They say that patriotism is the last refuge
To which a scoundrel clings
Steal a little and they throw you in jail
Steal a lot and they make you king
Bob Dylan, “Sweetheart Like You” (1983)
The record-breaking fine of £290m to which Barclays was subjected this week for financial crimes committed from 2005 onwards sounds significant, until you realise that Barclays chief executive Bob Diamond was paid £17m for last year alone (and that the bank also paid £5.7m to cover his tax bill), that he has been paid almost £100m since 2006, and that the amount of the fine (£60m in the UK and £230m in the US) is basically peanuts — just 10 days’ worth of profit for Barclays, as Paul Lewis of Radio 4′s Money Box programme explained to the BBC.
The first thing that occurred to me was that, however much bankers are caught committing financial crimes, they always seem to get away with it, as Bob Dylan explained back in 1983. Moreover, Bob’s recognition of the disparity between the rich and the poor when it comes to crimes involving money also rings horribly true still, as is clear from the punishment for Barclays — a slipped wrist — and the punishment for those involved, however peripherally, in last August’s “riots” in the UK, when judges decided to “make an example” of the mostly unfortunate young people who came up before them. The most shocking example I came across was described in the Guardian as follows:
At Camberwell Green magistrates, Nicholas Robinson, 23, an electrical engineering student with no previous convictions, was jailed for the maximum permitted six months after pleading guilty to stealing bottles of water worth £3.50 from Lidl in Brixton. He had been walking back from his girlfriend’s house in the early hours of Monday morning when he saw the store being looted, his lawyer said, and had taken the opportunity to go in and help himself to a case of water because he was thirsty. He was caught up in the moment, and was ashamed of his actions, his defence said.
But the prosecution told judge Alan Baldwin: “This defendant has contributed through his action to criminal activities to the atmosphere of chaos and sheer lawlessness.” There were gasps from the public gallery as his sentence was delivered.
To listen to Barclays boss Bob Diamond, you would think that the crimes uncovered by the Financial Services Authority in the UK and the Commodity Futures Trading Commission and the Department of Justice in the US were insignificant — and presumably, less significant than £3.50 worth of bottled water, for the theft of which Nicholas Robinson received a six-month sentence — but as Jonathan Freedland explained in the Guardian:
Confronted with a clear ruling that Barclays traders had lied and cheated in seeking to rig a key interest rate used to determine everything from mortgages to credit card bills, Diamond put his hands up and conceded that the traders’ action had been “wholly inappropriate”.
Inappropriate? Inappropriate is wearing a tie to a barbecue. Wholly inappropriate is burping during the wedding vows. Distorting for personal gain a rate that underpins contracts worth $350 trillion worldwide is rather more than “inappropriate”.
On the Guardian‘s letters page, a reader, Mike Davies from Leeds, also provided a simple but powerful explanation of the bankers’ crimes. He wrote that the rigging of the Libor and Euribor rates — the rates at which banks lend money to each other — by Barclays bankers and the employees of other major banks in the UK, US and Europe, including Lloyds and RBS, which are also under investigation (and which were both bailed out by taxpayers) “sounds just technical. It isn’t.” He added:
The Libor rate is the average rate at which UK banks lend to each other. It is also the rate used as a benchmark for everything from the interest due for late payment on many contracts to the interest rate on many mortgages — real payments by millions of real people. These rates also serve as benchmarks for much of the trade in financial “derivatives”: obscure instruments created by financiers whose total value is hundreds of trillions of pounds, an unbelievable amount. The money to be made by fraudulently manipulating this market simply beggars belief.
Adding that, because “finance capital continues to act purely to make huge profits, legally or illegally,” the entire banking system “is not a support to the real economy but a criminal conspiracy against it,” Davies recommended that, “Instead of propping up the unaccountable private banking system at the expense of ordinary people, we must replace it with a publicly owned, publicly run, publicly accountable national bank.”
I hope that many people agree, and that consumer indignation accompanies the forthcoming revelations that other banks were intimately involved in the rate-rigging scandal. As the Observer explained today:
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.
