Here’s Bob Diamond’s memo, with a few italicized changes to make it seem more sincere…
It has been an incredibly tough period for all of you given the nature and volume of negative comment that has come against Barclays in the past few days as I cling onto my ‘total remuneration package’ and sacrifice my friends whilst hanging onto all those share options and bonuses I trousered between 2005-9.
It must have been particularly hard for those of you on the front-line justifying the unjustifiable, given our customers and clients will understandably feel that we have let them down and that I am a greedy, parasitic little shit.
You need better information to help in your interactions with customers and clients – and our family and friends - not that I have any friends more important to me than cash.
Let me start by saying that I understand why the reaction has been severe – it has been like that since my school days. No one is more sorry, disappointed and angry about these events than I am - we got caught.
I am sorry because we let down the people whose trust we rely on – our customers and clients; our shareholders; our regulators; and the communities in which we live and work - as we avoid tax through structured finance and other clever wheezes and line our pockets with shareholders’ cash.
I am disappointed because many of these behaviours happened on my watch. It is my responsibility to make sure that it cannot happen again - as I am barely hanging onto my job.
More than anything, though, I am angry because the impression has been given that the behaviour revealed in the documents last week is indicative of the culture at Barclays generally – how could any intelligent person look at the Board’s executive remuneration policies and think we are greedy bastards?
I love Barclays – it has paid me millions and millions of dollars, and I am proud of all of you for listening to the bollocks I speak without laughing as you too want to eat at the shareholder trough. We all know that these events are not representative of our culture, and it is my responsibility to get to the bottom of that and resolve it – you know we need to pretend. Make no mistake the actions taken in this incident were against all of the principles we live by – how could any intelligent person think we are greedy bastards?
Many have rightly stated that there are questions that we have to answer – though mainly you have said that it is me who has questions to answer but I don’t care what you underlings think. Many of you will rightly feel the same given the impact this has had on you as your clients ask themselves why they bank with such a bunch of crooks.
Detailed answers will continue to come as we invent them in the PR department. You have my commitment on that.
Meanwhile, we are not standing still. I was restricted from seeing the full findings until just before they were published last week which is why I have come out of this so badly. Since that time I have worked with the Executive team and the Board to determine and drive execution of the further changes we must now make like shafting my mate Marcus Agius and any other underling necessary to save my skin.
We can and will restore Barclays reputation to the levels that the institution and you deserve – which isn’t that high to be frank.
First, we had to get to the bottom of what happened, why and how it happened and put in place changes to make sure that nothing like it can ever happen again at Barclays. We must not get caught.
It is important to bear in mind that this behaviour stopped nearly three years ago as soon as we were found out. The documents released last week represent part of an industry-wide investigation and are the result of investigations which we carried out in cooperation with three different regulatory Authorities over three years once we realised they had us by the goolies.
Those investigations studied millions of pieces of evidence, many hours of interviews and careful review of all aspects of the behaviour under question. All of that is the result of our very close cooperation with the Authorities, which they emphasise though to be frank we didn’t have any choice about cooperating with the bureaucratic pipsqueaks who couldn’t even afford a Porsche Boxster between them.
We did not wait for those investigations to be completed, however as we knew they had us bang to rights, guv. We moved to fix issues when they were uncovered (but obviously not elsewhere as they haven’t caught us yet) - the systems, controls and training that we now have in place around the submission of LIBOR and EURIBOR are first-class – and look good to an outsider upon casual inspection.
We have agreed with the Authorities to have our controls related to the submission processes externally audited on a regular basis -not that we had much choice. We will also publish the results of that external audit though of course we know, from our experience of auditors and remuneration consultants, that ‘he who pays the piper calls the tune’.
Our customers and clients are particularly concerned about the potential impact of this behaviour on them as manipulation of LIBOR was often directly ripping them off. Let me be clear: it does not matter if this was perpetrated by one individual or a handful – it was wrong to get caught.
