Recording suggests Bank of England pushed commercial banks to rig Libor

Maria Nikolova

“We’ve had some very serious pressure from the UK government and the Bank of England about pushing our Libors lower” – senior Barclays manager Mark Dearlove says in the recording.

banks

The Libor (London Interbank Offered Rate) rigging investigation has been high on the agenda lately, with more developments on the matter coming from the UK.

A secret recording, uncovered by BBC Panorama, implicates the Bank of England in the Libor rigging scandal. The recording, dating back to 2008, involves a talk between senior Barclays manager Mark Dearlove and Libor submitter Peter Johnson, with Mr Dearlove instructing Mr Johnson to lower the Libor rates, a practice known as lowballing:

“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.”

“The fact of the matter is we’ve got the Bank of England, all sorts of people involved in the whole thing… I am as reluctant as you are… these guys have just turned around and said just do it”, Mr Dearlove says in the recording.

The recording casts doubt over the truthfulness of statements given in 2012 to the Treasury select committee by ex-Barclays head Bob Diamond and Paul Tucker. Back in 2012, both claimed they had only recently got aware of the lowballing.

Peter Charles Johnson, a submitter, pleaded guilty to conspiracy to defraud in October 2014. He was sentenced to four years in prison.

Peter Charles Johnson, Jonathan James Mathew and Stylianos Contogoulas were charged on February 17, 2014 with Conspiracy to Defraud, with relation to an investigation by the UK Serious Fraud Office into the manipulation of US Dollar LIBOR. Peter Johnson pleaded guilty in October 2014, the first criminal conviction for a LIBOR offence in the UK – he was sentenced to four years in prison.

Last week, two former Barclays traders were acquitted of charges of Conspiracy to Defraud, with regards to a LIBOR rigging investigation. Stylianos Contogoulas and Ryan Michael Reich were acquitted by a jury at Southwark Crown Court following a retrial.

BBC Panorama played the 2008 recording to Mr Contogoulas. He commented that playing the recording during the criminal trials might have had an impact on the outcomes.

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