As you may have noticed, Barclays (BCS:US) was recently fined a record £290m/$450m by U.K. and U.S. authorities for attempting to manipulate the London interbank offered rate (Libor). As reported by the Financial Times, this settlement is the first in a probe launched by the U.S. Commodity Futures Trading Commission that now spans nearly a dozen regulators and more than 20 banks, and the continuing investigations are expected to set a basis for settlement negotiations with individuals and other institutions.
So, what went wrong? Two types of misbehavior in relation to Libor seem to be apparent from the investigation: from 2005–2007, the bank took requests from its own traders as well as those at other banks into account when making submissions and has also admitted to lowballing its Libor rate submissions in order to paint a rosier picture of its financial health after the collapse of Northern Rock (NRK) in the UK and Lehman Brothers (LEH) in the US. Only months after coming under fire from investors over his pay for 2011, Barclays’ CEO, Bob Diamond, along with three of his key lieutenants, announced plans to waive their potential bonuses for the year in response to the fine, and Diamond’s apology as quoted in the FT was, “I am sorry that some people acted in a manner not consistent with our culture and values.” Shareholders and political figures began clamoring for Diamond’s resignation, and former CEO of Barclays, Martin Taylor, said the bank’s actions amounted to “systemic dishonesty” and commented that the bank must rebuild its reputation following the scandal.
The latest development in this rapidly unfolding story is Diamond’s publicly announced resignation, which UK politicians and regulators have hailed as the “first step towards a new culture of British banking.” Admitting to and taking personal responsibility for wrongdoing is often the first step in the process, but it looks like both Diamond and Barclays have a long way to go in terms of restoring trust. Leaders, particularly CEOs, have a clear obligation and responsibility in setting the tone for the culture of their organization; perhaps Diamond’s key lesson from this experience (and his successor’s challenge) is to truly understand the role he should have been playing in transforming Barclay’s culture.
Here are some other must reads on leadership, innovation, and communications skills you may have missed in June:
- Is there an emerging succession struggle for CEOs? Read the key findings of a recent survey of CEOs published in CEO Briefing Newsletter, which seems to suggest three unsettling trends.
- How do you know if you’re really innovating, and what do you do if you fail? John Kotter shares lessons learned from innovation failures in his Forbes article, including the insight that real and successful innovation stems from chaos instead of controlled situations.
- Is charisma innate or learned? John Antonakis tackles this topic in his HBR article on research from the University of Lausanne that quantifies charisma as a set of skills that anyone can learn if they understand and practice the tactics.
- Is Sheryl Sandberg’s appointment as the first woman on Facebook’s board setting a new trend? In her Forbes article, Kate Taylor makes the case that putting more women on corporate boards is good not only for women but also for business and the economy.
- Is your body language sending signals you don’t intend? Carol Kinsey Goman explores common body language mistakes male leaders make and tips to avoid them.
For more news and trends, visit the Leadership, Management, and Communication Skills Community of Practice.