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 Observer further explained that it was the knock-on effect of the rigging of the interest rates on other parts of the world of finance that was particularly prompting further investigations. For example, one significant US broker, Charles Schwab, alleged in a lawsuit in April that he did not receive “rightful payments” as a result of the rate-rigging, and this, the Observer noted, suggests that “a plethora of similar lawsuits seeking compensation could soon be issued” — affecting as many as 16 banks in the UK, the US, Japan, Canada, the European Union and Singapore, including HSBC, Lloyds and RBS, as well as Barclays, and involving nine different government agencies.
Officials at a bank in Canada, who have agreed to become whistleblowers, have stated that a number of different banks “communicated with each other … to form agreements,” and that this “was done for the purpose of benefiting trading positions.” A trader at this particular bank is also “alleged to have communicated with traders at HSBC, Deutsche Bank, RBS, JP Morgan and Citibank.”
The Observer also noted that a “crucial question” is whether senior managers knew of, or approved of the traders’ activities. A former RBS trader in Singapore, who was fired, stated in a lawsuit that “it was ‘common practice’ among RBS’s senior employees to make requests for the Libor submissions to be set at certain rates.”
RBS denied these claims, but it is difficult to see why the banks’ protestations should be believed.
As the rate-rigging scandal erupted last week, politicians and those in positions of economic influence queued up to express their disgust. Mervyn King, the governor of the Bank of England, “said something had gone ‘very wrong’ with Britain’s banks that needed to be put right,” as the Guardian put it, and Lord Turner, the chairman of the FSA, said that there was a “culture of cynicism and greed that is quite shocking.” Vince Cable, the business secretary, described the problems in the UK banking system as “a moral quagmire of almost biblical proportions”, and Ed Miliband called for a public inquiry into the industry’s “institutional corruption.”
Predictably, the Tories, calling the shots in the coalition, decided instead to order a review of the inter-bank lending rate, which is obviously intended to be nothing more than a whitewash.
I suspect that rage — public rage on a colossal scale — is probably what is needed, but I have no idea when or if the crimes committed by the rich and powerful will provoke a significant response. However, we surely cannot tolerate forever the unfettered greed that crashed the global economy in 2008, but has been allowed to continue its ruinous work unpunished. In deliberately manipulating the inter-bank lending rates, bankers were clearly engaged in criminal activity, but even if there is a loophole — as there was, for example, in so many of the complex schemes developed by bankers, which were purportedly legal, but which brought the world crashing down just four years ago — it is time for all this cynical, unproductive profiteering to be brought to an end, permanently.
Andy Worthington is the author of The Guantánamo Files: The Stories of the 774 Detainees in America’s Illegal Prison (published by Pluto Press, distributed by Macmillan in the US, and available from Amazon — click on the following for the US and the UK) and of two other books: Stonehenge: Celebration and Subversion and The Battle of the Beanfield. To receive new articles in your inbox, please subscribe to my RSS feed (and I can also be found on Facebook, Twitter, Digg and YouTube). Also see my definitive Guantánamo prisoner list, updated in April 2012, “The Complete Guantánamo Files,” a 70-part, million-word series drawing on files released by WikiLeaks in April 2011, and details about the documentary film, “Outside the Law: Stories from Guantánamo” (co-directed by Polly Nash and Andy Worthington, and available on DVD here — or here for the US). Also see my definitive Guantánamo habeas list and the chronological list of all my articles, and please also consider joining the new “Close Guantánamo campaign,” and, if you appreciate my work, feel free to make a donation.
On Facebook, Barbara Carroll wrote:
The problem, as I see it, we’ve got only a fraction of souls awake enough to care about the 1980 -2012 banking/governmental larceny. And only a fraction of those willing to step up by hitting the streets. I haven’t been out there yet. But am about to start!
Remmic Lewis wrote:
Yeah, where’s “Anonymous”?
Toia Tutta Jung wrote:
We have some power if we want to change this; perhaps it’s not happening because it would be effective: THEIR money is ours. People need to become aware of that.
