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Categorized | Banks, Currencies, Financial

BofE report into forex-rigging cost £3m

Posted on January 30, 2015

The Bank of England is being urged to raise rates©Bloomberg

The Bank of England paid almost £3m of taxpayers’ money for a report on whether any of its staff knew about or were involved in alleged manipulation of one of the world’s biggest financial markets.

More than £400,000 was paid to Lord Grabiner QC, a senior barrister, according to BoE correspondence published on Friday.

    During a testy hearing earlier this month, Lord Grabiner told the Treasury select committee that he did not know how much he charged, or whether he had been paid by the central bank to lead the investigation, which reported its findings in November.

    Lord Grabiner has been involved in some high-profile inquiries. He chaired News International’s independent standards committee in the wake of the phone-hacking scandal. He charges an hourly rate said to be up to £3,000.

    The BoE gave no breakdown of how many hours he or other members of the legal team worked to compile the report, which cleared central bank officials of behaving improperly. The report did, however, criticise the former chief foreign exchange dealer, who has since left the institution, for not passing on concerns about possible collusion among traders.

    An international probe has investigated whether banks rigged the $5tn-a-day forex market. So far, six banks have paid $4.3bn to US, UK and Swiss authorities.

    Lord Grabiner told the Treasury committee, which questioned the thoroughness of parts of his report, that he had given a “serious discount” to the BoE, but did not specify the amount.

    “Barristers don’t get into the grubby world of negotiating their fees,” he said at the time.

    MPs on the committee said they would push the BoE to disclose how much it had paid for the investigation.

    “This was, by necessity, a substantial and thorough investigation that spanned the best part of a year and retrieved close to two million documents,” said the BoE.

    “While it was costly, the potential cost to the Bank’s credibility, and thus capacity to carry out its responsibilities effectively, would also have been considerable, had we not carried it out.”

    The disclosure of Lord Grabiner’s fees comes after the Financial Conduct Authority revealed it had spent £3.8m on an independent lawyer-led inquiry into a press briefing that caused shares in life insurers to plunge last year.

    Lord Grabiner is also leading an unrelated inquiry on whether BoE officials knew about or participated in alleged manipulation of a series of money market auctions launched at the start of the financial crisis, people familiar with the situation have told the Financial Times.

    The BoE correspondence, published on Friday, revealed that the bulk of the fees for the foreign exchange inquiry — £2.2m — was paid to Travers Smith, a London-headquartered law firm that assigned as many as 12 lawyers to the data trawl that formed the foundation of the investigation.

    Lord Grabiner’s junior barrister, Adam Rushworth, received another £106,000, while three specialist technology companies collected just under £200,000 between them.

    Andrew Tyrie, who chairs the Treasury committee, said the central bank’s decision to make the fees public was welcome and that “the cost of Lord Grabiner’s inquiry is a matter of public interest”.

    A clerk for Lord Grabiner at his chambers at One Essex Court declined to comment.