Exclusive: Barclays insider lifts lid on bank's toxic culture

Whistleblower: bosses ‘would have known’ what the traders were doing

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The Independent Online

A former senior Barclays employee today exposes the “culture of fear” that operated at the bank and claims Bob Diamond would have been aware of his traders' activities.

Speaking exclusively to The Independent, the banker alleges that senior executives would have known of Libor fiddling in 2008.

The Serious Fraud Office announced yesterday that it had launched a criminal inquiry into interest rate fixing amid increasing clamour for rogue bankers to be prosecuted.

Speaking on condition of anonymity, the banker says that senior Barclays bosses would have been told about Libor concerns because staff were drilled to pass anything untoward up to their managers. Failure to do this meant the sack.

"Libor fixing was escalated by several people up to their directors, they would then have escalated it up the line because at Barclays if you don't escalate, and it is found out that you haven't, it is grounds for disciplinary action. You will be dismissed."

The banker also describes the dark side of working for Mr Diamond's bank. He spoke of management by intimidation, even physical threat, punishing hours and a ruthless grading system that left workers in terror of their annual appraisals. Employees were often reduced to tears by the end of a day, but only when they had departed from the building. Such weakness would not be tolerated inside.

The SFO gave no details about who would be the subject of its investigations. It said: "The SFO director, David Green QC, has today decided formally to accept the Libor matter for investigation."

Danny Alexander, Chief Secretary to the Treasury, said he was "delighted" by the decision, which helped to strangle a muted recovery in the bank's shares over the past couple of days. Barclays finished down at 164.75p.

Investigations into other banks are continuing on both sides of the Atlantic. Misreporting of Libor figures is thought to have been common practice in the run-up to the financial crisis. Mr Diamond has claimed the scandal engulfing Barclays could put other banks off alerting regulators about such issues in future. He has argued that Barclays has been punished for being a "first mover".

Mr Diamond has always denied prior knowledge of Libor fixing and told MPs on Wednesday he was only made aware of it last month.

Connections between Mr Diamond and Barclays are understood to have been severed. "He's history," said a source. The scandal led to heated exchanges in the Commons between the Chancellor, George Osborne, and shadow Chancellor, Ed Balls. A parliamentary inquiry into the affair, as opposed to a judge-led public enquiry advocated by Labour, was agreed on Thursday.

Lord Ashcroft, a Tory peer, raised the temperature ahead of Monday's appearance before MPs of Paul Tucker, deputy governor of the Bank England. A note of a conversation between Mr Tucker and Mr Diamond, published by Barclays last week, appeared to suggest that senior government officials were endorsing Libor fixing.

Writing on the Conservative Home website, Lord Ashcroft criticised the Tory approach of "trying to establish shady motives on the part of Labour for demanding one type of inquiry rather than another; speculating about the role of former Labour ministers; and wondering what sort of 'senior figures' a Bank of England official was referring to in a conversation with the Barclays chief executive four years ago". He added: "The Libor scandal happened on Labour's watch, but voters have already passed judgement on Labour's time in office."

Mr Tucker is expected to face a grilling from MPs who will want to know exactly who the officials he talked to Mr Diamond about were.

Mr Diamond said he viewed the memo as a warning that the Barclays Libor submissions, which were higher than those of other banks, were worrying government officials.

Last night, a Barclays spokesman pointed out that Rich Ricci, head of the investment banking division, conducted the investigation into the Libor issue and reported to the board. Mr Diamond could not be contacted in time for publication.

Ricci’s tears: Banker who broke down

Rich Ricci, the man with the most notorious name in banking, has feelings, too. The Barclays’ investment banking boss reportedly wept as he tried to reassure staff the bank would be able to pull through the outrage after the Libor rate-rigging scandal.