28/06/2012 Daily Politics

Morning, folks. Welcome to Daily Politics. The chief executive of

Barclays Bank, Bob Diamond, is under huge fire after traders

manipulated a key interest rate. The bank's been fined nearly �300

million. MPs are calling for Mr Diamond's head on a plate.

This story is huge and it won't stop at Barclays. Other banks are

under investigation and there are those who want criminal charges to

follow for those who are proved to have been rigging the markets.

Is it time to intervene in Syria? Or at least arm the rebels who are

getting slaughtered by the Assad regime?

Back to the Cold War. The BBC has discovered that the Czechs had a

Tory Minister working for them back in the 1960s, he even gave them

floor plans of the Houses of Parliament.

All that in the next half an hour. Joining us for the programme is

Mark Malloch-Brown, once the deputy Secretary General of the United

Nations and Labour Foreign Office Minister and now works for FTI

Consulting which provides advice to businesses around the world.

Welcome. If they had they had floor plans of

the House of Commons, I am amazed they lost the Cold War! Information

like that. Something that's no laughing matter, the scandal that's

engulfing Barclays this morning, threatening to spread to other

banks in the City. Pressure is mounting on the boss of Barclays,

Bob Diamond to resign after the bank was fined �290 million by US

and British regulators for trying to manipulate the price of crucial

interest rates, actually the price of money they were trying to

manipulate in something called the LIBOR, an interest rate set in

London. The George Osborne -- the Chancellor, George Osborne, will

make a statement in the Commons. Bring us up to speed.

Bob Diamond took over as boss of Barclays in October 2010. The abuse

in question took place at the investment arm of Barclays, known

as Barclays Capital or BarCap. It happened between 2005 and 2009 when

he was in charge of BarCap, quite simply, the allegation is that

traders at the bank lied about the interest rates it was paying to

borrow money from other banks. The rates in question are the London

Interbank Offered Rate or LIBOR or EURIBOR. These rates directly

influence the value of trillions of tkhras of -- dollars of of

financial rate. It's believed other banks are also

being investigated, including Royal Bank of Scotland, HSBC. Bob die die

-- Diamond has already said he will waive his bonus as a result of this.

Joining us now is Allister Heath. It looks bad for all banks and it's

a disaster for the City's reputation. This was a central

asset in the City, because the City still has control of the price of

global money, that's what an EURIBOR is about and the City's

reputation is as a trustworthy marketplace, that's why consumers

and banks and institutions from all over the world trusted that price

that was set in London. Everybody thought it was a fair market, a

fair value of the cost of money of interbank lending. It turns out it

wasn't. In fact, it was a farce. You had various traders, not just

from Barclays, but almost certainly from other institutions

manipulating this to their own advantage and to be honest, they

all thought it was a bit of a joke and actually wrote it down in e-

mails, which is astonishing when you are breaking the rules in that

way. So it's a real blow for London this, a much bigger blow than

people realise. The evidence will be there if it was in e-mails and

they won't be surprised in the City there will be another round of

banker-bashing. This time it will be deserved because there's no

justification or excuse. In many ways this central part of what the

City does was run like a 1980s- style club, where it was not

serious, it was amateurish really and rules weren't enforced,

regulators were careless or didn't know what was going on. I think

it's a big problem indeed. What our viewers might want to know is what

would it mean for mortgages, have people been paying too much for

mortgages or loans or too little? It's a very complicated question.

In some cases they might have paid too much, in some cases too little.

The difference was probably not that massive, but still significant,

maybe a 10th of a percentage point at times. It's not a simple

question that some people lost, some you won. It's a question of a

central price at the heart of the global economy was wrong and wasn't

put together in a serious manner. Stay with us, but thank you for the

moment. With us now, former banking

Minister, Lord Myners and from the Treasury Select Committee, Jesse

Norman, who once worked at Barclays, but we won't hold that against him!

