Former FSA chief executive Hector Sants has produced evidence showing the regulator warned Barclays that its Libor investigation may impact on Bob Diamond’s appointment as chief executive, after Barclays claimed Libor was not mentioned during the approval process.
During the Treasury select committee’s inquiry into the Libor scandal, former Barclays chairman Marcus Agius told the committee that the FSA did not raise the investigation into Libor manipulation when considering Diamond’s appointment in September 2010.
Agius said: “These matters were not raised by the FSA at that time as casting doubt on his suitability as CEO.”
Two days after the publication of the TSC report into the Libor scandal, on 18 August this year, Sants wrote to TSC chairman Andrew Tyrie. In the letter, published last week, Sants produced FSA minutes of a meeting with Agius about Diamond’s appointment on 15 September 2010.
The minutes state: “Sants explained that in reaching a judgement on this appointment the FSA had taken into consideration an ongoing investigation with regard to Libor that involved both the FSA and US Commodities Futures Trading. Therefore agreeing to Diamond’s appointment at this time was on the basis that the current view of the investigation does not have an adverse effect. However, Sants stressed that this is an ongoing investigation and the FSA’s position could change so the board should be aware. Agius confirmed that he will notify Diamond.”
In his letter, Sants blasted Agius’ remarks as “not correct” and claims the FSA was “fully aware” of the Libor problem but did not want to pre-judge the outcome of the investigation.
He wrote: “I specifically made clear that we reserved the right to re-assess his suitability in the light of the conclusions reached but this point was not made in the letter [confirming Diamond’s appointment] because we did not wish to prejudice our enforcement process.”
Chelsea Financial Services managing director Darius McDermott says: “Barclays is a huge organisation and you want to be sure the FSA has confidence in its leadership. It is certainly a little odd that it had such serious concerns and yet approved Diamond at the time.”