The Bank of England has come under attack for failing to properly investigate its role in the rigging of foreign exchange markets.
In a report commissioned by Jesse Norman, the Conservative MP and a member of the Treasury select committee (TSC), a leading UK barrister said the Bank set “very low tests” for its inquiry into the scandal.
Charles Béar QC suggested a Bank-commissioned review by another barrister, Anthony Grabiner QC, was so narrow that it did not hold officials up to sufficient scrutiny.
Béar said: “The upshot is … that the performance of the Bank’s officials at various levels has not been subjected to scrutiny in the way in which professional people are normally assessed when a serious problem comes to light.
“The broader question of serious professional misconduct which would be a standard part of an equivalent investigation in other spheres of life was not part of the reference.”
The critical report is likely to set the tone for a fractious TSC evidence session on Tuesday morning, when the Bank’s governor Mark Carney and chairman of the Bank’s court, Anthony Habgood will take questions on the Grabiner report and the inquiry process.
Last March, the Bank appointed Grabiner to investigate allegations that some of its staff may have been involved in manipulating the £3.5tn-a-day foreign exchange markets. Grabiner cleared the Bank of improper behaviour.
He did however conclude that Martin Mallett, the Bank’s former chief currency dealer, made an “error of judgment” by not telling his superiors about his concerns that bank traders were sharing information.
Two UK and US regulators said they had found a “free for all culture” rife on trading floors which allowed the markets to be rigged for five years, from January 2008 to October 2013.
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