But we must help our customers and clients recognise that on the majority of days, no requests were made at all – so we weren’t outrageously dishonest and greedy every day – just some days. Even when made, the requests were not always accepted by the submitter, and the attempted adjustments were, on average, small – typically less than one basis point – which on billions of dollars adds up, he-he. When the ultimate rate was affected is a complex question, especially given the role of the other banks’ submissions – because we’re not sure if they are as good at being deceitful greedy bastards as us. This helps explain why the Department of Justice concluded that the rate was affected only on “some occasions”. All of that said, I appreciate that some clients will be concerned that there may be an impact on them – i.e. that we ripped them off. We are setting up a dedicated process to ensure that any client concerns can be dealt with consistently – and don’t forget that while supermarkets have customers, we have clients – just likes whores.
Second, we have to take appropriate action against those involved except me.
Of course, given the nature of the Authorities involved, the investigations were accompanied by criminal enquiries, and some of those are still underway because, well, we were stupid and left evidence and stuff.
Our internal disciplinary process, which began some time ago, will be completed swiftly now that the regulatory reviews are complete because fiddling LIBOR was not obviously dishonest to us initially – we are a learning organisation.
We are being thorough and robust while also ensuring that we undertake due process. We are reviewing those directly responsible except me and those in supervisory roles except me. We have the full range of tools at our disposal, from clawing back compensation except me to asking people to leave the bank except me. The Board including me is overseeing this entire process.
Third, we need to continue to build an industry-leading control environment across everything that we do so we never get caught again.
The events revealed last week arose in large part because we did not have appropriate controls in place to stop us getting caught. Frankly, we misjudged the risk associated with the underlying activity which shows we need to try harder to be professional greedy bastards. That slack approach must never happen again. Once we better understood the risks, we put in place the right controls and systems to stop us getting caught.
More generally, our efforts to make our operational and functional activities more integrated and independent of the businesses are vitally important - just like our executive bonus scheme, which is integrated to the cash flow of the business but independent of its performance. Christ, to get half my bonus we don’t even need to outperform our cost of capital. Those will improve control and drive more consistent standards and remuneration, as well as improve efficiency and reduce the chance of our being caught.
We have much more to do here hanging for dear life to our overpaid jobs, and you can expect to hear more from the Executive team over the coming weeks about our bonuses and why we deserve them Even when we’ve trashed TSR, economic profit and the bank’s reputation.
Fourth, and most important, we must evolve our culture to a consistently high standard of greed.
As I said at the start, I love Barclays bonuses. That is because of you; you make this a great place to work for me and my offshore accounts. It is my responsibility to make this a great place to work for you whilst trousering as much as I possibly can.
I do not accept the view that the behaviours revealed this week are representative of our culture. They are not. Only the A-players, the top of the pyramid, people like me, can be inspirationally greedy.
But I do recognise that our culture, and that of the industry overall, needs to evolve from open to a more subtle greed. The financial crisis revealed that banks need to revisit the basis on which they operate, and how they add value to society without, of course, paying much tax.
We know that a small minority have let us down but the Board will not do it again. We also know that we need to rebuild bonds of trust with the society we serve, though without giving up our bonuses or paying too much tax.
We began that journey some time ago, and different businesses are at, and in, different places on it, such as the Cayman Islands, Jersey, Ireland, Luxembourg and the Netherlands. Our efforts here are about accelerating the change that we already have underway and creating consistent standards across all of our businesses so we don’t get caught or pay too much tax ever again.
In particular, we have redefined our purpose and begun to re-orient our business activities around clear principles:
• Consistently putting customers and clients’ interests at the heart of everything that we do – striving to improve the service that we provide; making responsible decisions in how we manage our business; and actively managing the social and environmental impacts of what we do – sod shareholders though.
• Playing an even broader role in the communities in which we live and work through community investment programmes and the direct efforts of our colleagues so people don’t expect us to pay a decent tax rate.
• Supporting economic growth and job creation by operating a strong, profitable business that pays as little tax as possible that is focused on helping individuals, businesses, institutions and governments pursue their goals and especially on paying me big bonuses.
