Dutch Regulators Probe Libor, Euribor Submission Process

By Maud van Gaal on July 27, 2012

 

Dutch regulators are conducting a probe into potential rigging of interbank lending rates, as a global scandal triggered by the manipulation of Libor widens.

“The Dutch central bank is conducting an investigation in the broadest sense into possible manipulation of the Libor and Euribor submission process,” said Kees Verhagen, a spokesman for the Amsterdam-based central bank. The probe is being carried out jointly with financial markets regulator AFM and in cooperation with international supervisors, he said by telephone today.

The central bank declined to say which firms are under investigation. Dutch newspaper Het Financieele Dagblad reported earlier today that Rabobank Groep, the only Dutch bank on the Libor panel, fired four traders in 2008 and 2011 for possible involvement in manipulation of the rate. The bankers, based in London, were suspected of rigging rates to help colleagues boost profit, the paper said.

Rabobank spokesman Hendrik Jan Eijpe declined to comment on the employees. The bank is cooperating with the investigations by regulators, he said.

Mitsubishi UFJ Financial Group Inc., Japan’s biggest publicly traded bank, earlier this month said it suspended two London-based traders as investigators probe the suspected manipulation of benchmark interest rates. The two traders formerly worked at Rabobank, one of at least 12 banks being probed by regulators over allegations they rigged the London and euro interbank offered rates, a person with knowledge of the situation said on July 9.

Rigging Rates

Libor is determined by a daily poll that asks banks to estimate how much it would cost them to borrow from each other for different timeframes and in different currencies. Rabobank last month withdrew from the panels that set Libor in yen, the Canadian dollar, the Swiss franc, the Danish krone and the Swedish krona. It continues to contribute toward Libor in U.S. dollars, euros and pounds.

ING Groep NV (INGA), the largest Dutch financial-services company, is on the panel for setting Euribor, as is Rabobank. Officials at ING didn’t immediately respond to messages left on their mobile phones.

The Dutch central bank started the probe “some time ago,” Verhagen said.

The U.K. and the U.S. are criminally investigating how derivatives traders and rate submitters colluded to rig Libor, and other interest rates. Barclays was fined 290 million pounds ($456 million) in June by U.S. and U.K. regulators for submitting false rates. The lender today apologized for its role in the scandal.

Libor Crime Probe in U.K. Starts as U.S. Readies Indictments

The Canary Wharf business district is seen against the city skyline in London. Photographer: Jason Alden/Bloomberg

The Canary Wharf business district is seen against the city skyline in London. Photographer: Jason Alden/Bloomberg

By Greg Farrell and Lindsay Fortado on July 27, 2012 

Related

• VIDEO

U.K. Had Responsibility for Libor, Geithner Says

• VIDEO

Bernanke Says Libor System `Structurally Flawed'

The U.S. Justice Department is preparing to file charges this fall against traders from several banks in the global probe of interest rate-rigging. Meanwhile, U.K. prosecutors haven’t even decided whether they have a case.

The U.K. Serious Fraud Office opened a criminal investigation this month after Barclays Plc (BARC) was fined a record 290 million pounds ($450 million) by U.K. and U.S. authorities. Politicians including U.K. Chancellor of the Exchequer George Osborne and Ed Miliband, leader of the opposition Labour Party, called for a criminal probe, and the agency was told it would be given a budget to take on the case.

The SFO had declined to get involved in the investigation for more than a year, despite briefings with the U.K. Financial Services Authority and a compilation of findings from U.S. enforcement agents. The U.S. evidence was provided as early as late last year, according to a person familiar with the case who wasn’t authorized to discuss it.

“It’s partly the difference in culture,” said Andrew Haynes, a law professor at the University of Wolverhampton in England. “In America, economic crime is something that’s regarded as desperately serious. In this country it is regarded as a problem, but there’s sometimes a slothful response.”

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Dozen Banks

The U.K. joins the U.S. in criminally investigating how derivatives traders and rate submitters colluded to rig the London Interbank Offered Rate, or Libor, and other interest rates. At least a dozen banks are being probed by regulators worldwide.

