April 1, 2023

DealBook: Parliament Questions Marcus Agius About Culture at Barclays

Marcus Agius, Barclays' chairman, after testifying to lawmakers. He was asked mostly about the actions of Robert Diamond, Barclays' former chief.Jason Alden/Bloomberg NewsMarcus Agius, Barclays‘ chairman, after testifying to lawmakers. He was asked mostly about the actions of Robert Diamond, Barclays’ former chief.

LONDON — During his tenure as Barclays chief executive, Robert E. Diamond Jr. spoke passionately about creating a strong culture of integrity and trust, a common philosophy that would breed success at the big British Bank. In a speech last year, he emphasized that the “evidence of culture is how people behave when no one is watching.”

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But now Mr. Diamond, who stepped down last week, faces criticism about his leadership as Barclays deals with fallout from a scandal involving interest rate manipulation.

On Tuesday, Barclays released new documents that indicate British regulators had raised questions about Mr. Diamond’s management style, with concerns dating to his appointment to the top spot in late 2010. The scrutiny of Mr. Diamond came months — and in one case, years — before the bank came under fire for trying to manipulate key interest rates.

The revelations, during a tense parliamentary committee hearing in Britain, could put added pressure on the bank and Mr. Diamond.

Marcus Agius, testifying to lawmakers in London, has agreed to resign as Barclays' chairman.ReutersMarcus Agius, testifying to lawmakers in London, has agreed to resign as Barclays’ chairman.

“The culture at Barclays came from the top,” said Andrew Tyrie, a member of Parliament who heads the committee. “It came from top executives.”

In late June, Barclays agreed to pay $450 million to settle accusations by American and British authorities that it reported false rates in an effort to improve profits and make its financial position look stronger. The case, the first major action stemming from a global investigation into big banks, focuses on a key benchmark known as the London interbank offered rate, or Libor. Such rates are used to help determine the borrowing costs for credit cards, mortgages and other types of debt.

To help quell the anger over the case, Mr. Diamond agreed on Tuesday to forgo up to $31 million in stock bonuses that he was set to receive. Last week, the bank’s chairman, Marcus Agius, said he also would resign, along with one of Mr. Diamond’s top deputies, Jerry del Missier.

“I am sorry, angry and disappointed,” Mr. Diamond told the parliamentary committee last week.

On Tuesday, British politicians directed their ire at Mr. Agius, who testified at the hearing for more than two hours. Lawmakers focused mainly on the actions of Mr. Diamond, wondering what went wrong inside the bank.

The committee, in part, addressed the newly released documents that show British regulators’ earlier concerns about Mr. Diamond.

In a letter to Mr. Agius in late 2010, Hector Sants, the chief executive of Britain’s Financial Services Authority, pushed for Mr. Diamond, who had been recently tapped as chief executive, to have an “increased level of engagement” with authorities. He added that regulators expected the incoming Barclays chief, who took over in early 2011, to have a “close, open and transparent relationship” with them.

Mr. Sants also cautioned about the incoming chief’s chumminess with top Barclays deputies. Mr. Diamond helped build Barclays’ investment bank into a global leader, and regulators wanted to ensure that he would exercise sufficient “clarity in oversight” over two close colleagues, Mr. del Missier and Rich Ricci, who replaced Mr. Diamond as the co-heads of the unit.

Questions about the bank’s culture persisted.

In April, Adair Turner, chairman of the Financial Services Authority, wrote a letter to Mr. Agius, addressing what the regulator perceived as overly aggressive practices at the bank. He pointed to Barclays’ efforts to avoid paying around $774 million in corporate taxes and some of the bank’s accounting methods.

“Barclays often seems to be seeking to gain advantage through the use of complex structures, or through regulatory approaches which are at the aggressive end of interpretation of the relevant rules and regulations,” Mr. Turner wrote.

In his testimony on Tuesday, Mr. Agius said that Mr. Turner’s letter showed the bank’s “strained” relationship with the Financial Services Authority. “What that letter is saying is that we overdid it,” Mr. Agius said.

The correspondence between Barclays and British regulators appears to contradict evidence that Mr. Diamond gave last week to the same parliamentary committee.

In his testimony, Mr. Diamond indicated that the bank maintained a good relationship with the British regulator. He also said that he did not recall that the regulator had raised concerns about the bank’s activities or its internal culture.

“I knew nothing about it at the time that I was appointed,” Mr. Diamond told the parliamentary committee last week.

