Cable: Police must probe bank scandal

UK Political Correspondent

Monday 2 July 2012

BUSINESS Secretary Vince Cable has called for a police investigation into the bank interest-rate fixing scandal, saying that those responsible cannot be allowed to simply walk away.

DEMAND: Business Secretary Vince Cable has called for police to investigate the scandal. Picture: PA

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Kate Devlin UK Political Correspondent

The Liberal Democrat, who was backed by former Commissioner of the Metropolitan Police Lord Blair, also urged shareholders to purge companies of out-of-control executives he said had created a dangerous culture in the City.

Kenneth Clarke, the UK Justice Secretary, has called for bankers who have committed any crimes to be brought to trial.

In Scotland, Justice Secretary Kenny MacAskill said if the Lord Advocate was minded to prosecute bankers "he would have the Government's full support".The Tory-LibDem Coalition has admitted it is currently not a specific criminal offence to manipulate the interest rate known as the Libor rate, which governs how banks lend money to each other. However, ministers have said Serious Fraud Office (SFO) investigators are considering whether an investigation should be launched. Mr Cable said his "instinct", and that of the general public, would be to expect a criminal probe.He said: "They just can't understand why people are thrown into jail for petty theft and these guys just walk away having perpetrated what looks like conspiracy." Lord Blair said there was "nobody in the banking industry who can claim clean hands". "There has to be some form of inquiry, and there also has to be some prosecutions," he said, adding he considered the crime that had been committed to be clear. He said: "There have to be police inquiries into this. Anybody, the youngest detective, would say this is conspiracy to defraud. It can mean nothing else, and therefore someone has to launch a criminal inquiry into this behaviour."Lord Blair also suggested that the Coalition would face public anger over other controversial reforms if it was not seen to crack down on bankers. He said: "You can't say we're going to crack down on benefit fraudsters and then ignore this." On Thursday, Chancellor George Osborne said that manipulating the rate, which has a knock-on effect on the rates at which banks lend money to their customers, was not a specific criminal offence. However, he pledged ministers would urgently consider whether that situation needed to be rectified. Lord Turner, head of City watchdog the Financial Services Authority, added his voice to those calling for rigging the rate to be made a crime. Yesterday, Mr Cable also warned shareholders that they had to "get a stronger grip on weak boards and out-of-control executives."He warned regulators could only do so much to tackle bosses presiding over a "moral quagmire of almost Biblical proportions" in the City. He said: "Regulators are a backstop: they don't own banks. The governance at the top of our leading banks has been shown to be lamentably weak. No-one at the top of Barclays will take responsibility for systemic abuse."Shareholders, the owners, have a major responsibility here. I am bringing in legislation to strengthen their control over pay and bonuses, through binding votes, but shareholders have to get a stronger grip on weak boards and out-of-control executives."The Coalition Government is to begin a review into the Libor system, although Labour has warned it is not far-reaching enough and has called for a full judge-led inquiry into abuses in the banking industry.

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Cable: Police must probe bank scandal

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