Royal Bank of Scotland Group Plc, UBS AG (UBSN), Deutsche Bank AG (DBK) and Credit Suisse Group AG (CSGN) are among banks awaiting their fate as regulators from Tokyo to London to New York investigate.

“Now the priority is to come to an assessment whether the available offenses are there for us to prosecute in a criminal court,” SFO spokesman David Jones said. If “the answer to that is yes we can, then we start going hell for leather and putting together a formal investigation team,” he said.

Regardless of the detailed findings involving manipulation of Libor, the SFO didn’t express any interest in the matter until recently, the person said. The agency appointed a new director, David Green, in late April.

“We were in constant liaison with the SFO, and have been throughout, but ultimately the SFO’s decisions as to what they do are matters for the SFO,” Tracey McDermott, the FSA’s acting head of enforcement, told British lawmakers July 16.

Barclays Apologizes

Barclays today apologized for its role in the Libor scandal as it posted first-half profit that beat analyst estimates and disclosed that it was target of more Libor-linked lawsuits.

“We are sorry for what has happened,” Chairman Marcus Agius said. “However, our leadership continues to focus on the delivery of our financial performance targets.”

Credit Suisse has said that it doesn’t see evidence suggesting it might have “material exposure” in connection with Libor probes.

Barclays employees tried to manipulate Euribor and Libor for profit, while managers instructed rate-setters to make artificially low submissions to avoid the perception the lender was under stress amid turmoil in credit markets in 2007 and 2008, according to the settlement.

As part of the U.S. and U.K. settlements, Barclays admitted rigging rates as early as 2005. Chief Executive Officer Robert Diamond and Chief Operating Officer Jerry Del Missier resigned over the scandal.

Rate Fixing

The U.S. charges against individuals, which would probably be filed by October, center on alleged rate-fixing activity that goes beyond the conduct described in last month’s settlement between Barclays and regulators, according to the person familiar with the case.

Initially prosecutors aimed to bring charges as soon as Labor Day, the U.S. holiday on Sept. 3, against traders who illegally manipulated Libor rates. The eruption of political and public anger following the Barclays settlement captured the attention of other regulators in the U.S. and U.K., as well as lawmakers in Congress and Parliament.

Wider Interest

The wider interest in the Libor case in turn has altered the trajectory of the criminal probe, changing the timetable of criminal charges, the person said.

The Justice Department investigation of criminal activity related to Libor is moving on a parallel course with civil probes of the banks being conducted by the U.S. Commodity Futures Trading Commission, the U.S. Securities and Exchange Commission and U.K. regulators, including the Serious Fraud Office.

The Barclays settlement required approval of the CFTC, the Justice Department and the U.K.’s Financial Services Authority. Future civil settlements will also require agreement from the SEC and the Serious Fraud Office.

U.S. prosecutors have been criticized for failing to bring any “meaningful” cases against individuals stemming from the financial crisis, said Michael Perino, a law professor at St. John’s University in New York.

“A lot of what led to the financial crisis was reckless behavior that might not have been criminal,” Perino said. “There is this remaining pent-up anger that a different set of rules seems to apply to banks and Wall Street.”

Barclays is assisting the investigation into other firms and individuals and was the first to provide “extensive and meaningful cooperation,” the Justice Department said.

Outside Investigators

The SFO is likely to hire outside investigators to assist with the case if they decide it’s likely they’ll be able to bring charges, Jones said. They may ask the FSA for two or three secondees to help them, and the Treasury may provide more than 3 million pounds.

The case is currently being handled by division heads Satnam Tumani and Jane de Lozey, and the agency has hired the senior barrister Mukul Chawla to be their lead external lawyer on the investigation.

“Has the Serious Fraud Office got the message loud and clear that if it is possible to get a charge on these people, the public want that?” Andrew Tyrie, the chair of the U.K. Parliament’s Treasury Select Committee, asked the FSA’s McDermott at the hearing on the Libor case.

