July 4th, 2012
12:10 PM GMT
London (CNN) - Fresh from the frying pan and about to leap into the fire, former Barclays boss Bob Diamond faces a UK parliamentary committee today to answer questions on a rate fixing scandal that cost his bank $450 million and Diamond his job.
Diamond resigned yesterday - alongside COO Jerry del Messier – saying “the external pressure placed on Barclays has reached a level that risks damaging the franchise.”
A memo published by Diamond ahead of his testimony today appears to point the finger at senior central bankers and politicians, suggesting Barclays was encouraged to lower the rate known colloquially as ‘LIBOR.’
David Ruffley, a Conservative member of parliament for Bury St Edmunds, is one of 13 lawmakers from a cross-party panel which will grill Diamond later today.
World Business Today spoke to Ruffley about the questions lawmakers want answers to.
CNN: What would you like to hear from Bob Diamond?
Ruffley: There will be a lot of guns thrown at him from some of the members who will want to know whether his bonuses will be clawed back going back all the way since 2005. Is he contrite? Is he apologetic? Some of us are more interested in the substance of what he has to say.
He has made allegations about the behavior of a very highly respected and trustworthy Deputy Governor of the Bank of England, Paul Tucker, and many of us will want to get to the truth of that because it goes to the very heart of the integrity and probity of regulators in the City of London. One of those is the Bank of England.
CNN: Will there be a judicial enquiry?
Ruffley: I don’t think so. The tradition in the UK is that judicial enquiries go on for a very long time and they are set up to seek the facts. In this case we already know the facts. The CFTC had a long ruling published very recently.
What we need is some clarity as to what Mr. Diamond and the rest of the bank (knew). What has Mr. Diamond got to tell us today about the other senior people who were running Barclays?
But he makes an explosive charge about what he says the Deputy Governor of the BOE was telling him to do, i.e. manipulate LIBOR downwards.
CNN: Will Diamond be the fall guy?
Ruffley: He is first out of the trap - and he has suffered for that - but there are up to 15 banks under investigation in the UK for LIBOR-fixing allegations. If every chief executive of those has to fall on his or her sword for that and get the sack it would be a pretty bleak day for British banking. If Diamond goes because of this, what about other banks that are discovered to have done similar things to Barclays?
CNN: What about the brain drain?
Ruffley: As a freemarketeer politician I am concerned about that. We have in the City of London one of the great financial centers of the world and I don’t think anything that has happened recently will destroy that overnight but we have to show we are doing things right.
Diamond hasn’t gone because he didn’t do everything right. Diamond has gone because he has admitted that he got a lot of things wrong.
If he goes, does every chief executive of other banks involved have to go too? That’s what concerns me.
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