Amol Rajan: After the capitalist banquets it's time for humble pie

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Tuesday 08 November 2011 15:55

If corruption means anything, it means buying immunity from the law. The protesters occupying temples of capitalism around the world might be an incoherent bunch – more obviously against the present than in favour of a different future – but there is great solidarity with them in Western democracies, because it increasingly feels like it's one set of rules for the rich, and another for the rest of us.

Take Citigroup. In late October, the international financial conglomerate, as it describes itself, was forced to pay $285m to settle fraud charges with the Securities and Exchange Commission in America. Citigroup was accused of selling toxic mortgage-backed securities to customers which it knew would probably go bust, while at the same time shorting those securities – that is, betting millions of dollars they would go bust. They neither admitted nor denied wrongdoing, but this isn't just fraud being alleged, it's corruption. As the SEC noted, Citigroup exercised "significant influence" over choosing $500m of the £1bn assets in the deal.

Closer to home, Goldman Sachs denies allegations that it escaped a £10m payment to HM Revenue & Customs after a "sweetheart" deal on which the head of HMRC, Dave Hartnett, shook hands. Mr Hartnett has attended 107 breakfasts, lunches and dinners with big companies and accountancy firms during his three-year tenure, more than any other senior civil servant. It seems eminently possible that the HMRC waived the interest due on a bill for national insurance, and failed to reopen the case when alerted to the error, after lobbying from Goldman.

Would small businesses and tax-paying families around the country get off so lightly? Mr Hartnett claims not to have known about the dispute when he attended a private dinner at Goldman 18 months before the deal, and the former Chancellor Alistair Darling was very critical of the bank during the final three months of 2009. Nevertheless, Darling met with Goldman officials more than any other bank in that period. Doubtless small businesses and entrepreneurs across the land would love the chance to have access to a Chancellor so frequently, or serve hors d'oeuvre to our top taxman.

Economics is the study of how to feed people with minimal risk of war. Capitalism is the economic system that has done this worst of all – except for all the others. If it is to survive, as I hope it does, the likes of Citigroup and Goldman must play by the same rules as the rest of us. Otherwise they will be rendered enemies not just of capitalism, but of the people it serves, and might find those people start occupying their offices. That really would be bad business.

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