Welcome. This goes to the heart of the integrity of the City of London,

which is probably its most important asset, its reputation.

It's another example of Labour having failed to regulate it

properly. I think there were very significant shortcomings in

regulation, both when Labour was in power and now the coalition is in

power. Andrew, we need to be realistic. Regulators will never be

able to completely eliminate risk. The responsibility for that must

lie with the board of directors, senior management and shareholders.

The regulations allowed banks to set LIBOR on their word. It wasn't

done independently. It wasn't done on the basis of trades carried out

at a LIBOR rate, the banks could say LIBOR today was 2.1%. How could

that be allowed? The process for fixing LIBOR was under the

supervision of Thompson Reuterss and British Bankers' Association,

it was well documented, well published. We have been raising

questions about LIBOR for sometime. I put down a number of written

questions. You didn't when in power and you had a chance to do

something about it. That's absolutely not true, Andrew. This

happened when you were in power. am saying that there were failures

of regulation. We know that. Regulation simply wasn't good

enough t wasn't intrusive enough, it wasn't smart enough. But the

regulation won't stop this happening T didn't stop it

happening in America, in the Far East. Remember, this failure in

Barclays was not just in London, it was global. Worldwide. It was

systemic. It was - it involved a significant number of senior

managers. Who are the victims? if the rates have been pushed down

there will be savers and Allister is right that the amounts in each

case may be small, but when you have hundreds of thousands or

millions of savers, there may be some people who have suffered, if

not individually, collectively... Borrowers will be beneficiaries.

Most of the action seems to have been to push LIBOR down, people

will be getting lower rates. There were beneficiaries from this

manipulation. Well, it's manipulation against the reference

rate. It benefits some and hurts others. For savings, that will be

be pensioners, people like that. Bob Diamond was head of Barclays

Capital, it was where this was taking place, this manipulation,

the investment arm. He was the boss then. He's now the boss of all of

Barclays, including the retail and the banking. Shouldn't shareholders

say it's time for him to go? Well, I think we should wait to see what

he says in front of the Treasury Select Committee. There are

obviously huge questions about that. Barclays now, I can tell you it's a

different organisation from when I joined in 1991 and left in 97,

which was a very stodgy one, which had not by the way given up. These

institutions, Barclays and Lloyds were set up with a kind of moral

purpose, that's what makes this so ironic and sad. It's not a matter

for the Treasury Select Committee, whose grilling is mixed when it

comes to these things, sometimes it's good, sometimes it's pretty

poor. It's a matter for the shareholders who employ this man.

And the board of directors and they need to think carefully about this.

The chairman of the board of directors, also a director of the

BBC... Can he survive? Has been there since 2007. Bob diamond was

responsible for this throughout. Very big questions will be asked by

the shareholders. Of both of them? Of whether they need significant

change. The man now going to run the building of the ringfence

between the retail bank and a casino bank was one of the most

senior people who have given up a small part of their long-term

performance bonus benefits, given up a small part of their bonus.

Hardly... If they were really contrite about it they would give

up all long-term benefits. You may recall that in Barclays case one of

its strategies for getting out of the crash in 2007-8 was to take a

lot of assets and put them into special vehicles in which some of

its own executives were shareholders in their own right.

There is a systemic picture which needs to be investigated. What is

your take on this? As a bewildered owner of a bank account at Barclays

since I was 16 I am astonished what's happened to my bank. The

pwrouder -- broader point is it's clear other banks are involved. We

outside suddenly stumble across these things, some hard-living, big

talking traders are setting the daily interest rates through this

process, you think how can a practice survived? Why is LIBOR not

set by the amounts - by the rates actually prevailing in the market?

