Mark Carney distances Bank of England from foreign exchange scandal
Governor says dismissal of chief currency dealer Martin Mallett was unrelated to a Bank of England investigation into currency manipulation
Mark Carney distanced the Bank of England from the foreign exchange rigging scandal on Wednesday by insisting that the dismissal of the Bank’s chief currency dealer was entirely unrelated to an investigation into the Bank’s knowledge of misconduct.
Martin Mallett was fired on Tuesday over what the Bank’s Governor called “significant misconduct inconsistent with the bank’s internal policies”.
News of his departure came on the same day as an independent report that criticised Mr Mallett for an “error of judgment” in failing to report concerns about bank traders’ activity in the foreign exchange market.
The report, conducted by barrister Lord Grabiner, found that Mr Mallett knew that traders were sharing information, and that he was uncomfortable with his. However, it said there was no evidence that any Bank of England employee knew about foreign exchange manipulation.
“[Mr Mallett] was not involved in any unlawful or improper behaviour nor was he aware of specific instances of such behaviour,” the report said.
Mr Carney, when questioned about the circumstances of the dismissal, said on Wednesday: “The dismissal of the employee was for reasons that were unrelated to the FX investigation itself.
“It was information that was uncovered during the course of that investigation and it was information that indicated, in the judgment of an independent employment review, represented significant misconduct inconsistent with the Bank’s internal policies.”
A Bank spokesman said: "This information related to the Bank’s internal policies, not to FX."
When questioned about why news of Mr Mallett’s departure – six months after his suspension – emerged on the same day as regulators imposed £2bn of fines on banks over foreign exchange rigging, the Governor said: “The timing was based on the submission of various evidence, including by the employee in question.”
Lord Grabiner's report, which covered millions of chat logs and emails, revealed conversations between Mr Mallett and external traders.
In one, a trader said that there was "stuff going through that probably... doesn't exist and it's kind of... it's being... exaggerated shall we put".
Mr Mallett replied: "Well that's market manipulation isn't it?" and the trader said: "Yes absolutely."