Barings (Hansard, 19 June 1995)

§ Lord Inglewood
My Lords, the Board of Banking Supervision will complete its work as soon as it can. The Governor of the Bank of England has told my right honourable friend the Chancellor of the Exchequer that it may be able to submit its report in the early part of July, depending on the nature and timeliness of preliminary responses by those named in it and progress by the board in drawing out the lessons and implications from the Barings episode.

§ Lord Desai
My Lords, I thank the Minister for that reply. Is he aware that when the Barings collapse occurred one reason given for conducting the inquiry in private was that it would be speedy? Is it not astonishing that despite that there has been a long delay in submitting the report? Would it not have been better if the inquiry had been open to the public so that we could have seen the evidence as it was gathered by the Board of Banking Supervision and Control?

§ Lord Inglewood
My Lords, one of the principal reasons why the inquiry was constituted in that manner was in order that it should be quick and that we should have a report rather quicker than we did in the case of the BCCI inquiry. I do not believe that the suggestion proposed by the noble Lord, Lord Desai, would have assisted in achieving that.

§ Lord Boyd-Carpenter
My Lords, in view of the importance of the credit of the British banking system to the whole of the British economy, is my noble friend aware that many of us strongly support his insistence on an early receipt of this report, and if necessary action on it?

§ Lord Inglewood
My Lords, I am grateful to my noble friend for his comments on the seriousness of this matter which is. of course, a view which the Government share. However, it is also important, first of all, to be thorough in this inquiry so that the facts are properly established and the lessons that can be learnt from it are the right lessons. Secondly, it is important that we operate within the proper legal constraints which stop a precipitate helter-skelter rush to 4 conclusion.

§ Lord Lawson of Blaby
My Lords, as the Minister who was responsible for the creation of the Board of Banking Supervision and Control, may I ask my noble friend whether, despite the Governor's aspirations to produce a report by the beginning of July—I am sure that at the time those aspirations were given in good faith—there will be no pressure whatever, either from the Governor of the Bank of England or from any other quarter, on the independent members of the Board of Banking Supervision to produce their report into this highly complex and important matter before they are fully ready to do so?

§ Lord Inglewood
My Lords, I am most grateful for that comment from my noble friend Lord Lawson. I can confirm what he asked.

§ Lord Eatwell
My Lords, is the noble Lord aware that the credibility of the investigation into the Barings affair has been compromised by entrusting the investigation of the behaviour of the Bank of England in this respect to a board which operates under the authority of the Bank of England? To enhance the credibility of the report will he ensure that the evidence given to the board is published in full?

§ Lord Inglewood
My Lords, I have no evidence to support the allegation about the taint of this particular Inquiry to which the noble Lord opposite referred. I can assure the House that the matter will be reported as fully as is possible.

§ Lord Chalfont
My Lords, are the Government giving any consideration to the fate of the former Barings employee who seems to be destined to spend an indefinite time incarcerated in Germany?

§ Lord Inglewood
My Lords, the general law applies and we will deal with the predicament in which Mr. Leeson finds himself in the same way as we would with any other British citizen in such circumstances.

§ Lord Boardman
My Lords, as the report may well be highly critical of certain individuals does not my noble friend agree that it is right and just that it should be thorough even if it takes longer than many of us would have hoped?

§ Lord Inglewood
My Lords, of course that is absolutely right.

§ Lord Haskel
My Lords, as the Bank of England is an interested party in this matter does not the Minister agree that the report would be more thorough if it was undertaken by someone other than an interested party?

§ Lord Inglewood
My Lords, it is important to be clear on the role of the Board of Banking Supervision's independent members. We have every confidence that we will receive an impartial, thorough and properly argued analysis of what occurred and that the proper results and conclusions can be drawn from it.

§ Lord Desai
My Lords, does not the Minister agree, given all the difficulties we have heard about this afternoon, that it would be better if the task of banking supervision was taken away from the Bank of England and given to an independent body?

§ Lord Inglewood
My Lords, that is not the conclusion that the Treasury and Civil Service Committee of the House of Commons reached when looking into this matter. The committee concluded—the Government agree with this—that there is no overwhelming case for separating out the responsibility for prudential supervision to a separate body. It was interesting to note the evidence given to that inquiry by Professor Sir Charles Goodhart who argued that the distinction was, perhaps, more of form than of substance.

§ Lord Eatwell
My Lords, given the obvious great interest in this matter in your Lordships' House, will the Minister undertake that when the report is available time will be allocated to consider it fully in a debate in the House?

§ Lord Inglewood
My Lords, it is intended there will be a Statement made to the other place. It is then up to those on the Benches opposite if they wish the Statement to be repeated here, and that is a matter for the usual channels.