Why is it not just fixed against the rates that have been used that

day? It's astonishing. Allister Heath, my understanding is that

what has happened to Barclays is kind of the tip of the iceberg,

that many other banks were involved in this LIBOR scam and Barclays may

get off relatively lightly because they ended up co-operating with

authorities and they have fingered others who were involved, so more

to come, bigger fines or other banks s that true? Yes, it's

absolutely true. Barclays is just one of the many banks that are

being investigated by this and I am convinced other banks will also

have to settle in a similar way, perhaps have to cough up more.

Barclays co-operated faster and more more quickly and fully with

the authorities, that's why they're fine -- their fine was announced

first. This was a systemic issue in this market. This market wasn't a

proper market. It wasn't a serious market. That's the great failure.

This LIBOR manipulation did not cause a credit crunch or recession,

but it's a very, very damaging scandal and damaging blow to the

City's reputation. Ed Millie -- Ed Miliband has called for criminal

prosecutions to follow against those who broke the law, but is it

career that what they've done was criminal as opposed to a civil

breach of the law? I am not a lawyer, Andrew. It's hard to tell,

isn't it? I do believe the police and Crown Prosecution Service

should look at this. It's lamentable that white collar crime

seems to suffer such little consequence in terms of action.

That's part lay because the authorities are so -- partly

because the authorities are so useless at imposing it. Look at

what happened when there were 120 police outside Mayfair for

financial crimes and those brothers will win a lawsuit. I know nothing.

It's example... This has come from the American authorities. They've

been far tougher on this. Always have been. If there's been a breach

of the Fraud Act these people should be prosecuted. It's a

serious problem. If you think about, the average person who has a bank

account or a share in Barclays is going to be outraged by this. If

they did something of similar kind, slow payments, any breach of the

Fraud Act, they would be vigorously prosecuted. Can I also add the

Government is to pump more money into Barclays through their funding

for lending programme. The Government is using banks as their

principle agent to get the economy going. They're using organisations,

at least in one case and several others, where there are serious

moral failings at the heart of those organisations. There has to

be a change in the constitution of those banks. There has to be change

in the senior leadership of Barclays. Allister Heath, should

there be criminal prosecutions now and given this country's past track

record from Mr Maxwell, young Mr Maxwell skwrpbwards -- onwards,

would the prosecutions get anywhere? It seems apparently, I am

reporting what others are saying, it seems that these were not crimes,

that's why they're not prosecuting them. The question is should they

be crimes? Is the UK doing enough to prosecute white collar crimes?

Over the last two years they have started jailing and prosecuting

some white collar crimes, for example insider trading deals, and

actually people going to prison as a result. This hasn't happened in

the past. But of course this is is a massive setback and it will be

strange indeed if this particular set of circumstances wasn't

criminal. But apparently that's why there's merely a fine and not a

criminal prosecution. The problem is it's a Government's

responsibility to write the laws. It's absurd that you can do

something like that and it's not a crime. I don't understand why the

Government doesn't change the law in this case if that's what the

problem is. A lot of these fines will be going to America. A large

chunk is going to the UK. Where does the money go, do we get any of

it? To the FSA. Basically, a lot more banks are going to be hit by

fines here. What is the law, and is I suppose this is tax-deductable?

suspect it may well be. Barclays don't pay much tax, as we know, so

it may be they are being caught out by their own cleverness here.

right. Well, gentlemen, sometimes if you don't laugh, you would cry!

Thank you very much. I hope we will see you on This Week tonight.

I think that is a yes! Syria. Kofi Annan has put forward a plan for

the formation of a national unity government. This could be get the

backing of Russia. It is not clear whether Moscow shares the Western

interpretation that it would exclude President Assad. Russia's

backing might come as a bit of a surprise. Up till now, the Russians

have blocked several initiatives at the United Nations. Should those

countries that want to intervene get on and do something?

The new home of the General Assembly is ready for business.

