Fiddling while RBS burned – new book reveals Fred the Shred Goodwin’s fatal obsessions

Fred Goodwin was a corporate ‘psychopath’ who worried about minutiae as his bank lost control, a new book claims

No-one could have known it at the time, but the cleaner on the steps of Clydesdale Bank’s Glasgow office, sweeping up a cigarette butt one day in the late 90s, was an early warning of impending financial doom.

The cleaner was there because Fred Goodwin’s mother had been passing by.  Seeing the cigarette butt, she called her son, then the chief executive of Clydesdale, to tell him about it. The man they called Fred the Shred interrupted a meeting to call a senior executive, ordering him to have the offending litter tidied up immediately.

The story comes from a new book about the former Royal Bank of Scotland boss, which paints a picture of a man obsessed with minutiae – from office hygiene to the designs of Christmas cards – at the expense of the responsible strategic management of a world-leading investment bank.

In Making it Happen: Fred Goodwin, RBS and the Men who Blew Up the British Economy, by Iain Martin, the former editor of the Scotsman newspaper, Goodwin’s ex-colleagues recall how he took a personal interest in the cleanliness of his office, going so far as to ban filing cabinets with flat tops, so that piles of paper would not be left on them.

One close collaborator, quoted by Martin in the Sunday Times said: "The job of chief executive wasn't really done by him in the normal sense of someone trying to strategise properly and see the dangers and opportunities ahead. He was obsessed by all sorts of small details and measuring things and all sorts of minutiae and crap in certain parts of the business ... We would spend hours in meetings discussing the wrong things. Colours for advertising campaigns, computer systems and targets were what grabbed him.”

But what role did the obsessive streak in Goodwin’s character play in RBS’ eventual downfall?

Professor Malcolm Higgs, a leading occupational psychologist at the University of Southampton, told The Independent it certainly can’t have helped matters.

“You occasionally find this narcissistic tendency in CEOs,” he said. “They want to control everything, they don’t want to know that they’re not perfect. It’s not conducive to successful leadership of a company.”

Lehman Brothers boss Dick Fuld had similar tendencies, Professor Higgs said.

“The big question is: how do these ‘corporate psychopaths’ get to the top? They’re actually quite engaging people, they can appear very visionary. But they can’t take any negative feedback, so they lose contact with reality.”

Of course, on the way up the corporate ladder, the kind of manic attention to detail that led Goodwin to stipulate that RBS’ new fleet of chauffeur-driven Mercedes exactly matched the company’s logo (and the interiors matched the carpet in head office) might actually have been an asset.

Goodwin the up and coming executive at consultants Touche Ross was, in Martin’s words, “a hard-driving executive trained to spot and prosecute weakness.” He was snapped up by Clydesdale, gaining the moniker “Fred the Shred” for his ruthless pursuit of cost savings. He joined RBS in 1998.

“Being focused on detail and getting things just right might have been a useful trait when he was working at a lower level,” said Emma Donaldson-Feilder, occupational psychologist and director of consultants Affinity Health at Work, which specialises in workplace leadership and management.

“But you’ll find that as people go higher up an organisation, the things that were actually strengths at lower levels become over-used and high-risk…. It sounds likes Fred Goodwin became obsessive and that took his attention away from things that were much more important.”

The diagnosis matches other symptoms that Goodwin demonstrated after rising to the top of RBS in 2001. Martin writes of how, like many a doomed leader, he obsessed over a grand projet – RBS’ glimmering new headquarters at Gogarburn, outside Edinburgh.

Alarm bells should have rung for anyone close to Goodwin. According to Prof Higgs, managers and leaders who give meticulous attention to minor details are often over-compensating for a very deep insecurity that on another, more serious level, they really don’t feel in control at all.

“There’s a huge difference between attention to detail and obsessive control and it sounds like he had the latter,” Prof. Higgs said. “If he’d paid more attention to some of the deals they were making, they may not be in the state they are in now. There is fundamental self-insecurity behind it. If somebody is obsessive about controlling minor details – then it’s time to worry.”

The bank aggressively expanded under Goodwin, becoming the biggest in the world with a balance sheet of nearly £2 trillion by 2007. But the gains were unsustainable and RBA nearly collapsed in October 2008, needing a Government rescue by more than 80 per cent nationalisation. Fred the Shred lost his job and, four years later, the knighthood that he had been granted in 2004, for service to banking.

Martin, who says he became interested in Goodwin after struggling “to square his image as a coming titan of finance with the strangely unimpressive, slightly geeky figure in an RBS corporate tie and sober suit” wrote in a Sunday newspaper: “The public-spirited thing for Goodwin to do would be to donate himself to the psychology department of a decent university so that academics could run years of detailed tests.”

Start your day with The Independent, sign up for daily news emails
Voices
There will be a chance to bid for a rare example of the SAS Diary, collated by a former member of the regiment in the aftermath of World War II but only published – in a limited run of just 5,000 – in 2011
charity appealTime is running out to secure your favourite lot as our auction closes at 2pm today
News
File: James Woods attends the 52nd New York Film Festival at Walter Reade Theater on September 27, 2014
peopleActor was tweeting in wake of NYPD police shooting
Sport
Martin Skrtel heads in the dramatic equaliser
SPORTLiverpool vs Arsenal match report: Bandaged Martin Skrtel heads home in the 97th-minute
News
Billie Whitelaw was best known for her close collaboration with playwright Samuel Beckett, here performing in a Beckett Trilogy at The Riverside Studios, Hammersmith
people'Omen' star was best known for stage work with Samuel Beckett
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Carlton Senior Appointments: Private Banking Manager - Intl Bank - Los Angeles

$200 - $350 per annum: Carlton Senior Appointments: Managing Producer – Office...

Carlton Senior Appointments: San Fran - Investment Advisor – Ind Advisory Firm

$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...

Sheridan Maine: Commercial Finance Manager

Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Sheridan Maine: Regulatory Reporting Accountant

Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Day In a Page

Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all
The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there
The 12 ways of Christmas: Spare a thought for those who will be working to keep others safe during the festive season

The 12 ways of Christmas

We speak to a dozen people who will be working to keep others safe, happy and healthy over the holidays
Birdwatching men have a lot in common with their feathered friends, new study shows

The male exhibits strange behaviour

A new study shows that birdwatching men have a lot in common with their feathered friends...
Diaries of Evelyn Waugh, Virginia Woolf and Noël Coward reveal how they coped with the December blues

Famous diaries: Christmas week in history

Noël Coward parties into the night, Alan Clark bemoans the cost of servants, Evelyn Waugh ponders his drinking…
From noble to narky, the fall of the open letter

From noble to narky, the fall of the open letter

The great tradition of St Paul and Zola reached its nadir with a hungry worker's rant to Russell Brand, says DJ Taylor
A Christmas ghost story by Alison Moore: A prodigal daughter has a breakthrough

A Christmas ghost story by Alison Moore

The story was published earlier this month in 'Poor Souls' Light: Seven Curious Tales'