Ex-Barclays boss faces showdown with MPs04/07/2012 - 07:55:24
Former Barclays boss Bob Diamond will make an explosive appearance before MPs today after dragging senior Bank of England and UK government figures into the rate-rigging scandal.
A newly-released record of a phone call has sparked questions about whether the Bank’s deputy governor Paul Tucker encouraged improper behaviour.
Mr Tucker also allegedly told Mr Diamond “senior Whitehall figures” had suggested to him that Barclays should not be reporting such high interbank lending rates.
The dramatic disclosure came hours after Mr Diamond announced his resignation as chief executive with immediate effect, ending a stellar 16-year career with the bank. The details of his exit package are still being thrashed out – with reports that he will be asked to give up nearly £20m (€25m) in unvested shares.
The American banker is now expected to “speak more freely” when he gives evidence to the Treasury Select Committee this afternoon.
Mr Diamond’s daughter Nell has seemingly already vented her anger on Twitter, posting a lewd jibe at Chancellor George Osborne and Labour leader Ed Miliband, who welcomed her father’s departure.
Much attention at the Commons hearing will focus on a key conversation between the bank chief and Mr Tucker about Libor rates at the height of the credit crunch in 2008.
Barclays released the text of a note sent by Mr Diamond on October 30, 2008 to his right-hand man Jerry del Missier and then chief executive John Varley, recounting the exchange.
Mr Diamond said Mr Tucker had relayed concerns from “senior Whitehall figures” over why Barclays was always towards the top end of Libor pricings.
He is alleged to have added that the bank’s Libor rate did not “always” need to appear as high as it had recently.
According to Barclays, Mr Diamond “did not believe he received an instruction from Paul Tucker or that he gave an instruction to Jerry del Missier”.
“However, Jerry del Missier concluded that an instruction had been passed down from the Bank of England not to keep Libors so high and he therefore passed down a direction to that effect to the submitters,” a statement said.
Barclays said there was no allegation by the authorities that this instruction was intended to manipulate the ultimate Libor rate. The FSA investigated Jerry del Missier personally in relation to these events and closed the investigation without taking any enforcement action, the statement added.
Mr del Missier quit with immediate effect at the same time as Mr Diamond.
Tories highlighted the reference to pressure from Whitehall, suggesting that Labour ex-ministers had to explain their involvement.
Backbencher Matt Hancock said: “It is now shockingly clear that senior figures in the Labour government were involved in the question of what happened to Libor rates.
“Labour figures have serious questions to answer.”
Alistair Darling, who was chancellor from 2007 to 2010, said yesterday he did not believe anyone at the Treasury would have urged such improper intervention by the Bank.
However, he appeared to stop short of expressing confidence that no-one in government would have done so.
“Firstly, I think it is important that this committee which is examining Bob Diamond tomorrow also gets Paul Tucker in front of it at the earliest possible opportunity. Because this is Bob Diamond’s account,” he told Channel 4 News.
“But the second point is that what Bob Diamond or Barclays appear to be saying is that the Bank told them to do this.
“I would find it absolutely astonishing that the Bank would ever make such a suggestion and equally I can think of no circumstances that anyone, certainly in the department for which I was responsible, the Treasury, would ever suggest wrongdoing like that...
“The idea that anyone at the Treasury asked the Bank to do something that was improper, I just find it... there is absolutely no evidence of that, it would have been unforgivable, and I do not believe that it happened.”
Shadow chancellor Ed Balls, a close ally of Gordon Brown who was a Treasury minister in 2006/7, insisted he knew nothing about the issue.
“I have absolutely no idea, that’s why I want, as Ed Miliband does, a full open judicial inquiry at arms-length forensically to ask these questions to see whether anybody knew what was going on,” he told BBC News.
“Without that I don’t think we can have confidence or the public can’t have confidence that we are moving forward in sorting out this culture.”
Sources indicated that the Treasury Select Committee would decide whether to call Mr Tucker – who has been widely tipped as the next head of the Bank of England – after hearing Mr Diamond’s evidence.
Mr Osborne, who announced a parliamentary probe into banking standards on Monday, said Mr Diamond’s resignation had been the “right decision” for the bank and for the country.
The Treasury launched a consultation on the possibility of introducing a new criminal offence covering serious misconduct in bank management.
While Labour leader Ed Miliband also backed the departure, he continued to call for a full judicial inquiry into banking culture and accused the Prime Minister of failing to recognise “the gravity and scale of this crisis”.
Mr Diamond is estimated to have earned £120m (€150m) since joining Barclays’ board in 2005.
He took home nearly £18m (€22.4m) in pay rewards in 2011.
The scandal leaves Barclays racing to fill crucial vacancies at its top level. Chairman Marcus Agius, who had announced on Monday his own plans to resign, will stay on as executive chairman to lead the search for his replacement and a new chief executive.
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