James Moore: Sir James' timing in jumping ship from HBOS was on the genius level
Outlook: Whatever is said about the way he ran his bank his timing can’t be faulted
Sir James Crosby has largely escaped the sort of opprobrium heaped upon Fred Goodwin. Sir James quit as chief executive of HBOS in the middle of 2006, just before the financial crisis. Handy that. He also told the Parliamentary Commission on Banking Standards that he had sold more than two-thirds of his shares before the bank collapsed. Even more fortuitous.
Mr Goodwin went down with his ship, HMS Royal Bank of Scotland. He lost his knighthood, a couple of hundred thousand a year in pension (voluntarily), a good chunk of the rest of his wealth – he didn't have the chance to sell his shares – and all of his reputation. He's not exactly welcome on the Edinburgh golf circuit these days and his house had its windows caved in during the height of popular anger about his role in the crisis.
By contrast, Crosby is still Sir James and enjoys a £570,000 pension, having taken nearly £8m out of the bank in earnings. It's hard to say how much he made from his shares, but annual reports suggest he had more than £5m worth when he left in 2006. He also has a number of nice little jobs senior business people pick up when they move on.
Whatever is said about the way he ran his bank – and the commission's chairman, Andrew Tyrie, had to ask him the same question umpteen times before he accepted the charge of incompetent lending – his timing can't be faulted. It's at the genius level.
He jumped off his banking Titanic before its journey into the iceberg, handing the tickets for his first-class stateroom to some poor mugs he met in port.
Andy Hornby, Sir James' successor, has much to answer for. He was Sir James' boardroom colleague and head of retail lending during the years that the bank built up a portfolio of suicidal loans which sealed its fate.
But HBOS was Sir James' creation. He was the prime mover behind the attempt to turn it into a fifth force in banking and the seeds of its demise were sown on his watch. Mr Hornby simply sprayed a bit of fertiliser around when they were growing.
What is really disturbing about the whole affair is just how deeply Sir James, pictured, had become emeshed in the establishment while this was going on. He was banking adviser to the former Prime Minister, Gordon Brown. He became the deputy chairman of the Financial Services Authority, the banking regulator no less, garlands which were awarded to him despite the fact that he was overseeing an organisation whose lending was incompetent.
While the failure of HBOS ultimately has to be laid at the door of Sir James, there are others who now have some rather serious questions to answer.
Some 10 per cent of HBOS loans went bad, twice the impairment rate of the next-worst bank, you've guessed it, Royal Bank of Scotland. People keep saying the financial crisis was "unprecedented". So is the scale of the HBOS incompetence. Which nobody noticed.
It's not paying tax which is really anti-business
The prize for the most bone-headed quote of the week – and I know it's only Tuesday – must go to the founder of deVere Group, which styles itself as the world's largest independent financial advisory group.
Nigel Green, who is also the chief executive, yesterday said the decision by Starbucks to voluntarily pay something more like the amount of corporation tax it would be due if HM Revenue & Customs did its job (and if Britain's tax laws weren't so leaky) "sets a serious, anti-business precedent". He even argued that Starbucks paying up amounted to a "donation" under pressure from "blistering attacks from MPs" and warned darkly that the coffee company's directors could be in breach of their fiduciary duty.
Please. Mr Green was, of course, referring to members of the House of Commons' Public Accounts Committee (PAC), who took Starbucks (and Amazon and Google) to task for paying little or no corporation tax in this country on the profits they make here. Allowing this to happen is what's anti-business, at least if you run a business based in Britain that is engaged in trying to compete with those three.
The PAC yesterday published a report sensibly training its guns on HM Revenue & Customs, demanding that it be more "aggressive and assertive" in dealing with wheezes that allow certain multinationals to funnel profits through low-tax jurisdictions (legally, it should be noted) to avoid paying UK tax on UK earnings.
In other words, the PAC wants HM Revenue & Customs to treat corporate taxpayers in the same way that it treats individual taxpayers (and small businesses for that matter). That's, funnily enough, the way the US Internal Revenue Service (IRS) works. Something that Mr Green should be well aware of given his company is advertising seminars on the appropriately named FATCA. In case you were interested, FATCA (if only there was another T) is designed to stop American citizens from evading US tax by using foreign subsidiaries to invest in the US through foreign accounts. Uncle Sam surely loves business. But he's not shy about getting his share.
Starbucks' decision is actually eminently sensible from a fiduciary perspective, given the consumer anger that has been generated over its tax affairs.
Its directors are acting to protect the company's brand and sales from the very real possibility of a boycott.
As for the others? It's certainly true that if Amazon and Google haven't broken any laws (and it appears that they haven't) then the law needs reforming.
In the meantime, HM Revenue & Customs should be crawling all over them and threatening visits from the bailiffs for every unpaid tenner. In other words, it should follow the example of America's IRS and treat big companies the same as it treats citizens.
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