Barclays bankers thought Bank of England wanted rates falsified


Bank of England Dragged into Rate-Rigging Row

By Rowena Mason and Phillip Aldrick
The Telegraph, London
Sunday, July 1, 2012

Barclays stepped up its efforts to rig interest rates after its chief executive, Bob Diamond, spoke to the deputy governor of the Bank of England, Paul Tucker.

Diamond had a conversation with Tucker about how much Barclays was claiming it had to pay to borrow money during the financial crisis in 2008.

After Mr Diamond spoke to Mr Tucker, Barclays staff came to believe the Bank of England wanted them to falsify this data -- which was used to calculate Libor, the interest rate that banks pay to each other.

The bank's traders then escalated their secret attempts to manipulate the markets and make it appear that the bank was paying less to borrow money than was actually the case, documents show.

Last night sources at both banks insisted this was the result of a "misunderstanding." They insisted that Mr Tucker had not sanctioned Barclays' actions.

At the time the Bank of England was keen to see a lower Libor rate, as that would have been a positive sign in the depths of the credit crunch.

... Dispatch continues below ...


Sona Discovers Potential High-Grade Gold Mineralization
at Blackdome in British Columbia -- 13.6g over 1.5 Meters

From a Company Press Release
November 22, 2011

VANCOUVER, British Columbia -- With its latest surface diamond drilling program at its 100-percent-owned, formerly producing Blackdome gold mine in southern British Columbia, Sona Resources Corp. has discovered a potentially high-grade gold-mineralized area, with one hole intersecting 13.6 grams of gold in 1.5 meters of core drilling.

"We intersected a promising new mineralized zone, and we feel optimistic about the assay results," says Sona's president and CEO, John P. Thompson. "We have undertaken an aggressive exploration program that has tested a number of target zones. Our discovery of this new gold-bearing structure is significant, and it represents a positive development for the company."

Sona aims to bring its permitted Blackdome mill back into production over the next year and a half, at a rate of 200 tonnes per day, with feed from the formerly producing Blackdome mine and the nearby Elizabeth gold deposit property. A positive preliminary economic assessment by Micon International Ltd., based on a gold price of $950 per ounce over eight years, has estimated a cash cost of $208 per tonne milled, or $686 per gold ounce recovered.

For the company's complete press release, please visit:

The disclosure increases the pressure on Mr Diamond, who has now been put at the heart of discussions about the fixing of Libor. When he gives evidence to MPs this week the bank chief will also have to explain why his employees were left with the understanding that they were acting with the Bank of England's blessing.

Last night the scandal claimed its first scalp among the senior management of Barclays, as the bank confirmed Marcus Agius, its chairman, was set to resign.

Lord Turner of Ecchinswell, the head of the Financial Services Authority, said "more heads will roll" at badly behaving banks in future.

As the board of Barclays called an emergency meeting last night, there were calls for a criminal inquiry into the bank by Vince Cable, the Business Secretary, and Lord Blair of Boughton, the former Metropolitan Police commissioner.

Mr Diamond is also facing calls to step down over his failure to spot the scandal, which may have caused banks to charge mortgage holders, credit card users and businesses too much for billions of pounds in loans.

Barclays was last week fined L290 million for its role in the affair. Other high street banks are expected to face heavy penalties for similar wrongdoing.

Mr Diamond is likely to face calls to issue a full apology when he is questioned by Parliament's Treasury committee on Wednesday. Sources confirmed he would be asked exactly what he talked about with Mr Tucker, the second most senior figure in the Bank of England, during the crucial phone call about Libor in October 2008.

MPs will be especially keen to know how a confused message was passed on to Barclays traders, who ended up "escalating" the rate-rigging scandal soon afterwards.

Although the bank chief may have to give evidence under oath, he is expected to stonewall many questions for legal reasons.

John Mann, an MP on the Treasury committee, said Mr Diamond would face tough questions about the conversation. "I'm certain that issue will come up and that it will be raised directly," he said.

"We will certainly want answers as to if Bob Diamond has been hands-on and it will be surprising if he wasn't. We want to know exactly what he was doing."

