Executives said to know of low rates

Fresh details about the case show how Robert E Diamond Jr, the outgoing chief executive of Barclays, and other senior executives played a role in the questionable actions and failed to prevent them. In 2007 and 2008, Diamond’s top deputies told employees to report artificially low rates in line with its rivals, deflecting scrutiny about the health of Barclays at the height of the financial crisis, according to several people close to the case.

Lawmakers will ratchet up the pressure on Wednesday, when Diamond is scheduled to testify before a British parliamentary committee. David Cameron, Britain’s prime minister, also announced Monday a wide-ranging inquiry into the British banking sector, with the findings to be published by the end of the year.

Regulators in London and Washington are broadly investigating whether big banks manipulated interest rates to their own advantage, aiming to increase profits and fend off questions about their health. Such benchmarks are essential to setting the lending rates for corporations and consumers.

At Barclays, the problems started at the top.

During the period in question, the bank looked like a winner. After Lehman Brothers collapsed in September 2008, Barclays picked up some of the pieces.

And unlike peers, the bank did not have to take government bailout money. But in late 2008, Diamond, then head of the investment banking unit, informed his deputies that outside officials, including the Bank of England, were concerned Barclays was reporting high interest rates, a sign of poor health.

His top deputies relayed the message to lower-level employees, instructing them to depress the rates, according to people close to the case, who spoke on the condition of anonymity.

None of the executives has been accused of any wrongdoing. People close to the case say Diamond never told anyone to submit bogus rates.

Instead, Diamond’s conversation led to “a miscommunication,” according to regulatory documents.

© 2012 The New York Times News Service