We have also been pushing to create One Barclays. Some still misunderstand that to be about organisational structure which of course it is. It is not genuine. It is entirely about culture and values – we must have one consistent set of standards to guide behaviours across the entire organisation. There will be no exceptions. We must all be greedy, tax-avoiding vultures, feeding at the TARP and QE trough.
Prior to this week, all of that may have been sufficient. It is no longer since we got caught. Though the member of my team who really wrote this should have stopped by now.
We must move further and faster to show that banks, and those who work for them, consistently operate to the highest standards of probity and honesty – an impossible task so I haven’t been able to work out how we do that. Every day we are trusted with billions of pounds of our customers’ money – though I don’t know why. Every day we must demonstrate that we deserve that trust even though we don’t.
The burden of proof externally is now much higher now that we have stupidly been caught. Not only do we have to continue to make the right changes to our culture, but we also have to prove to external stakeholders that we have done so but they are idiots in comparison with us which is why it will be so easy and why we are paid so much.
The Board has agreed to launch an audit of our business practices as independent as our remuneration committee and consultants.
This audit will be led by an independent third party who we will pay millions of dollars, reporting to Sir Michael Rake and a panel of Non-Executive Directors who have demonstrated their independence by setting such demanding targets for executive pay and ensuring that shareholders receive such derisory dividends.
It will have three objectives:
• To undertake a root and branch review of all of the past practices that have been revealed as flawed since the credit crisis started and identify implications for our business practices and culture going forward. God, that sounds so clichéd it sounds as though the person who write it must have gone to a top MBA school, unlike me;
• To publish a public report of its findings with all the really interesting bits left out;
• To produce a new, mandatory code of conduct that will be applied across Barclays so we can cover our arses on the board.
We will use the output of that review to adjust our HR processes so that the standards that emerge play a material role in hiring and induction; assessment and development; and reward. That will start with Executive Management – we will identify greedy people who have the special skills necessary not to get caught – and they will not be cheap.
We will establish a zero tolerance policy for any actions that harm the reputation of the bank except for my remaining in my job.
We will also put in place an enforced governance process to ensure that we comply with these standards over a very long time.
I am committed to ensuring that the recommendations from this review and my bonus payments are implemented in full.
The actions that I have laid out are by no means an exhaustive outline of the change that we need to undertake to restore Barclays reputation and standing with our stakeholders. We will learn a lot as we progress on this journey. Just like St Paul on the road to Damascus, who took a financially-clueless hippy with some nice ideas and turned them into a global business with fantastic buildings and chairs.
All of us, most importantly me, serve our shareholders at the discretion of the Board. So their support for this plan is vital and they are all in my pocket, as you can see from my bonuses and ridiculously easy targets. Even that troublemaker, Carnwath or whatever her name is.
In that regard, let me share a few words about our Chairman, Marcus. He has shown a remarkable passion for Barclays and its people. He has been a thoughtful and supportive colleague to me in all of my roles – especially since I became Chief Executive last year – and for this I will always be grateful. As you know, he has been an outstanding leader of the Board at all times, particularly during the financial crisis, and he and his Board colleagues have had an extraordinary range and number of challenges to deal with over the past six years but consistently managed to shaft shareholders and their pre-emption rights in order to ensure I received the bonuses I so justly deserve.
Marcus has demonstrated hands on interest in, and practical support for, all we do with our customers and clients. In particular, he and his wife have travelled to all corners of Barclays operations to see colleagues, clients and community projects which distracts attention away from structured finance and my bonuses. In leading our Citizenship Awards each year, he has championed the extraordinary commitment of our staff to the communities in which they work, as well as their efforts inside and outside Barclays for which they receive little pay while I trouser millions.
Nothing is a better demonstration of these qualities than his statement today which deserves all of our respect.
I have reviewed the actions that I set out above in detail with Marcus and the other Non-Executive Directors. We have their full support, so it is now our responsibility to execute to ensure we are never caught again.
This is a great bank; full of great people working hard to pay my bonuses. We will emerge from this period as industry leaders in every sense of the word, particularly remuneration.
That is my commitment to you. In one word – greed.