CASE STUDY

SUBMITTED TO:

ANA LEE P. GARCIA, DM

SUBMITTED BY:

EMARIE A. SAMON
DICUSSSION CASE: The LIBOR scandal: It is okay if everyone Does

It?

Barclays manipulate and fraudulent interest rate used in international

financial markets. Barclays had regularly manipulated the LIBOR in order

both to profit from large trades and to falsely portray as financially

stronger than it was. Top managers and traders at the bank regularly

attempted to manipulate benchmark interest rate s over a period of years,

to benefit their own trading positions, to help other banks attempt at

manipulation, and to shore up Barclays reputation during financial crisis. It

is also effect of the organization because Mr. Bob Diamond the CEO of the

Barclays was resigned as CEO with immediate effect because of Bob

Diamond Barclays fined more than $450 million dollars.

On June 27, 2012 the U.S Department of Justice Investigation they

found out that Barclays manipulate and fraudulent interest rate use in

international financial markets. Mr. Diamond resigned as Chief Executive

of Barclays. Paul Tucker, deputy governor at the Bank of England in

October 2008. Paul Tucker and MR. Diamond had a phone call

conversation, when the par discussed the negative interpretation that was

being given to Barclays high Libor submissions during the financial crisis.

This many have led the Barclays staffers thinking it was fine for them to

submit falsely low rates to Libor rate setters.

Diamond had worked for Barclays for 16 years and ran Barclays Capital,

its investigate bank, building it up into a global operation helped by the

acquisition of bits of Lehman Brothers following its bankruptcy in 2008. It

became chief executive in January 2011 when John Varley stepped down

although many admired his leadership skills and competitive drive, his

short stint as Barclays boss was mired in controversy over his pay

(totaling 17 million in 2011) and controversies over money Laundering,

Tax Avoidance and most recently the manipulation of the Libor- interbank

lending rate.

In a conversation between a senior executive at Barclays and a

representative of the British Banking Administration, which was reported

by the U.S investigation, the Barclays employee defended the bank the

said I would sort of express us maybe as not clean, but clean in principle

. Were clean, but were dirty-clean, rather than clean-clean. Barclays

manipulated the LIBOR since at least 2005 in order both to gain profit

from large trades and to falsely portray the bank financially stronger than

it was.

The British Bankers Association (BBA) issued a warning to banks in

April 2008 to submit honest rates to its LIBOR setting panel, according to

a series of emails which demonstrate s that the problems which the

crucial interest rate were being discussed at the highest level during the

financial crisis.

Alternatives

The alternatives that they used not to commit legal risk, aside from

manipulating interest rate they can find another way, they can find many

investor to invest to their banks with reporting regularly to LIBOR at the

same rate from other banks. But It is not easy to find investor and of

course many banks will offered at lower rate like Bank of America, Bank of

Tokyo Mitsubishi. Citi Bank, Rabo Bank, Royal Bank of Canada,

Norinchukin Bank Royal Bank of Scotland, UBS and West LB.

In this situation alternative are not possible at this time because

every bank wants to gain more profit because of financial crisis.

Solutions

Being ethical in organization is one of the solutions, it is start from

their self, it will manage well and the organization ran with ethics. Ethics

concern individual moral judgment about right and wrong. Decisions taken

within organizations may be made by individuals or groups, but whoever

makes them will be influenced by the culture of the company. Ethical

behavior and corporate and social responsibility can bring significant

benefits to a business.

it easy to perform a good action, but not easy to acquire a settled

habit of performing such actions Aristotle. Business ethics lead to a

more productive workplace. Much temptation inside the company to

commit crime but if you want to manage your business ethical it will

happen with helping yourself.