So who instructed Barclays to reduce its submissions to LIBOR, the London inter-bank offer rate which the Economist recently estimated underpins contracts worldwide worth over £60 trillions? On this rather crucial question the Treasury Select Committee has done a fudge. The answer apparently is – nobody. Del Missier, the chief operating officer at Barclays, admitted he had told his staff in October 2008 to cut submissions after a conversation with Diamond, the chief executive, who was relaying a conversation with Tucker, the deputy governor of the Bank of England. So who was responsible for this colossal rate-fixing scandal which continued for 6 years – Diamond, Tucker or Del Missier? What a surprise – none of them. “If they are all to be believed (well, well, well!)” , says the Select Committee report, “an extraordinary, but conceivably plausible, series of miscommunications occurred”. Manipulating LIBOR over a 6-year period must be one of the biggest financial rackets in modern times: are we seriously to suppose that they didn’y check to make absolutely sure they’d got the message right before they would commit an offence of such enormity?
Nor is this a one-off error that just happened to engulf 3 top executives in 2 conversations at about the same time in one bank. The New York attorney-general has subpoenaed 7 of the world’s biggest banks suspected of complicity in LIBOR rigging – Deutsche Bank, Citigroup, JPMorgan Chase, RBS, HSBC and UB as well as Barclays. There reports that the UK financial regulators may be considering probing as many as 14 banks. The implication of all this is that there was a huge international conspiracy – but one for which, at least so far, nobody was actually responsible. Yes, and the moon is made of blue cheese.
The other issue in this is the feebleness of UK financial regulation. Why didn’t the FSA and the Bank of England wake up to the LIBOR fiddling for 6 years, and quite likely would never have done had it not been for the big prompt from New York? Alas, that again is not exceptional, but rather par for the course among regulators in general. Senior executives at EADS (the pan-European defence group) were told 5 years ago about likely corrupt payments made into the Cayman Islands account by one of its subsidiaries in Saudi Arabia, but nothing was done for 5 years until now when damning emails have come to light. The UK drug giant GSK has just been forced to pay out a £1.9bn fine for 10 years of mis-selling drugs and other illegal practices (lavishing entertainment on doctors, including golf lessons and fishing trips, to entice them to promote its medicines), and the only reason this came to light was company whistleblowers.
We now have, under neoliberal capitalism, an untrammelled private market whose regulation is generally feeble, hopelessly delayed, and lacking effective deterrent teeth. Corporate accountability is becoming close to a dead letter.