Secret recording ‘implicates the Bank of England in Libor fixing scandal’

A secret recording of two former Barclays bankers allegedly puts the Bank of England in the middle of the LIBOR fixing scandal that rocked the country, says the BBC. In the recording from 2008, one banker claims that the central bank was pressuring huge commercial banks to keep LIBOR rates low. LIBOR — the London interbank offered rate — is the daily measure showing the interest rate at which banks will lend to each other. It is used to set the price of hundreds of trillions of dollars worth of financial products.

The Bank of England has been assisting the SFO’s criminal investigations into Libor manipulation by employees at commercial banks and brokers by providing, on a voluntary basis, documents and records requested by the SFO.

Bank of England statement

Since the scandal first came to the public’s attention in 2012, the Bank of England has consistently said it did not know until much later about LIBOR rigging and lowballing. However, the recording from 2008 uncovered by BBC Panorama appears to contradict the BoE’s claim. A transcript of the secret recording between a senior Barclays manager, Mark Dearlove, and Barclays’ LIBOR submitter Peter Johnson states that Barclays had “some very serious pressure from the UK government and the Bank of England about pushing our Libors lower.” The BBC claims that the conversation took place on the same day, October 29, 2008, as a phone call between former BoE deputy governor Paul Tucker and CEO Bob Diamond, on which LIBOR was discussed. Diamond and Tucker later told the Treasury Select Committee in 2012 that they only become aware of lowballing after 2008. Tucker stepped down from the BoE in 2013.