Labour urge inquiry into Libor manipulation scandal

Maria Nikolova

“It is essential that we clarify who took the decisions to rig the Libor index, and when”, John McDonnell MP, Labour’s Shadow Chancellor.

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The UK has seen an increasing volume of calls for an urgent investigation into the Libor rigging scandal that was reignited about a week ago, when a secret recording implicated the Bank of England and the UK government into the rate manipulation.

On April 16, 2017, John McDonnell MP, Labour’s Shadow Chancellor, added his voice to these calls, as he wrote to the Chancellor, Philip Hammond MP, to request the opening of a public inquiry into the scandal of Libor interest-rate rigging.

John McDonnell notes that the rigging of Libor was known to regulators and Bank of England staff at least as far back as August 2005. He stresses that as small businesses and public bodies are dependent on loans and more complex financial products linked to the value of Libor, the manipulation of the interest rate could have cost the public billions.

“It is essential that we clarify who took the decisions to rig the Libor index, and when, so that the schools, NHS hospitals and local councils that lost out can be paid the compensation that is rightfully due and public confidence in our banking system and official institutions can be restored” – John McDonnell MP.

The secret recording played by BBC Panorama dates back to 2008 and includes a talk between senior Barclays manager Mark Dearlove and Libor submitter Peter Johnson. In the recording, Mr Dearlove tells Mr Johnson:

“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.”

On April 6, 2017, a jury at Southwark Crown Court acquitted two former Barclays traders – Stylianos Contogoulas and Ryan Michael Reich, of charges of Conspiracy to Defraud, with relation to a Libor rigging investigation.

Mr Contogoulas has said that playing the recording during the criminal trials might have changed their outcomes. Tom Hayes, an ex-Citigroup and UBS trader who was convicted on eight counts of conspiracy to defraud in August 2015 and is serving an 11-year sentence at present, has urged a probe after the BBC aired the recording.

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