Former Barclays boss Bob Diamond told MPs he felt "physically ill" when he discovered traders at his bank were manipulating the inter-bank interest rates.
During a feisty session before the Treasury select committee on Wednesday, Diamond said he was "disappointed" and "so angry" over the scandal, but denied having any knowledge of the affair at the time.
The banker stood by his former bank, telling MPs he "loved" Barclays and that the scandal was the fault of just 14 people and did not reflect a wider cultural problem in the bank.
Diamond is estimated to have received £120m since joining Barclays' board in 2005. He took home nearly £18m in pay rewards last year.
But he was forced out of the bank on Tuesday after Barclays was fined for fixing the Libor lending rate against the rules.
MPs on the committee were left unimpressed by Diamond's admission that he only learned of what his traders were doing last month.
Tory David Ruffley said it was "quite difficult to believe" that Diamond was "completely oblivious to illegality" at the bank he ran.
Asked by Labour MP Andrew Love if he should give up share awards to reflect what had happen at the bank, Diamond replied: "That is a question for the board."
"I don't feel personally culpable but what I do feel is a strong sense of responsibility, a very strong sense that when we find mistakes, we recognise them, we are open about them," Diamond said.
Love said: "There has to be recognition in that final pay off of what went wrong."
Diamond also insisted on referring to the MPs by their first names and interrupting them, much to the irritation of Labour committee member Theresa Pearce who tweeted from the session: "Really annoying that Mr Diamond is using our first names. So rude".
The former Barclays man was also subject to intense questioning from Labour MP John Mann, who offered to tattoo Barclays' founding principles of 'honesty, integrity and plain dealing’ on Diamond's knuckles.
"You personally are involved, either by being complicit or by being incompetent," he said.
Mann suggested Diamond give up some of his millions to help fund charities to demonstrate he was truly sorry. An offer Diamond declined to take up.
Diamond also told the committee that Barclays feared it would be nationalised at the hight of the financial crisis and that his chief operating officer, Jerry del Missier, mistakenly assumed the Bank of England had instructed him to lower the bank's Libor rate.
Diamond said Bank of England deputy governor Paul Tucker relayed concerns from officials within government that Barclays' Libor rate was too high - which could be a sign of financial weakness at the bank.
He said: "Whitehall was told Barclays had the highest Libor. They would think we couldn't fund and must nationalise the bank."
But he insisted he did not feel any action had been requested. "I didn't feel it was an instruction," he said.
MPs are due to vote tomorrow on whether to hold a parliamentary inquiry, as proposed by David Cameron, or a judge-led inquiry as called for by Ed Miliband, in to what happend at Barclays and across the banking sector.
Diamond: "I know Barclays would still act the same way... to come out and be the first to correct it. But I worry that the impact of being first and the recation to the one firm that's out first outside of the industry contact doesn't create great incentive for others to come forward."
Bob Diamond concludes his testimony after an afternoon of tough if varied questioning.
Diamond: "When there are mistakes we admit them, we act on them and we show that actions have consequences."
Stewart Hosie says it's "difficult to believe" that Barclays staff knew that other banks were trying to fix Libor, but somehow they didn't have internal processes to spot that they themselves were doing it.
Bob Diamond once again tries to say it was a limited number of people. Andrew Tyrie butts in and says, "Yes, we know this."
Diamond eventually says "it's a completely different issue," Hosie says it's not a different issue at all.
Diamond looks pensive again - he's been fairly relaxed so far, even when John Mann grilled him.
"There were discussions between compliance and the FSA," Diamond says, insisting that this happened before the FSA probe began.
Hosie says that's tantamount to saying the FSA gave a "nod and wink", Diamond says what must have happened is that the FSA had a different interpretation of those meetings than they'd previously thought.
It gets messier and messier - pardon the pun.
|@ tpearce003 : Really annoying that Mr Diamond is using our first names. so rude|
The MP says if Diamond were a cricketer he'd be Geoffrey Boycott. "You've been at the crease for two and a half hours and I'm not sure we're any further forward."
|@ DCAJason : BREAKING: CERN to smash Bob Diamond into Paul Tucker at incredible speed in hunt for elusive 'Truth' particle #diamond #Barclays|
The Labour MP asks Diamond: "Either you were implicit in what was going on, or you were negligent, or you were incompetent."
Bob Diamond says once they became aware they launched the investigation, there's no other way than answering the same question.
Mann is clearly finding it difficult to believe that a man paid so much could not have known. "You must have been grossly incompetent, if not complicit in this."
John Mann is incredulous - saying "it does appear strange to the outside world" that even those rate-setters who did not fix Libor did not report that they had been asked to.
You seem to have "seen nothing, known nothing, heard nothing, in that three-year period," says Mann.
Earlier John Mann offered to tattoo the original founding values of Barclays - Honesty, integrity, and plain dealing - onto Diamond's knuckles. It is a rare highlight in a session which lost its fizz about 20 mins ago.
Diamond is trying to refute the assertion that some of those who did the rigging attempts were "hot-headed 20 to 30 year-olds"
He says those who set the rates were "some of our most senior staff" who had been with Barclays for more than 20 years.
What does this say about Barclays? Nothing good, really.
Mark Garnier MP asks why those traders coming under pressure to fix Libor didn't tell their boss.
