David questions Chairman of Barclays on LIBOR scandal

Tuesday, 10 July, 2012

Following last week's testimony by the newly-resigned Chief Executive Bob Diamond, Barclays Chairman Marcus Agius has given evidence to the Treasury Select Committee (TSC).

David Ruffley MP questioned Mr. Agius on the concerns expressed by the Financial Services Authority (FSA) regarding culture at Barclays, and the reasons for Mr. Diamond's resignation.

The uncorrected transcript of the exchange, which was widely covered in the media, is below.

The Daily Telegraph reported the exchange here: http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9390636/Marcus-Agius-I-cannot-speak-to-Mr-Diamonds-testimony.html

The Guardian's coverage of the exchange is here:


Q611 Mr Ruffley: Mr Agius, for the benefit of the Committee and everyone watching, can you give us, in a sentence, the reason why Bob Diamond went?
Marcus Agius: He went because it became clear that he had lost the support of his regulators.

Q612 Mr Ruffley: And can you tell us in a sentence why you resigned?
Marcus Agius: I resigned because I felt responsible, as the ultimate keeper of the bank's reputation, that further action was taken. At that point, the alternative of seeking the resignation of Bob Diamond was something that our shareholders did not want to see, and we believed at that time that Bob Diamond continued to have the support of his regulators.

Q613 Mr Ruffley: Can we go back to this damning letter of 10 April? Far from it being an issue about 'going forward', which were the words you introduced, what Lord Turner says to you in the 10 April letter is, 'I wished to bring to your attention our concerns about the cumulative impression created by a pattern of behaviour over the last few years.' When did you become Chairman?
Marcus Agius: 2007.

Q614 Mr Ruffley: So he is referring to the last few years, and that would include your tenure going all the way back to 2007. Now, we have had examples here read out already from this letter, but let me just remind everyone of the Protium deal. Lord Turner talks about a 'convoluted attempt to portray a favourable accounting result'. In relation to the monoline CVA positions, it mentions 'Barclays choosing valuations clearly at the aggressive end of the acceptable spectrum'. Then we get on to the reference that 'Barclays was not fully transparent with us about the RWA impacts of a proposed extension of model approaches'. Then he goes on in relation to the protracted conversations, when you wanted to move index hedges of own credit from trading book to the banking book. Even though you did not get it resolved in your favour, you 'continued to argue for capital optimisation'. Then in relation to the EBA stress tests, he refers to 'the confusing and potentially misleading impression created by Barclays' initial presentation of its position under the EBA stress tests'. Finally, for good measure, he talks about your tax strategy, and Lord Turner says, 'The net impact has clearly been unfavourable to the degree of external trust in Barclays's approach to issues such as tax, regulation and accounting.' All these things happened on your watch. Is that correct?
Marcus Agius: Correct.

Q615 Mr Ruffley: Have you ever received in your professional career in the City as damning a letter as that of any organisation you have either chaired or had a position of authority in?
Marcus Agius: This letter-

Q616 Mr Ruffley: No; have you had a letter as damning as this in your professional career?
Marcus Agius: I do not wish to be pedantic, but I do not regard this as damning. I regard this as a firm letter from our regulator.

Q617 Mr Ruffley: I read out those things at length for a particular reason. All this is public, Chairman, I trust, today: 'not fully transparent', 'confusing and potentially misleading', 'unfavourable to the degree of external trust in Barclays' approach to tax regulation'. You do not think that is damning? Is that what you want to come out of this hearing-that you are saying this is not a damning letter?
Marcus Agius: I think this is a very important letter and one we took very seriously.

Q618 Mr Ruffley: Have you had one of this character or worse in your professional career? That is all I am asking.
Marcus Agius: I have not had another letter similar to this.
Chair: It is so important this letter that the Chief Executive scarcely remembers it.

