‘Very clever’ – Mandelson shared sensitive advice with Epstein at height of Eurozone drama
Peter Mandelson sent Jeffrey Epstein sensitive advice concerning the liquidity of the UK financial system and the stability of the euro that had been shared with Prime Minister Gordon Brown.
In the exchange, which took place in May 2010 at the height of the Eurozone debt crisis and in the turbulent political aftermath of the UK’s general election, a sender called ‘Michael’ told Mandelson it would be of “extraordinary benefit” for the economy and Labour party if a member of the government made a statement to UK market participants.
He added that any intervention should include a view on the health of UK markets and the wider Eurozone, which was in the throes of the largest crisis of its existence with the likes of Greece, Italy and Portugal facing the prospect of having to default on their sovereign debt.
“The volatility and lack of information among the financial investor world is at a truly unique point in the crisis,” Michael wrote in an email, sent just a day before Gordon Brown announced he would step down after losing the 2010 election.
On the same day, the European Union also announced a €750bn bailout package to save the euro, which had fallen roughly seven per cent against the dollar that month.
Mandelson replied: “I am with the PM now discussing all this. I will tell him your view.”
The messages, released as part of the so-called Epstein files, came at a historic period in European financial history, with several of the continent’s main economies facing bankruptcy in the wake of the 2008 global financial crisis.
‘UK liquidity will be a real issue’
The continent’s finance ministers – including Chancellor Alistair Darling – had descended on Basel to agree the package, despite the Labour party having lost the general election earlier that month.
In a follow-up email, Michael, whose identity cannot be confirmed, told Mandelson: “UK liquidity will be a real issue in the am. There is virtually no confidence in the EU actions… Even if the ECB [European Central Bank] embarks on QE [quantitative easing] in the am, the market tension is extreme.”
“The PM galvanised,” Mandelson responded.
The politician’s exchange with Michael continued on 15 May 2010, when the then business secretary emailed to ask how low the euro could fall, after markets responded badly to news of the earlier bailout.
“The market forces continue to drive down the euro and up the cost of European government [debt] and European banks to unsustainable levels,” he replied.
“The unsustainable levels are not clearly defined but will consist of continued substantive increases in Libor [a now extinct interest rate set by banks] and dramatic tightening of the interbank funding market.”
He added: “In this scenario, which is receiving more speculative attention and press, but not much clear analysis of the actual mechanics, the euro does not hold.”
Mandelson forwarded the entire exchange to Epstein who responded that Michael “Seems a very clever and well informed man.”
Gordon Brown ‘needs to be confined asap’
That morning, Gordon Brown devoted a section of his resignation speech to appeasing markets. In it, he revealed he had had discussions with the key European officials and that Darling was involved in wider discussions. He added that the first priority of his successor “should be an agreed deficit reduction plan to support economic growth and a return to full employment”.
Michael later messaged to say the speech had been “handled well”.
Weeks earlier, at the end of March, Mandeslon had emailed Epstein to say “The PM needs to be confined asap to a sanitorium” [sic] and that Brown was “full on victimhood and spraying blame…”
A representative for Peter Mandelson was approached for comment.
Emails put further pressure on Mandelson
Mandelson’s decision to pass on advice from Michael – whose full name and email address is redacted in the documents – to the Prime Minister and then Jeffrey Epstein will raise further questions over his handling of market sensitive information and potential conflicts of interest.
On Monday, it emerged in a separate chain that the disgraced politician appeared to forwarn Epstein of the unprecedented Eurozone bailout, potentially giving him hours to trade on the inside knowledge. In June 2009, the documents also show Mandelson forwarded a memo sent by a senior Treasury adviser revealing ministers’ plans to offload government assets worth hundreds of millions of pounds.
The Metropolitan Police has since said it is reviewing reports made by opposition parties about Mandelson’s handling of sensitive information in the wake of the revelations.