British politicians repeatedly asked Mr. Agius on Tuesday whether Mr. Diamond had been completely forthcoming during his testimony.

“Would you say that Mr. Diamond lied to this committee?” David Ruffley, a member of Parliament, asked Mr. Agius.

“I can’t comment on Mr. Diamond’s testimony,” the Barclays chairman said.

In light of the concerns about Mr. Diamond’s testimony, Mr. Diamond might be recalled to give further evidence next week. Senior officials from the Financial Services Authority also are expected to testify.

In his testimony, Mr. Agius gave more detail about the inner workings of the British bank. The Barclays chairman, who said he was first told about the investigations into the bank’s Libor activities in April 2010, said the bank’s board did not make decisions involving the setting of the Libor. Instead, issues related to the rate were left to lower-level executives, he told lawmakers.

When asked why senior managers did not question decisions to report artificially low rates, Mr. Agius said that the bank handled many difficult situations after the collapse of Lehman Brothers in 2008.

“I think it reflects the extraordinary times,” he said.

At the beginning of his testimony, Mr. Agius said that Mr. Diamond would give up his deferred stock bonuses.

Still, Mr. Diamond will receive around $3.1 million, including one year’s pay and a cash payment. The agreement is roughly double what he is contractually owed.
“We want to retain such good will as we can with him,” Mr. Agius said.

Mr. Agius, who became Barclays’ chairman in 2007, was asked to detail the circumstances of Mr. Diamond’s resignation last week.

He told the committee that in early July he and Michael Rake, one of the bank’s independent directors, talked to Mervyn A. King, the governor of the Bank of England, about the rate-manipulation scandal. During the conversation, Mr. King indicated that Mr. Diamond no longer had the support of the Financial Services Authority, according to Mr. Agius’s testimony. But Mr. King said Barclays’ board would have to make the final decision about Mr. Diamond’s future.

After the conversation with Mr. King, Mr. Agius held a conference call with the bank’s nonexecutive directors, who decided to ask Mr. Diamond to resign. After calling Mr. King to inform him of the board’s decision, the chairman visited Mr. Diamond at his house.

“I left confident that he would resign,” Mr. Agius said.

Article source: http://dealbook.nytimes.com/2012/07/10/parliament-questions-culture-at-barclays/?partner=rss&emc=rss

Murdoch Company Settles With 36 Hacking Victims

A statement by lawyers representing hacking victims said that Mr. Murdoch’s News Group Newspapers, which published the now-defunct News of the World tabloid, had agreed to pay substantial damages on the basis “that senior employees and directors” of the company “knew about the wrongdoing and sought to conceal it by deliberately deceiving investigators and destroying evidence.”

While not explicitly admitting or denying those claims, the company agreed to set compensation on the basis that it was true. In doing so, it acknowledged, lawyers said, that it had deliberately covered up both the existence and the pervasiveness of The News of the World’s phone-hacking operation, lied about it to the police and Parliament, and destroyed evidence in the case.

Details about some of the settlements were disclosed at a High Court hearing on Thursday, in which victims’ statements were read aloud and a lawyer for News International, a British subsidiary of News Corp., repeatedly apologized on behalf of the company.

Victims whose settlement details were disclosed include Mr. Law, who received £130,000 (about $200,000) in damages; Sadie Frost, his ex-wife, who received £50,000 ($77,000) ; Ben Jackson, his assistant, who received £40,000 ($61,000); Denis MacShane, a member of Parliament, who received £32,500 ($50,000); and Gavin Henson, a Welsh rugby star, who received £40,000 ($61,000). In each case, the settlement includes legal costs, which can easily run into six-figure sums for a single complainant.

The settlements disclosed on Thursday represent only a small number of the cases brought by people who say their phones were hacked against News International.

Mark Lewis, a lawyer for many of the phone-hacking victims, said in an e-mail that the claimants’ fight against the Murdoch media properties was not over.

“It is important that we don’t get carried away into thinking that the war is over,” Mr. Lewis said, according to The Associated Press. “ There are many more cases in the pipeline.”

He added: “This is too early to celebrate, we’re not even at the end of the beginning.”

The scandal, which exploded last year into a full-blown crisis for Mr. Murdoch’s holdings in Britain, has led to a series of police and judicial inquiries into the behavior of journalists, police officers and politicians.

At the same time, disclosures about hacking by a private investigator employed by The News of the World — a 168-year-old Sunday tabloid that Mr. Murdoch ordered closed last year as the scandal spread — forced a series of high-level resignations, including that of Andy Coulson, a former News of the World editor who later became media adviser to Prime Minister David Cameron. He resigned a year ago amid continued questions about his possible involvement in the illegal hacking.