The SFO was criticized under its previous director, Richard Alderman, for taking on high-profile investigations, including ones into American International Group Inc. (AIG) (AIG)’s Financial Products unit and convicted swindler Bernard Madoff’s London operations, only to close them later without charges, citing a lack of evidence. The agency has also faced a shrinking budget, a fight with the Home Office to save it from dissolution, and a staff exodus prior to Green’s arrival.

“They don’t have a glorious history in terms of getting on top of these things,” Wolverhampton’s Haynes said. “It could be partly that it falls into the cracks between the SFO and the FSA, and doesn’t clearly land on anyone’s lap.”

To contact the reporters on this story: Greg Farrell in New York at gregfarrell@bloomberg.net; Lindsay Fortado in London at lfortado@bloomberg.net

To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net; Michael Hytha at mhytha@bloomberg.net

The LIBOR Scandal

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PERSONAL FINANCE 

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7/26/2012 @ 12:40PM |978 views

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Click for full photo gallery: Top Billionaire Scandals of 2011

Allegations that the major banks colluded in suppressing their funding costs to appear healthier than they actually were during the financial crisis of four years ago, and the manipulation of rates through an opaque setting process, have come to a head with the resignation of Barclays CEO Bob Diamond. Diamond admitted to manipulating the rates at his firm, which incurred a $450 million (290 million pound) fine. COO Jerry Del Missier and Chairman Marcus Agius stepped down as well, which was also followed by 20 banks undergoing investigation, including Citigroup, UBS, RBS, BOA, JP Morgan, HSBC, Deutsche Bank and Credit Suisse.

SEE: Standards And Ethics For Financial Professionals

Greg Smith resigning from Goldman Sachs in disgust at a culture gone awry, JP Morgan admitting to a botched hedging strategy in its Chief Investment Office, MF Global collapsing beneath the weight of bad trading and a failure to protect its clients, Fabrice Tourre, Jérome Kerviel and Kweku Adobole caught out in bad trades and now this. Has scandal become sufficiently commonplace in the banking community that, like a road show, we can pick it up anywhere? Has the culture of serving clients been turned on its head? There would most definitely appear to be something wrong somewhere.

The London Interbank Offered Rate (LIBOR) and its Brussels and Japanese equivalents (the European Interbank Offered Rate (EURIBOR) and the Tokyo Interbank Offered Rate (TIBOR), respectively) are set through a process whereby each day about 40 banks submit their interest rates at which they are willing to lend, to the respective trade organizations in their regions. Once the high and low bids are discarded, the rates of the two middle quartiles are arithmetically averaged. This process is repeated about 150 times to determine the final rates each day and extends to 10 currencies and across 15 time zones. The interbank offered rates serve as a reference for the pricing of financial products worth $350 trillion that include floating rate mortgages, savings accounts, interest rate swaps, other OTC derivatives, student loans, corporate loans and credit cards. (For related reading, check out Government Regulations: Do They Help Businesses?)
Barclays and allegedly other banks during the 2007-2009 period and earlier, took into account traders’ requests for them to submit, and submitted artificially low LIBOR rates so as to project an appearance of strength to one another in parlous circumstances and roiled markets. One could make a potential case for such posturing being in the public interest. The other motivation to do so was to boost traders’ profits. The rate-setting process appears, at best, translucent and arbitrary, and at worst, potentially fraudulent.

Pour Yourselves a Hard One, Guys
The consequences of perceived malpractice will be palpable across several fronts. To the public, these goings-on smack of continued arrogance of the banks whose conduct appears to be at great odds with ethical business practices. Individual and institutional consumers alike who use any of the numerous financial products based off LIBOR may have been paying artificially low rates, depending upon how widespread the practice will turn out to have been. Redress, if any, will have to be determined.

Investors in the banks potentially caught up in this snare in general and in Barclays PLC in particular may find themselves on the losing end of an investment whose leadership is called into question and whose conduct is reproachable. Moody’s Weekly Credit Outlook has shifted to a negative outlook in light of these events, expressing concern about a potential shift away from investment banking and difficulty in finding a suitable replacement for Bob Diamond, who would be facile in investment banking and credible in his or her ability to rectify internal lapses.

