New Delhi: Newly released US documents linked to financier and convicted pedophile Jeffrey Epstein have triggered renewed political scrutiny in Britain and revived questions about the global financial system that collapsed in 2008.
At the centre of the controversy is Lord Peter Mandelson, a senior figure in successive Labour governments, whose past contacts with Epstein, as exposed in their correspondence, are now being examined alongside his role during the financial crisis. Lord Mandelson has since resigned from the House of Lords.
Prime Minister Sir Keir Starmer on Wednesday confirmed in Parliament that he knew Lord Mandelson had remained in contact with Epstein after the financier’s 2008 conviction for soliciting a minor. However, he said he had not been aware of what he described as “the depth and extent” of the relationship at the time Mandelson was later appointed to a senior public role.
“If I knew then what I know now,” Sir Keir told MPs during Prime Minister’s Questions, “he would never have been anywhere near government.” The prime minister accused Mandelson of having “lied repeatedly” during the vetting process.
The Metropolitan Police have confirmed they are examining the documents to determine whether any criminal offences, including misconduct in public office, may have been committed. Lord Mandelson has denied wrongdoing and says he did not share confidential information improperly. However, senior journalists, politicians and public at large have reacted strongly to the disclosures.
Steven Swinford, political editor of The Times, wrote on X that Lord Mandelson “gave Jeffrey Epstein advance notice of a €500bn bailout to save the euro. He messaged Epstein about the bailout on the evening of May 9, 2010. It was formally announced the following morning.” BBC political editor Laura Kuenssberg reported: “New — PM explicitly asked Mandelson about links to Epstein before he gave him US job… No 10 now believes he was overall ‘economical with the truth’.”
UK Conservative leader Kemi Badenoch confronted the Prime Minister in Parliament and also wrote on X: “Starmer appointed Mandelson knowing he had links to the paedophile Jeffrey Epstein. The Prime Minister then tried to cover it up.” Labour MP Zarah Sultana highlighted Mandelson’s continued contact with Epstein after his conviction, writing: “He stayed in touch until 2016 and, on the eve of Epstein being jailed for child sex abuse charges, wrote: ‘I think the world of you.’”
Lord Mandelson has been one of the most influential figures in British politics during the years surrounding the global financial crash. A key strategist for Tony Blair and a senior minister under Gordon Brown, he served as business secretary from 2008 to 2010, overseeing policy during the collapse of major banks and the subsequent recession.
Those years coincided with unprecedented intervention by governments and central banks to stabilise the financial system. In the United States, the collapse of the subprime mortgage market triggered the failure of major institutions, including Bear Stearns.
At the same time, Jeffrey Epstein was an instrumental figure in the US financial system that collapsed in 2008. He had a long and documented involvement in structured finance and mortgage-backed securities. From 1997 to 2004, Epstein was a senior client and adviser to Bear Stearns, then one of Wall Street’s largest investment banks.
Later, he became chairman of Liquid Funding Ltd, a Bermuda-based company established in 2000 that specialised in bundling mortgages — including high-risk subprime loans — into securities sold to global investors. These products were widely held by banks and funds across the US and Europe.
Liquid Funding Ltd. was 40% owned by Bear Stearns, with the remainder held by other institutional investors. The company packaged mortgages — including large volumes of subprime loans — into collateralised debt obligations (CDOs) sold to global investors. These securities received high credit ratings from agencies such as Moody’s and Standard & Poor’s.
By 2006, Liquid Funding had more than $6.7bn in outstanding debt. Its products were widely held by hedge funds and institutional investors in the US and Europe. In 2007, two Bear Stearns hedge funds heavily exposed to subprime mortgages collapsed. Epstein had personally invested more than $57m in one of those funds, which failed months before the wider financial system unravelled.
In March 2008, as Bear Stearns faced imminent collapse, the US Federal Reserve intervened directly. It facilitated Bear Stearns’ emergency takeover by JPMorgan Chase, providing $29bn in non-recourse loans through a special purpose vehicle known as Maiden Lane LLC.
Under the deal, the Fed assumed responsibility for $30bn of Bear Stearns’ most illiquid and risky assets, shielding JPMorgan from losses and failure. As a result of the rescue, JPMorgan inherited Bear Stearns’ obligations. Epstein later pursued legal claims linked to his financial dealings and received a $9 million settlement from JPMorgan in 2009, even as millions of ordinary Americans faced foreclosures and job losses.
The US crisis quickly spread to Europe, exposing fragile banks and overleveraged governments. In May 2010, eurozone finance ministers agreed to a €500bn emergency rescue mechanism to prevent Greece’s debt crisis from triggering wider collapse.
Although the UK was not part of the euro, British officials including Lord Mandelson were deeply involved due to the exposure of UK banks and the City of London’s central role in global finance. Markets during this period were extremely volatile. Even informal indications of bailout decisions could move bond yields, currencies and equity markets within minutes.
It is in this context that emails referring to the timing of bailout announcements have drawn scrutiny. Whether Epstein traded on Mandelson’s information, which he had early access to, and gained market advantage, is not known yet.
The Mandelson–Epstein correspondence has exposed proximity between political decision-makers and financial actors and reignited debate about how governments, central banks and financiers interacted during one of the most consequential economic collapses of modern times. Former Labour MP Simon Danczuk wrote on X: “We see who the British establishment care about — it’s not the victims.”
