A senior civil servant is photographed walking into Downing Street for a National Security Council meeting clutching a piece of paper upon which can clearly be read thoughts on how the Government should respond to the Ukraine crisis. Britain should "not support, for now, trade sanctions" nor should it "close London's financial centre to Russians".
And all hell breaks loose. Much is written about how Russians have taken over our fair capital city. The US press go into overdrive, lambasting the UK for its cowardice, for having a foreign policy shaped by its dependence on oligarchs and money launderers. Two pieces, by Anne Applebaum in The Washington Post (repeated in The Independent) and Ben Judah in The New York Times, are savage in their appraisal of just how low we, as a nation, have sunk.
My first reaction is to applaud. I've lost count of how many times recently the topic of London property prices has cropped up in conversation. It's a middle-class obsession. Everyone has a tale to tell of a house on the market for £Xm that was once worth zilch; how even ordinary terraces have gone sky-high; how a tiny mews or even a garage can command a fortune; how young people don't have a prayer of getting on the ladder.
Then, in the City, the old boys will moan that things are not how they were; that standards have slipped; the days of the patrician merchant banks have gone; there are few trustworthy gentlemen to be found now. It's all the fault, apparently, of the wave of ultra-rich foreigners coming in and ruining everything. They've got no class; they don't have any feel for our traditions and values; they treat London as a glorified Disneyland, its art and historic buildings there to be snaffled, its streets turned into race tracks for their luxury sports cars. You hear these charges over and over.
Is it any worse now than before? Ever since I arrived in London, in 1982, house prices have been of all-consuming interest. And they were being propelled by buyers from overseas.
I cast my mind back to when I worked in a City law firm 32 years ago. I spent a period in the conveyancing department. One day I was asked to see the senior partner. He had an important job for me: a wealthy client wanted to exchange contracts and complete on a house in The Boltons, one of the smartest addresses in London, in just two weeks.
That's all: a fortnight from start to finish for a process that would normally take a couple of months. He was paying cash, and I mean cash. The money was being wired from his private bank. He was Malaysian, one of that country's senior politicians. He was buying the house for his children.
How he'd acquired his wealth was not our concern. Neither was his insistence on the rushed timeframe. Our role was to make it happen – and pocket a higher fee as a result.
So we did. I remember rushing round from office to office, delivering Land Registry forms, conducting searches at break-neck speed, setting up the utility supply, even securing council parking permits. Everything was done, as he requested, in 14 days.
Another episode. I was in a City bar one night. It was the period of the big privatisations. Suddenly, the door was flung open and a chap walked in clutching a hot-off-the-press share prospectus. It was so new, it had not yet been released to the public. "Fancy some stagging, boys!" he roared. They did. Everyone gathered round to look at the small print – to see how many shares they could in effect grab and then sell back on to the market at an inflated price.
This was more Wild West than mannered, restrained Square Mile. Of course, there was that more decorous side but they were at it too, forming concert parties (remember them?), discounting stock to favoured friends and family, and, in many cases, if the opportunity arose, insider dealing.
The City was a free-for-all, populated to a substantial extent by chancers and fraudsters. There were the good guys, obviously, but the authorities could not keep up with the scams – the worthless shares that went nowhere except even further down, the boiler-rooms, the sharks out to make a killing, usually at the expense of a trusting sap. Often, the paper trail would lead to some off-limits overseas haven – and the perpetrators would turn out to be Chinese, Indian, American or, God forbid, British.
The idea that back then all was squeaky-clean – that business in London was conducted over polite cups of tea and sealed with firm handshakes – is complete stuff and nonsense. Yes, hedge funds were not as we know them today, but that's not to say shares were not being shorted; that false rumours were not being deliberately peddled to drive up prices; that commodity futures were not being manipulated.
Of course they were, and much more besides. It's easy to forget now that the Guinness affair centred on the takeover of Distillers in 1986 – that four men (all of them British) were convicted of illegally buying Guinness shares to prop up its share price. Their cause evoked a lot of sympathy in the City. Why? Because what they did was regarded as standard practice. Indeed, it was possible to point to other instances of share purchases made to falsely bolster prices.
Memories are short. When was Liar's Poker, Michael Lewis's classic work about the greed of Wall Street bond traders set? 1984. When did Gordon Gekko (played by Michael Douglas) pronounce "greed is good"? 1987. When did the private equity firm Kohlberg Kravis Roberts acquire RJR Nabisco after the most vicious of takeover battles – one enshrined in the best-selling book Barbarians at the Gate? 1988.
We can don rose-tinted glasses if we wish, but can we really get soppy about greenmail, corporate raiders, asset-strippers and junk bonds? And, let us not forget, there was not a Russian in sight.
What has changed is the importance of the City relative to the UK economy. We made things back then, we had a manufacturing base. The Government will maintain we still do, but on my frequent travels to see relatives in the North of England, it's passed me by.
The City has grown and prospered, while pretty much everything else has receded. That boom has come on the back of an open-door approach. It has steered London to the point where it is either the world's number one financial centre or at least equal to New York. Challenges from Frankfurt, Paris, Singapore and Tokyo have been vanquished.
For a small island, without factories belting out products and a massive domestic hinterland to fall back upon, that's not a bad place for us to be. There's plenty not to like about the current London and its preponderance of flash recipients of hefty bonuses, of folk who make fortunes without displaying any social responsibility. It's not always a pleasant spectacle.
But the rules are tighter than they were, and becoming tighter all the time. Banks now have compliance officers and entire departments devoted to standards, where previously there were none. Law firms and accountants pay greater heed to ethics. Corporate governance is king. Everything has to be declared and approved – just ask my pal who has been trying to set up, for more than a year now, an investment management business.
We can sneer at the hapless civil servant's guide to foreign affairs, and the recommendation that the City does not close to Russians. In truth, what he should really have scribbled is that we mess with it at our peril. We've come a long way, and we want to stay there.Reuse content