U.K. lawmakers accused former Barclays Plc Chief Executive Officer Robert Diamond of “living in a parallel universe” and operating a “worrying” management structure, as he apologized for the lender’s rigging of interest rates.
“Do you live in a parallel universe to the rest of the U.K.?” Andrea Leadsom, a Conservative member of the House of Commons Treasury Committee, asked Diamond at a hearing in London yesterday. “You say it’s the culture that saved Barclays, but it’s the culture that’s the problem.”
Diamond was testifying the day after he resigned amid the uproar that followed the bank’s admission it manipulated the London interbank offered rate. He opened by telling lawmakers “I love Barclays,” describing the behavior of “a small number” of traders as “reprehensible.” In three hours of testimony, he addressed panel members by their first names and attempted to banter with them, at one point telling Tory Mark Garnier he was “just looking for a little love.”
The committee responded at times with expressions of disbelief, cutting him off as he tried to give longer answers and quoting back to him remarks he’d made in the past. “You have come to symbolize a culture that itself needs changing,” Labour’s Pat McFadden told him.
Andrew Tyrie, the committee’s Conservative chairman, later summarized Diamond’s version of events as “somewhat implausible.”
“Cumulatively, the whole thing looks a fairly sorry tale from the point of view of the culture of Barclays,” Tyrie told Sky News television late last night. “He was defending the culture of Barclays but the bank have now got a root-and-branch investigation into themselves going on right now, the only justification of which must be they feel there is something wrong with the culture too.”
Parliament’s lower House of Commons will vote later today on what kind of inquiry the government should hold into the banks. Prime Minister David Cameron wants a time-limited probe by lawmakers, chaired by Tyrie. The opposition Labour Party wants a judge-led investigation. Tyrie said yesterday he’ll only lead an inquiry that has cross-party support.
Barclays, the U.K.’s second-largest bank by assets, was fined a record 290 million pounds ($453 million) on June 27 for rigging Libor, a global benchmark. Lawmakers sought to determine precisely what Diamond, 60, knew about the affair.
The Massachusetts-born banker began with contrition. Questioned about e-mails between traders and those responsible for supplying information on the rates Barclays was paying to borrow money overnight that showed routine requests for false submissions, he said they made him “physically ill.”
Leadsom, a former Barclays banker herself, questioned why compliance officers hadn’t been aware of these exchanges, which took place over a period of years. Diamond replied that rate-setting hadn’t been seen as a high-risk area.
She then asked whether the bank’s bonus culture had encouraged wrongdoing. “Individuals were remunerated just to look after No. 1,” she said.
Leadsom told the BBC that she thought future witnesses should be instructed to address panel members as Mr. or Mrs.
Labour’s John Mann said his voters viewed Diamond as running a “rotten, thieving bank” and suggested he give his recent annual bonuses to a homeless charity. “Either you were complicit in what was going on, or you were grossly negligent, or you were incompetent,” he said.
Asked by Mann whether he was upholding the values of the Quakers who founded Barclays, Diamond replied that “honesty, integrity and plain-dealing” had characterized his career.
Another Labour lawmaker, George Mudie, told Diamond that his statement that no one at Barclays had raised concerns about traders’ actions “doesn’t wash” and indicated a cultural shortcoming.
“You were running that firm,” Mudie said. “We know the behavior was wrong. But the management in your place was extremely worrying.”
Liberal Democrat John Thurso offered Diamond a back-handed compliment. Conceding they had got little new information from the banker, he compared him to former England cricketer Geoffrey Boycott, known for batting unadventurously for hours without making errors.
“You’ve been occupying the crease for 2 1/2 hours and I’m not sure we’ve got a great deal further forward,” Thurso said.