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.
Mr. Mallett, nicknamed "The Hammer," was sent the emails at his
hammer@bankofengland.co.uk 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 had no immediate comment.
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.
Write to David Enrich at david.enrich@wsj.com
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