Sunday, July 1, 2012

Banking scandal: how document trail reveals global scam

It's not a comfortable weekend for the men heading some of the world's biggest banks. Barclays has already been hit by a £290m fine for rigging interest rates but that could be dwarfed by a series of global lawsuits which could cost banks billions
The interest rate rigging scandal that has engulfed Barclays was the result of a coordinated attempt at collusion by traders working for a coterie of leading banks over at least five years, according to a series of lawsuits and legal rulings filed in courts in Asia and North America.
The lawsuits allege the fraud was extensive, spanning at least three continents and involving trades worth tens of billions of pounds. The allegations raise further serious questions about the banks' ability to police themselves and the role of senior management in monitoring the activities of their employees.
In a 28-page statement of facts relating to last week's revelation that Barclays had been fined a total of £290m, the US Department of Justice discloses how a network of traders working on both sides of the Atlantic conspired to influence both the Libor and Euribor interest rates – the rates at which banks lend to each other. It was, in effect, a worldwide conspiracy against the free functioning of the market.
The size of the fines was significant and the opprobrium heaped on Barclays unremitting. "This is the most damaging scam I can recall," said Andrew Tyrie, chair of parliament's Treasury select committee. "It appears that many banks were involved and Barclays were the first to own up."
Indeed, as politicians bay for his blood this weekend, the one source of comfort for Bob Diamond, the embattled Barclays chief executive, is that his bank appears to have been merely one of several involved in the scandal.
For their own sake, many of his fellow senior bankers will be hoping this weekend that he does not go the way of Northern Rock's Adam Applegarth and RBS's Fred Goodwin – ousted by a tidal wave of public fury.

Read more: http://www.guardian.co.uk/business/2012/jun/30/banking-scandal-barclays-lawsuits-libor

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