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Libor scandal: del Missier questioned by MPs Libor scandal: Del Missier 'instructed' by Diamond
(40 minutes later)
A former Barclays executive responsible for cutting the bank's Libor interest rate has told MPs that it was not very "significant" in the circumstances. A former Barclays executive has told MPs he was instructed by his then boss, Bob Diamond, to cut the bank's Libor interest rate submissions.
Jerry del Missier, who quit as Barclays chief operating officer, is appearing before the Treasury Select Committee. Jerry del Missier, who quit as Barclays chief operating officer, is appearing before the Treasury select committee.
Given the global financial crisis in 2008, the controversial rate-rigging did "not seem a significant event given what was going on," he said. Asked if a 2008 phone call from his boss was an instruction to cut the rates Mr del Missier said "yes it was".
Lord Turner, chairman of the FSA city regulator, will also give evidence.
Last month, Barclays was fined £290m after admitting trying to manipulate Libor from 2005 to 2009.Last month, Barclays was fined £290m after admitting trying to manipulate Libor from 2005 to 2009.
In 2008 Mr del Missier told staff to cut Libor interest rate submissions following what Barclays says was a misunderstanding over a note sent from his then boss, Bob Diamond. Barclays has said that Mr del Missier told his traders to cut the Libor interest rate submissions following a misunderstanding over a note sent from Mr Diamond.
Last month, Barclays suffered penalties of £290m after it admitted trying to manipulate Libor from 2005 to 2009. However Mr del Missier told MPs he acted on the basis of a phone call from Mr Diamond the day before.
MPs asked Mr del Missier several times if the manipulation of rates was illegal. However, Mr del Missier said that it was not a "yes or no" matter. "I took the action on the basis of the phone call that I had had with Mr Diamond," Mr del Missier said.
Crucial email "He [Bob Diamond] said that he had a conversation with Mr Tucker of the Bank of England, that the Bank of England was getting pressure from Whitehall around Barclays, the health of Barclays as a result of Libor rates and that we should get our Libor rates down and that we should not be outliers.
MPs are asking Mr del Missier how he managed to misunderstand a crucial email from Mr Diamond. "At the time it did not seem an inappropriate action given that this was coming from the Bank of England," Mr del Missier added.
The email summarised a phone call between Mr Diamond and Paul Tucker, deputy governor of the Bank of England. Asked, was it an instruction from Mr Diamond to him to lower Libor, del Missier replied "yes it was."
"I passed the instruction on to the head of the money market desk. I relayed the content of the conversation I had with Mr Diamond and fully expected the Bank of England views would be fully incorporated in the Libor submission," he said.
Blind eye
MPs asked Mr del Missier how he managed to misunderstand a crucial email from Mr Diamond sent the day after the phone call.
The email had summarised a call between Mr Diamond and Paul Tucker, deputy governor of the Bank of England.
It appeared to suggest that the Bank might turn a blind eye if Barclays reduced its high Libor submissions, to avoid appearing under financial stress at the height of the international banking crisis.It appeared to suggest that the Bank might turn a blind eye if Barclays reduced its high Libor submissions, to avoid appearing under financial stress at the height of the international banking crisis.
This email apparently led Mr del Missier to tell senior Barclays managers to submit artificially low figures to the British Bankers' Association (BBA), as part of the daily process of setting the various Libor (London inter-bank offered rate) interest rates at the time. "Mr Tucker stated... it did not always need to be the case that we appeared as high as we have recently," the notes, written by Mr Diamond said.
Mr del Missier told the committee he believed the Bank of England alone instructed Barclays to lower Libor submissions.
Mr Diamond had previously told the committee he did not believe the Bank of England instructed the bank to lower the inter-bank lending rate and did not believe he instructed Mr del Missier to do so.
Asked how he could have misinterpreted Mr Diamond's conversation, Mr del Missier said: "I can only tell you what I clearly recall from the conversation."
Last week Mr Tucker told the Treasury committee that the last line of Mr Diamond's note "gives the wrong impression".
"We would not suggest anybody did anything wrong," he said, adding that he had not been instructed by anyone in the government to "lean on" Barclays to lower its Libor submissions, Mr Tucker told MPs.
Illegal?
Mr del Missier said that given the global financial crisis in 2008, the controversial rate-rigging did "not seem a significant event given what was going on".
MPs asked Mr del Missier several times if the manipulation of rates was illegal.
However, Mr del Missier said that it was not a "yes or no" matter.
Mr del Missier, who was separately investigated by the FSA and cleared of any wrongdoing, said: "The fact that there were control breakdowns is unacceptable. That's why we're here and I deeply regret that."
Asked if he was the "fall guy" for Mr Diamond, he said: "I don't think I'm acting as a fall guy. I've resigned my position with the bank, for the good of the bank. I'm not the fall guy for anything."
He said he and Mr Diamond were "professional friends" but did not "socialise very often".
Asked if he could understand why some held the view that there was a conspiracy among Barclays' top executives, Mr del Missier said: "I can understand why there is resentment towards Barclays and the banks."
The Libor rates are used to price trillions of dollars worth of deals between banks and other financial companies, as well as being used as the benchmark for pricing loans to businesses, as well as some mortgages.The Libor rates are used to price trillions of dollars worth of deals between banks and other financial companies, as well as being used as the benchmark for pricing loans to businesses, as well as some mortgages.
The big questions
MPs will want to know:
  • how and why Mr del Missier got the wrong end of the stick
  • how the Barclays manipulation was carried out; and who else was involved within the bank
  • what light he can shed on Barclays' Libor manipulation in earlier years
  • which other banks may have been involved in similar activities
  • what bodies, such as the Bank of England and the BBA, knew
  • who, among Barclays customers and clients, may have lost or made money from the Libor manipulation.
On Friday the bank sent an email to its staff suggesting that in due course other banks would be punished for their role in the scandal, which is being investigated by financial authorities in several countries including the US.
When the former chief executive of Barclays, Bob Diamond, appeared before the committee earlier this month, some of the MPs subsequently complained that he had tried to pull the wool over their eyes and had given less than frank answers.
However, many commentators pointed out that the MPs had been inadequate in their questioning and had failed to probe hard enough to uncover any new information about how the Libor scandal had occurred.
Lord Turner and two other senior officials of the FSA will also be questioned by the MPs.
The committee members will want to know for how long the authorities have been aware that Libor had been subject to manipulation, and who else is likely to be punished.