Libor inquiry unexpectedly shut down

An investigation into the rigging of Libor has been unexpectedly shut down despite evidence that implicates the Bank of England.

The Serious Fraud Office (SFO) began investigating the Libor scandal in 2012, when the then-chancellor George Osborne described it as a “shocking indictment of the culture at banks”. The SFO looked into the manipulation of the Libor benchmark rate, a “key interbank borrowing rate that underpins hundreds of trillions of debt worldwide”, explains the Financial Times.

Thirteen traders and money brokers were prosecuted by the SFO over the past four years for conspiracy to defraud, resulting in four convictions, while banks and regulators around the world have faced fines running to billions of pounds.

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The BBC reports that a secret audio recording from 2008 implicates the Bank of England, which “intervened in the Libor setting process” as it was concerned about financial stability.

But when the audio was broadcast in April 2017, the Bank of England said Libor was unregulated at the time.

The SFO has now said in a statement: “Following a thorough investigation and a detailed review of the available evidence, there will be no further charges brought in this case. This decision was taken in line with the test in the Code for Crown Prosecutors.”

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The Times says the SFO’s decision “means that no one will be prosecuted in the UK for ‘low-balling’, which involved institutions understating the interest rates they paid to borrow money”.

John Mann, who served on the Treasury select committee from 2009 to 2015, said there was now a danger that lessons would not be learned from one of the darkest episodes in the City’s past.

“The Libor scandal is being allowed to quietly slip into history, increasing dangers that lessons will not be learnt and leaving those culpable not being held to account,” he said.

However, the Financial Times says the SFO’s seven-year investigation has received “criticism from lawyers who said the agency should have abandoned it sooner”.

Neil O’May, partner at Norton Rose Fulbright representing Barclays ex-group treasurer Jon Stone, said: “Questions must be asked about the effect of such a protracted investigation on those under suspicion and whether justice is indeed served.”