As bankers try to regain our trust, enter the self-serving chancers

http://www.theguardian.com/commentisfree/2015/apr/05/banking-standards-board-much-needed-watchdog

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I sometimes ask people who they think are the worst British businessmen of the last couple of decades. This is ongoing research for a book I have in mind – working title: Not-very-eminent Elizabethans – on the people behind the bad deals and ill-thought-through decisions that have laid British business so low.

One consistent nomination for worst ever British businessman is the disgraced Fred Goodwin, the accountant whose dreams of grandeur and increasingly toxic deals took RBS to bankruptcy.

Business should be more careful about trust: once gone, as the bankers have learned, its recovery can be near impossible. Last week, Colette Bowe completed the board of the Banking Standards Board, which she chairs. Financed by the industry, its job is to promote “high standards of behaviour and competence “ in this crucial industry, and so help to restore trust after the multiple disasters that have beset it.

BSB members include the bishop of Birmingham, David Urquhart, moral philosopher Onora O’Neill, the director of the Institute of Fiscal Studies, Paul Johnson and the former head of the TUC, Brendan Barber.

British banking knows it has a long road back; listening to, and acting on, the recommendations of the BSB will be fundamental to the task – and its board members must necessarily have independent standing and moral authority that too many business and banking leaders now lack.

As Bowe finalised the names on her board, the now infamous business-leaders’ letter urging the British to vote Tory was printed in the Telegraph. Not one of the 103 signatories to the Tory letter, compromised by giving their names to a propaganda exercise and thus revealing an insecure grip of what generates trust, and many of whom are on my growing list of Not very-eminent Elizabethans, would be of any use to her. Featured on the list are over-ambitious accountants and ex-financial controllers who love the adrenaline rush of deal-making but have got lucky, or just narrowly escaped the disastrous consequences of their actions.

Thus BAE Systems, one of our last great manufacturing companies, but now stuck in a strategic fix. Defence spending in the UK and Europe is going down; the US favours its own defence manufacturers. What BAE should have is a strong stake in booming civil aviation, which it used to have with its stake in Airbus. But in what is widely recognised as one of the great strategic mistakes of the last 20 years, BAE sold its 20% stake in 2006. The author of the deal was letter signatory Dick Olver.

His idea as a convinced Eurosceptic was to exit “sclerotic” Europe and use the proceeds to try to become a contender in the US defence market. Instead, and inevitably, BAE plays second fiddle as a subcontractor in the US, stripped of its technology by predator American contractors with whom it is forced to partner.

Humiliatingly, Olver tried to reverse the mistake by merging with the European aeronautic and defence consortium EADs, but the deal was vetoed by Angela Merkel on the grounds the UK might leave the EU. Only vast UK government spending on aviation research persuades Airbus not to move wing manufacture to Germany. Compensating for Olver’s mistake, it falls to the taxpayer to keep jobs in the UK

Another frequent nominee is accountant and deal-maker Nigel Rudd. Over the last 10 years, Britain has sold more than twice as many companies to foreigners as we have bought abroad – and the salesman-in-chief is Rudd. His first strategic instinct is never to build a company under his stewardship, investing in costly R&D, but to sell it in the name of “maximising shareholder value”. On his watch, Pilkington, Boots and most recently Invensys have been sold abroad: indeed, after the Invensys sale to the French company, Schneider, the Sun and Daily Mail dubbed him as the man who sold Britain. They were right.

Two decades of extraordinary executive pay increases have seen British executive pay for pound of turnover rise to become the highest proportionally in the world. Two of the most egregious examples are Paul Walsh, ex-CEO of Diageo, now chairman of Compass, and Bob Dudley, CEO of BP – both, of course, are on the list. Walsh at Diageo, another deal-making addict, struck lucky with one deal – buying the Seagrams drinks business back in 2001, which became the foundation of Diageo’s portfolio, but after that his record was more mixed. Nonetheless, his remuneration ran into tens of millions, as has that of Bob Dudley, part of the BP board when the Gulf drilling disaster struck but who was deemed, as an American, to be a better public face in the US than a media-unfriendly Brit. One of the most highly paid executives on the planet, he recently froze BP workers’ pay in the wake of the oil price slump . How much his own pay will fall – if at all – is a matter of conjecture.

The threat of corporation tax being maintained at 21% rather than cut to 20% (still the lowest in the G7, a benchmark Labour has promised to maintain), along with some extra billions of borrowing to support infrastructure spending, has persuaded the letter’s signatories that Labour constitutes such a mortal threat that they must drop any pretence of impartiality. They thus volunteered to become pawns in an exercise that the Chinese Communist party’s organisation and central propaganda departments would admire. The Daily Telegraph outdid even the People’s Daily in dedicating its whole front page to party business supporters mouthing their fealty to the great leaders Cameron and Osborne. Not only was it embarrassing and disproportionate, but it made a mockery of the notion of a free, independent press or business as trusted, impartial members of civil society.

Britain is in the midst of a full-blown crisis of collapsed productivity, lack of investment and chronic inability to compete internationally. Olver, Rudd, Walsh and Dudley – and most of the rest of the letter signatories – are part of the same business culture that laid the bankers so low and whose cumulative decisions have caused these economic problems. British business is not so trusted – nor its record of success so fabulous – that it can afford the partisanship of joining one political party’s propaganda machine.

To be trusted means it is better to be nearer the culture of the new Banking Standards Board than a British-style People’s Daily. Would that more business leaders could see that elementary truth.