Libor scandal: Former Barclays COO del Missier “following orders” from superiors

Bob Diamond

Former Barclays COO Jerry del Missier told a parliamentary committee on Monday that he was following orders from former CEO Bob Diamond when he instructed employees to submit artificially low estimates of the bank’s borrowing costs.

The testimony conflicted with earlier testimony from Diamond and Deputy Governor Paul Tucker of the Bank of England, both of whom deny ordering any employee to understate Barclays’s borrowing costs, according to The Wall Street Journal.

Regulatory authorities allege that Barclays attempted to manipulate the London interbank offered rate — commonly known as Libor — through the submission of artificially low borrowing estimates as part of an effort to deflect concerns regarding the bank’s financial health. The Libor rate is a benchmark interest rate used in the derivatives industry and for a number of financial products and services, including mortgages and student loans.

Last month, Barclays agreed to pay $451.6 million in a settlement with U.S. and U.K. authorities. Following the settlement, public ire led former Barclays chairman Marcus Agius, as well as Diamond and del Missier, to resign from the company, The Wall Street Journal reports.

del Missier maintains that he did not see the artificially low submissions as inappropriate, saying that it was a result of instructions from a central bank “at a time when governments were tangibly calling the shots,” according to The Wall Street Journal.

Tucker has also come under fire regarding his role in the Libor scandal and why he did not take action to address initial concerns regarding rate manipulation between 2007 and 2008. Tucker said before a parliamentary committee on Tuesday that he pressed Barclays, as well as several other firms, to pressure the British Bankers’ Association to review Libor in 2008, BusinessWeek reports.

The U.K.’s main financial regulator, the Financial Services Authority, has cleared Diamond and del Missier of any wrongdoing in the matter, saying that the issue was simply a miscommunication between the former executives, according to The Wall Street Journal.

Comments are closed.