It’s hardly surprising to think that Barclay’s CEO Bob Diamond shaded the truth more than a tad in his Parliamentary testimony earlier this week. Recall that he said the manipulation was the doing of 14 traders, and in context, he was clearly saying only those 14, their immediate supervisors, and the lax compliance types were at fault out of all of Barclays. The FSA’s letter to Barclays shows that to be untrue. It clearly says “at least” 14 traders were involved, as well as various “submitters” which were in a completely different unit operationally.
The Independent has posted an interview with a former senior executive who calls out Diamond for his biggest howler, that he had no idea that anything untoward was happening until about two weeks ago. This blog had noted that Diamond’s claim that he had just found out about the rate fixing two weeks ago was utterly implausible, but it is quite a different matter for an insider to confirm that
From the Independent:
Diamond said he found out what his traders were up to only two weeks ago, when the fines dropped into his inbox. What I don’t understand is why the MPs didn’t make more of that. If that is the case, and yet they’ve paid £300m in fines, in my view it is impossible that he wouldn’t have known.
Barclays operates a policy of escalation. That is endemic. It is almost entombed in the culture of the bank. The purpose of that is that if something goes wrong it gets escalated up the line. I don’t know how or why Diamond wasn’t questioned more on that point. Libor fixing was escalated by several people up to their directors, they would then have escalated it up to the line because, at Barclays, if you don’t escalate and it is found that out you haven’t, it is grounds for disciplinary action. You will be dismissed. You are taught that, and you have to do regular in-house FSA courses. You have to sign off every year. If a member of a team saw something and didn’t escalate they would be fired….
Back in 2008, we noticed what was going on with Libor. We were informed on a weekly basis of the rates we were having to charge to clients and the rates at which Barclays was borrowing. The dealers in our Treasury area, they would send a monthly update of the difference between the Libor interest rate they were quoting and the Libor they were getting. They were advising us of the difference of what was being published and their actual cost of funds. This was escalated up.