(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)
By George Hay
LONDON, Sept 19 (Reuters Breakingviews) - The Libor-fixing scandal continues to plague Barclays (BARC.L). Proof that the UK bank had attempted to manipulate the London Interbank Offered Rate led to the departures of Chief Executive Bob Diamond and Chairman Marcus Agius during the summer. Now Hector Sants, the former chief executive of the Financial Services Authority, has taken issue with the way Agius characterized his dealings with the UK regulator.
The doubts centre on discussions that took place in September 2010, when the FSA was giving approval to Barclays for the appointment of Diamond as chief executive. In a submission to a UK parliamentary inquiry following the Libor scandal, Agius said that the ongoing Libor probe was not raised by the FSA at that time as casting doubt on the suitability of Diamond to be Barclays’ boss.
It is true that the FSA decided against mentioning Libor in their letter confirming Diamond’s appointment. But Sants says that the FSA’s approval of Diamond was conditional on the Libor investigation not uncovering anything nasty – which it then spectacularly went on to do. Sants also says it is “not correct” that the Libor investigation was not considered at the time of appointing Diamond. This appears to contradict Agius’ submission.
Sants says he refrained from mentioning Libor in the letter of approval because he didn’t want to prejudice the FSA's enforcement process. In Agius’ defence, his letter does mention the existence of an “ongoing” probe.
The latest interventions represent a twist, rather than a whole new chapter, in the Barclays-Libor tale. Sants’ letter also shows how sensitive regulators past and present are to the perception that they were asleep on the job. That’s hardly surprising. Any abuses that occurred on Diamond’s watch also occurred on theirs.
For Agius, suggestions of disingenuous dealings with the regulator may not sully his already tarnished reputation by much. But it will not be any easier for him to start the rehabilitation process.
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- Letter to Chair from Hector Sants re LIBOR report (August 2012): r.reuters.com/jum72t
- Chair to Lord Turner - Sants comment on LIBOR report: r.reuters.com/kum72t
- FSA's records of Bob Diamond's appointment as CEO at Barclays: link.reuters.com/num72t
- Reuters: UK regulator had warned Barclays on approving Diamond [ID:nWLA3483]
- For previous columns by the author, Reuters customers can click on [HAY/]
(Editing by Robert Cole and Martin Langfield)
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