The Bottom Line
To the regulators, the scandal is but more fodder for greater oversight. Indeed, the Commodity Futures Trading Commission (CFTC) is working with Barclays to develop a more transparent and robust rate-setting process. Compliance officers would need to exercise better supervision. When traders brazenly thank each other with the promise of a fine tipple over monitored email, they are nonchalant or blithely unaware. Apparently, they missed the meeting and need retraining, if they haven’t been taken to the woodshed already. It appears that mission control has given way to missing control.

Such conduct points to an issue that looms larger still and is not willed away or eradicated so easily by public outrage or regulatory pressure: firm culture. Change must come from within and be pervasive. As the past several weeks’ events have shown, firms can police themselves or be policed. Given the long reach of LIBOR, should violations be proven on a grand scale, this incident could shape up as the largest financial fraud in history and a field day for litigators – unless, of course, other nefarious goings-on surface that could be worse.

READ MORE: Infamous Insider Traders

READ MORE: Backdating: Insight Into A Scandal

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Bernanke, Geithner response to Libor scandal rings hollow

By Pedro Nicolaci da Costa

WASHINGTON, July 27 | Fri Jul 27, 2012 11:36pm IST

(Reuters) - Ben Bernanke heads the most powerful central bank in the world. Yet the Federal Reserve chairman says he was largely powerless to stop what some are calling the biggest financial fraud in history: the systematic manipulation of a key global interest rate.

It's a line of argument that has fallen flat with some lawmakers and investors, who want to know why Bernanke and other key U.S. regulators did not do more to end a potentially criminal rigging of interest rates affecting trillions of dollars in financial contracts.

Bernanke said last week he had been largely unable to directly address problems with Libor, or the London interbank offered rate, which he said he learned of in 2008.

"We are and need to continue advocating for reforms to the Libor process. It is constructed by a private organization in the UK, and so our direct ability to influence that is limited," Bernanke said in congressional testimony.

Timothy Geithner, who oversaw Wall Street as president of the New York Fed for five years before he became Treasury Secretary in 2009, has delivered much the same message.

He told lawmakers this week that he informed regulators "early on" about the problems and made recommendations to the Bank of England on how to reform the system.

"Seriously? They did all that they could do? I mean, come on," said Alan De Rose, managing director of government and trading finance at Oppenheimer in New York.

"Answers like those, they strain credibility," said De Rose, formerly a trader at a U.S. primary dealer, the selected large banks that do business directly with the Fed.

Legislators are similarly skeptical, at a time when the Fed is already taking heat in Congress for its regulatory failings that contributed to the financial crisis.

Republican Congressman Scott Garrett took aim at Geithner at a hearing of the House of Representatives' Financial Services Committee on Wednesday.

"You have been before this committee countless numbers of times since 2008 and if this is the crime of the century, as so many people are reporting today, never once did you ever once come and mention it as being a problem, never once did you come here and say this is what you're going to do about it," he said.

The revelations about Libor have further dented public confidence in the financial industry, which has been battered by a string of crises that led to unpopular taxpayer bailouts in many advanced economies. It is also another blow to the standing of regulators who have been widely accused of being asleep at the switch in the run-up to the financial crisis of 2008-2009.

Geithner told lawmakers this week he contacted the appropriate regulatory authorities, including the Bank of England, quickly after being informed that there were suspicions about the veracity of rates being reported by banks.

"We, at least I, first learned about those concerns in the early parts of spring of 2008 and we acted very quickly at that stage," Geithner said. "We took a very careful look at these concerns, we thought those concerns were justified."

The Federal Reserve Board, the New York Fed and the Treasury all declined to comment for this article.

Policymakers had a lot on their plate in 2008 as the global financial system was at risk of melting down.

JAY-WALKING OR HIGHWAY ROBBERY?

As well as wondering why U.S. regulators failed to follow up with the British authorities after no immediate corrective steps were taken, lawmakers noted the Fed itself continued to use Libor as a benchmark in its emergency lending programs, including the controversial bailout of failed insurer AIG.

"It appears that the early response was to keep using it, which means it appears that you treated it as almost a curiosity or something akin to jay-walking instead of highway robbery," Republican Congressman Jeb Hensarling told Geithner this week.

