Sir, Your editorial “In defence of eyebrows and cosy fireside chats at BoE” (March 4) rightly emphasises the recent progress that the Bank of England has made in improving its own governance, and the need for it to have wide and sensitive intelligence gathering capabilities, and to use them wisely.
But this point is quite separate from the accountability that is at stake in the Grabiner inquiry. As Charles Béar QC’s opinion underlines, there are two potential tests of conduct here. The first asks the normative question: in this case, whether staff at the Bank ought to have been aware of and/or acted with regard to forex market manipulation. The second asks the factual question: whether staff at the Bank were in fact aware of or involved in actual or potential market manipulation.
As counsel’s opinion makes clear, the first test is the normal legal standard for inquiries into serious professional misconduct. The second is a lower and narrower standard, below that normally used in such cases. Yet the second is the standard adopted by the Grabiner inquiry’s terms of reference.
In their recent testimony before the Treasury Committee, BoE governor Mark Carney appeared to reject this well-established distinction and Anthony Habgood, who chairs the central bank’s Oversight Committee, to accept it, a not entirely happy combination. Both, however, concluded that whatever the tests may have been, the Grabiner inquiry met them. But the truth is that there is a very substantial difference between these standards, and the inquiry would almost certainly have proceeded differently if the higher standard had been adopted.
Restricting the inquiry to what officials actually knew has the potential effect of shielding them from liability, and of closing off the issue of whether those in more senior positions in the Bank ought to have been better at scrutinising their subordinates. It thus reduces accountability, rather than embracing it as the Bank has done elsewhere.
It is simply not appropriate for the Bank to proceed in this way on such a serious matter, in its first inquiry under the newly empowered Oversight Committee, and given the still higher standards to which it properly aspires.
Jesse Norman MP
Conservative, Hereford and South Herefordshire
House of Commons