Banking scandal taints Colby board chairman

Bankster Watch  
By LANCE TAPLEY  |  July 11, 2012

BIG BUCKS Colby chairman Robert Diamond Jr. resigned from heading Barclays amid fraud accusations.

Colby College's public problems in recent years have mostly involved lowly students engaged in fighting, drinking, and sex abuse. But now the college has been hit by a big scandal at the very top.

And one alumnus accuses Colby — the bestower of the Elijah Parish Lovejoy Award for journalistic courage — of trying to sweep its scandals under the rug.

In the latest disgrace, Robert E. Diamond Jr., chairman of the Waterville liberal-arts college's board of trustees and possibly its most generous financial donor ever, was forced to resign on July 3 as CEO of giant London-based Barclays bank. According to the Irish Independent, Diamond is "one of the world's richest" bankers.

On July 10 Diamond surrendered $31 million in bonuses. He also has quit as co-host of a lavish upcoming London fundraiser for Republican presidential candidate Mitt Romney.

Barclays was involved in rigging, for years, the world's benchmark interest rate, called Libor. The bank paid a $450-million fine to British and American regulators.

In the face of the scandal, Colby spokesman Michael Kiser says "nothing to date has affected" the college's relationship with Diamond. The board chairman is highly respected at Colby, he says, but "we're keeping an eye on the situation." He later emailed: "He remains a strongly supportive and valued trustee."

His support has been huge. Diamond, a Massachusetts native who graduated in the class of 1973, gave $6 million in 2003 for the new Diamond Building, which houses social-science departments, including economics, his college major.

In 2008, at his 35th reunion, according to the Boston Herald, he gave $4 million to support environmental and energy-policy studies. He has also endowed an academic chair. Reports have him donating to other Colby programs. Kiser refused to provide details on Diamond's gifts.

But how Diamond amassed the vast wealth that enabled him to make such donations is now being called into question.

The full dimensions of the rate manipulation aren't clear. Investigations continue into Diamond's role and the role of other big international banks. But columnist and former US Secretary of Labor Robert Reich calls the corruption "a rip-off of almost cosmic proportions."

Worldwide borrowing of hundreds of trillions of dollars for mortgages, credit cards, and student loans may be affected. One way a bank can make money by manipulating the Libor rate is by betting it will go in a direction it helped rig.

British Prime Minister David Cameron suggests businesses and homeowners paid higher interest rates because of the manipulation, which he called "outrageous," the BBC reported. The New York Times's Gretchen Morgenson reported that UK Chancellor of the Exchequer George Osborne asked Parliament: "Fraud is a crime in ordinary business — why shouldn't it be so in banking?"

Lew Kingsbury, a Pittston farmer and Occupy Augusta activist who was a Colby freshman when the trustees' chairman was a senior, thinks the college should return its "ill-gotten Diamond donations to Barclays to set an ethical example."

He asks: "How can Colby as an institution provide a moral compass for its students without addressing" the behavior of one of its trustees?

1  |  2  |   next >
  Topics: This Just In , scandal, Money, banking,  More more >
| More

Most Popular
Share this entry with Delicious
  •   MICHAEL JAMES SENT BACK TO PRISON  |  April 16, 2014
    The hearing’s topic was whether James’s “antisocial personality disorder” was enough of a mental disease to keep him from being sent to prison.
  •   LOCKING UP THE MENTALLY ILL  |  April 03, 2014
    The merger of the prison and mental-health systems continues
    The conference was held in March despite the risk of a snowstorm because its organizers wanted “to reach the Legislature while it’s in session,” co-coordinator Fred Horch said.
  •   ANATOMY OF A RIP-OFF, PART II  |  March 06, 2014
    Imagine if state government gave out millions of dollars a year to fat-cat financiers, big banks,  and speculative ventures without monitoring how the money is spent — basically, giving it to whoever walks in the door as long as they flash a few credentials.
  •   ANATOMY OF A TAXPAYER RIP-OFF  |  February 19, 2014
    To try to restore several hundred mill jobs to the historic paper-making North Country towns of Millinocket and East Millinocket, Maine’s politicians, in a bipartisan manner, have given away and are planning to give away millions of taxpayer dollars to various corporate interests, including big, out-of-state banks.

 See all articles by: LANCE TAPLEY