POLITICS

Bob Diamond: 'I Was Physically Ill At Rate-Fixing Scandal'

04/07/2012 17:56

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.

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