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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.