New ‘rigging rates’ evidence necessitates fresh inquiry, MPs say

Nine rate-rigging trials of traders and brokers took place between 2015 and 2019. 38 traders were prosecuted (24 from the UK), and 11 were convicted.

Evidence uncovered by the BBC found that the jailed traders had requested colleagues alter estimated interest rates, often by one hundredth of a percentage point up or down (a “basis point”). The result was that the London Interbank Offered Rate (Libor) average would shift to benefit the bank’s trades.

Barclays cash traders Peter Johnson and Colin Bermingham had sought to act as whistleblowers for “lowballing” – another form of rigging, whereby banks pretend to be able to borrow cash at much cheaper rates.

But the pair were prosecuted for interest rate rigging, and were alleged to have entered a conspiracy to commit fraud by asking colleagues to tweak interest rates.

However, leaked audio recordings and documentation released on BBC Radio 4 podcast The Lowball Tapes implicate the Bank of England (BoE) and government officials in pressuring Barclays to rig interest rates. 

The 2012 parliamentary inquiry was not privy to this evidence during its investigation, nor were juries in the trials that followed.

In one recording, Johnson is told by his manager Mark Dearlove that Barclays has endured “very serious pressure from the UK government and the Bank of England about pushing our Libors lower".

It also emerged that Dearlove said he was personally pressured by Paul Tucker, then BoE executive director, to “put down” Barclays’ Libor rate, because it was receiving government attention.

Furthermore, evidence suggested the BoE had been intervening in the Libor-setting process since August 2007, to attempt to manage the credit crunch and subsequent economic crash, the BBC says.

According to the BBC, both Barclays’ legal department and the Financial Services Authority had access to this evidence. But there was no mention of it in contemporarily produced regulatory notices, and MPs were not informed.

Andrew Tyrie, chair of the Treasury Select Committee at the time of the 2012 investigation, told the BBC that further inquiries would be made, had they known what has since been discovered.

"From what I can tell the whistleblowers were, as the name suggests, trying to do the right thing. Whistleblowing is a crucial part of investigative machinery. And it’s very important, it should be seen to function well. And it doesn’t seem to work in this case," he said.

Three other former and current Treasury Committee members called for a fresh investigation.

“It needs a new full, judge-led inquiry,” Treasury Committee member Kevin Hollinrake said. “You cannot have a situation where the rule-setters […] go by one set of rules and the rest of us go by another”.

Mark Garnier, an MP who was also on the 2012 Treasury Committee, suggested he would be ordering hearings if he was the chairman today. Terese Pearce, MP and part of the committee’s inquiry, echoed calls to reopen the investigation.

Neither Paul Tucker nor Barclays responded to our requests for comment. The BBC says that former Barclays executives denied coming under pressure from BoE to “lower” Libor, and the BoE denied putting pressure on banks and said Libor was not regulated then.

But the Serious Fraud office told the broadcaster it had run a thorough investigation.