US Govt wants to cut questions about BBA’s discussions with Bank of England over LIBOR

Maria Nikolova

The US Government does not approve of a question on whether the BBA had discussions with the Bank of England or other regulators concerning Panel Bank submissions.

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As the US case against Matthew Connolly and Gavin Campbell Black, former derivative product traders at Deutsche Bank who are accused of LIBOR rigging, gathers pace, so does the process of obtaining evidence.

As FinanceFeeds reported earlier in July, the ex-traders are seeking to depose John Ewan, a former LIBOR Director of the British Bankers’ Association (BBA). Mr Ewan’s expected testimony would be relevant and material to key issues in this case, the defense argues, as he was first the BBA’s LIBOR Manager, and then the LIBOR Director. Also, his role entailed looking after the day-to-day operation and publication of the LIBOR benchmark, working on preparing material for the committee that oversaw LIBOR, as well as conducting annual relationship meetings with contributor panel banks and having discussions with others in the financial community.

Mr Ewan is expected to offer material testimony concerning the considerations and flexibility allowed by the BBA in the interpretation of the LIBOR definition. He is expected to provide exculpatory evidence to counter the Government’s argument that the Deutsche Bank USD LIBOR submissions “were false precisely because they did not conform to the BBA’s definition.”

On Monday, July 9, 2018, the US Government provided a response to the defendants’ motion, which is overall supportive of their request to depose Mr Ewan. However, the US Government would like to revise the letter rogatory proposed by the defendants.

In particular, “the “Questions Proposed to Mr. Ewan” section of the draft letter rogatory should be revised—to omit the reference to whether the BBA had discussions with the Bank of England or other regulators, as such discussions would be irrelevant to any theory of liability”.

Here is the question that the US Government wants to delete:

“Whether the BBA had discussions with the Bank of England or other regulators concerning Panel Bank submissions and the practice of submitting rates lower than the rate at which the bank could borrow funds for reputational reasons”.

Let’s note that this is not the first time that the Bank of England gets embroiled in the LIBOR-rigging scandal. In April this year, a secret recording, uncovered by BBC Panorama, implicated the Bank of England in the Libor manipulation 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 said in the recording.

The question about the BBA’s discussions with the Bank of England over LIBOR means that this recording has not been forgotten.

The case, captioned USA v. Connolly (1:16-cr-00370), continues at the New York Southern District Court.

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