19 May 2016
Shred the Dosh
by J.R.Thomas
This is not a good time to be rich and powerful in Britain. The rich are generally not popular: the powerful even less so. There are compensations of course in having lots of money; the yachts, the supercars, the champagne. But even so, wealth has slightly lost its allure. Look at Sir (enjoy that handle while you can) Philip Green. Abused from every side, all those he thought of as best mates suddenly biting his ankles, rotten cabbages thrown at him when he steps out of his front door. (We speak metaphorically of course, Sir Philip has no front door, just a set of hydraulic steps up which he can bound up into the leather finished cabin of his private jet to make for Monaco. And a cabbage is rarer than caviar in this new London of the super-rich.)
But if there were more cabbages to hand one does get the impression that the population of the UK is getting very close to the point at which they would start hurling them at the gilded ones who move amongst us. Never have there been so many wealthy persons in this green and pleasant land, and you might think that this would be a cause for pleasure and congratulation. Being rich is in itself, of course, no reason for walking around Mayfair smugly or thumbing ones nose with exquisitely manicured thumb at hoi polloi at Ascot. But, for many centuries, the Brits seemed rather fond of the rich and their funny ways, to say nothing of their largesse and generosity at times of economic difficulty. Many a hospital and school was put up by a wealthy magnate – to say nothing of park walls round numerous country estates to create employment in bad times (and no doubt to enhance the lucky one’s privacy). Sir Bernard Docker, an industrialist of the 1950’s, added greatly to public pleasure by having a gold plated Daimler and a mink-coat plated wife to go with it. In the 1970’s the press followed with glee the soaring business careers of Robert Hanson and Gordon White and, with even more glee, their flamboyant life styles, enhanced by numerous film starlets.
Some forms of richness are still acceptable. Film starlets, male or female, seem to be allowed by the public to be worth a bob or two, or several millions come to that. (Though Ms Emma Watson seems to have touched a raw nerve by arranging her house purchase through some complex Panamanian arrangements – to ensure privacy, she assures her fans, not for any tax reason.) Pop stars are positively encouraged to be rich. Sir Michael Jagger is famously shrewd with his money and regarded indulgently for this characterful point. David Bowie was the first music superstar to securitise his back catalogue of hits – getting him a very large slug of capital up front. Footballers are rarely criticised for their earnings or their spendings, though occasionally for their taste. Artists and architects and even childrens’ writers can pile the stuff up with impunity and nobody grumbles; quite rightly; it is difficult to achieve material success in the creative professions and not to be begrudged when achieved.
No, what we don’t seem to care for any more is people who achieve success in business. Bankers; property developers; chain retailers; hedge fund owners; none of them, no sir! What we dislike most are people who essentially do, or did, what we do, and became very good at it. And if they control our loans and mortgages, we somehow dislike them even more.
Which takes us directly and without passing Go or collecting £200,000, to everybody’s most reviled banker, Fred Goodwin. No longer Sir Fred, long since decanted from the chief executiveship of Royal Bank of Scotland Group, his non-executive directorships gone, his pension pot shrunk. For five years the Crown Office in Scotland has been investigating Mr Goodwin’s stewardship of RBS, along with a group of other senior executives in the bank who formed the cabal that ran it from about the turn of the century to its effective collapse in 2008. Goodwin resigned in 2009, along with most of his team. The bank was bailed out by the government who remain RBS Group’s main shareholder and are a long way off recovering more than a modest proportion of the capital poured in to stabilise things after it dramatically over-paid to buy the Dutch bank ABN Amro, and then ran headlong into a major UK property slump and recession (or caused it, if that is your take on things and/or you are Gordon Brown).
Various books and articles, some learned, many salacious, have been written about the dramatic end of what was in 2008 the biggest bank in Britain, and the role of Fred. “Fred the Shred” is how Mr Goodwin will go down in history, for his ruthless governance of the bank and his single minded ascent of the corporate ladder. Now, the Crown Office say that they have examined 160,000 documents relating to the running of RBS by Fred and his team, over five years with the assistance of various specialist practitioners in law, banking, and accountancy.
And they can find no reason to bring any charges against any of them. No wrong doings, no illegalities, no frauds or false prospectuses or even fiddling of expenses. Fred and his merry men were honest and true. Even the documentation relating to the £12 billion rights issue to pay for ABN Amro, only six months before the bank collapsed, was correct and legal and honest.
Cue howls of derision and anger. Rob MacGregor of Unite, the union which represents some of RBS’s staff said this “is staggering….eight years after the near implosion of RBS no one has faced criminal charges”. Sir Vince Cable, former Business Secretary in the last government and “Come Dancing” contestant, said that he was disappointed and that this displayed “a serious injustice”. Numerous bloggers have launched vitriolic attacks on rich bankers escaping prosecutions.
What does not seem to have crossed the minds of any of these various angry persons is that the reason there have been no prosecutions is that there have been no crimes. The bank was run to high standards of legality and propriety. Mr Goodwin was a successful and very well regarded accountant before in 1995 he was head-hunted for a senior job at Clydesdale Bank which he performed highly successfully, so successfully that he was poached by RBS in 1998 and took the top job there in 2001. He may have drastically misread the economic situation ten years ago, he may have become carried away in his breathless push to make RBS one of the largest banks in the world, his hard driving style may have led him to disregard the contrary opinions and the more cautious views of others, but none of that is remotely criminal. Far from it, if got right with better timing it would have enabled him to succeed in his ambitions and he would be a great British folk hero, no doubt advising the government from his seat in the House of Lords. Well, maybe not, it is difficult to imagine Fred having much time for that sort of thing.
But the point is that good businesspeople need both drive and luck. Fred’s luck ran out. His shareholders, who have every reason to hate and revile him, paid the price. So did Fred. His private and public life has been ruined. He has no employment. Part of his pension scheme was stripped from him, though perfectly properly accrued. Much of his own money was in RBS shares so he has suffered with his shareholders, not so much that he will have had to give up golf or subsist on baked beans but certainly a severe blow to a proud and ambitious man.
We would not suggest that readers need feel much sympathy for Mr Goodwin, but you could feel he has suffered for his errors. We might also just reflect that a business man who tries but fails to build an international business makes at least as big a contribution to our lives as ex-cabinet ministers who augment their pensions on “Come Dancing”, actors and writers, rock musicians and dress designers. Maybe we should just judge people a little more kindly, even bankers.
P.S. J R Thomas has to confess to spending time in banking. He hopes to be released eventually, with remission, for good behaviour.
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