At least 20 people have been arrested by the police.

News reports on Thursday did not immediately specify the total amount involved in the settlements. But only a fraction of potential victims have settled with the company, and its final legal bill could be well into the tens of millions of pounds, lawyers say.

All of the cases dealt with voice-mail interception except one, which related to alleged hacking of the personal e-mail account of Christopher Shipman, the son of the convicted mass murderer Harold Shipman.

Article source: http://feeds.nytimes.com/click.phdo?i=34555c369812ffdb6abfc42128ddb8b9

Struggle of Israel’s Channel 10 Tied to Political Wars

Traveling in luxury at the expense of others may violate public service rules and the law. It also doesn’t look good. But instead of accolades for its journalism, Channel 10 is now fighting for its life, and Mr. Netanyahu’s hostility toward it is being cast as part of a broader cultural and political war in Israel between the left and the right involving efforts to control the judiciary, the reporting of news and public discourse.

It is a battle that most immediately pits the rightist governing coalition against the liberal elite as the government refuses to postpone the station’s debt, which could force it to close.

“The fight over Channel 10 is partly a matter of revenge — Netanyahu wants to make them pay for what they did to him,” argued Nachman Shai, a member of Parliament from the opposition party Kadima and a former news executive who helped set up Channel 10 a decade ago. “But it is also part of a three-front struggle — over the courts, civil society and the media. The right wants to control every institution. Freedom of expression is at risk.”

Those around Mr. Netanyahu, who filed a million-dollar libel suit against the station, say Channel 10 is a failed business whose payments have been forgiven numerous times and is hiding behind political complaints and inflated concerns about free speech to make the public absorb its debts.

On its face, the request by Channel 10 is modest. It owes $11 million, most of it to an official regulatory body, the rest in taxes. Ayelet Metzger, deputy director general of the regulatory body, said both her agency and the Finance Ministry had agreed to postpone the debt for a year.

But a parliamentary committee this month voted against doing so. Mr. Netanyahu’s coalition obliged its members to vote no. This means that Channel 10 will, in theory, shut its doors at the end of January, when its 10-year franchise ends.

In practice, there will be a drawn-out battle to save it because of the belief that it plays a vital role in public debate through its crusading investigative news broadcasts. The only other independent station is Channel 2, which is also facing economic woes.

Otherwise, Mr. Netanyahu has strong influence over other media outlets: the state-owned Channel 1, State Radio and a freely distributed and successful newspaper, Yisrael Hayom, owned by a close American friend, the billionaire Sheldon Adelson.

President Shimon Peres, a member of Kadima, has weighed in, saying that the channel’s effort to survive is “a struggle for Israel’s democratic character.” In a related comment, he also declared himself “ashamed” of several bills being considered in Parliament that he believes chip away at democracy in Israel: an antidefamation law, one that silences loudspeakers issuing the Muslim call to prayer and another that prevents foreign governments from financing left-wing Israeli groups.

Last summer, Parliament passed a law making it possible to sue anyone who advocates boycotting things Israeli, including West Bank settlements.

Channel 10 infuriated the Netanyahus over the reports of lavish travel, when he was a member of Parliament and as finance minister, and spurred a continuing investigation by the state comptroller. But the channel also angered previous leaders, playing a key role in exposing the way the 2006 Lebanon war was conducted and publicizing suspicions of corrupt land deals in the family of former Prime Minister Ariel Sharon.

It brought to the screen the fate of a Palestinian doctor in Gaza whose three daughters were killed in the 2008-2009 offensive there by Israeli forces, and showed a minister from the nationalist party Yisrael Beiteinu arriving at the home of a woman suspected to be his mistress and leaving the house the next morning.

“I believe that if we die, the message will be clear that if you have the guts to open a critical news company, you will go bankrupt,” said Raviv Drucker, the station’s chief investigative reporter, who broke the story of Mr. Netanyahu’s travels.

An executive of Channel 10 who spoke on the condition of anonymity said that he had been told by a top aide of Mr. Netanyahu that if Mr. Drucker were given a long vacation, postponing the debt would be a lot easier. Mr. Netanyahu’s office said no such conversation had occurred.

Article source: http://www.nytimes.com/2011/12/27/world/middleeast/struggle-of-israels-channel-10-tied-to-political-wars.html?partner=rss&emc=rss