How to use libor
Martin Mallett received emails in which brokers made suggestions of where to set Libor
Updated May 27, 2015 10:29 a.m. ET
LONDON—A senior Bank of England official received emails that were part of an alleged campaign to rig benchmark interest rates, according to evidence presented in a London trial Wednesday.
Martin Mallett, who at the time was the chief currencies dealer at the Bank of England, was among a couple dozen recipients of emails sent in 2007 by brokers allegedly working at the behest of former bank trader Tom Hayes. The recipients were blind carbon-copied on the messages.
In the emails, the brokers sent out daily suggestions for where a variety of banks should set the London interbank offered rate, or Libor. Mukul Chawla, the prosecutor trying Mr. Hayes, said those emails were used in an attempt to skew interest rates for the benefit of Mr. Hayes, at the time a trader in Tokyo at UBS AG UBS -0.19 % .
Mr. Mallett, nicknamed “The Hammer,” was sent the emails at his email@example.com address.
Mr. Mallett left the Bank of England amid an investigation into attempted manipulation of foreign-exchange markets. He was fired for what the central bank described as “serious misconduct,” although the bank said his departure wasn’t directly related to the currencies-rigging investigation. Mr. Mallett, who couldn’t immediately be reached Wednesday, hasn’t previously commented.
A Bank of England spokesman said: “In line with convention followed by public bodies, where precedence to criminal trials is afforded wherever possible, it would be inappropriate for the Bank to comment on an active criminal proceeding.”
It is unclear why Mr. Mallett was receiving the emails. There is no indication that Mr. Mallett was involved in the alleged Libor manipulation by Mr. Hayes and his brokers.
The development is the latest in a series of embarrassing revelations for the Bank of
England. Last week, the bank’s plans to examine the effect on Britain’s financial sector of a possible U.K. exit from the European Union were accidentally leaked to the press.
And Mr. Mallett’s receipt of the emails is the latest connection between the Bank of England and the Libor scandal. In 2012, after Barclays admitted trying to manipulate the widely used financial benchmark, Barclays released documents showing that senior executives were under the impression that Paul Tucker, at the time one of the central bank’s top officials, had instructed Barclays to skew its Libor data. Mr. Tucker denied giving any such instructions, but the allegations led some British lawmakers to criticize the Bank of England.
In addition, documents released by the British Parliament in 2012 showed that other officials at the Bank of England were aware of concerns about the integrity of Libor, long before the manipulation scandal erupted in public view. But the central bank and other financial authorities rebuffed suggestions that they take responsibility for formally regulating Libor—a decision that years later would elicit criticism of the Bank of England for missing an opportunity to defuse a brewing crisis.
Mr. Chawla said Wednesday that Mr. Hayes’s employer, UBS, arranged special payments—or “kickbacks”—to the brokers for their assistance.
UBS pleaded guilty to Libor manipulation in 2012.
The trial of Mr. Hayes began Tuesday. The prosecutor described Mr. Hayes as “the ringmaster” and “the epicenter” of an alleged scheme to manipulate the London interbank offered rate, or Libor.
Mr. Hayes pleaded not guilty to the criminal charges, but hasn’t had the chance to present his defense to the jury. He previously told The Wall Street Journal that “this goes much, much higher than me.”
News organizations covering Mr. Hayes’s trial aren’t currently allowed to report on the identities of the brokers or their employers.
—Jason Douglas contributed to this article.Source: www.wsj.com