There was a joke going around at the beginning of the last decade. It went like this: Who is the odd one out – Dennis Stevenson (former chairman of HBOS), Andy Hornby (former chief executive of HBOS), Fred Goodwin (former chief executive of RBS), Tom McKillop (former chairman of RBS) or Terry Wogan (presenter of the Radio 2 breakfast show)?
If you haven’t guessed already, the correct answer is Terry Wogan – the only one of these individuals with any sort of banking qualification.
However, as you will know none of these five individuals was subjected to any criminal investigation, even though four of them were largely responsible for the collapse of the UK banking system, saved only by a £500 billion bailout from the UK Government.
Only one Scottish banker was censured – Peter Cummings of Bank of Scotland was fined £500,000 and banned from ever working again in the financial sector. Presumably Cummings easily funded his fine from his £600,000 pay-off from the bank and he also kept his £352,000 yearly pension.
This soft touch approach to individual errant bankers has continued ever since.
In 2016, a US congressional report revealed that the then UK chancellor, George Osborne, had pressed the US authorities to drop all criminal charges against executives at HSBC, which was under investigation for laundering millions of dollars of Mexican drug money, and for breaking US sanctions in its dealings with Iran, Libya and Sudan.
HSBC was fined $1.9bn but no individual was prosecuted. Perhaps Osborne’s position had been influenced by HSBC’s regular threats to move its headquarters out of London.
Last year, the UK Serious Fraud Office (SFO) abandoned its attempts to prosecute four top Barclays executives including CEO John Varley for arranging their emergency 2008 rescue package, in which £6.1bn was raised in a private bailout in order to escape UK Government intervention and avoid interference in their remuneration policies and business dealings.
It had been alleged that Barclays had bribed the royal families of Qatar and Abu Dhabi in undisclosed side deals and arranged a $3bn loan to Qatar which had been interpreted an illegal action of “lending money to fund the purchase of their own shares”. The judge criticised the SFO for failing to take “reasonable and appropriate steps” to obtain
key evidence.
Last October, the SFO decided to close down its investigation into the manipulation of the London Interbank Offered Rate (LIBOR), the mechanism that set lending rates for hundreds of trillions of debts worldwide. It had been intended to represent real market conditions but had been illegally manipulated for the benefit of bankers, including allegations that Barclays had lowered its Libor submissions to make its balance sheet appear healthier during the 2008 financial crisis.
Given all this, you may be surprised to hear that several bankers have been convicted as a result of the financial crisis. Spain has sent 11 bankers to jail, Ireland has locked up seven and Iceland has convicted 26 with combined sentences of 74 years for “market manipulation” and “gross breach of fiduciary duty”.
It reminds me of another joke: Q. Why do people rob banks? A. Because that’s where the money is.
It seems that some bankers have worked out how to get rich not by physically robbing the banks but by fiddling the banking system without much risk of suffering any serious consequences.
It seems that, at least here in the UK, they’ve all been issued with get out of jail free cards.
Ian Ritchie is a leading businessman who advises start-up technology companies
