Diamond acknowledges 'reprehensible' behaviour at Barclays

Former Barclays chief executive Bob Diamond criticised "reprehensible" behaviour over a rate-fixing scandal Wednesday in his first public comments since quitting amid a high-profile boardroom exodus. Diamond added that while there had been "mistakes" at the lender, swift action was taken to tackle traders' attempts to manipulate key inter-bank lending rates. "Clearly there were mistakes, clearly there was behaviour that was reprehensible," the American banker told the British parliament's Treasury Select Committee. He said he was "physically ill" when he learned the full detail of the revelations, which he insisted was only after the regulators' investigation this month. "I'm sorry, I'm disappointed and I'm also angry," Diamond said. In defiant form during a three-hour hearing, Diamond repeatedly stressed his love for a bank which he said acted quickly to address a problem which he linked to 14 traders out of 2,000 worldwide. "The attitude of Barclays three years ago when this was recognised was, let's get to the bottom of it," he said. But he acknowledged that a "no jerk" rule at Barclays had failed to stop the wrongdoers. The 60-year-old stepped down from the top post on Tuesday over the scandal, which has also seen Barclays chief operating officer Jerry del Missier and chairman Marcus Agius quit. Last week, the bank was fined £290 million ($452 million, 360 million euros) by British and US regulators for the attempted rigging of the Libor and Euribor interest rates. Libor (London Interbank Offered Rate) is a flagship London instrument used as an interest benchmark throughout the world, while Euribor is the eurozone equivalent. The rates play a key role in global markets, affecting what banks, businesses and individuals pay to borrow money. Diamond told MPs he was concerned that British officials could have seen Barclays' relatively high Libor rates as a reason to nationalise the bank at the height of the financial crisis in 2008. Barclays had adequate funding at the time, when other lenders such as the Royal Bank of Scotland were being nationalised, Diamond said. "If Whitehall then was told Barclays was at the highest of Libor, officials might have told themselves, 'My goodness they can't fund, we need to nationalise them' as they had nationalised other British banks," Diamond said. Lawmakers also quizzed Diamond on a telephone call he had with Paul Tucker, the deputy governor of the Bank of England (BoE) who is seen as a leading contender to succeed current governor Mervyn King, in 2008. Barclays released Diamond's summary of this Tuesday. According to Diamond's written account, Tucker said he had received calls from "a number of senior figures within Whitehall" to ask why Barclays' Libor submissions were "towards the top end of Libor pricing." "Tucker stated... that it did not always need to be the case that we appeared as high as we have recently," Diamond wrote in the note. Barclays says del Missier interpreted this as an instruction from the BoE to manipulate the rate, though Diamond told the committee he himself "didn't feel it was an instruction." In an increasing political row over the scandal, finance minister George Osborne charged Wednesday that members of the previous Labour government, in power at the time the rate-fixing took place, were "clearly involved" in the scandal. "As for the role of the Labour government and the people around Gordon Brown -- well I think there are questions to be asked of them," Osborne told The Spectator magazine. Labour's current finance spokesman Ed Balls and former Treasury minister Shriti Vadera, who were key figures close to then premier Gordon Brown, both insisted Wednesday they had not spoken to Tucker about Libor. Tucker has requested to appear before the Treasury Select Committee as soon as possible to give his own version of events. Prime Minister David Cameron branded the rate-fixing scandal "appalling" and added his voice on Wednesday to a growing chorus of politicians urging Barclays not to give Diamond a generous severance package. Diamond was one of the world's highest paid bankers, earning a package worth £17.7 million (22 million euros, $27.7 million) last year. Britain's Serious Fraud Office on Monday announced that it was considering whether to bring criminal prosecutions over the issue, while Cameron has announced a parliamentary inquiry into the scandal. Lawmakers will vote Thursday on whether to back calls from the main opposition Labour party to set up a judge-led inquiry similar to the press ethics probe triggered by phone-hacking at Rupert Murdoch's media empire.