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Monday 2 July 2012

Diamond Geezer Remains Bulletproof

[Updates, two so far, at end of post]

So, following last week’s revelation that traders at Barclays Bank had been involved in fiddling the London Inter Bank Offered Rate (LIBOR), there was a substantial fine and the apparent eating of much humble pie. But CEO Bob Diamond was not, repeat not, resigning. Nor was his board inclined to cause him so to do. The thought entered that lesser mortals might not have been treated so leniently.

Got away with that, eh, lads?

Fast forward to today, and someone at Barclays is resigning. But that man is not Bob Diamond. It is chairman Marcus Agius. Who he? Well, Agius has had a long career in banking, mainly with Lazards, and became chairman of Barclays in 2007. And here we have a problem: the LIBOR fiddle dates back to 2005. So the chairman is walking the plank for what happened before he arrived.

Maybe the guilty boss from that time should take the rap instead. So who was in charge of all those upmarket spivs who collectively had the odds stacked in favour of their personal casino and its one-way bets? Well, that man is still at Barclays, and he’s not going anywhere right now. That is because his name, and as Theresa May might have said, I am not making this up, is Bob Diamond.

He wouldn't trust them this far

After a decent pause for anyone not familiar with the strange parallel universe in which the banking sector operates to pick their chin off the floor, let’s try and figure this out. Diamond was where the buck stopped with the fiddles, but he stays, because the Barclays board wants him to. But that board is making its decision on the basis of what will be best for Barclays. Morals and ethics do not enter.

Having looked into this less than savoury world of high finance, it is to no surprise at all that Mil The Younger has demanded an enquiry into not just the LIBOR fiddle, but the entire industry which so nearly brought the economies of the UK and many other nations down back in 2008. And equally unsurprising is the way that the right has chosen to spin the affair in order to defend the status quo.

Miliband has called this one correctly: that there was no such enquiry in 2008 is surprising, and is an omission by the Government of which he was a member. His call also means Labour owning up to that omission. But the response from Tory MPs and their pals in the Fourth Estate, to try and pin it all on Pa Broon and the tripartite system of regulation, really will not do.

Those same Tories and their City friends were constantly agitating for less regulation, and whether or not the previous arrangement, with the Bank of England in sole charge, would have picked up on the casino at Barclays and elsewhere is doubtful. And added to this is the thought that the Tories could get sucked in to any subsequent fallout: Diamond is an advisor to Boris Johnson.

But enquiry there must be. The electorate will not settle for anything less.

[UPDATE1 1805 hours: Young Dave has now announced an inquiry, but it will be a Parliamentary Committee of Inquiry, chaired by Andrew Tyrie, who chairs the Treasury Committee. Therefore it will not be independent of Parliament.

This has not impressed Mil The Younger one bit. He wants any inquiry to be independent of both bankers and politicians, and given the relationship between the two - especially that with the Tories - it is not hard to see why. Miliband has called this one right, and there will have to be a thorough and properly independent inquiry sooner or later.

Meanwhile, Bob Diamond has announced that a review is taking place, which may result in some people leaving Barclays. Sadly, he has not yet taken on board the thought that the first one out the door should not have been Marcus Agius, but him]

[UPDATE2 3 July 0945 hours: before trading started this morning in London, Bob Diamond announced his resignation, and to no surprise at all, Marcus Agius has become Lazarus, being raised from the corporate dead to be reinstated as Barclays' Chairman. Perhaps it will go down as the "Curse of the Guardian" after the paper called the bank out for premeditated tax avoidance.

This may not be unconnected with Diamond having been summoned to testify before a Commons committee tomorrow, where the questions will inevitably focus on his discussions with senior staff at the Bank of England at the time of the LIBOR fiddling.

That means it is highly likely that, had Diamond still been in post when he went into that hearing, he would most likely have been on his way out of both committee and job very soon after. And here's a prediction: this won't be the last departure of a senior banker as a result of the LIBOR rigging]

1 comment:

John Ruddy said...

Apprently, this investigation has been going on for some time - as far back as late 2009.