BOE Spent $4.4 Million on Lawyers for Currency-Rigging Probe

The Bank of England spent 2.93 million pounds ($4.4 million) on an eight-month investigation into what its staff knew about manipulation in the foreign-exchange market.

Anthony Grabiner charged 401,000 pounds for his work, according to a letter from Anthony Habgood, chairman of the BOE’s governing body, released Friday. The London law firm Travers Smith LLP received 2.2 million pounds.

The BOE’s Oversight Committee commissioned Grabiner, 69, to look into whether central bank employees knew currency traders shared client information with counterparts at other firms to rig key currency benchmarks. The probe cleared staff of condoning manipulation in foreign exchange and said the chief currency dealer, Martin Mallett, hadn’t acted “in bad faith” when he didn’t escalate concerns about the practice.

“It’s a lot of money but we’ve got to make sure people feel confident in the central bank,” said Mark Garnier, a Conservative lawmaker and member of the Treasury Committee, which sought the payment details.

Kirsty Hough, a clerk for Grabiner, declined to comment.

At least 14 lawyers, assisted by specialist firms, worked on the investigation, which ran from March to November. They searched 1.8 million documents and 87,000 telephone calls, and reviewed almost 73,000 pieces of evidence drawn from them, according to the letter.

Discount Rate

The results of the probe were published Nov. 12, the same day six banks were fined $4.3 billion by regulators who found senior dealers colluded with counterparts at other firms to rig currency markets. The central bank fired Mallett, while saying it wasn’t related to Grabiner’s report.

Grabiner is a top-tier U.K. litigator. In 2011, News Corp. hired him to look into phone hacking and bribing sources. He charges as much as 3,000 pounds an hour on cases, a person with knowledge of the matter said in September.

“Grabiner and Travers Smith carried out their work at a discount to their normal commercial rates,” Habgood said in the letter.

Habgood wrote to the Treasury Committee at the request of lawmakers after a testy exchange with Grabiner during a Jan. 21 hearing in London when he said he didn’t know what he charged or whether he’d been paid.

“Barristers don’t get into the grubby world of negotiating fees,” Grabiner said at the time. He told Treasury Committee Chairman Andrew Tyrie the bank got a “very attractive deal.”

The Treasury Committee has said it may call Grabiner back. In addition to sparring with the lawyer over the costs, members quizzed him on why he hadn’t listened to audio evidence and why he asserted the market manipulation under review could have been legal, among other things. At one point, he said the questioning was “offensive,” saying his interpretations of the evidence were right and others weren’t qualified to draw conclusions.

“The evidence session did not suggest to us that this was somebody who was on top of the report and on top of the brief,” Garnier said. “He was the worst witness I’ve ever seen.”

Before it's here, it's on the Bloomberg Terminal.