Both Barclays and the Bank admit that a conversation took place about Libor but deny there was any instruction to lower the rate. They claim that traders misunderstood directions from their superiors about how they should deal with Libor.

The Financial Services Authority accepted the explanation that instructions from the bank's executives were misinterpreted by more junior employees.

"No instruction for Barclays to lower its Libor submissions was given during this telephone conversation," the FSA said.

"However, as the substance of the telephone conversation was relayed down the chain of command at Barclays, a misunderstanding or miscommunication occurred. This meant that Barclays' submitters believed mistakenly that they were operating under an instruction from the Bank of England as conveyed by senior management to reduce Barclays' Libor submissions."

US regulators believe that a member of Barclays' senior management team was responsible for the message that the bank's data needed to be lower.

One trader emailed his boss at the time to say: "Following on from my conversation with you I will reluctantly, gradually, and artificially get my Libors in line with the rest of the contributors as requested. I disagree with this approach as you are well aware. I will be contributing rates which are nowhere near the clearing rates for unsecured cash and therefore will not be posting honest prices."

At the time of Mr Diamond's conversation with Mr Tucker, the Bank of England was keen to see Libor reduced, as a higher rate was a sign that the credit crunch was strangling lending between the banks.

However, the Bank of England last night insisted it was "nonsense" to suggest that it was aware of any impropriety in the setting of Libor.

A spokesman added: "If we had been aware of attempts to manipulate Libor we would have treated them very seriously."

Several other companies are also expected to settle with the regulators, after George Osborne, the Chancellor, disclosed that the Royal Bank of Scotland was among the dozen banks or so under investigation.

It emerged over the weekend that RBS has sacked up to 10 traders in connection with Libor fixing.

* * *

Join GATA here:

Toronto Resource Investment Conference
Thursday-Friday, September 27-28, 2012
Toronto Sheraton Centre Hotel
Toronto, Ontario, Canada

New Orleans Investment Conference
Wednesday-Saturday, October 24-27, 2012
Hilton New Orleans Riverside Hotel
New Orleans, Louisiana

* * *

Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006:

Or by purchasing a colorful GATA T-shirt:

Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

To contribute to GATA, please visit:


Prophecy Platinum Announces Wellgreen Preliminary Economic Assessment:
38% Pre-Tax IRR, $3.0 Billion NPV, and a 37-Year Mine Life

Company Press Release

VANCOUVER, British Columbia, Canada -- Prophecy Platinum Corp. (TSX-V: NKL, OTC-QX: PNIKF, Frankfurt: P94P) reports the results of an independent NI 43-101-compliant preliminary economic assessment for its fully owned Wellgreen nickel-copper-platinum group metals project in the Yukon Territory.

The independent assessment, prepared by Tetra Tech, evaluated a base case of an open-pit mine (with a mining rate of 111,500 tonnes per day), an on-site concentrator (with a milling rate of 32,000 tonnes per day), and an initial capital cost of $863 million. The project is expected to produce (in concentrate) 1.959 billion pounds of nickel, 2.058 billion pounds of copper, and 7.119 million ounces of platinum, palladium, and gold during a mine life of 37 years with an average strip ratio of 2.57.

The financial highlights of the preliminary economic assessment, shown in U.S. dollars, are as follows:

Payback period: 3.55 years
Initial capital investment: $863 million
IRR pre-tax (100% equity): 38 percent
NPV pre-tax (8% discount): $3 billion
Mine life: 37 years
Total mill feed: 405.3 million tonnes
Mill throughput: 32,000 tonnes per day

Prophecy Chairman John Lee says: "We are pleased with the preliminary economic assessment results. The numbers indicate that Wellgreen is one of most exciting mineral projects in the Yukon. The company is drilling to upgrade and expand the resource base. The infrastructure is excellent as the project is only 1,400 meters in altitude and 14 kilometers from the paved Alaska Highway, which leads to the Haines deep seaport. Discussions are under way with support from local stakeholders regarding permitting and logistics."

For the complete press release, please visit: