So the regulator is either incompetent or corrupt - you decide...

Sants: FSA was fully aware of Libor scandal at Diamond's appointment 

 Sarah Miloudi on Sep 19, 2012 at 12:51

Hector Sants, the former managing director of the Financial Services Authority (FSA), has said that the regulator was 'fully' aware of the Libor manipulation allegations hanging over Barclays at the time of Bob Diamond's appointment.
Sants' claims contradict those submitted during the Libor investigation conducted by the Treasury Select Committee (TSC), in which the FSA said it did not consider these allegations when Diamond became the bank's boss in 2010.
'I would like to make clear the statement that the Libor investigation was not considered at the time of appointing Mr Diamond as CEO (chief executive officer) is not correct. The FSA was fully aware the on-going investigation might come to conclusions which would be relevant to Mr Diamond's suitability.
'The fact there were certain conclusions which might be reached which would have precluded Mr Diamond from holding the CEO role were fully appreciated by the FSA at the time and were discussed at an executive committee and minuted,' Sants revealed, in a frank exchange with Andrew Tyrie, the chair of the TSC.
Moreover, Sants (pictured) said that in a meeting on 15 September 2010 he handed Marcus Agius, the outgoing Barclays chair, a letter regarding Diamond's appointment. He said he made clear in the document that the FSA could reconsider Diamond's position if the Libor investigation threw up worrying details.
'I specifically made clear that we reserved the right to re-assess his suitability in light of the conclusions reached by this investigation and requested he make this clear to Mr Diamond,' Sants wrote.
'The reason this point was made in the letter was because we did not wish to prejudice our enforcement process,' he added.
The exchange published today is one of a series the TSC has thrust into the public domain about Libor manipulation and the investigation that followed.
Earlier this year Barclays was hit with a record £290 million fine for low-balling the London interbank lending rate, and a series of other lenders have been dragged into the scandal since Barclays settled on its fine.
The Royal Bank of Scotland (RBS) could face a similar penalty, according to estimates released last month. Lloyds has also been implicated, though only Barclays has formally settled the case that was against it.