Bob Diamond's denial boosts case for new judicial inquiry

BOB DIAMOND told MPs today that he felt "physically ill" when he read the emails from Barclays traders celebrating their fiddling of the interest rates by opening a bottle of Bollinger. But the former Barclays chief executive, perhaps mindful of the £20m pay-off he can expect once these hearings are out of the way, appeared to be in total denial about his role in the rate-fixing scandal which is threatening to inflict lasting damage on the reputation of British banks.

Andrea Leadsom, a Conservative MP on the Treasury select committee who once worked for Barclays, asked Diamond whether he was "living in a parallel universe" to the rest of Britain because of his denial about doing anything wrong.

Diamond had to be reminded by another Tory, David Ruffley, that Barclays had been fined a record £290 million for breaching the banking regulations. "That is why you resigned," said Ruffley.

Ruffley acted as if Diamond’s answers beggared belief, sparking the banker into life for the first time after more an hour of questioning. "When I read those emails from those traders, I got physically ill. I'm sorry. I'm disappointed and I'm angry," Diamond said. "It is wrong and I am not happy about it.

"It doesn't represent the Barclays that I know and I love."

Crucially, Diamond denied that the Bank of England deputy governor Paul Tucker had given him a "nod and a wink" in his telephone conversation with him in 2008 to lower its Libor submissions.

He said his main concern was that the Labour Government would get the wrong impression from its 'high' Libor returns that Barclays was having difficulty raising loans and might be nationalised.

He claimed he had never had a conversation with his head of operations, Jerry Del Missier suggesting, that the Bank of England wanted the Barclays Libor rate to be lowered, despite his so-called 'smoking gun' email containing a note of his conversation with Tucker. Del Missier resigned yesterday a few hours after Diamond.

Diamond failed to live up to the earlier billing that he was going to wreak revenge on the Bank of England for alleged collusion in the interest rate rigging.

He astonished members of the committee by saying he only learned earlier this month about the true extent of the rate rigging, when he read the damning report by the Financial Services Authority after a three-year investigation.

Diamond's rambling performance and the shambolic questioning strengthened Labour's case for a new inquiry into the banking industry to be handled by a judge rather than a parliamentary committee chaired by Tory grandee, Andrew Tyrie, who oversaw today's hearing. · 

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