UK parliament to probe rate rigging

Friday, July 06, 2012    

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BRITISH lawmakers voted to hold a parliamentary investigation yesterday instead of a full judicial inquiry into a bank rate-rigging scandal which has notably tainted Barclays.

Prime Minister David Cameron's call for a parliamentary probe was approved after several hours of angry debate in the House of Commons, while the opposition Labour party's call for a judge-led investigation was rejected.

Politicians from all parties will now hold an investigation into the banking industry but critics have voiced concerns that this will not be as wide-ranging as a judicial probe could have been.

The probe comes amid a scandal over the fixing of interbank lending rates which has claimed the jobs of three top Barclays executives including former chief executive Bob Diamond this week.

Barclays was fined £290 million by British and US regulators last week for attempted rigging of the rates, in a potentially explosive case that might implicate other banks and trigger criminal prosecutions.

Finance minister George Osborne said a judicial inquiry would take too long to complete and accused Labour of trying to "put off the moment" of investigating the scandal.

He claims that the party — which was in government during the 2008 financial crisis which is at the heart of the allegations — could be implicated.

Labour finance spokesman Ed Balls accused Cameron and Osborne of "a very grave error of judgment" in pushing a parliamentary investigation but said his party would cooperate with the inquiry.

It is not clear when the work of the investigation will get under way.

Earlier Thursday it emerged that the Bank of England's deputy governor Paul Tucker, who has been drawn into the Barclays affair, will separately appear before the Treasury Select Committee next Monday.

The committee also confirmed that Barclays chairman Marcus Agius, who resigned this week over the row, will testify on Tuesday.

Diamond appeared before the committee Wednesday.

Tucker is likely to face questions over whether he encouraged Barclays to manipulate interbank lending rates.

Tucker, widely regarded as a possible successor to the BoE's Governor Mervyn King, requested the committee appearance to "clarify the position" of the BoE, the central bank said in a statement on Wednesday.

Questions emerged over whether Barclays had been encouraged to manipulate the key Libor and Euribor rates after Barclays published Diamond's account of a phone call with Tucker in October 2008.

That note recounted Tucker saying he was receiving calls about Barclays' rates issue from "senior" Whitehall figures and adding "that it did not always need to be the case that we appeared as high as we have recently."

Giving evidence to the committee, Diamond said Jerry del Missier — the third senior figure at Barclays to quit over the scandal — had interpreted this as an instruction to manipulate the rates.



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