Jumat, 06 Juli 2012

ALEX BRUMMER: Paul Tucker takes the Bank of England¿s fire

ALEX BRUMMER: Paul Tucker takes the Bank of England¿s fire

By Alex Brummer

PUBLISHED: 15:58 EST, 6 July 2012 | UPDATED: 16:09 EST, 6 July 2012

Bank of England deputy governor Paul Tucker

Under pressure: Bank of England deputy governor Paul Tucker

One has to have some sympathy for Paul Tucker. Until the Barclays disclosures of this week the Bank of England’s deputy governor was favourite to succeed Sir Mervyn King when the governor steps down in a year’s time.

Now he has been called to give evidence to the Treasury Select Committee on Monday on his role in the Libor scandal.

It may well determine whether he will have served a 32-year apprenticeship to be governor, only to miss the glittering prize.

Tucker is not without strong documentary support. Investigations by the Financial Services Authority here and by the Department of Justice in the US (not known as a pushover) both make it quite clear that no instruction was given by Tucker to Barclays. All that there is to support the case is Bob Diamond’s file note.

In the wake of Diamond’s flawed testimony and his claims of no knowledge of shenanigans in the Libor market, despite massive probes on both sides of th e Atlantic, it is hard to put total faith in Bob’s note. What we don’t know is whether Tucker himself kept his own record of the conversation.

As far as we know Tucker does not tape his conversations. But it is custom and practice in most government departments, if not the Bank of England, for a private secretary or another official to listen in on important calls and make a note for the record.

In Tucker’s case, one cannot be sure. As head of market operations he would have made dozens of phone calls each day to banks and dealers checking on the smooth running of markets.

Clearly, fixing markets is not the job of central banks.

But many of their actions, from co-ordinated intervention in foreign exchange markets to controlling the way auctions for bills are conducted, are about getting the outcomes the central banks want. To put it in the words of the typical Group of Seven communique, central banks seek to prevent ‘disorderly markets’ at all times. As this paper observed earlier this week, Tucker almost certainly left room for confusion because of the curious coded language used by central bankers.

One only had to listen to Mario Draghi, president of the European Central Bank on Thursday, to recognise that much of what is said can be interpreted in several ways.

Nevertheless, it is going to be hard for Tucker to escape the mess.

As the point man between the Bank, the markets and Whitehall some of the mud â€" however unjustified â€" is bound to stick.

And despite his effecti veness as an operator, he has not always been the pin-up boy of some of his colleagues at the Bank. Past experience suggests, however, that in the current hostile circumstances there will be a circling of the wagons.

All of this makes the choice of the next governor that much harder.

The Tories may want a banker or financier, but finding someone not tainted by some aspect of the great panic, in all its manifestations, will be hard. The pendulum swings back towards officialdom with regulators such as Lord Turner and Sir John Vickers now looking far more likely.

Foreign forces

Trade minister Lord Green boasts that the UN World Investment Report ranks Britain as the top destination for inward investment in Europe.

This is hardly surprising given France’s 17 strategic industries, including yoghurt, that are protected, and Germany’s allergy to Anglo-Saxon capitalism.

Sure, there are wonderful examples of ove rseas investors breathing new life into manufacturing such as Tata at Jaguar Land Rover. But they are few and far between.

New data from Experian shows that of the £92.4bn of takeovers done in the first half of 2012 the vast majority, 18 out of 24, were overseas firms swallowing British enterprises worth £51.3bn.

The whooshing sound that can be heard is that of the new owners moving headquarters overseas, carrying off the intellectual property and patents and shifting tax domicile to Zug and the like.
Not something to be welcomed.

Witty watch

GaxoSmithKline has sought to portray the £1.9bn settlement with the American authorities over bad selling practices as a thing of the past and an example of the new ethical GSK, under the command of Sir Andrew Witty who took over in May 2008, refurbishing the company’s image and reputation.

That is all very well, except the US authorities say that until ‘at least 2010†™ Glaxo was still using illegal marketing tactics to promote Advair, an inhaler used to treat asthma.

Indeed, a new complaint was filed in the federal court of Massachusetts as recently as October 2011.

It looks as if some of the alleged misbehaviour may have taken place on Witty’s watch after all.

So the clean-up isn’t quite finished yet.


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