Ethics Sample Essay on Barclays Tries to Stem Fallout as Chief Executive Resigns

Memo

TO: Board of Classmates and Dr. Beverly Cleave, Chairman of the Board

FROM:

DATE: March 31, 2014

SUBJECT: Barclays Bank Fraud Scandal

The Barclays bank was caught in a scandal that involved manipulation of the interest rates (Armstrong et al, 2012). Although there is suspicion that the scandal involves several other multinational banks in the UK and US, Barclays bank is the first bank, which was found guilty of the offense (Armstrong et al, 2012). The scandal resulted in the resignation of several top level managers of Barclays bank in order to pave way for further investigations. There was the accusation of the banks top management, including the banks CEO, Bob Diamond (Treanor, 2012). The top management was accused of fraud that they manipulated London Interbank Offered Rate (Libor) and the Euro Interbank Offered Rate (Euribor) daily settings (Armstrong et al, 2012; Wilson, 2012). The manipulation of interest rates had serious effects to the lending rates between banks and the interest rates charged on loans and mortgages to bank customers.

The investigations by the United States Department of Justice and UK Financial Services Authority (FSA) found Barclays bank guilty of financial fraud (Wilson, 2012; Tangel&Stobart, 2012; Armstrong et al, 2012). The FSA imposed a fine of US$92.7 million to Barclays bank (Wilson, 2012; Tangel&Stobart, 2012; Armstrong et al, 2012). There was also another fine imposed to the bank worth US$450 million by the American and British banking regulators (Wilson, 2012). Furthermore, the Barclay bank CEO resigned on July 2012 and offered his compensation and bonus from the bank of approximately $7.92 million to settle the fraud accusations (Tangel&Stobart, 2012; Armstrong et al, 2012). A day before the CEO resigned, the chairman of Barclays group, Marcus Agius had resigned (Scott, 2012). However, the chairman returned in an acting CEO position before the bank appointed a new CEO. The Chief Operating Officer, Jerry Del Missier also resigned a few hours after CEO resignation (Scott, 2012; Armstrong et al, 2012).

References

Wilson, H. (2012, June 28). Bob Diamond: Barclays falsified Libor to protect bank during            financial crisis, The Telegraph. Retrieved from http://www.telegraph.co.uk/       finance/newsbysector/banksandfinance/9363421/Bob-Diamond-Barclays-falsified-Libor-    to-protect-bank-during-financial-crisis.html

Scott, M. (2012, July 3). Barclays Tries to Stem Fallout as Chief Executive Resigns, The New       York Times. Retreived from http://dealbook.nytimes.com/2012/07/03/chief-executive-of-           barclays-resigns/?_php=true&_type=blogs&_r=0

Treanor, J. (2012,July 3). Barclays chief executive Bob Diamond resigns, The Guardian.   Retreived from http://www.theguardian.com/business/2012/jul/03/bob-diamond-resigns-     barclays

Armstrong, P. et al. (2012, July 4). Barclays bank CEO Diamond resigns amid scandal. CNN.       Retrieved from http://edition.cnn.com/2012/07/03/business/barclays-diamond-resigns/

Tangel, A.&Stobart, J. (2012, July 04). Barclays CEO resigns amid rate-fixing scandal, Los           Angeles Times. Retrieved from http://articles.latimes.com/2012/jul/04/business/la-fi-            barclays-ceo-20120704