Banking inquiry a whitewash, says MP

Two of the Commons' toughest financial inquisitors were excluded from the parliamentary inquiry into the Libor rate-fixing scandal yesterday, prompting claims of a "whitewash".

Neither the Conservative MP Andrea Leadsom, who worked for Barclays for more than a decade and was widely praised for her questioning of Bob Diamond, nor the Labour MP John Mann have been selected to sit on the Parliamentary Commission on Banking Standards.

Their absence from the panel, which will begin its sessions this summer, was met with surprise and anger at Westminster.

Instead the positions went Tory MP Mark Garnier, Labour MPs Andy Love and Pat McFadden and the Liberal Democrat John Thurso. The Commission will be chaired by the Tory MP and Treasury Committee chairman Andrew Tyrie.

Of those on the committee only Mr Garnier has long-term and personal experience of the banking industry.

Some speculated that Ms Leadsom may have been excluded for her forthright comments last week suggesting that George Osborne should apologise for suggesting that his opposite number Ed Balls had been aware of Libor fixing.

Unlike select committees – whose members are chosen by fellow MPs – the commission was chosen by party whips. The commission, which will study professional standards and the culture of the banking sector, and recommend new legislation, will also feature members of the House of Lords. MPs on the commission will be offered the services of a professional QC to cross-examine bankers as part of their inquiry.

A motion to set up the committee has been signed by David Cameron and Mr Osborne, as well as Mr Balls and the Labour leader, Ed Miliband. The terms of reference set out in the motion require the commission to consider and report on the "professional standards and culture of the UK banking sector, taking account of regulatory and competition investigations into the Libor rate-setting process".

It will have the power to appoint a barrister to question witnesses, in an attempt to raise the standards of examination displayed by MP-led select committee inquiries and witnesses will be required to give evidence under oath. This could set a precedent for future Commons inquiries. The commission is required to report on its recommendations for legislation by 18 December and "on other matters as soon as possible thereafter".

Ms Leadsom won widespread praise for her forensic questioning of Mr Diamond earlier this month. Mr Mann also gave the banker a tough time, telling him: "Either you were complicit in what was going on, or you were grossly negligent, or you were grossly incompetent".

The banking review was announced by the Government shortly after it emerged that Barclays and other banks had been involved in manipulating the inter-bank lending rate, Libor.

"The membership of the committee is something for the political parties and they have agreed between themselves who can serve," the Prime Minister's spokesman said.

Mr Mann said the inquiry would be a "whitewash" and that he was going to set up his own. "Both Andrea and I were available for the inquiry and because we are too outspoken we have been blocked," he said. "This exposes the inquiry as a total whitewash with Andrew Tyrie reaching his conclusions in advance of the meetings."

Mr Tyrie said he was pleased that the Commission had the support of all three major parties. "The perpetrators of wrongdoing should be held fully accountable for their actions," he said. "The actions of a few have impugned the reputations of many. Hundreds of thousands of people in financial services work hard, honestly and for the benefit of their customers. They deserve better too."