June 28 (Bloomberg) -- Barclays Plc Chief Executive Officer Robert Diamond was urged by U.K. Prime Minister David Cameron to show accountability after the bank was fined $451 million for attempting to manipulate the inter-bank lending rate, known as Libor.
“I’m determined we learn all the lessons from what has happened at Barclays,” Cameron told reporters as he arrived in Brussels for a European Union summit. “People have to take responsibility for the actions and show how they’re going to be accountable for those actions. It’s very important that goes all the way to the top of the organization.”
Barclays, the U.K.’s second-largest bank by assets, said yesterday that Diamond and three other executives will forgo their bonuses this year. Investigators concluded that traders at Barclays lied to make the bank appear secure during the financial turmoil of 2008 and to make a profit, sometimes colluding with workers in at least four other banks.
Cameron’s comments followed opposition leader Ed Miliband’s demand for a criminal investigation into the matter. The call by the Labour Party chief was echoed by the London Mayor Boris Johnson, a Conservative ally of the prime minister.
“People struggling to make ends meet will be outraged and disgusted by the way bankers have been walking off with millions of pounds for rigging the market,” Miliband told reporters in Brighton, southern England. “First, we need criminal prosecutions, we need the full force of the law brought against those who have done wrong, and if they are found guilty and if their offences warrant it, they should go to jail.”
‘Proper Investigation’
Johnson, a defender of the interests of the City, the capital’s financial district, told the BBC today, “It strikes me that is almost certainly criminal and there needs to be a proper investigation.”
Cameron’s comments in Brussels marked an escalation after he said earlier today in England that the “whole management team has got some questions to answer.”
Diamond, who earned as much as 6.3 million pounds ($9.8 billion) in salary, bonuses and stock awards for 2011 as well as a 5.75 million-pound ($8.9 million) contribution toward his personal tax bill, used a BBC speech last year to call for banks to be “better citizens.”
Chancellor of the Exchequer George Osborne said Britain’s financial regulator is looking at whether it can bring criminal charges over the attempt by banks to manipulate the inter-bank lending rate, as he promised new laws to prevent abuse.
Osborne said he couldn’t comment on whether there are plans to prosecute executives at Barclays or other banks. The Financial Services Authority will “use every power available to them” and if these aren’t enough, Osborne said he will change the law to provide them.
Matthew Oakeshott, a member of the ruling Liberal Democrat party who sits in Parliament’s upper House of Lords, said if Diamond had any shame he would resign his position. A former minister for the City, Paul Myners, who also sits in the House of Lords for the Labour Party, said executives should face criminal charges for failings at the bank.
“If Bob Diamond had a scintilla of shame, he would resign,” Oakeshott told BBC News last night. “If Barclays’ board had an inch of backbone between them they would sack him.”
Myners told the BBC’s “Newsnight” program that “this is the most corrosive failure of moral behavior I have seen in a major U.K. financial institution in my career.”
Former Barclays CEO Martin Taylor said the board of the bank must decide whether Diamond should stay.
“It is a matter for the board to decide” whether Diamond “can be the person to turn the page on this, or whether he is part of the problem,” he told BBC Radio 4’s “Today” radio program.
‘Criminal Charges’
“Fines and public criticism will not stop these behaviors,” he said. “These behaviors will not stop until the people perpetrating it or responsible for overseeing them face the prospect of criminal charges and the prospect of going to jail.”
Andrew Tyrie, the chairman of Parliament’s cross-party Treasury Committee, said he would summon Diamond to appear before lawmakers to account for the bank.
At stake is the credibility of the decades-old Libor system and the securities and loan products that rely on it, ranging from an estimated $554 trillion in interest-rate contracts, according to the U.K. Financial Services Authority, to mortgage and credit-card payments made by consumers around the world.
Barclays pledged to pay $200 million to the CFTC, $160 million to the Justice Department and 59.5 million pounds ($91 million) to the FSA. The fines were the largest in the history of the CFTC and FSA.
Citigroup Inc., Royal Bank of Scotland Group Plc, UBS AG, ICAP Plc, Lloyds Banking Group Plc and Deutsche Bank AG are among companies regulators are investigating. A total of 18 banks are surveyed as part of the process of determining Libor and related rates.