Robert Shapiro, a former undersecretary of the U.S. Commerce Department who now runs Sonecon, an advisory firm in Washington, says the scandal is vast and will continue to grow.

"Barclays is not some lone, bad apple. This could well turn into the largest consumer fraud ever seen," Shapiro said.

Barclays last month admitted to giving false information as part of setting the interest rate in a record $453 million settlement with U.S. and UK authorities.

Dozens of big banks, including JPMorgan Chase & Co, are under investigation. An internal probe at Deutsche Bank found two former traders may have been involved in colluding to manipulate global benchmark interest rates but suggested top managers were unaware of the fraud.

Things could get more embarrassing for U.S. regulators. The House Financial Services Committee has asked the New York Fed for all communications going back to August 2007 with the banks that helped set Libor.

The first trove of documents from the New York Fed showed Barclays had flagged concerns as early as 2007 and Geithner sent the email to Bank of England governor Mervyn King in June 2008 with the Libor recommendations.

Still, analysts do not see immediate repercussions for Bernanke and Geithner other than the risk of an additional loss of public confidence.

Dean Baker, co-director of the Center for Economic and Policy Research, a liberal think tank in Washington, says the comments from Bernanke stretch credulity, particularly after the Fed fought hard to keep regulatory power over banks in post-financial crisis reforms.

"He is insulting his audience to say there was nothing they could do," Baker said. "That is complete nonsense. If he had called up King and said that he has to fix the Libor, and if he doesn't this all goes public, then King would have no choice."

"I think this is a case of the central bankers being a good old boys club and that would be considered rude behavior. Rather than break the rules of the club, Bernanke allowed this fraud to continue, violating his responsibilities as Fed chair."

The apparently mild nature of Geithner's warnings about Libor to the Bank of England allowed King to claim he was never informed of accusations of fraud at all, critics say.

Simon Johnson, a former chief economist at the International Monetary Fund, lambasted the Fed.

"The Federal Reserve is responsible for the 'safety and soundness' of the financial system in the United States," said Johnson, now a professor at the MIT Sloan School of Management.

"Does allowing suspicions of fraud to continue unchecked at the heart of this system help to sustain the credibility and legitimacy of markets? Surely not."

Obama signs Israel security bill ahead of Romney visit

 President Barack Obama signs the U.S.-Israel Enhanced Security Cooperation Act while (from L-R) Chairman of the Conference of Presidents of Major American Jewish Organizations Richard Stone, U.S. Sen. Barbara Boxer (D-Ca.), and past chair of AIPAC Howard Friedman watch in the Oval Office of the White House in Washington, July 27, 2012.

Credit: Reuters/Larry Downing

By Matt Spetalnick

WASHINGTON | Sat Jul 28, 2012 3:02am IST

(Reuters) - President Barack Obama signed a measure on Friday to strengthen U.S.-Israeli military ties, a move that could score points with American Jewish voters on the eve of Republican rival Mitt Romney's highly publicized visit to Israel.

Obama also used the White House bill-signing ceremony to announce he was releasing $70 million in approved funding for Israel's short-range rocket shield known as "Iron Dome," a project backed strongly by the powerful U.S. pro-Israel lobby.

His reaffirmation of an "unshakeable commitment" to Israel's security appeared timed to upstage Romney, who has accused the president of undermining Washington's relationship with its No. 1 partner in the Middle East.

The White House denied it was an election-year maneuver, even though senior administration officials have lavished attention on Israel in recent weeks.

Romney, whose Olympics-week tour of London has been plagued by diplomatic stumbles, will travel on Saturday to Jerusalem and meet on Sunday with Israeli Prime Minister Benjamin Netanyahu, who has had a strained relationship with Obama.

"I have made it a top priority for my administration to deepen cooperation with Israel across a whole spectrum of security issues," Obama said in the Oval Office.

Congress passed the legislation last week with broad support from Republicans and Obama's Democrats, but the president waited until Friday to put his signature to it.

