This is a somewhat belated comment on the saga that is banker Bob Diamond. I noted in a previous post last year that bankers were awarding themselves mega bonuses despite being publicly owned and performing badly. Well it is starting to come home to roost. Barclays chief executive Diamond Bob resigned on 3 July, a week after the bank was fined a record amount (£290 million) for trying to manipulate inter-bank lending rates (Libor). Staff did this over a number of years, trying to raise them for profit and then, during the financial crisis, lowering them to hide the level to which Barclays was under financial stress. Diamond was one of the highest paid chief executives, earning £20 million last year, and was described as "the unacceptable face" of banking by the then business secretary Lord Mendelson in 2010. diamond's severance package could net him another £20 to £30 million.
Diamond's tenure was criticised for his level of pay, his perceived lack of humility or modesty, and for being the bank's chief executive at a time when a number of malpractices were identified within the bank.
Outraged, but not surprised, the activities of these bankers was described by the chair of the Financial Services Authority as follows:
"The cynical greed of traders asking their colleagues to falsify their Libor submissions so that they could make bigger profits - has justifiably shocked and angered people, in particular when we are facing hard economic times provoked by the financial crisis." Chancellor George Osbourne welcomed his resignation and said that he hoped it was the "first step towards a new culture of responsibility" in banking.
Investigations are continuing in the UK and the US into other banks over Libor fixing, including criminal investigations by the Department of Justice. The Serious Fraud Office in the UK is looking into possible criminal prosecutions.
Barclays and controversy are not however new bedfellows. In the 1980s it had continued involvement in South Africa during the apartheid regime. Barclays also helped to fund Robert Mugabe's murderous regime in Zimbabwe by providing £30 million pound for land reforms that seized farmland and kicked people out of their homes. In March 2009 Barclays was accused of violating anti money laundering laws and in the same month documents appeared on the website "WikiLeaks". They showed how the bank manage to create an elaborate circuit of transactions that amounted to nearly £1 billion of tax avoidance. In 2010 the Wall Street Journal described how Barclays and other banks were helping the Iranian government carry out financial transactions during trade restrictions. In February 2012 the bank had to pay the UK government £500 million in tax which it had tried to avoid.
On 18 August a report by the Government's Treasury Select Committee blames bank bosses for "disgraceful" behaviour. They also criticise the regulatory supervision by Financial Services Authority and the Bank of England. They called for ugrents improvements in the way banks are run and regulated. Bob Diamond appeared before the committee to give evidence which was described as "highly selective" and "fell well short of the standard that Parliament expects, particulalry from such an experienced and senior witness." Barclays was accused of trying to pull the wool over their eyes by giving them the impression that the Bank of England approved inaccurate Libor submissions. They described this as a smokescreen to distract attention away from their internal practices.
On 30 August 2012, Antony Jenkins was appointed to replace Diamond Bob. He pledged that he will change the culture and said his first task was to "stabilise the organisation." Jenkins has kept a low profile and insiders say he is a serious and dedicated banker. He is said to be a conservative family man that will never appear in the gossip columns. Whether he can now reform the destructive culture that has built up at Barclays remains to be seen.
So far Barclays is the only bank which has been identified as submitting false Libor reports. Other banks are known to be under investigation.
