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UK to launch inquiry into banking scandal
British PM orders probe, as authorities explore the possibility of criminal proceedings against members of Barclays.
Last Modified: 02 Jul 2012 23:48

Britain's parliament will launch a probe into the interest rate rigging scandal that has claimed the job of Barclays Bank chairman Marcus Agius, David Cameron, the UK prime minister, has said.

"I want to establish a full parliamentary inquiry involving both houses, chaired by the chairman of the Commons Treasury Select Committee," Cameron told parliament on Monday.

The UK prime minister said people "want to see bankers who acted improperly punished, and they want to know we will learn the broader lessons of what happened in this particular scandal".

"This committee will be able to take evidence under oath, it will have full access to papers and officials and ministers
including ministers and special advisers from the last government."

The announcement came hours after Agius resigned over revelations that Barclays traders had lied about the interest rates other banks were charging it for loans.

Britain's Serious Fraud Office said on Monday it is considering whether it was "both appropriate and possible to bring criminal prosecutions" over the issue, adding that it hoped to come to a conclusion within a month.

The parliamentary inquiry should report on its findings by the end of this year to allow the government to change laws and prevent a repeat of the interest rate fixing scandal, George Osborne, British finance minister, said.

Martin Wheatley, the Chief Executive designate of the Financial Conduct Authority would review what reforms are
required to the current framework for setting and governing LIBOR and report by the end of summer, Osborne said.

Public anger

The government has come under increasing pressure to take a closer look at the bank sector, which has felt the force of public anger since taxpayers bailed out several banks during the 2008-9 financial crisis.

Barclays received a $453m fine by British and US regulators last week for submitting inaccurate submissions on the Libor interest rate.

The bank admitted that some of its traders attempted to manipulate the setting of the London interbank offered rate, or Libor, which is used worldwide as a benchmark for setting prices on about $350 trillion worth of derivatives and other financial products.

It emerged on Sunday that the Royal Bank of Scotland had sacked four traders over their alleged involvement in the affair, raising suspicions that the practice was widespread.

Extracts from an Financial Services Authority report released on Wednesday showed that Barclays staff mistakenly believed the Bank of England had encouraged them to manipulate the rate, according to the Press Association, Britain's domestic news agency.

Cameron had earlier vowed not to let possible fines end up being used by the bank to reduce its annual tax bill.

"These fines should not be reducing the bills of banks they should be reducing the bills of hard-pressed taxpayers and that is how it is going to be," he said.

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Source:
Agencies
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