Leaders: Only forensic inquiry can get to the truth at Barclays
QUESTIONING of Bob Diamond, the former chief executive of Barclays, by MPs on the Commons Treasury select committee, demonstrated why a parliamentary inquiry into the Libor interest rate fixing scandal is inadequate. Though the MPs got some answers from Mr Diamond, some of the bigger questions remain unanswered.
Mr Diamond, evidently interested in rescuing some of his own reputation and that of Barclays, an institution which he repeatedly said he loved, stressed how much store he set by integrity and honest dealing. If so, why did these leadership principles not percolate down through the bank to the extent that senior managers appeared to have condoned dishonest submissions of Libor rates?
Mr Diamond said he learned of the rate-fixing only a month ago. The Financial Services Authority report on Barclays mentions a number of times that rate- submitters raised concerns about wrong rates being sent to the British Banking Association with senior managers and the bank’s compliance division. Why did none of these managers report to Mr Diamond that his standards were being broken?
This evidence points to the conclusion that while Mr Diamond applied one set of standards, people underneath him operated to another, more disreputable, set. It points to a significant failure of leadership, which leads to the conclusion that Mr Diamond was right to resign.
It also appears that many other banks were involved in rate manipulation. Mr Diamond was clearly aggrieved at having been among the first to confess and to try to rectify things.
The more important implication is that many other senior managers need to be hauled before an inquiry and held to account. Judging by yesterday’s performance, MPs cannot fulfil that role. What is needed is the kind of forensic questioning by a QC to which journalists and politicians have been subjected in the Leveson Inquiry.
Though MPs made a reasonable stab at that yesterday, the format of their inquiry, if replicated for the full hearing into the Libor scandal promised by David Cameron, cannot produce the prolonged and detailed interrogation needed to get proper answers. From yesterday it was clear some MPs were more interested in playing to the gallery than unearthing important truths.
What caused the failure to meet standards? Did Mr Diamond not communicate his views effectively? Did the regulators fail to ask the right questions? Why, when concerns about rate-fixing had been raised in articles in the US and in a report by the New York Federal Reserve Bank in 2008, did Mr Diamond not inquire whether his bank was implicated?
If rate-fixing was occurring in any other financial jurisdiction, the British financial establishment would be screaming for a thorough cleansing. Regretably that is not, so far, happening here.
Rail plan a damp squib
Not for the first time, the SNP has over-promised and under-delivered. The electrification plans announced for the critical Edinburgh-Falkirk-Glasgow Queen Street rail artery are a dull fizzle rather than a bright spark. Journey times were supposed to be reduced from 50 to 35 minutes, but will now be cut to 40 minutes. Six trains an hour were promised, but only the current four will be provided. Electrification of rail lines to Dunblane and Alloa has been pushed back.
Granted, the provision of longer and more reliable trains on the Edinburgh-Glasgow route will be an improvement, but the transformation of the link into a high-frequency bullet train operation that was implied by the original promises has been abandoned.
Keith Brown, the transport minister, ingeniously presented the cost-cutting from £1 billion to £650 million as a massive saving for taxpayers. This is disingenuous. Much of the £350m now “saved” would have come from Network Rail sources and some from the Scottish Government’s capital budget. It is hard to imagine that if, say, the government had announced it was cancelling a £350m hospital, it would expect to get away with that as a “massive saving” which voters should applaud.
What is important, but is not at all clear, is whether the original ambition for the line is still there. The Glasgow-Edinburgh route is the busiest on the Scottish network and as the link between Scotland’s biggest cities, is essential for the efficient operation of the Scottish economy. The more people it can carry and at greater speeds is also an important factor in diverting people from road travel and reduce carbon emissions. But this too looks to have been shunted into a back seat.
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Thursday 20 June 2013
Temperature: 11 C to 19 C
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Temperature: 11 C to 18 C
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