Bob Diamond, the former chief executive of Barclays, has been accused of misleading Parliament in an unusually strong attack by MPs investigating the Libor scandal
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Philip Aldrick: In words that are likely to make it difficult for Mr Diamond to hold a senior
position in the UK again, the Treasury Select Committee said his evidence
“lacked candour”, was “unforthcoming”, and “fell well short of the standard
that Parliament expects”.
The criticism was made in a 121-page report into the interest rate rigging
scandal that saw Barclays fined a record £290m earlier this year.
Among its wide-ranging conclusions were that Barclays operated for years with
woefully inadequate controls, that senior staff at the bank should have
taken action earlier, that the Financial Services Authority (FSA) failed in
its duty as regulator to respond to rumours of rate-fixing, and that the
Bank of England had been “naive” and “inactive”.
“Public trust in banks is at an all-time low,” Andrew Tyrie, chairman of the
TSC, said. “Urgent improvements, both to the way banks are run and the way
they are regulated, is needed if public and market confidence is to be
restored.”
The decision to single out Mr Diamond will further damage the reputation of a
man who once held sway over the City and pocketed one of its biggest annual
pay cheques. Despite his attempt to win favour with the committee by giving
up a £19.9m pay-off, MPs decided he had been “highly selective” with his
evidence and described his version of events as “inconceivable”.
Mr Diamond said he was disappointed and disagreed with the judgment. “I answered every question that was put to me to me truthfully, candidly and based on information available to me. I categorically refute any suggestion to the contrary,” he added.
The committee also criticised Jerry del Missier, Barclays’ former chief operating officer, who admitted instructing staff to rig Libor. MPs rejected his claim that, following a discussion with Mr Diamond, he believed the instruction had come directly from the Bank of England.
“Mr del Missier’s evidence... is not convincing. He would have known that falsifying Libor submissions was not permitted,” the report said. The TSC yesterday released new documents showing that the Libor submitter who was ordered to post a false rate responded to the request by saying it would be “breaking the rules”.
The TSC’s criticisms were not reserved solely to Barclays, which has already responded by replacing the chairman and promising to change the old culture of risk-taking and “pushing the limits”.
The committee attacked the FSA for failing “to appreciate the significance of rumours relating to the rigging of Libor”. The watchdog is conducting an investigation into its shortcomings, the findings of which the TSC said should be made public.
The Bank of England, too, came under scrutiny. “The evidence suggests that the Bank was aware of the incentive for banks to behave dishonestly, yet did not think that dishonesty was occurring. Nor did it appear to have asked the FSA to check,” the TSC said. “This suggests a naivety. They were certainly relatively inactive.”
MPs added that they were particularly “disappointed” with remarks made by Sir Mervyn King, the Governor, who could not see why traders rigged the rate by such small amounts. He should have known that even tiny moves could deliver large rewards, the report said.
The handling of Mr Diamond’s exit was also “misjudged” by Sir Mervyn and the FSA. The Governor’s decision to intervene at the last minute was “difficult to justify”. Given the new powers the Bank will soon have, the TSC said the events underlined the need for stronger governance to ensure “authorities are unable to remove executives arbitrarily”.
A spokesman for the Treasury said: “The manipulation of key global rates has been another example of a culture of irresponsibility within banking, which the Government is determined to fix.”
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Mr Diamond said he was disappointed and disagreed with the judgment. “I answered every question that was put to me to me truthfully, candidly and based on information available to me. I categorically refute any suggestion to the contrary,” he added.
The committee also criticised Jerry del Missier, Barclays’ former chief operating officer, who admitted instructing staff to rig Libor. MPs rejected his claim that, following a discussion with Mr Diamond, he believed the instruction had come directly from the Bank of England.
“Mr del Missier’s evidence... is not convincing. He would have known that falsifying Libor submissions was not permitted,” the report said. The TSC yesterday released new documents showing that the Libor submitter who was ordered to post a false rate responded to the request by saying it would be “breaking the rules”.
The TSC’s criticisms were not reserved solely to Barclays, which has already responded by replacing the chairman and promising to change the old culture of risk-taking and “pushing the limits”.
The committee attacked the FSA for failing “to appreciate the significance of rumours relating to the rigging of Libor”. The watchdog is conducting an investigation into its shortcomings, the findings of which the TSC said should be made public.
The Bank of England, too, came under scrutiny. “The evidence suggests that the Bank was aware of the incentive for banks to behave dishonestly, yet did not think that dishonesty was occurring. Nor did it appear to have asked the FSA to check,” the TSC said. “This suggests a naivety. They were certainly relatively inactive.”
MPs added that they were particularly “disappointed” with remarks made by Sir Mervyn King, the Governor, who could not see why traders rigged the rate by such small amounts. He should have known that even tiny moves could deliver large rewards, the report said.
The handling of Mr Diamond’s exit was also “misjudged” by Sir Mervyn and the FSA. The Governor’s decision to intervene at the last minute was “difficult to justify”. Given the new powers the Bank will soon have, the TSC said the events underlined the need for stronger governance to ensure “authorities are unable to remove executives arbitrarily”.
A spokesman for the Treasury said: “The manipulation of key global rates has been another example of a culture of irresponsibility within banking, which the Government is determined to fix.”
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