Top Bank dealer 'errors' revealed
A Bank of England internal probe revealed a "series of misjudgments" by a senior member of staff including the leaking of a confidential document and sending of inappropriate emails, MPs were told by governor Mark Carney today.
Chief currency dealer Martin Mallett was sacked after being found to have made at least 20 such errors, following an investigation into what the Bank knew about the foreign exchange rate-rigging scandal, Mr Carney said.
The failings prompting his dismissal were not related to the central findings of the report - which the governor described as his failure to "escalate" any awareness of "the potential of wrongdoing" in the market.
His dismissal was announced in November on the same day that six banks were fined £2.6 billion by regulators including the UK's Financial Conduct Authority (FCA) over the forex scandal.
Mr Carney said the internal probe, which was led by Lord Grabiner QC and trawled through emails and chatroom conversations, brought to light "information that could have brought the Bank's public reputation into disrepute".
He told the Treasury Select Committee: "We discovered a series of misjudgments that Mr Mallett had made unrelated to the Grabiner inquiry. There were at least 20 examples of this."
These included violation of the Bank's IT and confidentiality policies, he said, as well as "sharing, on one occasion, a confidential Bank document with market participants".
Mr Mallett was also said to have volunteered his personal opinion on Bank policy - though this was an area he was not privy to. There has also been "inappropriate language, inappropriate attachments to emails".
Mr Carney said Mr Mallett, who had been at Threadneedle Street for 14 years, was an employee "who had in other respects served the Bank well" but that it had been obliged to act, with Bank staff held to a high standard.
He said: "I was disappointed because this is an individual who has made an immense contribution to the institution and his community.
"It's over a long period of time. We went back eight years. It is what one discovers by reading every email, every chat."
The governor said none of the failings related to dishonesty.
Mr Carney was also asked if Mr Mallett would have been sacked in any event as a result of Lord Grabiner's findings on forex.
He said: "In my judgment, there are serious errors of judgment by Mr Mallett that are uncovered as a result of the Grabiner inquiry that would rise at least to the level serious misconduct and if I were taking the decision - which I would not - I would in my opinion rise to the level of termination."
Mr Carney admitted the Bank had been damaged by the forex scandal - but said that it had responded in a timely fashion. He said: "The reputation has certainly taken a knock. This hasn't been a pleasant experience."
The governor said the Bank had acted on a series of recommendations made on changes to its internal processes.
Members of the Bank's market intelligence staff had now passed on 50 instances of potential market abuse to their superiors, of which 42 had been passed on to the FCA.
He said he was "pleased that the process is working".
But he added: "I'd be disappointed if the run-rate of what is escalated continued at that high level. There is an element of backlog here."
Meanwhile, the governor distanced himself from Lord Grabiner's performance at an earlier ill-tempered session of the Treasury Select Committee to discuss his report.
Mr Carney said the report had been thorough and comprehensive but that he was surprised at the way the barrister had responded to MPs' probing.
He said: "It wasn't the tone or demeanour I would have adopted in front of this committee. I felt the committee was asking legitimate questions probing issues of fact and judgment. It wasn't necessarily the posture I would have adopted."