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Banking Global Scandal: "The criminals must be charged and convicted"

Wayne styles  Thursday, 13 September 2012

It's not a comfortable weekend for the men heading some of the world's biggest banks. Barclays has already been hit by a £290m fine for rigging interest rates but that could be dwarfed by a series of global lawsuits which could cost banks billions.

The interest rate rigging scandal that has engulfed Barclays was the result of a coordinated attempt at collusion by traders working for a coterie of leading banks over at least five years, according to a series of lawsuits and legal rulings filed in courts in Asia and North America.

The lawsuits allege the fraud was extensive, spanning at least three continents and involving trades worth tens of billions of pounds. The allegations raise further serious questions about the banks' ability to police themselves and the role of senior management in monitoring the activities of their employees.

"This is the most damaging scam I can recall," said Andrew Tyrie, chair of parliament's Treasury select committee.

"It appears that many banks were involved and Barclays were the first to own up."

The crucial question is whether the traders were acting on their own or were doing so with the backing, or at the very least, the knowledge of senior managers. Certainly there are allegations senior management at at least one bank was aware what was happening.

A lawsuit filed in Singapore by a former RBS trader, fired by the bank, alleges it was "common practice" among RBS's senior employees to make requests for the Libor submissions to be set at certain rates.

...... politicians must share the blame. It was Gordon Brown who in his Mansion House speech in 2006 boasted how he had resisted a "regulatory crackdown" following the accounting scandal that brought down telecoms giant WorldCom. Brown promised the City a "predictable and light touch regulatory environment".

As he prepared to question Diamond this Wednesday, when the UK's highest paid businessman appears before the Treasury select committee he chairs, Conservative MP Tyrie warned: "The public's trust in banks has been even further eroded. Restoring the reputational damage must begin immediately." For this reason, the Barclays chief executive remains very much in the line of fire. "Diamond must go," said the former Lib Dem Treasury spokesman Lord Oakeshott.     

"The criminals must be charged and convicted whether in Barclays or other banks, brokers or hedge funds."

The lawsuit cites claims that the "underreporting of Libor had a $45bn effect on the market, representing the amount  that the banks did not pay" investors who had bought its financial products.  


The Department of Justice document states that the collusion between traders across a range of banks, including Barclays, took place from at least August 2005 through to least May 2008.

Last modified onMonday, 17 March 2014 05:24

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