Q619 Mr Ruffley: When you said that you had a 20 or 30 minute discussion with Mr Diamond, can you remember what day that was?
Marcus Agius: Sorry, we had a 20 or 30 minute discussion at the board.

Q620 Mr Ruffley: No, when this FSA letter on 10 April was received by you-the 'Dear Marcus' letter-what discussions did you have with Mr Diamond thereafter? What day and how long did it last?
Marcus Agius: I cannot remember what day it was, but I remember discussing it with him and with other relevant officials inside Barclays.

Q621 Mr Ruffley: And what did Mr Diamond say when you informed him of it? No doubt you gave him a copy of this letter, didn't you?
Marcus Agius: I would certainly have given him a copy of this letter.

Q622 Mr Ruffley: You would or you did?
Marcus Agius: I would have.

Q623 Mr Ruffley: So he received it and, as the Chairman, you talked through with the Chief Executive the contents of this letter?
Marcus Agius: I cannot remember whether I sat down face to face with him.

Q624 Mr Ruffley: You cannot remember. Given this litany of poor performance and poor culture, what do you say to people who say you were not very good at your job, Mr Agius?
Marcus Agius: I say what I said earlier, which was-

Q625 Mr Ruffley: No, what do you say to people who say you were not very good at your job?
Chair: Give Mr Agius an opportunity to reply.
Marcus Agius: I say what I said earlier. A major part of our day-to-day preoccupation at the bank is our interaction with our regulator. They have a very important job to do. We understand that and we respect that, but they are not always right. They are not always right. Many times situations come up when we say, 'Actually I don't agree with your interpretation of that. I don't agree with the extent of this or the extent of that.' How we push back, how we argue that subject, is absolutely responsible behaviour by our bank. If the consequence of all of this is that they say, 'Hang on, you're just going too far. It's making our life very difficult; you need to recognise that,' that is a message we should receive and did receive.

Q626 Mr Ruffley: So you think you were a good Chairman, not a poor Chairman. Is that what you are saying?
Marcus Agius: I think I responded to this letter in the appropriate fashion.

Q627 Mr Ruffley: Well, you are also not responding to very straightforward, binary questions. Finally, I think this Committee is owed an explanation. I am going to have one final go. If you look at the transcript at page four, question 15, we are talking about the February board meeting. Mr Diamond says of the contents of that meeting, when the FSA attended the board, 'The context of the discussion when it got to controls, which I think is what you are asking about-I should call it the control environment-was that the focus and the tone at the top was something that they were specifically happy with.' Can you hold that in your mind for a minute, Mr Agius? Then can you look at your letter of 18 April, where of the February meeting-so we are talking about the same thing; would you agree with that?-you say, 'While he', that is Mr Bailey of the FSA,'specifically excluded Bob Diamond and Chris Lucas from his comments, it was clear that ‘tone from the top' is one of the FSA's concerns.' On the basis of that, would you say that Mr Diamond lied to this Committee?
Marcus Agius: I cannot comment on Mr Diamond's testimony.

Q628 Mr Ruffley: Would you say, given those two statements, which contradict one another in words of pretty much one syllable-and we do not want to talk about future tenses or going forward, which is what you tried to introduce before, laughably I think-that those are two sets of statements on the record and one of them is untruthful. I ask you again: did Mr Diamond lie to the Treasury Select Committee?
Marcus Agius: I am not going to speak to Mr Diamond's testimony.

Q629 Mr Ruffley: So you are not defending him?
Marcus Agius: I am not going to speak to his testimony.

Q630 Mr Ruffley: Finally, do you think those two statements can be reconciled.
Marcus Agius: I think in the way I described before, about taking the reference in my letter to talk about the importance of tone at the top being something that continues.

Q631 Mr Ruffley: My final question: under your Chairmanship a great British bank has been dragged through the mud. Are you ashamed of that?
Marcus Agius: I regret deeply what has happened to Barclays and I have said in my resignation letter I am truly sorry.