EX-Barclays Chief Executive Bob Diamond was asked point blank yesterday if he believed bankers who broke the law should be jailed.
He was asked the question after he told the parliamentary committee he had written a memo to former Barclays chief executive John Varley, of his conversation with Bank of England Deputy Governor, Paul Tucker, about the fixing of interest rates.
The memo had said that Tucker had informed him that senior Whitehall officials considered that Barclays were setting their Libor rates too high.
Diamond said he did not know for certain who the Whitehall officials referred to in his memo were, and added it would be ‘wrong to speculate’ about who they might have been.
But he denied the email amounted to an explicit instruction from Tucker to artificially lower the rate.
‘I didn’t believe I received an instruction,’ he said.
‘My reaction was an appreciation of Paul Tucker doing his job.
‘Ministers were hearing that Barclays (Libor rates) were high and my first reaction was . . . let them know that we are funding fine.’
Diamond suggested he and Barclays had been the victims of an ‘unfortunate series of events’, and there had been problems at other banks.
‘I think there has been an unfortunate series of events in the last week around Barclays being identified as the first in what was a report that clearly showed very, very bad behaviour by groups of people.’
Diamond was asked: ‘Are you, Mr Diamond, to the best of your knowledge and belief, under investigation in your capacity as former Chief Executive of Barclays Bank PLC, are you under any civil or criminal investigation by either the FSA, the FCC or CFTC or the United States Department of Justice?
‘I don’t know,’ he replied.
‘Could I ask you do you think a criminal prosecution of a banker, a criminal prosecution resulting in a custodial sentence, do you think that would be a necessary deterrent for bankers who were reckless and/or committers of wrongdoing.
‘I think that is a decision for the regulators,’ Diamond said.
‘No, I’m asking you, do you think the role of banking in our society should include a regime, a more punitive regime, such that wrongdoers, either acting recklessly or deliberately to mislead markets, do you think that should lead to a custodial sentence for bankers. It’s a straight yes or no, what do you think?
Diamond replied: ‘I think people who do things that they are not supposed to do should be dealt harshly. I think they should go through due process.’
Diamond said of the Libor rate fixing: ‘Behaviour was appalling, behaviour was absolutely appalling. But I can’t go back and change that.’