Teaching Plan | HBS Case Collection | April 2013

Barclays and the LIBOR Scandal

by Clayton S. Rose and Aldo Sesia

Abstract

In the summer of 2012, Barclays plc, one of the largest banks in the world, agreed to settle with authorities and acknowledged that the firm had manipulated LIBOR (London Inter-Bank Offered Rate)—a benchmark reference rate that was fundamental to the operation of international financial markets and was the basis for trillions of dollars of financial transactions. The scandal brought into question the credibility of LIBOR and raised the issue of who was responsible for the manipulation that had occurred at Barclays. The scandal cost Barclays' chairman and its controversial CEO Robert Diamond their positions and called into question the actions of the Bank of England, U.K.'s central bank. The case provides students with an opportunity to understand the details behind the scandal and the roles of multiple parties. It allows students to explore the challenges faced by leaders operating in a corrupt system, and to understand the responsibilities that financial institutions and their leaders/managers have to the financial and economic systems in which they operate. Because LIBOR is so widely used as a benchmark reference, the case study and analysis have global implications.

Keywords: financial systems; financial services; ethics; corruption; regulation; culture; leadership; general management; Banking Industry; Financial Services Industry; United Kingdom;

Citation:

Rose, Clayton S., and Aldo Sesia. "Barclays and the LIBOR Scandal ." Harvard Business School Teaching Plan 313-108, April 2013.