WATERVILLE — The banker at the center of an international interest rate-fixing scandal originating in Great Britain is the chairman of Colby College’s Board of Trustees, but that’s not all.

Robert E. Diamond Jr., the Massachusetts native and 1973 graduate, with a bachelor’s degree in economics, has been generous to his alma mater, pledging more than $14 million since 2003 to the private college through a private family foundation.

The college is sticking by Diamond, the former CEO of British bank Barclays who has been called one of the world’s richest bankers. He’s a Colby alumnus and benefactor, with a prominent building named after him, and has donated a lot of money to U.S. Sen. Olympia Snowe, R-Maine.

Notably, the foundation reported having more than $3.3 million invested in Barclays stock in 2010.
Diamond resigned from Barclays, Britain’s second-largest bank, on July 3 under company pressure. News reports said he had lost regulators’ confidence.

“Clearly it’s disappointing to find out that there may have been wrongdoing,” said Waterville Mayor Karen Heck, a 1974 Colby graduate, of the scandal. “At the same time, there’s no denying that his support has been critical to allowing thousands of students an education at a fine college here in Maine.”

The Economist said “damning evidence” has emerged that employees at Barclays and other banks rigged the London interbank offered rate, or LIBOR, the average interest rate estimated by London’s leading banks that they’d be charged if they had to borrow from other banks. The magazine said the bank has paid hundreds of millions in fines to American and British regulators, who said bank staff tried to manipulate LIBOR for profit “and to quell concerns about its own creditworthiness.”
A Colby spokesman said the college is “mindful” of Diamond’s situation.

“Nothing that’s emerged from these stories has changed Bob’s relationship with the college,” said Colby spokesman Michael Kiser. “He’s long, long been a valuable supporter and a great leader for the board of trustees,” which meets twice a year.

Kiser described Diamond, a Concord, Mass., native, as filling “a traditional chairman-of-the-board role.” He said Diamond doesn’t get paid for the job.

Colby spokeswoman Ruth Jacobs has said that Diamond got former British Prime Minister Tony Blair to be the college’s 2012 commencement speaker because he knows him personally.

And when Colby got big Diamond donations in 2003 and 2008, it put out releases detailing the amounts and purposes: $6 million toward construction of a $12 million building named for Diamond to house social science departments and $4 million to “support interdisciplinary study of the environment, energy policy, climate change and sustainability.”

Kiser, when asked to provide information on other gifts, cited Colby policy against disclosing gifts outside their public record.

He also said it wouldn’t be possible to reach Diamond for comment through Colby.

IRS records from 2008, 2009 and 2011 for the Robert and Jennifer Diamond Family Foundation, to which Diamond was the  only supporter, according to the forms, reveal more information about donations to Colby.

A 2011 form showed the foundation gave Colby $2.5 million to sponsor a Diamond chair in sustainable energy. It gave $1.5 million to sponsor a Diamond fellowship in environmental studies. Both gifts were pledged in 2010, to be paid over seven years.

A 2009 form showed the foundation pledged $100,000 to the school’s alumni fund in 2006. It was set to be paid over five years.

What does it mean?

Hundreds of trillions of dollars are underpinned by the LIBOR rate. Reuters has reported that Barclays is the only world bank to admit its traders profited from rate manipulation as far back as 2005.

Reuters reported it also admitted lowering interest estimates of what they paid other banks in 2008, making its financial position look far more appealing than it was.

“If LIBOR is distorted, then the payments going between the parties are distorted,” said Bert Smoluk, a finance professor at the University of Southern Maine. “You’re talking huge amounts of money that are being transferred back and forth between parties that are erroneous because of the LIBOR scandal.”

Smoluk said the effects of the scandal fan out economy-wide, but lawsuits against banks who could have manipulated the rate like Barclays could come up. The city of Baltimore has joined a class-action suit against Barclays and other banks, saying they earned less than they should have on investments, according to the Baltimore Sun.

“The people who get hurt are going to sue the banks and that could really hurt the industry,” Smoluk said. “That’s how you can bring down the banks.”

Barclays chairman Marcus Agius, who is also resigning, has said Diamond had “no personal culpability” in the scandal.

British media have painted a complex picture of the banker, who joined Barclays in 1996 and was on its executive committee starting in 1997. He became CEO at 2011’s start.