He was flanked by U.S. Senator Barbara Boxer and Representative Howard Berman, the bill's sponsors, and several prominent Jewish leaders, including Lee Rosenberg, chairman of AIPAC, the leading pro-Israel lobby, and Richard Stone, chairman of the Conference of Presidents of Major American Jewish Organizations.

Obama, criticized by some of Israel's U.S. supporters for being too tough on a crucial ally, wants to shore up his advantage over Romney among Jewish voters, who could prove critical in battleground states like Florida and Pennsylvania in the November 6 election.

OUTREACH TO ISRAEL'S SUPPORTERS

Obama received 78 percent of the Jewish vote in the 2008 election, but a nationwide Gallup poll in June showed him down to 64 percent backing versus Romney's 29 percent.

Obama angered many Israelis and their U.S. supporters last year when he insisted any negotiations on the borders of a future Palestinian state begin on the basis of lines that existed before Israel captured the West Bank and Gaza Strip in a 1967 war. His Middle East peace efforts have stalled.

Obama visited Israel as a candidate in the 2008 campaign but has not done so as president. He has insisted security ties with Israel have never been stronger, although he has pressed Netanyahu to hold off on any attack on Iran's nuclear sites to give diplomacy and sanctions more time to work.

Romney has accused Obama of being too hard on Israel and not tough enough with Iran.

The new bill calls for enhanced cooperation with Israel, already a major beneficiary of military aid, on missile defense and intelligence, and increased access to advanced weapons.

Romney campaign spokeswoman Amanda Henneberg said the former Massachusetts governor was "happy" to see enhanced security cooperation with Israel.

"Unfortunately this bill does nothing to address ... evasiveness from the White House on whether President Obama recognizes Jerusalem as the capital of Israel, which raised doubt about the president's commitment to our closest ally in the region," she said.

The White House says Obama holds to long-standing U.S. policy that the status of Jerusalem, which Israel considers its undivided capital despite a lack of international recognition of its annexation of the Arab half of the city, be resolved in "final-status" negotiations between Israel and the Palestinians.

White House spokesman Jay Carney denied the bill signing was timed to pre-empt Romney, saying it was a scheduling matter, but adding, "I understand the coincidence."

Romney on Sunday will also meet President Shimon Peres, other top Israeli politicians and Palestinian Prime Minister Salam Fayyad, and deliver a foreign policy speech.

Assistant Secretary of State Andrew Shapiro said Washington understood Israel's anxiety about the changing situation in the Middle East and remained committed to helping it maintain its "qualitative military edge in the region."

Defense Secretary Leon Panetta will visit Israel next week to discuss heightened tensions in the region, including the escalating conflict in Syria.

(Additional reporting by Andrea Shalal-Esa; Editing by Peter Cooney)

Head of Chick-fil-A PR group dies suddenly

July 27 | Sat Jul 28, 2012 2:19am IST

(Reuters) - Don Perry, the long-time head of Chick-fil-A's public relations department, died unexpectedly on Friday, the company said, even as the fast food chain tried to negotiate a PR firestorm over its president's recent comments on gay marriage.

The Atlanta-based chain did not give a cause of death for Perry. Local media, citing Chick-fil-A franchise owners, said Perry had suffered a heart attack.

"Don was a member of our Chick-fil-A family for nearly 29 years," the company said in a statement. "He was a well-respected and well-liked media executive in the Atlanta and University of Georgia communities, and we will all miss him. Our thoughts and prayers are with his family."

Chick-fil-A has been in the center of a media storm after remarks by its president, Dan Cathy, earlier this month.

Cathy, son of Chick-fil-A's founder and current chairman, told an online religious newspaper that he supports "the biblical definition of the family unit" and that supporters of gay marriage were "arrogant."

Various politicians jumped on the comment. Boston Mayor Thomas Menino wrote a sharply worded letter to Dan Cathy, suggesting the company was not welcome in the city.

It has been a rare time in the spotlight for the privately owned chain, which has some 1,600 restaurants around the country selling popular fried-chicken sandwiches, waffle fries and peach milkshakes.

Perry, a native of rural Valdosta, Georgia, and a 1974 graduate of the University of Georgia, joined Chick-fil-A in 1983 to launch the public relations department at the growing company.

