Bank of England Official Resigns After Critical Parliament Report

http://www.nytimes.com/2017/03/14/business/dealbook/bank-england-charlotte-hogg-resign.html

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LONDON — A senior Bank of England official who had been named a deputy governor at the central bank has resigned after a Parliament committee found that her failure to disclose a potential conflict of interest showed she lacked the competence to take on a new role overseeing banks and financial markets.

The official, Charlotte Hogg, offered her resignation on Monday and it was accepted on Tuesday morning, the central bank said.

Ms. Hogg, whose family has deep roots in British politics, had been named the bank’s deputy governor for markets and banking. But she faced opposition after admitting she did not disclose that her brother held a senior position at Barclays during her time at the central bank, despite her having a role in drafting a code of conduct policy that required a disclosure of such conflicts.

Her resignation is the latest controversy to face Bank of England as some politicians have questioned whether it had become politicized under the bank’s governor, Mark J. Carney, in the run-up to Britain’s referendum last June on whether to leave the European Union.

Ms. Hogg, 46, was part of a team brought in by Mr. Carney to modernize the central bank’s operations. She began her career at the Bank of England before returning as its chief operating officer in July 2013. In the interim, she worked at a variety of companies, including the consulting firm McKinsey & Company, the banks Morgan Stanley and Santander, and the credit reporting company Experian.

She was later selected to replace Nemat Shafik as a deputy governor. Ms. Shafik is set to become director of the London School of Economics this year.

But a parliamentary committee said in a report that it found Ms. Hogg’s professional competence “falls short of the very high standards” required to be deputy governor, adding that her failure to disclose her brother’s role was a “serious error of judgment.”

Mr. Carney said on Tuesday that he deeply regretted Ms. Hogg’s decision to resign, saying in a statement that she had “transformed” its management and operations.

Her resignation is the latest in a set of controversies that have dogged the Bank of England under Mr. Carney, particularly since the so-called Brexit referendum.

Britain’s economy has performed better than expected since the June vote despite dire warnings by the central bank about the potential impact of Britain’s leaving the 28-country bloc.

As a result, some politicians who supported Britain’s exit from the European Union called for the governor’s resignation last year. Mr. Carney has said he would continue to lead the bank through June 2019.

In the case of Ms. Hogg, the Treasury Committee said that she did not deliberately conceal her brother’s role as director in group strategy at Barclays or that any prior conflict had arisen.

But it said that her conduct was “more serious” than a simple omission given the length of time before it was disclosed, her role in helping to draft the central bank’s code of conduct and her “failure to appreciate the seriousness of that history of noncompliance.”

Ms. Hogg initially declared her brother’s role at Barclays in a questionnaire submitted to the Treasury Committee on Feb. 22. In a letter dated March 2, she admitted that she had failed to formally declare her brother’s position before joining the central bank in 2013 or subsequently.

In her resignation letter, Ms. Hogg said she believed that she made an “honest mistake” and that she never made a secret of her brother’s job. She said in the letter that she first offered her resignation last week.

In her new role, she would have been a member of the Prudential Regulation Committee, which discusses “firm-specific information and reaches supervisory judgments, both of which the bank describes as ‘highly commercially-sensitive,’” the Treasury Committee noted.

John Mann, a Labour politician and member of the Treasury Committee, said on Twitter that the report was the “strongest opinion” ever published by the committee.

While praising improvements in the central bank’s transparency, accountability and governance, the Treasury Committee said that the incident involving Ms. Hogg raised “wider concerns” about the bank’s governance and that further reform may be needed.

On Tuesday, the Bank of England said it would reconfigure its reporting lines and internal structures in order to better safeguard the governance of its code of conduct, compliance and disciplinary procedures.

It also said its nonexecutive directors would conduct a review to ensure compliance at the most senior levels of the bank.

Ms. Hogg’s family has close ties to Britain’s Conservative Party.

She is the daughter of Douglas and Sarah Hogg, who both served in former Prime Minister John Major’s government. Her mother, an economist, a former journalist and now a baroness, was the first chairwoman of a listed company in the FTSE 100, an index of the biggest companies traded in London. Her paternal grandfather, Quintin Hogg, was also a long-serving member of Parliament.

Her father gained particular notoriety in Britain during a parliamentary expenses scandal in 2009 that led to his resignation from politics. At the time, he was found to have submitted a claim of 2,000 pounds, or $2,400 at current exchange rates, for the clearing of the moat at his country house.