Banking Scandal Exposes Weak Corporate Governance

The abuse by Barclays’ personnel of their positions of trust for the sake of corporate and indirect private gain was ethically corrupt behaviour and warrants an independent investigation, says Transparency International UK.

Barclays has paid fines of £290 million to settle investigations by UK and US regulators into attempted manipulation of the London Interbank Offered Rate (Libor).

Chandu Krishnan, Executive Director of Transparency International UK said “This is a shocking failure by a major UK financial institution to conduct its business according to the ethical standards its leadership publicly committed to uphold last year. The company’s board and senior management should be held accountable.

“It is also disturbing that other banks in the UK and abroad have been implicated in such behaviour. This will further undermine public confidence in the transparency and integrity of banks. It exposes weaknesses in corporate governance and the need for reforms that will increase transparency and accountability as well as reduce the incentives for irresponsible, corrupt behaviour. There should be criminal sanctions for individuals who have committed offences and reforms are also needed to allow criminal corporate prosecution of this form of economic crime in the UK”.

“In order to restore confidence, Barclays should commission an independent inquiry into what went wrong, why it went wrong, who was responsible, and what steps the company must take to improve its internal controls and corporate governance. The results of this inquiry should be made public. The Treasury’s proposed independent inquiry into how Libor operates should help to expose wider systemic failures and how they can be remedied”.

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