MPs are demanding an inquiry into claims that central banks and authorities misled parliament during their investigations into the rigging of the London Interbank Offered Rate, known as Libor.
The new claims come from a new book on the Libor scandal by BBC economics correspondent Andy Verity called ‘Rigged’, which The Times is publishing extracts from this week.
Speaking in parliament late last night, David Davis again repeated his calls for the Treasury Committee to investigate new evidence that suggested the authorities had misled parliament.
“The regulators, the US Department of Justice and the Serious Fraud Office rushed to assuage that anger and deliver convictions but failed to do the work necessary to properly fulfil their task. Instead, they effectively delegated investigation to the banks, allowing them to offer up middle-ranking scapegoats so that they could avoid prosecuting the directors of disaster who actually ran the banks,” Davis said.
“In British courts, critical evidence was concealed. In America, the DOJ used tactics that amounted to judicial blackmail. The result was serial miscarriage of justice,” he said.
Davis described some of the new evidence, including a call between two London-based Barclays bankers Peter Johnson and his boss Mark Dearlove.
He explained how Johnson was resisting pressure to lower Barclays’ rate, but then Dearlove replied: “The bottom line is you’re going to absolutely hate this… but we’ve had some very serious pressure from the UK government and the Bank of England about pushing our Libors lower.”
Davis said that prosecutors instead “switched their focus away from the state-sponsored lowballing” to focus on lower level traders and Libor submitters.
He then moved on to detail how parliament was potentially misled.
How was Parliament ‘misled’?
“In 2012, the then deputy governor of the Bank of England told the Treasury Committee he had learned of lowballing only in ‘the last few weeks’, yet there appears to be damning evidence that that was untrue, including meetings, phone calls and sworn testimony to US authorities,” Davis said.
“It was also claimed there were no Bank of England instructions to change LIBOR submissions, but evidence uncovered by Mr Verity suggests that is also untrue,” he added.
Former shadow chancellor, Labour MP John McDonnell, agreed that an inquiry should take place into what he described as “scandalous miscarriage of justice”.
“From the evidence available to us, it is clear that the house was misled,” McDonnell said.
City Minister Andrew Griffith said he it would be a matter for the Treasury Committee to respond to.
“I look forward to hearing the response of the Committee’s chair,” Griffith said.
The Bank of England declined to comment.
The UK’s Serious Fraud Office (SFO) convicted a total of nine traders for their role in rigging London Interbank Offered Rate, known as Libor, including former UBS and Citigroup trader Tom Hayes.
The SFO pointed City A.M. to a previous statement, where it said: “All either pleaded guilty or were found guilty by a jury. A number of those convictions have been reviewed by the Court of Appeal and all have been upheld.”