Barclays Ex-chief Diamond Apologizes for Traders’ “Reprehensible” Behavior

Bob Diamond, former head of Barclays faced a grilling before members of Britain’s parliament Wednesday about charges that his bank rigged an inter-bank lending rate. The BBC’s Rob Watson tells host Marco Werman that Diamond tried to defend Barclays, but also strike a note of contrition.

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Marco Werman: I’m Marco Werman, and this is The World, a co-production of the BBC World Service, PRI, and WGBH Boston. A high-flying American who until recently led one of Britain’s largest banks appeared humble today as he faced a grilling before British MPs. Bob Diamond, former head of Barclay’s, told members of a parliamentary committee that behavior by his traders was reprehensible and wrong. Barclay’s has already paid a $450 million fine to settle charges that it rigged a benchmark interest rate. The BBC’s Rob Watson watched Diamond’s testimony. He says Diamond tried to defend Barclay’s but was also apologetic.

Rob Watson: Of course it’s quite a tricky act to pull off because he is seen as being one of the most prominent, perhaps one of the loudest, the best paid bankers in Britain. The MPs were obviously mighty angry at what they see as a scandal that they fear could damage London’s reputation as a financial center. But he was determined to come and say, look, this was down to a number of rogue traders, I didn’t know about what was going on, and you shouldn’t tarnish Barclay’s, and that somehow Barclay’s was getting a bad rap simply because it was the first bank to be named, but that there were lots of others out there that had done the same thing.

Werman: And Diamond surely had to defend himself and the company. The questioning was pretty pointed. Let’s listen to an excerpt of Labor MP John Mann grilling Diamond. Here’s one part of what Mann had to say to Diamond earlier.

John Mann: The people working for you are fiddling the system. Potentially some of them are going to prison. Criminality. You’re the man in charge. You tell us, modestly, that under such a situation you lose your job that you have and you lose your shares. That’s a pretty small price for you to pay, or have you another suggestion of how you can show some contrition to those Barclay staff across the country and the customers who are wondering and emailing me asking, who said what do I do with me money? Do I take it out of this rotten thieving bank?

Werman: Now, Bob Diamond is an American. Rob Watson in London, did you detect an element of nationalism here as members of Parliament from the U.K. grilled an executive from across the pond?

Watson: I don’t think there’s any doubt that there is perhaps underlying it all a certain anti-Americanism, or certainly a anti-American bankerism, if I could put it that way. It’s crept into some of the coverage with a lot of people saying well, a British banker wouldn’t have behaved in this way. It didn’t come out in the committee, but you bet that it’s lurking there, this sort of sense of here you go, here’s this brash, hard-talking American. And of course a lot of his defenders, both here in London and the other side of the water have said that that is deeply unfair, and that, I’ve heard that some people in the United States think that actually the financial service industry in the U.K. was perhaps rather foolish to lose him so easily.

Werman: Now, Diamond is known for being brash, but as you said, he came before the committee today with a mission to be contrite. Here is Diamond describing his reaction to reading emails sent between Barclay’s traders in which they encourage one another to manipulate rates in exchange for bottles of champagne.

Bob Diamond: When I read the emails from those traders I got physically ill. It’s reprehensible behavior and if you’re asking me should those actions be dealt with, absolutely.

Werman: Now at the heart of this investigation is a charge, Rob, that Barclay’s rigged something known as the Libor, that’s an interest rate used between banks loaning each other money. Recap for us briefly the accusation against Barclay’s and also how did Diamond handle these charges of fiddling with the rate today?

Watson: There are two phases to it. The first phase is that individual traders were manipulating the rates in order to do good deals, to get a good deal for themselves and for the bank in particular trades they were making, but that there was then a second phase where the bank was trying to make it seem as though it could borrow money more easily than it could, or at a lower rate than it could, in the middle of the financial crisis in 2008. Now what really seemed to stagger most MPs is what, when they asked Bob Diamond, well when did you really know about this, he said last month, but that the bank, when it had been contacted by the authorities had cooperated all along the way and that that’s why he felt that Barclay’s was getting a bad rap, and that after all all the other banks were doing it too. What really struck the MPs, and clearly they were pretty incredulous, was well, how come all this could have been going on at the bank and for you not to have known about it. But he very much stuck to the line that he didn’t know and that there were reasons why he didn’t know.

Werman: Did Bob Diamond point the fingers at others at Barclay’s to share the blame for this scandal or is he taking the full hit?

Watson: Well, he’s pointing the blame at others in the sense that he’s saying this was traders and the people that were supervising the traders who let down the other 140,000 employees at the bank, so in that sense he’s pointing the finger. But I mean clearly he’s accepting overall responsibility, and that was why he resigned, because he felt that the good employees at Barclay’s weren’t going to get a proper hearing in the courts of public opinion as long as he was a lightning rod.

Werman: The BBC’s Rob Watson in London.

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