28/06/2012 Daily Politics


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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.


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