City culture saw bankers accept ‘holidays and prostitutes in return for lucrative deals’
A culture that developed in the City of London under which bankers accepted hospitality including strip club outings, holidays, prostitutes and even drugs from brokers helped created conditions under which the Libor rate could be fixed, it was claimed.
Investigators now believe that the culture of wild and expensive entertainment in return for lucrative business was so out of control in the financial sector in London that it made rate-fixing possible, according to an investigation by a leading US newspaper.
Brokers would routinely entertain bankers with expense account meals and heavy drinking sessions but would also pay for trips to strip clubs or invite them to Las Vegas or on weekends skiing, it is alleged. There is evidence that some traders were rewarded with prostitutes or cocaine, according to the newspaper report.
Such a culture meant that when traders at banks began urging brokers to provide inaccurate information designed to alter the Libor rate it was regarded as just another of the favours brokers and bankers did for each other to boost profits.
In an electronic message held by the US Justice Department a trader is recorded as asking a broker in February 2009 to move a yen version of Libor. He requested that it be shifted "as high as a kite" to which the broker agreed to try to help, saying "hahahha like it". Afterwards, the trader put business in the way of the broker who messaged back "love yu mate".
Brokerages commonly spend £30,000 or more on entertaining a single trader in the expectation that they will make it back through commission on deals directed their way. One former broker was quoted by the US newspaper as saying that after paying for a night out with a trader, "there would be a line of trades for me. I didn't even have to ask".
City businesses maintain that entertaining is a legitimate means of fostering good relations between traders and brokers, and that there are strict rules in place to prevent excessive or improper entertaining.
Brokerage officials also say entertaining traders is a legitimate form of relationship-building, not a form of payback. They say they have strict policies against improper or excessive entertainment.
Is your name now 'banned' in Saudi Arabia?
Exclusive: World’s most pristine waters are polluted by US Navy human waste
Missing Malaysia Airlines Flight MH370: Any terrorist seizure of the plane ‘would have required one hell of a piece of planning’
Croatia's second city to close 'worst zoo in the world' after reports of 'nightmare' conditions and 'depressed' animals
Missing Malaysia Airlines Flight MH370 Q&A by Simon Calder: How far could it have travelled? Who was responsible and what would their plans be? And how can a plane just vanish?
Katie Hopkins continues campaign to become Britain's most hated talking head with poorly timed Bob Crow tweet
No EU referendum under Labour: Ed Miliband to reveal that vote on membership is ‘unlikely’ in next Parliament if party wins power
Ukip and Nigel Farage on course for remarkable victory in European elections
Tony Benn was entirely ineffectual - and usually wrong
Grace Dent: Who cares if she spells it Barraco Barner? Gemma Worrall is more employable than some bookish arts graduate
The rise of Ukip: Study warns Labour that Eurosceptic party's electoral base now 'more working class than any of the main parties'
- 1 Is your name now 'banned' in Saudi Arabia?
- 2 Exclusive: World’s most pristine waters are polluted by US Navy human waste
- 3 Gender-specific books demean all our children. So the Independent on Sunday will no longer review anything marketed to exclude either sex
- 4 Missing Malaysia Airlines Flight MH370 Q&A by Simon Calder: How far could it have travelled? Who was responsible and what would their plans be? And how can a plane just vanish?
- 5 'Missing Malaysia Airlines Flight MH370 plane found in Bermuda Triangle!' Viral Facebook links are profiting hackers
iJobs Money & Business
£35000 - £43000 per annum + Bonus and Benefits: Harrington Starr: A global lea...
£50000 - £60000 per annum: Harrington Starr: Linux Systems Administrator - UNI...
£32000 - £36000 per annum + generous benefits: Pro-Recruitment Group: * TAX * ...
£37000 - £40000 per annum + £20000 benefits package: Pro-Recruitment Group: **...