July 13 (Bloomberg) — If we take Bob Diamond and Paul Tucker at their word, part of the Libor scandal at Barclays Plc can be chalked up to a series of comic misunderstandings, like a children’s game of telephone. It’s a bit much to swallow, but the spectacle sure has been fun to watch.

Both men agree that on Oct. 29, 2008, while the financial system was on the brink, Tucker, who is the Bank of England’s deputy governor, called Diamond on the phone. Diamond, who resigned last week as Barclays’s chief executive officer, was head of the company’s investment-banking business at the time.

In Diamond’s version, Tucker told him “he had received calls from a number of senior” U.K. government officials asking “why Barclays was always toward the top end of the Libor pricing,” according to a file note Diamond wrote that day. Tucker said “while he was certain we did not need advice, that it did not always need to be the case that we appeared as high as we have recently,” according to Diamond’s memo.

Tucker, testifying before a U.K. parliamentary panel this week, said that last sentence of Diamond’s note “gives the wrong impression.” He wasn’t nudging Barclays to underreport its Libor submissions, he said.

Rather, Tucker said he was expressing concern that Barclays was paying too much to borrow money — and sending signals to the markets that it was desperate for funding, at a time when Barclays was widely viewed as the next big U.K. bank to need a government bailout. Tucker said he didn’t make any record of the talk, in spite of the Bank of England’s policy to make notes of important phone calls. He said he was too busy.

Libor, or the London interbank offered rate, is the now- infamous interest-rate benchmark used in hundreds of trillions of dollars of transactions globally, from loans to derivative contracts. Each day, in surveys overseen by the British Bankers’ Association, major banks estimate their borrowing costs. It has been an open secret for years that banks routinely misstated their numbers. A Barclays Capital strategist, Tim Bond, even said so in a May 2008 interview.

Last month, Barclays agreed to pay $453 million to settle U.S. and U.K. claims that it manipulated its Libor submissions as far back as 2005 — years before the phone call in question. Sometimes the bank low-balled its costs to make itself look healthier. Other times, it filed false rates to make trading positions more profitable. On some occasions, its traders colluded with other banks, Barclays admitted.

Diamond told the same parliamentary panel last week that he didn’t interpret Tucker’s comments as an instruction to lower Barclays’s Libor submissions. Another top executive did perceive them that way, however, after receiving Diamond’s memo and passed down orders to that effect to the bank’s submitters. That person, Jerry del Missier, resigned as Barclays’s chief operating officer July 3.

The supposed misunderstandings don’t end there. In his October 2008 file note, Diamond wrote that he asked Tucker “if he could relay the reality, that not all banks were providing quotes at the levels that represented real transactions.”

Tucker told members of Parliament’s Treasury Committee that he didn’t take that statement to mean there was cheating going on. He said he thought it meant that “when they come to do real transactions, they will find they are paying a higher rate than they are judging they would need to pay.”

Tucker also was asked about a 2007 meeting with banking- industry members of a Bank of England liaison group. Minutes show “several group members thought that Libor fixings had been lower than actual traded interbank rates.” Tucker, who chaired the meeting, said “it did not set alarm bells ringing.”

“This doesn’t look good, Mr. Tucker,” the committee’s chairman, Andrew Tyrie, said. “It doesn’t look good that we have in the minutes on the 15th of November 2007, what appears to any reasonable person to be a clear indication of low- balling, about which nothing was done.” Tucker replied: “We thought it was a malfunctioning market, not a dishonest market.”

Diamond’s credibility doesn’t look any better. This week, Barclays’s departing chairman, Marcus Agius, released an April 10 letter from the chairman of the U.K.’s Financial Services Authority, Adair Turner, expressing doubts that Barclays could be trusted. At last week’s hearing, Diamond said the FSA had been happy with the bank’s “tone at the top.” He downplayed the FSA’s concerns as mere “cultural issues,” even when asked about the letter, which hadn’t been released publicly yet when he testified. It’s hard to know whom to believe less.

There’s no mystery why Tucker’s 2008 phone call to Diamond is receiving so much attention. The notion that a central banker may have prodded a big bank to lie about its numbers rings true. Many times over the past five years, in Europe and the U.S., bank regulators and other government officials have seemed to be in cahoots with the industry they oversee.

In May 2008, for example, the U.S. Office of Thrift Supervision let IndyMac Bancorp Inc. backdate a capital contribution so it would appear on its books in the prior quarter. IndyMac failed two months later, costing the Federal Deposit Insurance Corp. almost $11 billion. When banks were teetering in 2008 and 2009, regulators and lawmakers in Europe and the U.S. browbeat accounting-standard setters into making emergency rule tweaks so banks could show smaller losses.

After American International Group Inc.’s 2008 government bailout, officials at the Federal Reserve Bank of New York pressured AIG executives not to disclose details of how the company had paid its counterparties 100 cents on the dollar using taxpayer money. Now it turns out the New York Fed says it received “occasional anecdotal reports from Barclays of problems with Libor” in 2007, according to a statement it released July 10. The district bank wasn’t a party to Barclays’s settlement.

Here’s one lesson that hopefully has been learned from all this: If you ever think someone in business is telling you to lie, ask that person to put it in writing.

(Jonathan Weil is a Bloomberg View columnist. The opinions expressed are his own.)