finance division and where the alleged fraudulent transaction took place

Giles Darby, 45, was born in India, where his father was a diplomat, and joined NatWest at 17. He has five children from two marriages and inspired the character of the Energiser Bunny in The Pursuit of Happiness. He is best friends with Mr Mulgrew

David Bermingham, 45, has three young children by his wife, Emma, whom he met when he had left the Army for the City. He was living in a mock castle in Oxfordshire before his extradition to the US. He is characterised in The Pursuit of Happiness as Charlie Bristols, a man who wades through the small print

Bank charges

December 2001 Collapse of Enron, the US energy giant
June 2002 US prosecutors issue arrest warrants for David Bermingham, Gary Mulgrew and Giles Darby over a suspected £11 million fraud involving an Enron subsidiary
September 2004 Judge rules the three can be extradited to US
February 2006 The High Court upholds the extradition
July 13, 2006 The three are extradited
January 7, 2008 Trial to start unless charges are dropped or a plea-bargain agreed

Explore Law

• Columnists

• Law Panel

• Law Reports

• Student Law

Times Recommends

• BGC 'set aside £40m to lure Tullett brokers'
• Legal aid review to ensure value
• Fears as 21 magistrates' courts face closure