Published on 3 Jul 2012

‘Red’ Diamond, ‘deep throat’ and the bank

The email from Bob Diamond (known as “RED” in Barclays, it would seem from the email) to fellow Barclays bosses John Varley and Jerry de Missier (the latter also resigned today) raises serious questions for the Bank of England’s Paul Tucker, seen by many as the heir apparent to Mervyn King.

The select committee will presumably think it owes him a very early evidence session alllowing him to clear his name. The email will also trigger a “deep throat” style hunt for the “senior” Whitehall sources who were pestering the Bank of England over Libor rates in 2008 – though one veteran of that government and the banking crisis tells me “You’d be hard pressed to find anyone who wasn’t worried by the libor rate – that doesn’t mean they promoted illegal acts.”

You can see the email below.

There will inevitably be suspicion that the Whitehall sources were led by Baroness Vadera, the old city hand brought into the Treasury by Gordon Brown and (from a perch at Business and the Cabinet Office) an extremely close adviser to him as PM over banking. That suspicion will be fuelled by the Daily Mail story this morning suggesting Baroness Vadera had her eye on the Libor rates.  In a comment on the article Baroness Vadera said concern about Libor rates was very different from market manipulation, which is true.

In the Barclays submission, the bank argues that Jerry de Missier interpreted the Bank of England call between Paul Tucker and “RED” as “an instruction” from the Bank. Barclays says it didn’t affect the Libor rate as Barclays was “regularly excluded” from the calculation and that “the instruction became redundant after a few days as liquidity flowed back into the market”.

But that won’t wash much. The overall impression is left that a Bank of England senior figure and candidate for the governorship ended up (intentionally or unintentionally) giving the impression (indirectly) to a Barclays employee (the employee claims) that he wanted Barclays to keep its interest figures down – presumably, though not explicitly, by submitting lower estimates. That seems exactly the impression that Barclays wants you to come away with.

The email ropes in another bank governor candidate who gets talked about – John Varley, RED’s predecessor. Another possible candidate, Lord Green, now a minister, chaired the British Bankers’ Association at the time.

Every time the scale and reach of this scandal increases, Labour will feel that its arguments for the judicial inquiry increases. Labour is still insisting that it will not back down even if it loses Thursday’s vote on how the inquiry should be constituted.

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4 reader comments

  1. Philip says:

    Let’s get the whole rats’ nest out into the open through a proper judicial enquiry. If Labour has skeletons in the closet, it’s better they are brought out along with all the rest. If not, will Georgie Porgie apologise? Ho ho!

  2. Peter Randall says:

    It is unlikely given the ‘sociology of the City that a Deputy Governor of the Bank of England would have afforded Baroness Vadera the epithet of ‘a senior figure from Whitehall’. Given his micro management of events and the pressure he was under over the RBS rescue it may be alledged that a senior figure would have been Gordon Brown MP.

  3. Philip Edwards says:

    Gary,

    It’s a safe bet this also has roots among permanent senior civil servants.

    By now it is proven that the following in London have been engaged in widespread corruption, making money, deception and spreading lies:

    Politicians.
    Police.
    Journalists.
    Media owners.
    Bankers.
    “Entrepreneurs” and “risk takers.”
    Industrialists.
    Arms dealers.
    “Intelligence” services.

    That is virtually the entire establishment who run the country, all of them based in our despised capital.

    But guess who’s escaped so far?

  4. citizen smith says:

    We need some independant investigative journalism not a judge led or HoP inquiry.

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