Three years on from the near collapse of The Royal Bank of Scotland (RBS) and after millions of pounds have been spent it's finally official. Fred the Shred and his ilk had, to put it mildly, a fairly relaxed attitude to due diligence.
It's funny but along with what I imagine to be a large crowd of fellow jaw-gaping onlookers I had more or less worked that out for myself.
The devil is in the detail
For most people, buying a house generates enough paperwork to fill a reasonably sized file. If the story by Nick Goodway, appearing on the London Evening Standard website on the 9th December 2011 is true then you can imagine the relief felt by Fred and his fellow board members when they only had to leaf through two lever-arch files and look at a CD-Rom before signing away £49 billion for ABN-Amro in 2007.
Still it's good to have the shortcomings officially recognised by the FSA. That's right the Financial Services Authority, the very same body that most of us in the UK had relied on to spot that kind of deficiency in the first place.
Relying on the FSA might be pushing it a bit too far. Most commentators were aware of what the authority was set up to do but few actually believed they had the muscle or inclination to do it. And so it turned out, as reported on the Daily Mail website in a piece by Rob Davies titled "RBS report to reveal fatal flaws at the heart of financial regulator", the FSA as a regulatory body appears to have been even more relaxed than the corporate vandals it was supposed to protect us from.
A comedy of errors
If the whole RBS scandal hadn't had such a far reaching effect on the lives of ordinary people it might easily be seen as funny with a plot picked straight out of "Yes, Prime Minister". This popular UK sitcom of the 80's enjoys endless repeats on satellite television and a recently screened episode involved the choice of a new Governor of the Bank of England. More poignant was the fact that the appointment came at the same time as rumours of scandal at a well-known bank were circulating. If the rumours became public then the bank could fold leading to serious economic instability.
The discussion between the permanent secretary to the cabinet and a prominent city big-wig centred on the fact that "the chap" would have to be someone "the other chaps" could trust. In other words someone who would keep a lid on any misdemeanours amongst the city brethren, give them a short, sharp talking to over a pink gin if they screwed up and then get back to work.
There is a point to this although in the case of RBS replace the Bank of England with the FSA. When originally tasked with the job of investigating what went wrong under Sir Fred Goodwin it refused to make any of the findings public. The public in this case being those hard working ordinary folk who bailed the bank out whilst Fred rode off into the sunset with a package significantly bigger than any of them could ever hope to earn in three lifetimes.
Water it down, it's easier to swallow
So what now? Well that's the forty-five billion pound question if a report on the same Daily Mail website is anything to go by. In a story titled "Fred the Shred 'tries to dilute RBS report': Banker's lawyers challenge criticism of his role", it appears that solicitors acting for the former CEO could have succeeded in having passages that mention him personally removed from the report.
Under a rather strange restriction the FSA are not allowed to name people without their consent. Imagine how many of the more traditional style of bank robber, now languishing at Her Majesty's pleasure, are reading that and thinking if only the same applied to English law they might just have been able to keep their names off the charge sheet!
Over to you Vince
Reports like the one on RBS are generally handed over to The Department for Business, Innovation and Skills (BIS) and it is then up to them to decide if an individual needs hauling over the coals. What they would be able to do with a diluted version however is not clear. A report that reads along the lines of: "some people who we cannot name were a bit reckless with some other people's money, and the people who were responsible for stopping them, who we also cannot name, didn't", is hardly worth the millions spent on it.
The last time a corporate failure held the public's imagination quite like this surrounded the disaster at MG Rover. The management involved there were similarly viewed as villains when they paid £10 for the business, awarded themselves millions and then watched it sink along with over 6,000 jobs in 2005. It took a further six years before the individuals concerned suffered any sort of personal sanction and when it came it was in the form of boardroom bans of three and six years.
Sent to Coventry - first class of course
According to The Times on Monday 12th December 2011, in a piece by Miles Costello titled "Former RBS directors could face city bans" a similar fate is probably the very worst outcome the architects of the RBS demise can expect. It's a terrible inconvenience I'm sure but as the MG Rover trailblazers can no doubt attest, it's made a lot easier when you have a few million in the bank. Those made redundant or suffering from the very worst effects of the economic collapse won't be having it so good.
Still, as the season of goodwill marches on, and as he strolls across the grouse moors of Scotland with his shotgun cocked and a smile on his face, I'm sure Sir Fred won't be worrying too much about how to put a turkey on the table or some presents in his children's stockings.
Sources:
Barrow, Becky & Davies, Rob -" Fred the shred 'tries to dilute RBS report': Banker's lawyers challenge criticism of his role" - dailymail.co.uk - accessed Monday 12th December 2011
Unattributed - "RBS was warned about Fred the Shred's leadership FIVE YEARS before bank's failure, says damning report", - dailymail.co.uk -accessed Monday 12th December 2011
Costello, Miles - "Former RBS directors could face city bans" - The London Times - Monday 12th december 2011
Goodway, Nick - "FSA calls for more power on bank takeovers" - thisislondon.co.uk - accessed Monday 12th December 2011