Some things haven't changed much since then. The Security Council is

still based on something called rate power unanimity, meaning the

permanent five members - the US, UK, France, China and Russia - have a

veto. The Russians have used theirs twice leading some foreign affairs

analysts to wonder what is the point? There has to be a way around

this, this deadlock, because people are dying. How many genocides, how

many instances of "ethnic cleansing" have happened while the

UN Security Council is feckless? We had Rwanda in the '90s, we had

Darfur and now Syria. When can countries break the deadlock by

going it alone and intervening militarily without any blue

helmets? Never, unless there is a Security Council Resolution, or it

is clear self-defence. There is no other just and legitimate way of

using force internationally. Jeremy should know. He was our man

in New York when Britain and America failed to get a second

resolution authorising the invasion of Iraq. The co-sponsors reserve

their right to take their own steps to secure the disarmament of Iraq.

Nowadays he says it isn't fair to blame the UN when things go wrong.

Or don't happen at all. There is a ceiling to these things. The UN is

its member states in the political arena. It is not a separate

government, or agency that you go to when there is a fire in your

house, that has its own fire engine. The member states provide the

solutions. The UN is the forum for that under certain rules. Even the

institution's critics don't think it should be circumvented

altogether? Doing that is risky. What is the point of having this

international institution, international legal system in place,

if people are going to run roughshod over it? It is not just

the United States and Britain that could do that, any country could do

that. Joining us now is David Mellor, who served in as many six

Departments of State including the Foreign Office with responsibility

for the Middle East. Welcome. This idea of a national unity government

in Syria, is that going to work? is probably the only way forward.

The fighting is really reaching quite a peak now. A TV station got

seized just last night, a government TV station on the

outskirts of Damascus. I felt throughout that the only

alternative to fully-fledged civil war with huge consequences for

civilian life is a negotiated solution which takes Assad out but

leaves elements of the regime in. The Russians think that Assad would

be included in some sort of national government. That would not

succeed? I think they understand... They do? That he is on his way out.

The other elements they have backed will still have a part in it.

view? Many people have said it would cause more problems. Now, we

are hearing today that the Turks are sending military reinforcements

to the border after what happened last week. It is getting to that

pinch point of potential military action? It is. The point was well

made in a discussion I had the other day that Syria possesses

quite potent anti-aircraft weapons and they demonstrated that with the

Turks. I think though it is inevitable that countries like

Qatar, Saudi Arabia - they will continue to arm the rebels. It is

obvious if problems continue with Turkey, the Turks would at least

rattle their sabres even if they don't do anything about it. They

wouldn't probably privately want a full-scale military action. That

brings us to the point of arming the rebels. Is that the way

forward? It is a very bad second choice. It may be inevitable. But

the fact is Qatar and Saudi Arabia evidently already are arming the

rebels, which is why they are putting up a much better fight of

it now. I think we are into - it is a minute to midnight, there is a

last chance for diplomacy. If it doesn't work, it will be a fully-

fledged conflict. I agree. I think that Kofi Annan has called this

meeting in Geneva and that is a last-ditch. Otherwise, I do think

that serious efforts have to be made to persuade the Russians to

take a more constructive view. Experienced people in the region

have been telling me, like the founding General Secretary of The

Gulf Co-operation Council. He said, "Don't worry, he will be gone by

Christmas." The worry is, what is there left? I had the privilege of

knowing his father - a totally different character. You feel that

Bashar was thrust into government. There is a big issue as to whether

he is the frontman or whether he is the man of power. I suspect it is

the people behind him who pose more of a threat. People continue to be

killed in quite large numbers. It does draw attention then to whether

the United Nations really is any more a forum... I agree. This may

be the one thing where he wants to believe in the UN. I want to

believe in the UN. If one or two members of the big five opt out,

you can't, the UN becomes impotent. So should countries act outside

that forum? They have to. It is a dangerous, slippery path. Then

anything becomes allowable. The veto is rarely used now. It's

tragic it's been used on Syria. Continually on Syria? Several times.

