Former Barclays chief executive Bob Diamond offered a highly selective account to a parliamentary hearing on the banking rate-fixing scandal, say British lawmakers in a highly critical report.
In its report released yesterday regarding manipulation of a key inter-bank interest rate, Parliament's Treasury committee demanded sweeping changes to regulation of the banking industry, calling for authorities to get wider powers to prosecute offenders.
Barclays has been fined US$453 million by US and British agencies for feeding false data which went into calculations of the London interbank offered rate, known as Libor, a market index that influences the costs of a range of financial instruments.
The committee criticised both the Bank of England and the Financial Services Authority over failures to uncover the scandal sooner, and said it was highly unlikely that the practice of rate-fixing was confined to one bank.
"The sustained rigging of a crucial benchmark rate has done great damage to the UK's reputation. Public trust in banks is at an all-time low," committee chairman Andrew Tyrie said.
"Urgent improvements, both to the way banks are run and the way they are regulated, is needed if public and market confidence is to be restored.
"The manipulation was spotted neither by the FSA nor the Bank of England at the time. That doesn't look good."
Tyrie said his committee was calling for higher fines for firms that fail to co-operate with regulators, a tightening of laws to make it easier to prosecute rate-fixing offences, and stronger governance from the Bank of England which was criticised as naive and "relatively inactive", over manipulation of the Libor rate.
In evidence given to the panel at a hearing last month, Diamond appeared to suggest that a Bank of England executive had encouraged Barclays to manipulate rate data - a charge the bank has denied.
Legislators said they believed they had been misled by Diamond.
"Select committees are entitled to expect candour and frankness from witnesses before them," Tyrie said.
"Mr Diamond's evidence, at times highly selective, fell well short of the standard that Parliament expects, particularly from such an experienced and senior witness."
In response, Diamond strongly rejected the committee's allegations about his own testimony and attack on his former bank's reputation.
"I answered every question that was put to me truthfully, candidly and based on information available to me," Diamond said.
"I categorically refute any suggestion to the contrary."
He said the committee's claims that Barclays had a corporate culture "that had gone badly awry", were misplaced.
"The picture being presented today of what Barclays stood for under my watch could not be further from the truth," he said.
"There is no question that the behaviour of a small group of traders related to Libor manipulation was reprehensible and not in keeping with Barclays' high standards."
The government has announced that Tyrie will lead a Parliamentary Commission on Banking Standards, to look at steps needed to restore confidence in the country's banking sector.
Britain's Treasury said: "The manipulation of key global benchmark rates has been another example of a culture of irresponsibility within the banking system, which the Government is determined to fix as quickly as possible."