Pauline Kiernan wrote:
Thanks Andy. Sharing
Toia Tutta Jung wrote:
It’s good to see the spirit of fight this article express – funny and informative- thanks!
Barbara Carroll wrote:
It appears “Anonymous” has been silenced. All that Homeland Security money stuffed into the university computer labs paid off for them…maybe.
Thanks, Remmic, Toia, Pauline, Barbara – and everyone who has liked and shared this. Toia, you’re definitely onto something with regard to “our” money. For the UK, the Guardian is speculating that the Cooperative Bank is likely to gain business as a result of the scandal: http://www.guardian.co.uk/business/2012/jun/30/coop-poised-breakthough-anger-banks
Another big question, I suppose, is whether credit unions will gain significant support as a result. For the UK, see: http://www.abcul.org/home
For the US, see: http://www.cuna.org/
And then, of course, there’s the need for massive reform – first of all by reinstating Glass-Steagall, or some new version of it, to separate real bankers from the speculators, and then to ask why the hell any of us are supposed to put up with thieving scum whose greed knows no limits and whose work does nothing – nothing – to improve anyone’s lives except their own.
For Glass-Steagall, see: http://en.wikipedia.org/wiki/Glass–Steagall_Act
On Digg, cosmicsurfer wrote:
After Jamie Dimon/Chase fiasco ($2 billion lost turning to $9 billion lost and growing while trying to hide it from the world), Wells Fargo scam with document forgery, and Barclay’s, the continued corruption oozing from every major bank on the planet – with the support of governments turning a blind eye and even colluding in cover ups, bail outs and siphoning off loss as they dump that loss (including toxic debt) on the people – is one of the biggest causes of the economic disaster we are facing. It isn’t JUST Chase or Barclay’s, but USB, Wells Fargo, Bank of America, and probably the worst of all, Goldman Sachs – acting in greed, they blackmail, manipulate and buy off politicians to keep themselves out of trouble.
Thanks, cosmicsurfer. I do hope that, as this corruption spreads, it becomes so toxic that more and more people see through the continuing illusion that we NEED Wall Street and the City of London, when what we need is to stop tolerating criminal behavior on an almost unthinkable scale.
On Facebook, Malcolm Bush wrote:
I read all this in the Guardian and other outlets; but a thought came into my mind, or more of a question? If Barclays and the others had not fixed the Libor at the time of the major crisis would we have been worse off?
Richard Osbourne wrote:
But why is it the Chairman of Barclays resigning and not the real scalp, the real criminal Bob Diamond? He’s still trying to get away with it and until he (and his ilk) are all locked up, I won’t believe that anything is changing.
Good questions, gentlemen. From my understanding, Malcolm, the banks felt under pressure to manipulate the rates at the time of the 2008 crash so that they didn’t appear to be in trouble. However, the rigging began in 2005, when only a few ostracized people were predicting a crash, so the driving reason for it all was just so more men could send each other messages about what “big boys” they were, and buy in some more Bollinger with the profits they had made from cynically manipulating what was supposed to be an objective measurement of rates to enrich themselves still further. Pure criminality.
And Richard, I agree that one scalp – the news that Barclays chairman Marcus Agius has resigned – is indicative of nothing, except the traditional sacrifice of one tainted individual. Crimes have been committed, and criminals in the world of finance, like those elsewhere, need to be arrested, charged and tried. Nothing less will suffice.
Criminal bankers are not above the law.
Here’s the resignation statement by Marcus Agius, the chairman of Barclays. Note how he continues to defend Bob Diamond, and how, although he mentions “unacceptable standards of behaviour within the bank,” and promises a review – an audit – of Barclays’ business practices, he is more concerned with the bank’s reputation, which has been “dealt a devastating blow.” He explicitly states that the audit is “intended to restore Barclays’ reputation” and that Barclays “will establish a zero-tolerance policy for any actions that harm the reputation of the bank.” No mention of actions that are wrong in and of themselves. What a disgrace.