"My expression routinely is 'there are no dull days,'" he told alumni publication Georgia Magazine in a profile published in June. "You just don't know what's going to happen moment to moment." (Reporting by Ros Krasny in Boston; editing by Matthew Lewis)

Amelia Earhart Search: $2.2 Million Expedition To Find Famed Aviator's Plane

AP  |  By OSKAR GARCIA Posted: 07/23/2012 9:59 pm Updated: 07/24/2012 7:08 pm

July 13, 2012 -- As the search for Amelia Earhart's plane probes the waters off Nikumaroro, a tiny uninhabited island in the southwestern Pacific republic of Kiribati, a new paper has reconstructed what may have happened to the legendary aviator 75 years ago.

Written by Thomas King, the senior archaeologist on Amelia Earhart search project, the paper summarizes 23 years of interdisciplinary research by the International Group for Historic Aircraft Recovery (or TIGHAR). It will be published by the academic journal Pacific Studies in October.

"In the Earhart case, strong circumstantial evidence supports the hypothesis that the pilot and navigator Fred Noonan landed their Lockheed Electra 10E safely on Nikumaroro, made repeated efforts to radio for help, and eventually died as castaways," King told Discovery News.

HONOLULU -- A $2.2 million expedition that hoped to find wreckage from famed aviator Amelia Earhart's final flight is on its way back to Hawaii without the dramatic, conclusive plane images searchers were hoping to attain.

But the group leading the search, The International Group for Historic Aircraft Recovery, still believes Earhart and her navigator crashed onto a reef off a remote island in the Pacific Ocean 75 years ago this month, its president told The Associated Press on Monday.

"This is just sort of the way things are in this world," TIGHAR president Pat Thrasher said. "It's not like an Indiana Jones flick where you go through a door and there it is. It's not like that - it's never like that."

Thrasher said the group collected a significant amount of video and sonar data, which searchers will pore over on the return voyage to Hawaii this week and afterward to look for things that may be tough to see at first glance.

The group is also planning a voyage for next year to scour the land where it's believed Earhart survived a short while after the crash, Thrasher said.

Thrasher maintained touch throughout the search with TIGHAR founder Ric Gillespie, her husband, and posted updates about the trip to the group's website. The updates tell of a search that was cut short because of treacherous underwater terrain and repeated, unexpected equipment mishaps that caused delays and left the group with only five days of search time rather than 10, as originally planned.

During one episode, an autonomous underwater vehicle the group was using in its search wedged itself into a narrow cave, a day after squashing its nose cone against the ocean floor. It needed to be rescued.

"The rescue mission was successful - but it was a real cliffhanger," Gillespie wrote in an email posted online last week. "Operating literally at the end of our tether, we searched for over an hour in nightmare terrain: a vertical cliff face pockmarked with caves and covered with fern-like marine growth."

Thrasher said the environment was tougher to navigate than searchers expected.

The U.S. State Department had encouraged the privately-funded voyage, which launched earlier this month from Honolulu using 30,000 pounds in specialized equipment and a University of Hawaii ship normally used for ocean research.

The group's thesis is based on the idea that Earhart and navigator Fred Noonan landed on a reef near the Kiribati atoll of Nikumaroro, then survived a short time.

Previous visits to the island have recovered artifacts that could have belonged to Earhart and Noonan, and experts say an October 1937 photo of the shoreline of the island could include a blurry image of the strut and wheel of a Lockheed Electra landing gear.

The photo was enough for the State Department blessing, and led to the Kiribati government to sign a contract with the group to work together if anything is found, Gillespie said at the start of the voyage.

A separate group working under a different theory plans its third voyage later this year near Howland Island.

Earhart and Noonan were flying from New Guinea to Howland Island when they went missing July 2, 1937, during Earhart's bid to become the first woman to circumnavigate the globe.

