Almost four years have passed since Bob Diamond sat in the Commons and told MPs: “There was a period of remorse and apology for banks. I think that period needs to be over.”
That was in January 2011, and since then we’ve been subjected to scandal after scandal in his banking industry, several of them involving his former bank, Barclays.
Diamond was the king-pin of that bank but stood down when Barclays was found to have rigged the Libor rate. This week, Barclays is up to its neck again in shame, as one of the banks caught manipulating the foreign exchange markets.
Yet, as is being screamed loudly on newspaper front pages and by politicians, no banker has gone to jail in this country for anything – not for their greed that almost brought the entire economic system of the world to a grinding halt, not for mis-selling financial products to unsuspecting customers, not for fixing key benchmark interest rates and currency prices.
Diamond? His bonuses that easily totalled £100m during his reign are safely stashed away, he’s launched a new African banking venture, and his daughter’s recent wedding in the South of France was eye-popping in its opulence. Bob tweeted proudly “Father of the Bride” under a picture of Nell in her dress made from 35 meters of silk and comprising a 15-foot-long train.
On Libor, 13 traders have been charged and one has pleaded guilty to the charge of conspiracy to defraud. The judge has imposed a gagging order barring the name of that trader or their bank.
And that is it. That’s as far as we’ve got, after the taxpayer-funded bailouts, the losses running into billions the misery inflicted on millions either indirectly by the Government’s forced austerity measures or directly by mis-selling and fiddling the markets.
We’re right to be livid. It’s not as if banking malpractice has just crept up on us – the credit crunch occurred in 2008, Northern Rock ran into trouble in 2007.
At the heart of the lack of bankers in the dock is the simple fact that in this country we do not take white-collar crime seriously enough. It’s a question of attitude: in Dante’s Inferno, fraudsters were reserved for the inner-depths, worse than murderers and ordinary thieves; not in Britain.
I recently interviewed Denis MacShane, the former MP and Labour minister, who was jailed for falsely claiming Parliamentary expenses. MacShane argued without blinking and hesitating, that criminals such as himself should not be sent to prison. There was nothing to be gained from it.
That approach typifies a prevailing Establishment view which says that financial crime is not that bad. American prosecutors love to point out the gulf that exists between there and here. Both New York and London are of roughly the same size in terms of business but only in one are executives frequently led off in chains and handed long jail terms.
Our Serious Fraud Office says it has the resources it needs but in truth, it is fighting City law firms that pull every trick in the book to obstruct and obfuscate any attempt at prosecution. Credit to this government for responding positively to the SFO’s special pleading for more cash, for high-profile complex cases. But the SFO can only ask for so much, and a glance at its premises and their staffing levels says theirs is an unequal battle against the massed ranks of legal eagles seeking to harry and to delay.
The law itself has been found wanting. Bank chiefs have been able to argue that they knew nothing of what was being done by those below them in the bank’s name.
Sometimes that was genuinely the case – the banks are now so big, their operations so complex, that nobody knew for sure what its staff were up to. But that claim only goes so far – the fact is that the bank should have known and it is beholden on those at the top to ensure they do. That principle has now been taken up by the Government, much to the rage of the bankers. They face a seven-year maximum prison term for “reckless banking” which is best defined as not bothering to find out what was occurring on their patch.
The level of criminal proof is high – much higher than in civil cases. Finding a jury that can sit and properly understand convoluted, technical argument lasting several months is difficult. Judges know that, which may explain a marked reluctance to accelerate such prosecutions.
Unlike in the US, plea bargaining is not an accepted part of our justice system. There, the prospect of a long sentence is used a threat, to coerce a guilty plea to a lesser charge. Here, there is no such leeway.
What’s made the British experience seem worse, as well, is the attitude of the banks. Every attempt to toughen regulation or break them up has been met by shrill opposition. As with the hiring of expensive lawyers, they’ve called upon smart lobbyists to argue their cause. By and large, they’ve made a successful job of it, so they’ve been able to maintain successfully that high bonuses are necessary because the jobs market is so competitive and a rival will come in and snatch someone away – despite there being no firm evidence that is the case.
Exacerbating everything too, has been the lack of repentance. There is none. Senior bankers continue to behave as though the last few years were a figment of someone else’s fertile imagination, still strutting around, being paid fortunes, claiming they’re being vilified unfairly, and treating the rest of society with disdain.
Something is badly wrong where banking is concerned. The banks are both too big to fail, and, it seems, their bankers are also too big to jail. That imbalance needs rectifying, and fast.
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