Thank goodness it's been used on Israel. They teach the lessons for

others of course. The fact is the veto, may when it is used by Russia

or the United States, or China, we may not like it, but it

occasionally has some purpose of reflecting the fact there isn't an

international consensus. While the Russians have lots of bad ideas

about what they are doing, they don't want the precedent of

intervention because of their own Chechnya-like problems, they also

in some ways may have a more realistic view of Syria being a

fragmented, mosaic of a country, different ethnic groups, that if

you break it, it is very hard to put it together again. All right.

Thank you very much. You are staying with us, David Mellor.

Don't go. We are all staying! We are keeping them hostage for

another five minutes. We are familiar with the names of Cold War

traitors - Kim Philby, Guy Burgess, Anthony Blunt, John Stonehouse -

and many others, too. We can add a new name to that list -

Conservative MP, Ray Mawby, who a BBC investigation has discovered

spent a decade stalking the House of Commons all the time working for

the Communist Czechoslovakian Secret Service. He even gave them

floorplans showing where the Prime Minister's office was inside the

building. I think these are also on tourist maps! LAUGHTER Mr Mawby, a

junior minister in Harold Macmillan's Government, and he was

a staunch defender of right-wing traditional values. Here he is on

BBC Television opposing the legalisation of homosexuality

without a hint of irony on the grounds that it might be a security

risk. He is more liable to blackmail as

we have seen in many of the security cases in the past. Most of

the people have been found to be male homosexuals and they were not

blackmailed, I believe the main thing was not because of the danger

of them being brought into a police court, the danger that their

friends and relatives and parents would in fact be told by the

blackmailer if they refused to either pay the money or hand over

whatever they were asked for. man who exposed Ray Mawby's

treachery is Gordon Corera. Welcome. Thank you. Congratulations, too.

Did this guy ever hand over anything of any use? Well, none of

it was top secret, in a sense. He never had access to national

security information. What is fascinating is the Czechs were

fascinated with Westminster. They wanted the political gossip. They

asked him for information on the personal and financial

peculiarities of other Tory MPs, looking to see if there was anyone

else they could target. Then there are these interesting floorplans of

the Prime Minister's office where he points out where the security

guards might be. The implication is they were going to bug it or do

something like that. So not top secret, but inside Westminster.

They thought it was useful. Why did he do it? Very simple answer -

money. He didn't have much money. He wasn't a fellow traveller?

at all. He was gambling in clubs. He would lose money and the Czechs

would be there to cover his losses... Have a cheque! LAUGHTER

There is a bonus if you get some extra staff. You met him, David?

knew him very well. I was elected in 1979. Was it still black-and-

white television then? No! LAUGHTER He was a member between '79 and '7.

-- '7. Ray was more likely to be found in the bar. He was a very

jovial character. If you had to spend a long night having a laugh

and a joke with Ray and others of similar dispositions so when I

heard this morning on the radio that this man had been exposed by

our friend here, who - watch out for poisoned umbrellas - I never

thought Ray would be the one. our authorities know, did MI5 - MI5

is paid to stop this from happening? It is. No comment from a

Whitehall official is all I got. They certainly know then! Maybe he

was a double agent? Who knows. If there were warnings to him - but

I'm not sure they knew about it. You must have come across a few

spies at the UN? Quite a lot. place is full of them! LAUGHTER

They mainly live in my building! phone had been tapped which my

reply was, "Hell, I worked at the UN, my phone was tapped by

everybody!" LAUGHTER How did you get this story? I was looking for a

story about Ted Heath. I didn't find any evidence of a blackmail

plot against him. I found evidence of Ray Mawby. Hundreds of secrets...

I would have been much better value! LAUGHTER I would have

charged more than 400 quid! Why didn't anyone ask me? They will now.

Listen, thank you to all of you. I will be back tonight with This Week

on BBC One at 11.35pm. We will have a sad man on a train, Michael

Portillo, Alan Johnson and Hollywood film star, Danny Devito.