The scandal of Barclays rigging key interest rates could lead to criminal charges against some individuals, according to top politicians and sources inside the bank itself.
Andrew Tyrie, chairman of the powerful Treasury Select Committee, told Financial Mail this weekend that there could be prosecutions in Britain.
Barclays was fined a total of £290 million by regulators in Britain and the US, but appeared to have been spared from criminal charges.
Weathering the storm: The FSA said it could not prosecute as the Libor rate – which Barclays manipulated – lies outside the sphere of its criminal prosecution powers
But a Barclays spokesman said that although the bank had reached a no-prosecution settlement with US authorities, the deal did not preclude US regulators bringing criminal charges against individuals.
Britain’s Financial Services Authority said it could not prosecute as the key Libor interest rate – which Barclays manipulated – and the billions of pounds worth of derivatives linked to it, lie outside the sphere of its criminal prosecution powers under the Financial Services and Markets Act created by the last Labour Government.
But in an interview with Financial Mail today, Tyrie says more general laws could be used to charge individuals. ‘There is the criminal law behind the Financial Services and Markets Act to consider,’ Tyrie said. ‘Fraud is fraud.’
The MP called on the Government to commit immediately to closing the loophole and to bringing the offences committed by Barclays within the scope of the financial regulator.
Meanwhile, charges in the US are still a possibility. Part of Barclays’ fine was $160 million (£101 million) that must be paid to the US Department of Justice. That settlement included an agreement that the DOJ would not bring criminal charges against the bank.
A Barclays source, however, insisted that the settlement could not stop the DOJ prosecuting individuals. The total fines against Barclays were mostly levied by US authorities, with the FSA imposing a £59 million penalty.
The bank was involved in two types of abuse. The first was carried out by traders who tried to influence the level of the Libor rate to boost the profits on their complex trades.
The second was carried out by senior managers during the credit crisis when they put pressure on juniors to lie about Barclays’ own borrowing costs in an effort to make the bank look more financially secure. It has never been made publicly clear exactly where in the chain of command the pressure originated.
Barclays said the key individuals responsible for the offences had either already left the bank or were now being dismissed.
The Treasury Committee has summoned Diamond to appear on Wednesday this week while Barclays chairman Marcus Agius will give evidence on Thursday.
Barclays is the only bank so far fined by the FSA, but other banks around the world, including Britain’s HSBC, Lloyds and Royal Bank of Scotland, have been asked to contribute to investigations by regulators and have been named in legal actions by investors.
According to a Mail on Sunday poll, seven out of ten voters believe that Bob Diamond should resign and nine out of ten think that Barclays employees who meddled with interest rates should be prosecuted.
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