Parliament Report Slams Barclays, Banking Culture Over LIBOR

Pointing out these discrepancies in testimony between Diamond and members of the FSA, the report said, “It seems to us inconceivable that Mr. Diamond could have believed that the FSA was satisfied with the tone at the top of Barclays.”

There was also considerable discussion about the telephone call between Tucker and Diamond, during which Tucker denied in his testimony any suggestion that Barclays should lower its LIBOR rate so as not to appear to be in trouble by having to pay more to borrow than its peers. Diamond had said he did not regard Tucker as having given him an instruction for the bank to lower its LIBOR submissions. However, according to the parliamentary report, “A key point which Mr. Diamond appeared to have had in his mind at this time was the potential threat of nationalization: ‘If Whitehall was told, “Barclays is at the highest of LIBOR,” without knowing all that I just went through, they might say to themselves, “My goodness, they can’t fund. We need to nationalize them,” as they had nationalized other British banks.’”

As a result of these thoughts, it appears, Diamond took what at the time was an unusual step: writing a file note to John Varley, who was then Barclays chief executive, and to Jerry del Missier, at the time co-president of Barclays Capital; the latter allegedly took the file note as an instruction for the bank to lower its LIBOR submissions.

Tyree said in his statement of the exchange, “As the Report points out, it remains possible that the information released in the Barclays File Note, regarding a dialogue between Mr. Tucker and Diamond, could have been a smokescreen put up to distract our attention and that of outside commentators from the most serious issues underlying this scandal.”

Diamond issued his own statement Saturday, in which he said, “I am disappointed by, and strongly disagree with, several statements by the Treasury Select Committee. There is little dispute that Barclays was both aggressive in its investigation of this matter and engaged in its cooperation with the appropriate authorities.” In a Reuters report, he was quoted saying that he had answered Parliament’s questions “truthfully, candidly and based on information available to me. I categorically refute any suggestion to the contrary.”