I’m not entirely certain about all the ins and outs of the Libor affair and the tsunami which has lately overtaken Barclays, but I was intrigued by the performance of former Barclays Chief Executive Bob Diamond in front of the Treasury Select Committee earlier this week.
Because it was a performance, and it wasn’t such a shabby one.
Bob – and I’ll call him Bob because it accords with his personal habit of calling pretty much everyone, including his inquisitors on the Committee, by their first name – is first and foremost a company man. Many people picked up on the number of times that he expressed his love for Barclays. It was comical for a while, but I began to wonder whether he didn’t actually mean it, and if this might not be the key to understanding what he was doing in that room at Portcullis House.
According to Wiki, Bob got his MBA from the business school at the University of Connecticut, graduating first in his class. He went on to lecture there, then joined Morgan Stanley and subsequently CS First Boston, before fetching up at Barclays in 1996 and becoming Group Chief Executive last year.
There’s no doubt that Barclays has been good to Bob. A couple of years ago, when his salary – a reported £63 million – became public knowledge, he experienced the ‘hello, kettle. I’m a pot, you’re really black’ moment of being described by Lord Mandelson as ‘the unacceptable face of banking.’ And despite the fact that he resigned from his post – after some initial shillyshallying – his future still depends on being seen to have done his job.
Which is what we saw at the Select Committee. Bob doing his job. Not catching malpractice within the bank – which he should have been doing – but representing and defending Barclays in public. His job was to take the bullets which would otherwise riddle the institution he represented.
And he did it beautifully. Barclays was one of the finest organisations in the world, except for a tiny minorty of rogues, and what they had done was so awful, so offensive to his sensibilities, that it had made him physically sick. He admitted to feeling responsible, but not to having personal culpability in the Libor affair. In fact, the first thing he knew about it all was earlier this month.
This is an eerily familiar position. Rupert and Jamie Murdoch, and other News International execs, professed similar sentiments at Leveson, and it does paint a picture of huge corporations being run by saintly but rather distant people, while their employees are all raging feral maniacs. Does it wash? Maybe, maybe not. Barclays has 140,000 employees; knowing what they’re all doing would be roughly equivalent to keeping tabs on the entire population of Blackpool, all the time, so in that respect the ‘I didn’t know what they were doing’ defence has a certain credibility. If the Libor manipulation was a policy matter from higher up, that changes things.
Anyway. I personally found Bob’s first-name terms with the Committee rather disrespectful, but kind of illuminating as to how he regarded them. Select Committees are odd birds; they don’t have judicial powers themselves – the TSC couldn’t find Bob guilty and send him to jail – and as far as I understand it there’s no formal oath, although I believe there is a charge of lying to Parliament.
I think Bob and his team and his superiors looked at the situation and understood that, in order to firefight the breaking scandal, someone had to step up as a sacrificial lamb. Someone had to go in front of the Committee and get shouted at. Obviously, it was always going to be Bob, but I think they believed that so long as he could get through it without losing his sanity and bawling spittle-flecked abuse at the Committee it might at least represent a start at rescuing the situation. I’m sure Bob didn’t walk into that room lightly, but I think he realised that the people in it couldn’t – on the day, anyway – hurt him.
Banks, in common, I suppose, with any other business, trade in reputation. Their standing in the financial world directly affects their ability to operate and make money – a bank with a reputation for mismanagement and flagrant illegality will probably find itself without friends quite quickly. So Bob’s performance was, in part, a message to the rest of the financial world. It was saying, “Look at the calibre of men we have leading us. Look at this man bearing the weight of Parliament’s opprobrium. Is he not magnificent? The people who caused all this trouble are bastards, but there were only a handful of them and Bob didn’t know about it – and who among us can say, with hand on heart, that we know what all our employees are doing? Bob is a team player, he’s taking the lumps for us. He loves us.”
How this looks to the public and the media is, to a degree, irrelevant. Bob’s real audience was The Markets.
Now, the very last thing I want to do is sound as if I’m defending Bob. But – at least in the terms I, probably incorrectly, understand what went on earlier this week – I think he played a blinder. I can’t tell what will happen next – criminal prosecutions may follow, I suppose – but for the moment at least, in the world where it really matters, Bob Diamond is the daddy.