This is the statement:
It has been my privilege to serve as Barclays chairman for the past six years. This has been a period of unprecedented stress and turmoil for the banking industry in particular and for the wider world economy in general. Barclays has been well served by an excellent executive team – led, first by John Varley, and now by Bob Diamond – which has worked constructively with a strong and supportive board of directors. Barclays has remained resilient throughout the crisis, and has worked hard to ensure that today it is a strong, well capitalised and profitable business.
But last week’s events – evidencing as they do unacceptable standards of behaviour within the bank – have dealt a devastating blow to Barclays’ reputation. As chairman, I am the ultimate guardian of the bank’s reputation. Accordingly, the buck stops with me and I must acknowledge responsibility by standing aside.
The board has also agreed to launch an audit of our business practices. This audit will be led by an independent third party reporting to Sir Michael Rake and a panel of non-executive directors. It will have three objectives:
• to undertake a root and branch review of all of the past practices that have been revealed as flawed since the credit crisis started and identify implications for our business practices and culture going forward;
• to publish a public report of its findings; and
• to produce a new, mandatory code of conduct that will be applied across Barclays.
This exercise will be part of a broader programme of activity intended to restore Barclays’ reputation and we will establish a zero-tolerance policy for any actions that harm the reputation of the bank.
I am truly sorry that our customers, clients, employees and shareholders have been let down. Barclays is full of hard-working, talented individuals whose integrity is not in question.
It goes without saying that Barclays will continue to have my wholehearted support in the future.
Richard Osbourne wrote:
It would seem that the entire system has to go to avoid this happening again. They can’t stop themselves – too much ego in it.
Too much ego and too much money, Richard. In our country (and it’s true to an even greater degree, I fear, in the US), those who toil away at proper jobs for regular incomes – those on the average income of £26,000, or the median income of £14,000 – have, since Thatcher, and particularly since Blair, been made to feel inadequate by people who don’t do jobs of any benefit to society, who haven’t invented a great product, or entertained anyone, but who insist that, at the bare minimum, they deserve to be paid a million pounds a year – what someone on the average of £26K a year will take a lifetime to earn.
Politicians tend to look at the Scandinavian countries for some of their ideas, but they never dwell on them for too long, because they discover that they are happier, that the gap between the rich and the poor is less than elsewhere (the two are connected), and that high taxes ensure the provision of important state-provided services to everyone.
It’s time for radical change – but it won’t come from the government, if the Tories can help it. They are the very definition of everything that is wrong.
On the face of all we’ve heard, Bob Diamond has to go – and repay all his bonuses from recent years while he’s at it. There needs to be a thoroughly independent inquiry, i.e. one not led by politicians. That inquiry should examine whether any political parties have received funding from the bankers.
That’s a very good point about independence, Bill. I have a lot of respect for Andrew Tyrie – undoubtedly one of very few decent Tory MPs – but I agree that something sweeping and independent is what is needed, rather than just a Parliamentary Inquiry. Ed Balls said as much just now on Channel 4 News – acknowledging that both Labour and the Tories were to blame for what has happened, but stating that what is needed now is a thorough inquiry to understand fully what has gone on. Politically opportune, no doubt, given public hostility to bankers right now, but also correct.
Zilma Nunes wrote:
rich became more rich…its a savage law system…
Richard Osbourne wrote:
Agree Andy. It’s not going to come from any establishment powerbase because it’s in their interest to keep things exactly as they are. Only every single one of us, acting together as one can make the difference. Like Occupy or the Purple People, important in Italy.
Thanks, Zilma, and thanks again, Richard. I agree, although at the moment I’m obliged to reflect that the mobilisation is difficult to achieve. We need a name. Any ideas, anyone out there? Something involving bankers, crimes and accountability/prosecution …
there scum fuckers,and you know wot nothing will be done about it they will get away with it ,i mean innapropret for gods sake like he,s farted during a sermon and the tories will have a reviue andy thease fuckers are grabbing grabbing grabbing everything like there lives depend on it..will people rise up..hmmm..i mean give those bankers a hideing,strip them of everything..charge them or at least tar and feather them…….huh and they jailed some lad for nicking a bottle of water..were liveing in insane times
it’s unbelievable, isn’t it, Damo? And this epic thievery only began under Thatcher and Reagan, when the restraints on finance were done away with. I remember that her justification was that there would be a trickle-down effect from whoever got rich down to the rest of us, and I remember thinking at the time that we wouldn’t see any trickle-down effect. Back in the Victorian era, when Britain became stinking rich through the Empire ad the Industrial Revolution, we had monsters like the Tories, blaming the poor for their poverty, but we also had some genuine social reformers, philanthropists – and we also had the Labour movement – pushing for votes, education, sanitation, adequate housing, and eventually the NHS and the welfare state. The current government is working hard to turn the clock back, and it will be their lookout if, the next time people explode in frustration, as they did last summer, there won’t even be enough police to deal with it.
