MPs fail to land knockout with Barclays boss on ropes

LONDON BRIEFING: Bob Diamond's tales of humble Irish-American roots did not melt Westminster hearts

DESPERATE SITUATIONS require desperate measures, and so it was yesterday that Britain’s best-paid banker invoked memories of his childhood in an attempt to deflect members of parliament as they grilled him on the thorny topic of bankers’ bonuses.

US-born Bob Diamond, who stepped up as chief executive of Barclays less than a fortnight ago, was making his first appearance in front of a treasury select committee. Unusually for such a smooth operator, the lavishly remunerated investment banker was pushed on to the ropes a couple of times although the politicians failed to land any killer punches.

It was not for want of trying. The hearing took place amid the growing realisation in Westminster and in the City that, despite all its tough talk, the government has effectively abandoned any attempt to rein in bankers’ bonuses. The most it is hoping to achieve now is to persuade the banks to meet lending targets to businesses and perhaps to reveal how much their five best-paid employees earn, although their names will almost certainly remain a secret.

There’s no secret about Diamond’s earnings, however. He is legendary even in banking circles for the sheer size of his pay package – already said to be worth almost £100 million, the Barclays boss has earned £70 million in shares and cash over the past four years, despite having waived bonus payments for the past two. This year, he stands to collect a bonus in the region of £8 million.

It was against that background that the cross-party group of MPs questioned Diamond, ostensibly on the subject of competition and choice in the banking industry.

No one was sticking to that agenda, of course, and for 2½ hours Diamond was subjected to a barrage of hostile questioning on every possible aspect of his bonus. So relentless was the questioning that, towards the end of the session, even one of the MPs admitted that he was “bonused-out”.

While there were no killer blows, there were some uncomfortable moments for the well-rehearsed Barclays boss and a couple of pretty startling revelations, not least of which was that no government minister had ever asked Diamond not to take a bonus. It seems, then, that for all the government rhetoric about clamping down on “casino bankers”, neither David Cameron nor the chancellor, George Osborne, has actually bothered – or had the nerve – to make a direct demand for restraint.

Osborne came under attack in the House of Commons later in the day when he was forced to fend off an emergency question on bonuses from shadow chancellor Alan Johnson. The chancellor’s attempts to list the actions the government had taken to rein in the banks were all but drowned out by hoots of derision.

“I’ve made it very clear to them that nothing is off the table,” he said. But there seems to be precious little on the table either.

Chuka Umunna, a rising star on the Labour benches, scored some points when questioning Diamond over Barclays’ tax avoidance tactics. Diamond was forced to admit that he did not know how many of the bank’s subsidiaries were in tax havens.

Unfortunately for Bob, Chuka did know and reeled off the numbers: 30 in the Isle of Man,

38 in Jersey and 181 in the Cayman Islands. In total, the MP said, Barclays has more than 300 companies operating in tax-haven jurisdictions around the world.

It was some time after this that Diamond resorted to a misty-eyed trip back to his roots in a rather toe-curling attempt to explain exactly why bankers must be motivated to do their jobs by big bonuses. His grandparents had emigrated to America from Ireland and he recalled his childhood in small-town Massachusetts, where he grew up as the eldest of nine children to schoolteacher parents.

“I learned at a very early age that if I wanted a new shirt or bicycle, I had to pay for it myself,” he told the committee. He got the response he deserved: “You’ve got tears coming down my cheek.”

So what else did we learn during the 2½ hours of the Diamond grilling? That he believes the period of “remorse and apology” for banks needs to be over; that the banks are listening to the calls for restraint and will not pay out any more in bonuses than is necessary.

And, for the record, he neither knows what his bonus will be this year nor has he decided whether he will waive it. Well, it’s one way to while away a morning in Westminster.

Fiona Walsh writes for the Guardiannewspaper in London