Barclays Plc. and the Libor Scandal

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nInstitution

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nDate

nBarclays Plc. and the Libor Scandal

nIntroduction

nThe Libor scandal refers to a number of falsified activities linked the London Interbank Offered Rate (Libor). It was noted that financial institutions were deceptively deflating or inflating their rates to take advantage of the rates or to give image that they were more financially secure than they were. The scandal involved derivatives worthy of nearly $350 trillion (Huan, Parbonetti, and Previts 5). In 2012, the Barclays Bank was placed under investigation, as it emerged that it had participated in the scandal. Consequently, it was penalized $450 million. The organization admitted that it engaged in unscrupulous influence of the submissions, which negatively influenced the fixed rates on various instances aiming to make more profits (Ashton and Brett 3). Barclays CEOs have continued to claim that a few individual traders were responsible for the rate manipulation and the subsequent penalties and damages imposed on the bank (Johnston 12). Although some individuals were involved in the Libor scandal, the institution was at fault.

nAccording to the Office of Serious Crime in the UK, three former bankers in the Barclays Bank colluded to influence the Libor rates since 2005 to 2005. The three included Stylianos Contogoulas, Jonathan James Mathew, and Peter Charles Johnson (Huan, Parbonetti, and Previts 5). Reports also indicated that the CEO Bob Diamond was also involved in the dealings. The persons were accused on knowingly attempting to sway the rates in an attempt to assist the bank in its own business or acquire more money (Vaughan and Finch 1). Nine merchants and different types of investment merchants hired by institutes in New York and London are indicted of colluding to engage in such activities. Additionally, the persons were aware that Barclays Bank operated in their profitable interests when preparing their submissions to the process of Libor setting every day (Ashton and Brett 3). Such financial malpractices required cooperation between UK and US authorities. Consequently, four persons were imprisoned for the crimes committed. They involved Alex Pabon who was jailed for two years, Mathew Jonathan and Peterson Johnson for four years and Merchant Jay received a jail term of six and half years (Johnston 13).

nHowever, the institution takes the highest responsibility in the scandal because the senior management such as the board of directors and the executive officer were aware of the conspiracy (Vaughan and Finch 1). Recent reports indicated that two former investors in the company who were accused of conspiring to defraud Libor were set free by a jury for the allegations (Huan, Parbonetti, and Previts 6). They included Stylianos Contogoulas and Ryan Reich. The individuals who were jailed were junior staffs in Barclays Bank meaning that their actions and behaviours were encouraged, and tolerated by the companys top management. In addition, such actions were widespread throughout the organization hence could not be blamed on few individuals at that moment (Ashton and Brett 7). The acquittal of these individuals indicated that the organization was accountable for the financial conspiracy at Libor. In this regard, Barclays Bank facilitated the activities at various banks in order to get higher profits. Therefore, the bank through its top management should be responsible for its role in influencing Libor (Johnston 17).

nConclusion

nThe CEO of the Barclays Bank has indicated that a few individual traders were responsible for influencing Libor rates. Although it is clear that few individual working for the bank were involved in the conspiracy, the institution was largely accountable for the mess (Huan, Parbonetti, and Previts 7). In fact, such actions were encouraged and supervised by the top management including the Board of directors and CEO. Therefore, the institution should bear the penalties and fines instead of individual.

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nWork Cited

nAshton, Philip, and Brett Christophers. “On arbitration, arbitrage and arbitrariness in financial markets and their governance: Unpacking LIBOR and the LIBOR scandal.” Economy and Society 44.2 (2015): 188-217.

nHuan, Xing, Antonio Parbonetti, and Gary Previts. “Understanding the LIBOR Scandal: The Historical, the Ethical, and the Technological.” (2015).

nJohnston, Chris. “Two Barclays traders found not guilty in Libor retrial.” BBC News, BBC, 6 Apr. 2017, HYPERLINK “http://www.bbc.com/news/business-39514924″www.bbc.com/news/business-39514924.

nVaughan, Liam, and Gavin Finch. “Libor scandal: the bankers who fixed the world’s most important number | Liam Vaughan and Gavin Finch.” The Guardian, Guardian News and Media, 18 Jan. 2017, www.theguardian.com/business/2017/jan/18/libor-scandal-the-bankers-who-fixed-the-worlds-most-important-number.