Emily O’Reilly challenges ECB on ‘technical error’

European Ombudsman Emily O’Reilly is taking on the powerful ECB, asking why market-moving information was revealed to a select group of people including bankers and hedge fund managers in London.

This is the second time Ms O’Reilly has tackled the Frankfurt institution. Last year she successfully made it release a letter written to the Irish government on the eve of the bailout.

She has also announced an investigation into secretive negotiations that often amount to horse trading between EU institutions on the content of legislation that then applies to EU citizens.

Revelations made by ECB executive board member Benoît Coeuré at a closed-doors meeting 10 days ago, that the bank was to step up the pace of its bond buying, coincided with the value of the euro falling against the dollar while the price of stocks and bonds soared.

Ms O’Reilly, who investigates suspected wrongdoing in EU-related institutions, sent a letter yesterday to ECB president Mario Draghi asking what happened and what measures he will take to prevent a recurrence.

“The ECB has said there was a technical error but given public concern about privileged access, I thought it would be appropriate to ask a few questions… I have no reason to think that there was anything sinister, but we have to check,” she said.

Her letter reveals that when her staff contacted the ECB following the incident, they “replied, notably by drawing our attention to a number of press articles”.

The press reports quoted the ECB as blaming an internal procedural error that meant Mr Coeuré’s speech was not released when he made it, but was delayed until the following morning.

The letter, which asked for a reply within a fortnight, states: “I should be grateful if the ECB could provide a more detailed account of the incident in question and in particular of the measures it has taken to avoid a similar incident occurring in the future, so as to enable me to ascertain whether there is any need for action on my part.”

Among the event organisers was a financial research centre funded by Brevan Howard, a major European hedge fund which trades on bonds and currencies to predict market shifts.

Ms O’Reilly, presenting her annual report in Brussels, noted that one of her achievements was having the ECB release a letter that former president Jean-Claude Trichet sent to the Irish finance minister in late 2010.

“It was a one-day-wonder in Ireland that showed it should have been released earlier,” she said.

The Ombudsman’s latest initiative focuses on trilogues, whereby representatives of the European Commission, Council, and parliament negotiate on their differences over law.

It can fasttrack legislation by reducing the number of readings in the parliament from three to one.

In the past five years there have been 1,500 closed-doors trilogues, with 80% of legislation agreed after a first reading.

Ms O’Reilly is investigating how the final deals on two pieces of legislation, clinical trials regulation and the mortgage credit directive, were reached.

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