Labour’s Balls Denies That He Pressured Barclays on Libor

U.K. Opposition Labour Party Treasury Spokesman Ed Balls
The role of government officials such as U.K. Opposition Labour Party Treasury Spokesman Ed Balls may be one of the issues likely to be explored by the Treasury Select Committee in Parliament today when it questions Diamond. Photographer: Simon Dawson/Bloomberg

U.K. opposition Labour Party Treasury spokesman Ed Balls rejected Conservatives’ suggestions that he steered Barclays Plc toward Libor fixing in 2008.

The dispute stems from an Oct. 30, 2008 e-mail written by Robert Diamond, who quit yesterday as Barclays chief executive officer after the bank admitted to fixing the rate, which is used as a global benchmark. It cited the Bank of England’s Paul Tucker as relaying a suggestion from a “senior” official to lower Libor. Conservatives openly speculated about the role of Balls, a former economic aide to Premier Gordon Brown who was then a minister.

“At no point did I have any conversation with Mr. Tucker at all, at any time when I was a Treasury minister, a Treasury adviser or subsequently to that when I was a Cabinet minister,” Balls told the BBC today. “The allegations which are made are entirely false and without foundation.”

Paul Myners, the City minister in Brown’s Labour administration in 2008, also denied today he’d spoken to Tucker, now the central bank’s deputy governor, about Libor. The then chancellor of the exchequer, Alistair Darling, issued a similar denial yesterday, and the BBC cited another ex-minister, Shriti Vadera, as saying she’d not spoken to anyone at the BOE about Libor.

Chancellor of the Exchequer George Osborne said there were questions to be asked of “the Labour government and the people around Gordon Brown.” In an interview with The Spectator to be published tomorrow, Osborne singled out Balls.

Osborne’s Challenge

“My opposite number, who was the City minister for part of this period and Gordon Brown’s right-hand man for all of it, so he has questions to answer,” Osborne told the magazine. “That’s Ed Balls by the way.”

Balls was in charge of the government’s financial policy for over a decade and served as Treasury minister in 2006 and 2007. Balls pointed to the fact that he was children’s secretary in Brown’s government at the time of the call in 2008.

Labour lawmaker Chris Leslie said Osborne is “lashing out in a frenzied way that demeans the office of the chancellor of the exchequer.”

“It is now increasingly clear that he isn’t interested in getting to the truth, only in playing party politics and throwing around false allegations with no evidence.”

The e-mail in question, released by Barclays yesterday, was from Diamond to John Varley, the CEO at the time, and purported to recount his conversation with Tucker.

“Tucker stated that the levels of calls he was receiving from Whitehall were ‘senior’ and that while he was certain we did not need advice, that it did not always need to be the case that we appeared as high as we have recently,” the e-mail said.

Categorical Denial

“I can say quite categorically I didn’t speak to Paul Tucker or anybody at the Bank of England about the Libor rate-setting process,” Myners told BBC Radio 4’s “Today” program today. He said no one else at the Treasury under Darling was responsible either.

“I am absolutely sure Paul Tucker will have a recording of the conversation or he would have had his private secretary listening to the call,” Myners said. “Paul Tucker will have his own contemporaneous record of that conversation. The Tories are putting a lot of flak up, trying to take attention away from their role.”

Tucker today asked to testify in the House of Commons to give his version of what happened on the call with Diamond.

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