After Harris and Coulson, isn't it about time for a historic banking crime investigation?

After a string of unprecedented sex abuse and hacking trials, it would make sense


We have been so transfixed by the criminal trials of the former stars of TV entertainment shows and of tabloid editors and journalists these past few weeks that we haven’t noticed who has been missing. Not a single senior banker has come before the courts.

Is it because the banks’ reckless overtrading that caused the financial crisis, cost taxpayers billions of pounds and created a global recession is hardly worth the time of the courts given the other matters they have to handle? I don’t think this can be so.

There is, it seems, a difficulty in recognising criminal behaviour for what it is when a respectable institution carries it out. To take a minor example, British banks, for instance, have put aside some £20bn to compensate customers for mis-selling them payment protection insurance. Now mis-selling financial products superficially seems like what I call an “Ooo woops!” situation. “Sorry, I’ve made a mistake there and I will put it right.” Hardly criminal, one might think.

Well, it is a strange simple error that can be perpetrated by so many banks, on such a scale, over such a period of time, that £20bn is required to cover the losses inflicted on customers. In effect that is £20bn knowingly taken out of customers’ pockets by banks, which often incentivised their staff to increase this type of business with large amounts of commission so that profits could be harvested.

So what explains the failure to prosecute senior bankers? One reason often put forward is that it is difficult to prove fraudulent intent on the part of the high-level management of banks. David Green, Director of the Serious Fraud Office, recently told a BBC programme that “in order to make a company liable for fraud or dishonesty by its senior management, the law requires that a controlling mind was complicit or involved in that fraud or dishonesty”.

In the US, on the other hand, the doctrine of wilful blindness holds that defendants cannot escape by deliberately shielding themselves from involvement in crime. This is where the recent conviction of the former editor of the News of the World, Andy Coulson, is so interesting. For he was not, of course, found guilty of hacking phones himself but of “conspiracy to intercept voicemails”. “Conspiracy” and “wilful blindness” are beginning to seem like the same thing to me.

The second major objection to bringing senior bankers before the courts is that such prosecutions would themselves harm the economy by undermining confidence in the banks themselves. Andrew Bailey, for instance, the Chief Executive Officer of the Prudential Regulation Authority, said just before he was appointed that bringing a legal action against a major financial institution raised “very difficult questions”. He told The Daily Telegraph that some banks had grown too large to prosecute. “It would be a very destabilising issue,” he said. “It’s another version of too important to fail.”

Jeremy Meeks is a monster, not a heartthrob
The Government must make our roads safer for children
The new DKNY Ramadam collection is beautiful

Now I accept that confidence is a precious commodity for banks. Once a bank loses it, depositors are swift to withdraw their funds and a bank run quickly develops. But this possibility can be vastly exaggerated. And fortunately we have a recent example to show this. When it appeared likely that the large French bank, BNP Paribas, would be fined $10bn by the US authorities for breaking the American embargo on financing oil trading by countries such as Iran, Sudan and Cuba, it became a big issue between the two governments. For in addition it was proposed that BNP Paribas would be denied access to dollar markets for a period.

The French President, François Hollande, told President Obama that such a fine – and banning trading in dollars – would cause irreparable damage both to BNP Paribas and to the French financial system. In the event the fine was reduced slightly, being set at $8.9bn and the ban on dollar-clearing was time limited. Then when the news was announced on Tuesday, the shares rose 3.6 per cent and Jean-Laurent Bonnafé, the chief executive, said that “indications are that at this stage [there will be] no major impact on the business”.

So much for any bank being too big to punish. And there is a second reason why I think British regulators should pay particular attention to this example. The US Department of Justice insisted, as part of the settlement, that about a dozen employees should lose their jobs up to the level of the Chief Operating Officer, Georges Chodron de Courcel. That is a useful precedent.

But at the risk of repeating a cliché, I think there is a strong element of establishment cover-up in not prosecuting senior bankers. When the perpetrators of a crime closely resemble the establishment of the day in background, habits and outlook, then the chances of being prosecuted drop sharply.

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Recruitment Genius: Warehouse Operations & Logistics Manager

£38000 - £42000 per annum: Recruitment Genius: One of the UK's best performing...

Recruitment Genius: GeoDatabase Specialist - Hazard Modelling

£35000 - £43000 per annum: Recruitment Genius: Our award-winning client is one...

Recruitment Genius: Compressed Air Pipework Installation Engineer

£15000 - £21000 per annum: Recruitment Genius: This leading provider of Atlas ...

Recruitment Genius: Operations Coordinator - Pallet Network

£18000 - £20000 per annum: Recruitment Genius: Opportunity to join established...

Day In a Page

Read Next

Letter from the Political Editor: With 100 days still to go how will Cameron, Miliband and Co. keep us all engaged?

Andrew Grice
A solar energy farm in France  

Nature Studies: For all the attractions of solar power, it shouldn’t blight the countryside

Michael McCarthy
Woman who was sent to three Nazi death camps describes how she escaped the gas chamber

Auschwitz liberation 70th anniversary

Woman sent to three Nazi death camps describes surviving gas chamber
DSK, Dodo the Pimp, and the Carlton Hotel

The inside track on France's trial of the year

Dominique Strauss-Kahn, Dodo the Pimp, and the Carlton Hotel:
As provocative now as they ever were

Sarah Kane season

Why her plays are as provocative now as when they were written
Murder of Japanese hostage has grim echoes of a killing in Iraq 11 years ago

Murder of Japanese hostage has grim echoes of another killing

Japanese mood was against what was seen as irresponsible trips to a vicious war zone
Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore
'I'm gay, and plan to fight military homophobia'

'I'm gay, and plan to fight military homophobia'

Army general planning to come out
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea