Financial Scandals Of Barclays

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Barclays is a financial institution guilty of fraudulent activity, including misrepresentation of interbank borrowings as well as reporting incredulously low rates to allow the perception of financial health. Many banks were involved and colluding in these practices, therefore one can certainly conclude that the problem does not lie solely with the panel banks but the financial system and its governing regulators as well.

LIBOR stands for London Interbank Offered Rate; it was intended to be a firm representation of the cost of funding for the largest financial institutions. It was developed in 1969 by Minos Zombanakis, a former banker. He created LIBOR when he was going to extend a loan, but needed a rate. To determine at what rate to lend,
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Firstly, the Barclays Money Market Desk was located on the same trading floor with the derivative traders, this facilitated communication between the two groups. The FSA and the CFTC identified between 2005-2007

One of the main players of the Barclays’ scandal was CEO Robert (Bob) Diamond. Diamond began his career with Barclays in 1996. Undeterred by these conclusive indicators that Diamond should not be held to a place of power, Barclay’s still elected to continue keeping him as their CEO.

Despite being a main contributor to the firm’s issues, Diamond didn’t directly commit fraudulent behaviour. However, he did essentially ignore many of the issues which were brought to his attention. Many of these issues that occurred within Barclays that were not addressed had been to a personal benefit of the firm, hence Diamond’s motivation to ignore the issues. A possible indicator of Diamond trying to cover himself from any allegations is found within an article released by The Guardian.com. In the article, it is stated that Diamond had fired approximately 30 staff members for failure to comply with a new “ethics code”. It is most likely either an attempt to bolster the reputation of the company, due to pressures from shareholders, or an attempt by Bob Diamond to silence employees who were involved in trying to regulate the
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This desire to maximize their income and the fear of looking bad in the eyes of the public was what encouraged them to make unethical decisions. As a final measure, a more intensive regulatory system that will control and limit these corporations should be implemented. As they have demonstrated with the LIBOR scandal, they are unable to obey the law and consider the public interest with mainly trust to guide them. Though this is the recommended strategy, there are some flaws associated with it. Firstly, enacting such regulations will cost a fairly large sum of money from either the government, or the organization which will enforce these regulations. Second, an association to regulate the corporations will have to be determined and funded. Furthermore, it will require every employee of the company to spend time that would otherwise be dedicated to working and generating profits, to learning the new rules of the

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