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Barclays forced to name Libor culprits

Jan 25 2013 09:44 Reuters

Barclays bank

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London - Barclays was forced to name former heads Bob Diamond and John Varley, finance director Chris Lucas and other top executives and traders linked to a global rate-fixing probe, despite their calls for anonymity.

A UK judge ordered the bank to reveal their identities on Thursday during a preliminary hearing for a British test case on the mis-selling of interest rate swaps brought by a residential care home operator.

Guardian Care Homes alleges Barclays mis-sold interest rate hedging products based on Libor (London interbank offered rate) in a case that is shining a light on those involved in the bank's interest rate-setting process.

"The cat is out of the bag," said Judge Julian Flaux, as he dismissed requests by 104 former and current Barclays staff for anonymity, citing the public interest.

Barclays was the first bank to be fined for trying to game Libor, a central cog in the global financial system and a benchmark for around $550 trillion in contracts ranging from interest rate derivatives to home loans and credit cards. 

The judge told the court that the release of the names was necessary in order to have an "informed debate" during the case. He also said that documents lodged with the court ahead of the trial, due to start in October, "showed some debate at a fairly high level in the bank" about the setting of Libor.

The judge instructed Barclays to release more minutes from board meetings at which Libor was discussed than those already provided.

Addressing the court, Tim Lord, the lawyer representing Guardian Care Homes, cited documents which referred to communications from "the 31st floor" - the part of Barclays headquarters in Canary Wharf, London, occupied by senior executives.

Barclays lost three of its most senior staff - chief executive Bob Diamond, chairman Marcus Agius and chief operating officer Jerry del Missier in the fallout from the Libor affair.

Other banks remain under investigation in a probe stretching from the US to Japan that is triggering lawsuits from those alleging rate-rigging pushed up their loan costs.

Barclays released a list of staff on Thursday whose email accounts it had previously disclosed to regulators. 
The list includes a subset of 24 people who have been named in regulatory documents referring to Barclays' attempted rigging of Libor. That shorter list was not immediately available.

None of those named is necessarily implicated in any wrongdoing. 

"There is a legitimate public interest in the true picture in relation to the manipulation of Libor by banks generally, not just Barclays, being brought fully to light," Flaux said.

"In my judgment, fair and accurate media reporting of all aspects of Libor manipulation, including the involvement of employees and ex-employees of Barclays and their identity, is an important aspect of the public obtaining that true picture." 

Name call

Those named include Rich Ricci, head of Barclays' investment bank and former compliance head Stephen Morse, who was notified in 2008 about problems brewing, according to documents that were made public last year. He left to lead the compliance department at Canada's Toronto-Dominion Bank.

Benoit de Vitry, the current treasurer who used to run commodities and emerging markets, Ivan Ritossa, now retired, who ran currency and prime services business, money markets desk head Mark Dearlove and former group treasurer Jon Stone were also named.

Others include Ryan Reich, a 30-year-old former Barclays swaps trader based in New York who was fired in 2010. US prosecutors are investigating Reich's activities while at Barclays between August 2006 and March 2010, according to several people familiar with the situation.

Ritankar "Ronti" Pal, who oversaw desk trading since 2006, was also on the list. He recently left Barclays.

Other names included Eric Bommensath, a French bond trader who became global head of fixed income and a member of the bank's executive committee, and Harry Harrison, a UK banker in charge of dollar-denominated fixed-income trading in New York who is now head of rates.

Lawyers welcomed the publication of the names.

"This shows the judges will not allow the banks to escape scrutiny," said Rich Eldridge of law firm Manches. "Borrowers will be encouraged by the issue being given such importance that it outweighs the risk of innocent people being named." 

Barclays was fined $450m by US and UK authorities last June for allowing traders to try to rig Libor and its euro cousin Euribor and for low-balling rates during the 2007/08 credit crunch.

Switzerland's UBS was fined $1.5bn in December and Royal Bank of Scotland is expected to be penalised shortly.

Barclays says it has fired five employees and disciplined eight others after an internal investigation into how it submitted Libor rates. Many identified in that investigation have also left the bank, it told lawmakers in November.

"This started as an alleged mis-selling case which the bank considers has no merit," Barclays said. "The addition of a claim based on what happened with Libor does not change the bank's view.

"The fact that someone's documents were reviewed by the bank during its review of millions of documents does not mean that such person was involved in any wrongdoing." added Barclays.

 

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barclays  |  libor scandal  |  financial services
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