you know wot as bad as it sounds i hope there arent enuff police to deal with it burn thease rich fuckers out of house and home come on andy lets start a riot in ..chelsea and the home countys,lol
It would not surprise me, Damo. Frankly, it’s a sign of this government’s obsession with its malignant mission to destroy as many jobs as possible that they’re cutting the police budget, so that tens of thousands of jobs will be lost, and they’re not even bothered about it. Margaret Thatcher at least understood that, if you’re fomenting a situation in which rioting and public dissent are probable, then you should keep the police onside.
I don’t think the Government will do anything about these corrupt Bankers because, a couple of years ago, Directors of a business that about fifty people worked for (including myself), were lied to about the state of that company.
Then, those unscrupulous Directors simply used holes in Employment law to withhold staff wages and ultimately cheat employees out of the money that they had worked hard to earn ( http://bobblackmanmp.info/ ).
Now, despite Employment Tribunals agreeing that staff were treated badly, the High Court tells us that they are powerless to help because of the way that the law has been written.
But, to rub salt in the wound, the local MP and his Government officials simply dodge the issue by claiming that it is not in the public interest to do anything about this matter, whilst refusing to have the Directors struck off, failing to introduce new laws to outlaw these kinds of sharp practices, and not even bothering to call for an inquiry into this scandal.
Very sad to hear that, Jonathan, although I’m sure it happens more than most people know. I agree that it makes things look hopeless for the UK as a whole, but I believe that there will eventually be significant disssent, given the extent to which we have been lied to, the extent to which bankers and other businessmen and women are allowed to commit crimes, and, in particular, because of the Tory-led coalition government’s response the 2008 crash – savage cuts to state expenditure whose impact has only just begun to be felt, and which are impacting most heavily on the poor, the weak, the unemployed, the old, the young and the disabled, and not on those who caused the crash. I simply find it impossible to believe that a government whose only ability is to create more and more unemployment and to drive more and more people into abject poverty, while still shielding and helping the rich, can get away with it. But I concede that I may be mistaken abut my fellow citizens’ ability to be downtrodden, despondent, ignorant, apathetic or just exhausted trying to get by. We shall see …
bob diamond has got away with it well we all do nothing just tut tut and shake our heads round the bankers up if there youngish and healthy harvest them for organs otherwise ..kill them imeadeatly,lol,lol make there familys do hard labour for the rest of there lives
Yes, they’re all getting away with it, sadly, although I do believe that more and people are waking up to what’s happening, little by little. That’s not enough, but it’ll have to do for now. Otherwise, it’ll be: hello feudalism! How we haven’t missed you!
lol,lol,andy it is feudalisum,lol its neofudalisum thats wots happening right now just look around you,lol
It’s heading that way, Damo, that’s for sure. The rich live in houses that are big enough to start having servants again.
give me just a little nitro andy and we,ll have em outta there in no time,lol
Ha! We’d still need to win hearts and minds, Damo. Too many of our people, Damo, have been fooled into believing that selfishness will get them through, and that solidarity has no place in the modern world. If only they realised how hard the ruling classes worked to create that delusion, so that they can accrue all the wealth they can lay their hands on and abuse the workers as much as they feel like, without anyone raising a murmur of dissent.
Investigative journalist, author, filmmaker, photographer and Guantanamo expert
Email Andy Worthington
Please support Andy Worthington, independent journalist: