Carney at odds with SFO over probe
Bank of England governor Mark Carney and the Serious Fraud Office (SFO) have found themselves at odds over why a probe into liquidity auctions by the Bank was kept secret for nearly four months.
Mr Carney said the Bank was advised by the agency to keep the probe under wraps when it referred the claims in November.
The SFO initially denied advising the Bank not to make the investigation public, but has now admitted it did advise "circumspection" at the time.
However, when a criminal investigation was formally launched in December, the SFO was understood to have told the Bank the decision to make it public was for Bank chiefs and that it did not ask or advise that it should be kept secret.
It is the SFO's policy, when such a probe has been opened, to confirm that fact if a subject decides to make it public.
Allegations about the auctions surfaced a year ago at Threadneedle Street but the existence of the probe - after an internal inquiry by Lord Grabiner recommended in November that they should be referred to the SFO - was not disclosed until last week.
Mr Carney yesterday spoke publicly about it for the first time in evidence to the Lords economic affairs committee.
The governor told peers that the allegations were referred to the SFO on November 20, and the move had been disclosed in confidence to Andrew Tyrie, chairman of the Commons Treasury Select Committee.
He added: "We were under advice from the SFO to keep this investigation in confidence so as not to run any risk of prejudice to the investigation.
"These are serious issues for them to be referred and it's absolutely paramount that they are properly investigated and dealt with. I don't want to do anything that would jeopardise that."
But the SFO responded by saying: "It was a matter for the Bank whether they made it public. It's untrue we advised them not to make the existence of the investigation publicly known."
The agency today sought to clarify what happened at the time of the referral in November.
A spokesman said: "We advised circumspection. In most cases, at that kind of point the SFO wouldn't confirm or deny interest in allegations about individuals or companies."
He added that at that stage, in November, there was no investigation to announce as it was not launched until the following month.
The probe concerns the auctions in which banks were invited to borrow funds from the Bank in exchange for collateral at the height of the financial crisis in 2007/08.
Little detail has been disclosed but it would appear to raise the suspicion that banks colluded to rig the scheme to bring down the cost of the emergency lending, and has also prompted questions about whether Bank of England officials turned a blind eye.