Rona Fairhead should lose BBC job over HSBC role, says influential MP
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Version 0 of 1. Rona Fairhead has been urged to resign from her role as chair of the BBC Trust by the chair of the influential public accounts committee, in the aftermath of the tax avoidance scandal at HSBC, where she has been a long-serving non-executive director. Related: HSBC: Tory MPs accused of blocking watchdog's bid to question Green Under intense questioning by MPs on the PAC, Fairhead insisted no evidence of tax avoidance at HSBC’s Swiss bank had been brought to her attention during her 10 years on the board of Britain’s largest bank. She told MPs that she blamed tax avoiders, the Swiss bank’s customer relationship managers and its in-country managers for failings that allowed clients to withdraw bricks of cash without question and for the decision to allow dealers in drugs and arms to open accounts. Following her evidence, Labour MP Margaret Hodge, who chairs the PAC, rounded on Fairhead, saying: “I think you knew. Either you colluded in tax evasion or you didn’t know. In that case you are either incredibly naive or totally incompetent. The performance you have shown here as a guardian of HSBC does not give me confidence as a licence fee-payer in your ability as a guardian of the licence fee-payers’ money and I think you should consider your position and resign. I’m afraid you’ve lost my trust.” Related: HSBC chiefs face Margaret Hodge at her most merciless She went on: “I really do think that you should consider your position and you should think about resigning and if not, I think the government should sack you.” Fairhead has been a non-executive director of HSBC since 2004, and was made the chair of the audit and risk committee – which bore responsibility for governance and compliance across the global bank – in May 2007. She earns £513,000 a year for her HSBC role, significantly more than the £110,000 paid for her work at the BBC Trust, of which she became chair in September last year. In a summary of the demands on her time, Fairhead told the committee she spent 70 to 100 days a year on her HSBC work, including evenings and weekends, 150 or 180 days a year working for the BBC Trust, and a further 25 for PepsiCo, on whose board she also sits. Hodge was speaking at a heated session, where police evicted anti-HSBC campaigner Nicolas Wilson as he attempted to put a question of his own to the witnesses from his seat in the audience. Also giving evidence were the HSBC chief executive, Stuart Gulliver, and Chris Meares, who was head of global private banking with oversight of the Swiss bank from 2006 to 2011. Both refused to take individual responsibility for failings of oversight. Fairhead claimed the blame lay beneath board level. She said: “First and foremost, the people who are most culpable are those people who evade taxes. I also hold the frontline who were breaching the policies of this bank accountable. But I also hold accountable the management in country the most, because they should have created a controlled environment.” A former chief executive of the Financial Times Group, Fairhead rejected any suggestion that she should resign. “I can assure you we had no evidence of tax evasion,” she said. “We had internal auditors, Finma, the Swiss regulator, in, strict policies – our expectation was that those were being complied with, otherwise it would be highlighted to the board of the Swiss bank.” Fairhead’s responses drew criticism that she had played too passive a role in policing HSBC. Conservative MP Stephen Phillips also called on Fairhead to resign, but from the HSBC board. Phillips said: “How can you stay in place as a non-executive of this bank? Surely you should go?” Fairhead replied: “I think we’ve been quite clear about where the responsibility lies. In terms of the oversight, I could only respond to the information that I had.” She added that HSBC’s loosely federated structure – which had allowed 88 country managers a large degree of autonomy – had been partly to blame for the control failures. “We’ve got to a stage where this structure was no longer fit for purpose. It had been fit for purpose for 140 years. We had to simplify the business,” Fairhead said. Hodge countered: “If it was fit for purpose there wouldn’t have been £135m of tax evasion. That was just in the UK.” MPs were highly critical of HSBC’s holdmail service, where statements and other correspondence was kept at bank offices instead of being mailed to customers’ homes. Fairhead was pressed on whether she had challenged the practice. “In terms of the holdmail account I cannot recall it being brought to our committee,” she said. “What we relied on was the three layers of board oversight and the multiple layers of executive oversight to raise issues.” Last week, Fairhead told the Oxford Media Convention that the BBC “would be my main focus of attention” before adding that she would keep her ability to sit on the boards of HSBC and Pepsi under review. “I almost never worked a five-day week,” she said. “I am invariably working weekends.” |