Destroyed Libor note fuels questions over Labour role

Missing document adds to calls for inquiry into claims former government tried to manipulate bank rate

THE former Labour government is facing further questions over Libor after it emerged that a handwritten note requested by the fraud investigators has been “destroyed”, The Daily Telegraph can disclose.

“Contemporaneous material” that is understood to record a meeting at a government department relating to Libor, the rate at which banks lend to each other, was requested by the Serious Fraud Office as part of the inquiry.

A typed version was provided, but lawyers working for the SFO asked to see the original. It then emerged that the document had been destroyed.

It is understood that the SFO spoke to a “source” about the meeting and concluded that the electronic record that was on file was sufficient.

However, its disappearance will raise questions about the involvement of Labour ministers and civil servants in discussing the setting of the Libor.

Yesterday, Parliament was under pressure to launch an inquiry into allegations that the Bank of England and the previous Labour government may have been involved in manipulation of the rate.

The BBC’s Panorama said it had uncovered a 2008 recording of a conversation between a senior Barclays manager and its Libor submitter that suggests the Bank of England was exerting pressure to lower the rate.

Mark Dearlove, a senior manager at Barclays, reportedly told the submitter: “The bottom line is you’re going to absolutely hate this… but we’ve had some very serious pressure from the UK Government and the Bank of England about pushing our Libors lower.”

Libor – the London Interbank Offered Rate – is used to set millions of pounds’ worth of financial deals. Chris Philp, a Tory member of the Treasury select committee, said MPs should launch an inquiry into the claims.

The Croydon South MP said the recording appeared to indicate that Barclays was “pressured or even instructed to lower their Libor rate” and raised questions about evidence given by Bob Diamond, Barclay’s former chief exec- utive, and Sir Paul Tucker, who served as the central bank’s deputy governor, to the Treasury committee in 2012.

Mike Potts, a partner at Byrne and Partners, said that original documents were “always preferable” during a criminal investigation because typed-up versions could be a “summary” rather than a detailed note of what was said.

Mr Diamond told the BBC: “I never misled Parliament and… I stand by everything I have said previously.”

Mr Tucker told the committee in 2012 there was no pressure from the Bank of England or Government to lower Libor.

A spokesman for the SFO said that as part of its Libor investigation “[ We] reviewed a large number of documents from several government departments. The assistance of the Cabinet Office was welcome in facilitating our review of this material, which was required to discharge our disclosure obligations.

“There was no question of any material we asked for being withheld or denied, or access to such material somehow having been restricted, and no question of our investigation being undermined by the unavailability of a note.”

Barclays and the Cabinet Office declined to comment.