"They were seeing those emails coming in," says Garnier. "There aren't examples of 177 replies saying stop this, of a Libor setter going to his line manager or compliance and saying we've got a problem."
Diamond: "They weren't, and it's inexcusable"
Diamond says part of the risk-management function is to have the culture in place to ensure this didn't happen. He says this fed straight into the Chief Operating Officer, who reported directly to Diamond once he took over as CEO.
"Although it didn't present a financial risk, it was a real break to our culture," he says.
Diamond says he was given all the documents a week before this all became public (so nearly a fortnight ago). He says as he was downloading the documents he became physically ill.
"We're serious in Barclays that when people don't behave, they have to leave"
When asked to comment on news reports that Diamond is under pressure not to take his severance pay and bonuses, Diamond just says he hasn't been reading the press lately.
And for some unknown reason, the MPs let him off answering further questions on that!!
Bob Diamond says the Barclays board has to decide whether those who have harmed the banks bonuses should have their deferred bonuses revoked.
Leadsom has turned into a rapier, suggesting that the bank culture meant that people were paid massive amounts of money just to ensure their own books were healthy, above all other regulatory concerns. She suggests angrily that even former Barclays employees could still hold influence in exchange for a bottle of Bollinger.
Diamond: I think you take the conclusions way too far.
Leadsom: Have you been concerned about other rate-fixing, possibly to gilt-edged markets.
Diamond: That would have been part of our audit procedure.
Leadsom: But you didn't spot Libor-fixing? In light of the fact your audit failed to spot for several years that there was corruption going on, and quite openly, have you investigated whether other parts of Barclays have been fraudulently fixing things?
Diamond suggests that inquiries into other areas will happen, but is very guarded about whether anything has been un-earthed so far.
Tory MP Andrea Leadsom is grilling Bob Diamond on what the compliance procedures were in terms of whistleblowing on improper activity.
"I don't have a manual with me but I'm sure it's both to compliance and to their boss," says Diamond.
Huffpost can't help but think that compliance doesn't seem to have been particularly pro-active!
Diamond says trading desk supervisors were aware of the libor-rigging. Some of them have been suspended, others have been "dealt with". Some of them have been asked to stay on during the investigation
Diamond is once again trying to get on first name terms, this time with Andrea Leadsom, a Tory MP.
Leadsom says she wants to focus on the criminality of the issues. She says there are 173 recording requests for rate-fixing of Libor.
"When you say it was limited to a small group of traders, clearly there was a significant amount of collusion going on?" suggests Leadsom.
Bob just says "It's wrong." - again.
Leadsom pushes Diamond, saying what does it say about the culture of Barclays?
"It was appalling. When it was clear there was this behaviour it was dealt with immediately."
Diamond says there will be a follow-up criminal investigation. "We're certainly not going to stand in the way of it," he says.
Diamond says it says a lot of Barclays that "we were first" to come forward and settle over libor-fixing.
"As soon as it was known, it was dealt with. And I think that's an important thing."
"I'm sorry," says Diamond, saying again the behaviour was "reprehensible"
"I'm disappointed, I'm also angry," says Diamond, claiming "This doesn't represent the Barclays that I know and love."
Diamond is asked whether bankers should come under a regime where wrongdoers who mislead markets should face criminal charges and prison sentences
Diamond: I think people who do things they are not supposed to do should be treated harshly.
Diamond says "the reports that came to me every day were the rates of Libor, not the relative ratings."
So he is claiming that although he had a daily report on Libor, it didn't include BarCap's submissions for that rate. Plausible deniability?
Diamond says he learned about the rigging "during the investigation" - not before.
He says that "soon after the credit crisis" in 2009, a request came in for an investigation.
David Ruffley tries to pin him down on the exact date. Diamond then starts veering off onto other areas. But says he only found out about it "this month"
It's still unclear whether ministers were involved - Diamond says Barclays tried to make it clear that it did not have a liquidity problem similar to other banks in October 2008.
Diamond says he doesn't have a "recollection" of meeting Shriti Vadera at that time.
He also says that minutes of meetings are not available, saying "not that we have located", before hastily saying "not that we know of"
People will suspect, of course, that such minutes existed at some point.
Diamond says Baroness Vadera was "very involved" with the recapitalisation of the distressed banks. He refers to her as "Shriti" continuously, again in a very matey style.
Bob Diamond says he didn't take the lead on discussions with Vadera, but says he can't recall whether those discussions were taking place before the 29th of October, when the Libor rate suddenly plummeted.
Twitter doesn't seem to think Norman has done much to advance the sum of human knowledge. The fact Diamond referred to him as "Jesse" in a quite matey manner didn't help. Michael Fallon now up.
|@ kamalahmed1 : Why isn't @Jesse_Norman continuing the questioning on the memo rather than moving on to another issue? #diamond|
Andrew Tyrie has stopped his grilling and Tory MP (and former banker) Jesse Norman is now asking questions about his management style
In some softball questionning Diamond says he has a consensual management style.
He says the FSA took decisions to increase the equity of the UK banks in October 2008 - the height of the financial crisis.
Norman asks whether the Bank of England was too slow to respond to the financial crisis?
Diamond: We always wanted as much a response as we could get from the central banks. I don't recall a specific issue, but he says the Federal Reserve took the lead. But he says he wasn't "critical" of the Bank of England and describes its efforts as "encouraging".