Petraeus, the CIA, Barclays, the BBC... something is rotten in the state of our institutions. But what?

A series of scandals have afflicted institutions in many different sectors. Is it a series of particularities - or a general problem that is a product of the age in which we live?

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The headlines are bad enough, but what lies behind them is worse still. We are looking at the decay of institutions, of trusted institutions on both sides of the Atlantic. The first sign can be routine in its banality. From Washington we learnt, for instance, that General Petraeus must stand down as director of the Central Intelligence Agency for having shown, in his words, “extremely poor judgement by engaging in an extramarital affair”.

This was unfortunate, but such things happen, it could be said. But then it turned out that another senior officer, General Allen, who was due to be named as commander of US forces in Europe, had had “inappropriate communications” with a certain Jill Kelley, a self-appointed ambassador for servicemen stationed in Tampa, home to the US Central Command. So General Allen’s new appointment is now on hold.

This turn of events prompted the New York Times to remind its readers that incidents like these are becoming a habit with top military men. In the past year alone, General William Ward came under scrutiny for allegations of misusing tens of thousands of government dollars for travel and lodging. Brigader General Jeffrey A Sinclair is confronting the military equivalent of a grand jury to decide whether he should stand trial for adultery, sexual misconduct and forcible sodomy, stemming from relationships with five women. And Colonel James H Johnson III was expelled from the Army, fined and reduced in rank after being convicted of bigamy and fraud stemming from an improper relationship with an Iraqi woman and business dealings with her family.

Calamities

Goodness me, what happens to the respect that army commanders must earn from their soldiers if they are to ask them to risk their lives in battle? Doesn’t a moral rot that spreads and insinuates itself everywhere deaden the spirit?

In the case of the BBC, the first revelations of the Jimmy Savile case were disturbing enough. The Corporation engaged in a passive cover-up by failing to act when presented with incriminating evidence. It was silent when it should have been in touch with the police. Its sins were those of omission. Then it turned out that it wasn’t only Jimmy Savile. Nevertheless you could still comfort yourself by the observation that that was then and now is different.

But then came the Newsnight calamities and the new Director-General’s extraordinary performance on the Today programme last Saturday. It wasn’t that any moral failing became evident, but something nearly as deadly to institutions, what the French call déformation professionnelle or job conditioning so that the world is viewed in a distorted way.

George Entwistle’s replies to John Humphrys’ questions were the product of some 23 years of continuous employment by the BBC in a series of increasingly important executive positions. It was Mr Entwistle’s BBC training that led to him failing even to know that Newsnight was planning to run a paedophile exposé. It was his formation, to use another very good French word, that meant that he gave a low priority to reading the newspapers so that he missed a warning that the Newsnight programme was seriously flawed. He had been taught to be all big picture and no detail, a fatal combination. So, no doubt, has the entire upper tier of the BBC management team learnt the same unfortunate lesson, for it can be safely assumed that they are subject to the same déformation professionnelle.

But why?

But what is one to make of an institution that is neither an army nor a giant broadcasting organisation but rather a series of financial and commodity markets where the main users are large companies, such as banks and energy companies, who, it is alleged, have got into the habit of working together to manipulate prices? These may be big boys’ markets, where single transactions are worth millions of pounds, but their trends nonetheless affect, say, how much our mortgages cost and how much we pay for our gas and electricity. So we need these markets to be honestly and efficiently conducted. And the evidence is accumulating that they are not.

In the case of the market in which banks lend to each other for short periods, where a daily rate is established that effects numerous transactions around the world – the London Inter-Bank Offered Rate, the famous Libor – Barclays has already pleaded guilty to manipulation and been fined. Regulators in at least seven countries are now investigating the rigging of Libor and around 20 major banks have been named in investigations and court cases. Now it is alleged that the same sort of fraudulent behaviour has been taking place in the gas and electricity markets. And if bad behaviour is proved, no doubt some individual traders and department heads will be punished.

But this would miss the main point. It is boards of directors who set the standards by which their companies operate. It is they, seemingly respectable people, living in nice houses in Surrey, stalwarts of their local communities, widely respected, solid citizens, who are responsible for the decay of their institutions. And there are others in grave difficulties – the police and Parliament among them. We know what is happening, or at least we are gradually finding out. But we don’t know why. Are they each special cases with their own particularities or is there a general explanation. Why?

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