(Bloomberg) — If Barclays Plc would lie about its borrowing costs, what else would it lie about?
That question gets to the heart of the damage Barclays did to itself by submitting false numbers for years to the British Bankers’ Association as part of the surveys used to set the London interbank offered rate, the benchmark for $360 trillion of financial instruments globally. The most important asset any bank has is trust — especially when it comes to the figures on its own financial statements. Whatever credibility Barclays had, it’s been poured down the drain like last night’s suds.
Andrea Leadsom, a member of the U.K. parliamentary committee that grilled former Barclays Chief Executive Officer Robert Diamond at a hearing two days ago, framed the issue well when she asked Diamond: “In light of the fact that your audit failed to notice for several years that there was fraud and corruption going on under your noses and very openly, have you now looked at other areas of the bank to see whether something like that has been going on there for years, too?”
Diamond, who resigned July 3, replied: “Of course.” His terse response came off as less than credible. Later he said: “The way to do that is to start by going through our processes and our controls and our audit reports. And if someone wasn’t happy with those and made suggestions that there were other places to look, of course we would do it.” So, perhaps Barclays made such an inquiry. Or maybe it would, if someone became unhappy. It’s hard to tell.