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On a visit to the Amelia Earhart birthplace in Atchison, Kan., Karyn Mchorney and her daughter Emily look at photograph on Wednesday, March 21, 2012. A new theory has emerged based on a photo taken three months after she disappeared in an attempt to make a flight around the world in 1937. (AP Photo/The St. Joseph News-Press, Eric Keith )


This image provided by The International Group for Historic Aircraft Recovery and displayed at a U.S. State Department news conference on Tuesday, March 20, 2012, may provide a new clue in one of the 20th century's most enduring mysteries and could soon help uncover the fate of American aviator Amelia Earhart, who went missing without a trace over the South Pacific 75 years ago, investigators said. Enhanced analysis of a photograph taken just months after Earhart's Lockheed Electra plane vanished shows what experts think may be the landing gear of the aircraft, the small black object on the left side of the image, protruding from the waters off the remote island of Nikumaroro, in what is now the Pacific nation of Kiribati. Armed with that analysis by the State Department, historians, scientists and salvagers from The International Group for Historic Aircraft Recovery, are returning to the island in July 2012 in the hope of finding the wreckage of Earhart's plane and perhaps even the remains of the pilot and her navigator Fred Noonan. (AP Photo/The International Group for Historic Aircraft Recovery)


Ric Gillespie, right, founder of The International Group for Historic Aircraft Recovery, watches equipment testing alongside Wolfgang Burnside from aboard a ship at port in Honolulu on Sunday, July 1, 2012. Gillespie is leading a month-long voyage to find plane wreckage from Amelia Earhart's Lockheed Electra, which disappeared over the South Pacific 75 years ago. (AP Photo/Oskar Garcia)


A variety of fragmented objects collected by archaeologists at a site on the uninhabited island may have originally been American beauty and skin care products, all dating to the 1930s.

Source: TIGHAR

AMELIA EARHART: 115 YEARS OLD TODAY

Analysis by Rossella Lorenzi
Tue Jul 24, 2012 10:10 AM ET
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Amelia Earhart, the aviation pioneer who vanished over the Pacific 75 years ago, would have been 115 today. Meanwhile, researchers are scouring over data gathered during a deep-water search for her plane in the Pacific.

Google marked the aviator's birthday with a Doodle on Google's front page today. It shows Earhart climbing a Lockheed Vega 5B monoplane as her yellow scarf flutters in the wind.

Born in Kansas on July 24, 1897, Earhart became the first woman to receive the U.S. Distinguished Flying Cross from Congress. The award was granted after she flew her Lockheed Vega from Newfoundland in Canada to Culmore in Northern Ireland in 1932 -- the first woman to fly solo across the Atlantic.

WATCH VIDEO: Find out how the search for Amelia has gone down.

PHOTOS: Amelia Earhart's Fate Reconstructed

Tall, slender and brave, Earhart disappeared while flying over the Pacific Ocean on July 2, 1937 in a record attempt to fly around the world at the equator. Her final resting place remains a mystery.

The most recent attempt of finding evidence of her Lockheed Electra 10E, a $2.2 million expedition by The International Group for Historic Aircraft Recovery (TIGHAR ) off the waters of a tiny uninhabited island between Hawaii and Australia, ended up without any conclusive image of the plane.

ANALYSIS: Hopes of finding Earhart's plane fade

Indeed, last week, TIGHAR called off the expedition to Nikumaroro island because of the difficult underwater environment -- filled with nooks and crannies and caves and projections -- and a number of technical issues.

Nevertheless, TIGHAR still believes Earhart and her navigator Fred Noonan landed on Nikumaroro's reef and died there as castaways.

"Big pieces of airplane wreckage were not immediately apparent, but after 75 years in Nikumaroro's severe and unstable underwater environment, that is hardly surprising. Whatever survives is hard to find," TIGHAR said in a statement.

Get full coverage of the Amelia Earhart story here

They added that analysis of sonar data and review of many hours of high-definition video will tell "whether we found it."

Due to the limitations of the technology, the researchers were only able to see standard-definition video images during the search operations.

"Now that we're examining the recorded high-definition video, we're already seeing objects we want our forensic imaging specialist, Jeff Glickman, to look at," TIGHAR said.

"We'll also be getting expert second opinions on our best sonar targets," they added.

Results should be ready by the time a Discovery Channel show on the expedition airs on August 19th.

Photo: Amelia Earhart honored with a Google doodle.