A confession: I’ve known Michael Spencer for years, and I like him a lot. I’ve dined with him at the offices of Icap, the broking firm he founded in the City, and at his club, George, in Mayfair. I’ve sampled wines from his splendid cellar. Only a few weeks ago, I was sailing with him and his partner, Sarah, the Marchioness of Milford Haven, family and friends, off the Isle of Wight.
On that trip, we discussed, among other things, politics – he’s a former Conservative treasurer and remains close to the party hierarchy; the economy and markets, naturally; his fitness and diet – subjects that all men of a certain age seem to ponder over these days; his love of Kenya, where he has a home. Did we talk about the Libor-rigging scandal and the case brought against Icap by UK and US regulators? Yes we did.
There will be readers of this who find all that nauseating. A journalist from The Independent hobnobbing with a super-rich Tory, wealthiest self-made man in the City! Oh my word.
The fact that Icap has been fined £55m by those regulators will only fuel their outrage. A journalist from The Independent fraternising with the boss of a company done for cheating! How utterly dreadful.
The impression I got that day from Spencer regarding Libor was one of shock. We did not talk about it in enormous detail but his anger at the way his company had been dragged into the global scam and its fallout was palpable.
Now, I’m also aware that Spencer is someone who has built his entire career and considerable fortune upon being spot-on, of immersing himself in the adrenalin and buzz of dealing. Even though he ascended to the gods at his organisation, and loved to entertain the great and good in his art-filled boardroom, he also liked nothing more than to wander the dealing floor, chatting to his traders. There was even a desk that was kept spare for him. Off would come the jacket, revealing his trademark red braces, and he would lean forward, intently scanning the flickering screens, listening to the numbers being shouted, the orders hurtling across.
In those moments, and I’ve been with Michael as he’s left the glasses of his favourite Pomerol behind and rolled up his sleeves, you see a different Spencer. The urbane, silky charm is replaced by a calculating machine, someone with a brain for numbers and a nose for a profitable opportunity.
So it’s hard for me to believe he did not know what his brokers were up to. But I also witnessed his fury at first-hand as we coursed along in the Solent. And I will say this: an upset Spencer is something to behold. He may be the son of a diplomat, and a brainbox of an astro-physicist from Oxford, but he can swear as colourfully as any man when it suits him. His face reddens, his eyes flash, his lips curl into a snarl and he lets rip. He certainly did that when I first mentioned the word Libor.
Of course, the cynics among you will immediately surmise he was displaying embarrassment at being caught, that the contrast between his staff fixing a figure that has profound influence across the world in the pricing of financial products and touches the lives of ordinary people, not just banks and institutions, and his position as a leading member of the City and political establishment was tough to bear.
That’s not how I read him. Spencer does not need to set his dealers loose on manipulating the sums in order to earn a bit of extra cash.
Icap may operate in the jungle of capital but it’s a respectable business, one that in recent years has grown extremely fond of its hegemony status – the most important day in Spencer’s year is his annual charity day when all Icap’s daily profits are donated to good causes. It’s become a fixture, with actors, sports stars, politicians from all persuasions and members of the Royal Family all manning the phones to clinch trades and make some money for the less fortunate.
He loves it, as he does, too, his membership of the Downing Street inner circle. There’s no way on earth he would risk those. Ah, I hear you say, we’ve been here before with the bankers who brought us down. I agree, hubris is never far away, especially where City greed and self-aggrandisement are concerned.
However, I’ve never sensed that with Spencer. What I have seen is that as he’s got older and grander, and more involved in politics, those visits to the trading floor have become less frequent. Some of his senior staff have changed; the eyes and ears monitoring the place might not be what they once were.
In his rage yesterday, Spencer said: “I deeply regret and condemn the actions of the three brokers [ex-Icap employees, now facing criminal charges]. It’s not a cultural problem. It’s a rotten apple situation here.”
I disagree. It is a cultural problem, but one that runs across the entire City and the world’s financial centres. The lack of morality that allows those rotten apples actually to flourish is the issue (and yes, regulators and management who fail to grasp what is going on, do not help). I may be wrong about Spencer. If so I apologise: he’s an even better actor than he is money-making genius.
The focus groups are happy – go ahead and screw the economy, Ed
If I was the Labour leadership I would keep my collective trap shut. No sooner does Ed Miliband announce a freeze in energy prices than the cat is out of the bag: apparently, explain the cognoscenti, it went down well in focus groups.
Blow me down. You sit around in a dusty hall somewhere; probably late at night with some people who will answer your questions in exchange for M&S sandwiches and a fiver, and they tell you they think not putting up the cost of gas and electricity is a good idea.
You see, I’ve done that trip. Many times, I’ve sat on the other side of the glass as folk have been led through their likes and dislikes. We’ve watched (and also munched crisps, sausage rolls and BLTs) as they’ve opened up.
Would the facilitator have gone on to ask them how Labour’s perceived anti-big-business stance would help the party in its fund-raising or make overseas companies want to come and set up shop here?
Were they quizzed on the fact that energy infrastructure projects will grind to a halt because energy firms can’t guarantee future profits and how did they feel about that? And, without those new power sources we could face blackouts and did that bother them? Or, if they had pensions, those retirement pots were almost certainly invested in the energy sector and were they happy to see those holdings suffer? And what signal did they suppose such a move would send to companies in the global, fiercely competitive world in which Britain is obliged to operate? Would they worry, for example if businesses thought Labour might freeze other prices as well?
Probably not. Possibly, that was because the questioner was anxious to move on and ask if they would vote for a government that gave away free chocolate and beer. How they answered was highly complex and sophisticated, and remains a closely guarded Labour secret. Don’t be surprised, though, if it’s in next year’s, pre-election conference tub-thumper from Milband.