‘Smoking gun’ email suggests Barclays were encouraged to manipulate LIBOR by Whitehall officials


By Martin Kelly
An internal memo released by Barclays Bank indicates that in 2008 senior Whitehall officials were expressing concern at the level of Libor pricing submitted by the Bank.
The memo, dated 29th October 2008, relates to a call from Bank of England deputy Paul Tucker to someone called RED, believed to be Bob (Robert Edward) Diamond – pictured.

The memo gives Mr Diamond’s recollections of communications between him and the Bank of England’s Paul Tucker.

According to the memo, Mr Tucker repeats to Mr Diamond claims made in earlier communications that Whitehall is worried about the level of LIBOR rates Barclays bank is submitting.

Mr Diamond responds by expressing his own concerns that other banks were submitting rates at odds with reality, to which Mr Tucker apparently replied “oh, that would be worse”.  The memo ends with what appears to be a suggestion that Barclay’s rates do not need to be as high as they are.

File Note: Call to RED from Paul Tucker, Bank of England

Date: 29th October 2008

Further to our last call, Mr Tucker reiterated that he had received calls from a number of senior figures within Whitehall to question why Barclays was always towards the top end of Libor pricing.

His response was “you have to pay what you have to pay”.

I asked if he could relay the reality, that not all banks were providing quotes at the levels that represented real transactions, his response “oh, that would be worse”.

I explained again our market rate driven policy and that it had recently meant that we appeared in the top quartile and on occasion the top decile of the pricing.  Equally, I noted that we continued to see others in the market posting rates at levels that were not representative of where they would actually undertake business.

This latter point has on occasion pushed us higher than would otherwise appear to be the case.  In fact, we are not having to ‘pay up’ for money at all.

Mr Tucker stated the levels of calls he was receiving from Whitehall were ‘senior’ and that while he was certain we did not need advice, that it did not always need to be the case that we appeared as high as we have recently.


The memo was sent on October 30, 2008, to the then-chief executive John Varley and Jerry del Missier, who was president of Barclays Capital.  Barclays Capital was the arm responsible for the rate rigging misdemeanours.

The publication of the email will fuel speculation that pressure was indeed applied by senior Government figures worried about the rise in interest rates at the height of the credit crunch.  It follows revelations that UK regulatory bodies ignored five warnings about LIBOR, the first coming in 2007.

The email comes just one day before former Barclay’s Chief Mr Diamond appears in front of a Committee of MPs to answer questions on the rate rigging scandal which has already seen the high flyer resign along with two colleagues.

The email will also increase the pressure on Labour Ministers who were in power at the time of the scandal, to explain what they knew.  The SNP has already called for full transparency from Labour and called on former PM Gordon Brown and former Chancellor Alistair Darling to answer a series of ten questions.

The news also comes on the same day that the Crown confirms investigations are currently taking place into possible banking irregularities in the Scottish banking sector.

The possibility of prosecutions is easier under Scots law which treats such transgressions as common law offences instead of a reliance on statute as is required in England.