The Wall Street Journal has reported he agreed to forgo a possible $31 million bonus after quitting the company but will receive $3.1 million in severance and pension — twice what his contract provided.

He’s also one of the world’s richest bankers, Reuters has said, reporting this week that he’s likely earned at least $186 million since 2005 and more than $26 million last year.

Barclays stock involved?

Barry Farber, a Bates College visiting lecturer in accounting and David VanderLinden, a USM professor of finance, reviewed the 2011 form showing donations from the Robert and Jennifer Diamond Family Foundation to Colby.

In an email, VanderLinden wrote that “it appears that the foundation does hold Barclays stock” and it “may have been contributed in the fiscal year.”

At one point, the report places the same dollar figure in a category intended for corporate stock category that it did in another section for government obligations.

Farber was confused by that, but said it could have been a mistake.

“In no way do I see any tie-in between what he does for Colby and these shares,” he said. “Other than these shares are a potential asset that could be turned into cash.”

The New York Times has reported Diamond got his 2010 bonus in stock. The Daily Mail has said it’s possible he has more than $30 million in shares.

Smoluk said it’s common for stock to be given away.

“It makes sense that he’s giving away his stock,” he said. “He could just give away the shares and get the tax benefit.”

The school’s website says Diamond started a Robert E. Diamond professorship in 1993 in honor of his father.

Jane Moss, the beneficiary of that professorship who now holds a position at Duke University, wrote in an email she can’t comment.

“There are good things people do and bad things people do,” said Heck, Waterville’s mayor. “And when you have a lot of money, those are on big scales.”

Money and politics

The Wall Street Journal reported in 2011 that Barclays was moving to restructure United States operations because of an amendment, drafted by Maine Sen. Susan Collins, to the Dodd-Frank Wall Street Reform and Consumer Protection Act that became law in 2010.

The Collins amendment strengthened capital standards on banks. Snowe and Collins were two of three Senate Republicans to vote for the act’s passage.

In a prepared statement Friday night, Collins spokesman Kevin Kelley said the allegations surrounding Barclays are being investigated by the Senate Banking Committee and the senator expects Treasury Secretary Timothy Geithner to be asked to discuss that scandal when he appears before the committee this month.

“Barclays, and Bob Diamond in particular, strenuously opposed Senator Collins’ amendment to the financial reform bill passed by Congress,” Kelley wrote. “Senator Collins is concerned about these allegations.”

Diamond also contributed $2,500 in December to Snowe’s aborted 2012 re-election campaign, according to OpenSecrets.com, an online clearinghouse for information on political contributions.

Barclays Group US, a political action committee, gave Snowe another $2,500 for the 2012 cycle. For 2010, it gave Sen. Susan Collins, R-Maine, $1,000. In 2008, Collins got another $2,000. Records show that Diamond didn’t give money to that PAC.

His son Charles Diamond, in Colby’s class of 2012, volunteered for Snowe in January.

The Colby Echo, the college’s student newspaper, quoted the younger Diamond, a government student, in a March story on Snowe’s departure from the race. It said he used Jan Plan, a period set aside for students to pursue outside study or focused course work, to do the campaign work.

Justin Brasell, the Republican operative who was manager of Snowe’s campaign, said Charles Diamond was a volunteer. Brasell said he never spoke with the elder Diamond during his time on the campaign.

Diamond is a large player on the national political scene as well.

The Guardian recently reported after his troubles, he bowed out of hosting a swanky London fundraiser for Mitt Romney, the Republican presidential nominee. The price per head? From $25,000 to $75,000, the Telegraph of London reported.

“Bob Diamond was a big supporter of Mitt Romney and Mitt Romney tends to not favor regulation of banks,” said state Rep. Henry Beck, D-Waterville, who is a 2009 Colby graduate. “Barack Obama does. I think that’s fair to say.”

Diamond himself donated $2,500 to Romney’s campaign in August and $7,600 to the National Republican Senatorial Committee in January 2011, according to OpenSecrets.com.

Beck said Diamond’s generosity to the Colby community “has been appreciated,” but he thinks community members “still have to learn more.”

“It serves as an example of why we need strong regulation of banks and Wall Street,” he said.

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