I was slightly surprised by this morning’s news from the top of the Barclays tower that Bob Diamond has resigned. Prior to today I can’t think of a time when a leading non-bankrupt banker would have been forced out by essentially political pressure.
It’s doubly unthinkable that a tough street fighter such as Diamond would throw in the towel. It is extremely out of character, and his statement was pretty clear that he feels he has been hounded out by politicians.
As the story developed over the weekend it was clear that Diamond would have to resign.
He appears directly implicated
Bob Diamond himself spoke to Paul Tucker about the Libor rate in autumn 2008. “After their conversation took place, senior Barclays’ management on October 29 2008 gave an explicit instruction to reduce Libor submissions,” wrote Robert Peston last week.
There is no record of the conversation between Tucker and Diamond. Both men have different memories of it. But there is an agreement that: “no instruction for Barclays to lower its Libor submissions was given during this telephone conversation”. Nevertheless, the FSA says that as the substance of Diamond’s conversation with Tucker was relayed down the chain of command, a misunderstanding occurred and Barclays’ Libor submitters, “believed mistakenly that they were operating under an instruction from the Bank of England (as conveyed by senior management) to reduce Barclays’ Libor submissions”.
As CEO, Diamond surely had a duty to ensure his edicts were implemented accurately?
By his own measure, he has failed
Barclays has done a lot to push responsible corporate citizenship in recent years. Its results announcements almost always include a lengthy and incongruous section on what its been doing for the community. As an organisation, Barclays recognises the importance in being seen to be good. That will be hard as long as Bob remains in charge.
Most damaging, is a comment Diamond made in a BBC interview last year. “For me the evidence of culture is how people behave when no-one is watching,” he said. On this basis, Barclays’ culture doesn’t look admirable.
He had the chance to put things right, and didn’t
“Barclays’ compliance department failed to act on three separate internal warnings between 2007 and 2008 about conflicts of interest and “patently false” submissions by its staff,” said the FT this weekend. Bob wasn’t the compliance department, but he was the chief executive. He should have been responsible.
Rumbles of extradition
The FBI is said to be investigating 14 Barclays traders at the centre of the scandal. If culpable, they could be extradited. But what if they argue they were following management orders, as suggested by point 1?
The whole issue seems to now hang on what really happened during that conversation with Tucker, and how the content of that call was communicated subsequently.
Politicians are sovereign
“I don’t think the Bob Diamonds of this world would have resigned four or five years ago,” said the chancellor on this morning’s Today programme.
We have entered a new world. Politicians now appear sovereign over our banking system. Many in Britain will welcome that. For many, it will be a profound shock. And this is just the beginning of an industry-wide issue.