Thursday, 2 February 2012

Demise, S̶i̶r̶ Fred

It is no longer politically correct to refer to taking back what was freely given as Welshing, nor to refer to the giver/taker as an "Indian-giver"; it therefore surprises me that an old Etonian Prime Minister has put Her Britannic Majesty into that invidious position over the annulment of Fred Goodwin's knighthood.  This honour was bestowed in 2004 at a time when the Royal Bank of Scotland (Frederick Anderson Goodwin is a Scottish Chartered Accountant) was expanding rapidly and taking a major role in global banking.  From the time that S̶i̶r̶ ̶F̶r̶e̶ Mr Goodwin took over as chief executive until 2007, RBS's assets quadrupled, its cost-to-income ratio improved markedly, and its profits soared.  He was criticised for buying into the Bank of China in 2005, now seen as a good thing.  His downfall came through the acquisition of ABN-Amro in 2007 to prevent Barclays Bank from acquiring it: in October 2008 the global liquidity crisis prevented the inteded splitting and sell off of various parts of ABN-Amro that was planned, the resulting collapse accounted for nearly £17 Billion of the RBS group's £24 Billion losses.

So S̶i̶r̶ ̶F̶r̶e̶ Mr Goodwin was rewarded for quadrupling the value of his company and bringing significant wealth into Britain and moving the RBS from its origins as a Scottish bank into a truly global enterprise.  Then the world's financial systems caught a nasty cold, possibly from the American problems with sub-prime mortgages, it was, after all, the US operation of ABN-Amro that collapsed first, but, whatever the cause, it hit "the west" hard and RBS very hard, hence the Government buy-out.  Did S̶i̶r̶ ̶F̶r̶e̶ Mr Goodwin cause that collapse?  There is little evidence to confirm that he did.  Freddie Mac and Fannie Mae were found guilty of illegal trading and fined substantial sums of money; was S̶i̶r̶ ̶F̶r̶e̶ Mr Goodwin?  the Chairman and Chief Executive of the Northern Rock resigned due to the crisis, S̶i̶r̶ ̶F̶r̶e̶ Mr Goodwin retired early in October 2008 as a result of the ABN-Amro failure, before (although he could possibly have seen it coming!) the now infamous fluidity crisis.

Now the size of his pension is undoubtedly obscene.  I myself, from nearly 40 years of work in the public sector have what I believe to be a good pension income, it is roughly per year, what S̶i̶r̶ ̶F̶r̶e̶ Mr Goodwin gets per fortnight and I suspect he pays rather less proportionately in tax than I, as I am a naive nobody and he is a financier.  However, the pension was agreed and based upon his enormous success in international banking in the early noughties.  I recall a Firemaster taking slightly early retirement when it was rumoured that M̶r̶s̶, sorry, Lady Thatcher was to tax lump sums, she didn't, it was Bliar that eventually did that, but it would have cost him more than 5 times my annual salary in tax if she had, so he cut and ran.  Perhaps Sir Fred took his pension early because it would have been worth much less one year on, but this is all speculation, it was an agreed award.  Bankers earn what the market will support, however much we might disapprove, I think the only thing we innocents can say without chewing sour grapes is "nice work if you can get it!".

So, will the citation for future knighthoods contain a clause suggesting that if the recipient should fall out of favour, the said award will become null and void?  This would suggest that the nature of awards is temporary, transient and revokable, unlike good pension arrangements!  Did Jeffrey Archer, Baron Archer of Weston-super-Mud have his seat in the Lords taken from him in 2001 as he began his prison term for perjury and perverting the course of justice?  No, why not, he is a convicted criminal?

Much as it irritates me that a very rich man got even richer by jumping ship just before it hit the rocks, unlike another master we discussed recently, I feel that the words of Lord (Jack) Jones "I think there is the faint whiff of the lynch mob on the village green about this..." hit the proverbial nail on the head, however, he completely spoiled the poetic feeling by continuing "but that isn’t to say that the end result isn’t what is right.”  I am sorry, but I disagree totally, in my opinion, it was wrong, very wrong.   S̶i̶r̶ ̶F̶r̶e̶ Mr Goodwin, however, had the last laugh; he was reported yesterday, in the best Catherine Tate tradition of "face...bovvered?" as saying "I'm rich enough to simply pay people to keep calling me "Sir Fred"."

Getting the "right" result for the wrong reasons is not morally or ethically correct, in my opinion,  I think this does smack of scapegoats and lynch mobs and I sincerely hope that I do not live to see a repeat of a petulant Prime Minister embarrassing the Palace in such a way again.  </rant off>

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