Barclays Libor scandal: Sorry, angry, disappointed – but Bob Diamond still ready to take £20m

• Bob Diamond has refused to forego his £20 million pay out from Barclays following his resignation

• In bad-tempered three-hour session before Commons Treasury select committee, Diamond admitted his bank lied about Libor rates

• MPs “shocked” that Diamond was unaware of culture of wrong-doing until last month

During a bad-tempered three-hour session before MPs, where he was accused of being either complicit or incompetent, Barclays’ former chief executive was forced to agree his bank had lied to cover up the price it paid for cash.

Mr Diamond repeatedly told the Treasury select committee the actions of traders at his bank had been “reprehensible”, and that he had been “physically ill” when reading e-mails detailing their deceit.

But MPs afterwards said they were “shocked” by the fact that the head of one of Britain’s most trusted institutions appeared not to have known about a culture of wrong-doing at the bank dating back several years.

Mr Diamond told MPs he had only discovered the true extent of the bank’s actions last month when he received a copy of a damning Financial Services Authority (FSA) report into the affair. Asked whether he felt he should take a severance package from Barclays, following his resignation on Tuesday, Mr Diamond said only that the decision would be for the Barclays board.

MPs are today expected to back a parliamentary inquiry into the scandal, with the coalition government rejecting Labour’s call for a judicial inquiry.

The scandal focuses on revelations that Barclays traders had artificially lowered the rate at which the bank was paying for cash – known as the Libor rate – in order to make extra profits on financial markets. Mr Diamond insisted he had known nothing about the manipulation until notified by the FSA report.

Reflecting on when he read e-mails from Barclays traders – one of which referred to a bottle of Bollinger as a reward for fixing rates – Mr Diamond said: “I got physically ill. It is reprehensible behaviour. I’m sorry, I’m disappointed and I am also angry. There is no excuse for the behaviour that was exhibited. And I stand for a lot of people at Barclays that are really angry about this. This doesn’t represent the Barclays I know and I love.”

Asked to explain a memo he wrote in 2008 detailing a conversation with the Bank of England in which the deputy governor Paul Tucker had told him the bank’s rate “did not need” to be so high, Mr Diamond claimed one of his senior colleagues had “misunderstood” him and gone ahead and lowered the rate without his knowledge.

But despite telling MPs that he had personally raised concerns with regulators about rate-fixing at other banks, Mr Diamond then claimed he had not sought to check whether it was going on in his own bank.

That only drew incredulity from the committee, with one MP declaring that “either you grossly negligent or you were grossly incompetent.”

Labour MP John Mann told Mr Diamond he would be happy to tattoo the Barclays motto – “honesty, integrity and plain dealing” – on to his knuckles.

Asked whether he would give up his estimated £20m severance pay award, Mr Diamond declined, saying it was “a matter for the board” to decide. Pressed on whether he would give the cash to charity, the American banker said only that he and his senior managers had done a “good job” in ordering a £100m internal investigation into the scandal.

The evidence session came a day after Mr Diamond announced his resignation as the chief executive of the 300-year old bank a week after the scandal emerged last week.

On Tuesday evening, Barclays had implicated both the Bank of England and the Treasury in the affair, releasing a note which suggested that both Mr Tucker and “senior Whitehall sources” wanted the bank to adjust the rate downwards.

However, pressed to name the Whitehall figures, Mr Diamond declined. He also claimed Mr Tucker had been “doing his job” by warning the bank about its position. But his claim to have only discovered the full extent of wrong-doing last month was met with incredulity.

Tory MP David Ruffley said: “Either he was complicit or incompetent. It was quite shocking testimony, in the sense that there was serious wrong-doing and he didn’t know about it.