Sunday, 1 March 2009

Good on yer Goodwin

Only a misery-guts, only the most mean-spirited, envy-ravaged spoilsport could possibly begrudge Sir Fred Goodwin his generous pension. Such base specimens of human covetousness have, it is true, seemed to be everywhere these past few days: in the government, in the media, in the street ("bankers should be grateful if they still have a job and relieved that they have not been lynched" says Andrew Rawnsley). But such anger is largely synthetic, manipulated, convenient (as Jeff Randall points out) in the way it deflects anger away from the widespread incompetence to be found among ministers, and based on a simplistic view of the world of finance from which the former RBS chief hails, and dangerous.

That such envy-maddened people should be easy to find in the Labour party is not surprising. That leading spokesmen for the Conservative party should be indulging in such populist "hang-a-banker" rhetoric is a depressing example of political opportunism, not to mention deeply hypocritical. (Anything to get elected, I suppose.) Yes, Goodwin is a banker. Yes, he made some strategic mistakes - above all in the purchase of ABN Amro - which directly brought the ancient Scottish financial institution to the point of collapse. And yes, news about his settlement was brought to the public attention at the same time that RBS posted the largest corporate loss in UK history. But these matters have little or nothing to do with his pension.

Of course Goodwin doesn't "deserve" a pension of getting on for £700K at the age of fifty. But nor would anyone else. And compared with the irrecoverable billions already thrown down the bottomless well of RBS, Lloyds and the rest of them, Fred's pension pot is small change. The taxpayer will not miss it. Even if higher estimate of £28 million is accurate, that works out at less than 50p for every man woman and child in the country. Less than the cost of a newspaper. It's far less a waste of public money than, say, ID cards. Desert, in the sense of fair compensation for effort, is in any case besides the point. In the world which Fred Goodwin inhabits - and which the top echelons of business, politics, the media, even trade union bosses also inhabit - generous salaries, perks, bonuses and retirement packages usually pass without notice. To those that have, more shall be given: that has ever been the way of the world. Even in Soviet Russia top party members got to luxuriate in dachas while the proletariat queued.

As Letters from a Tory pointed out this morning, Tony Blair hasn't done so badly for himself since leaving office, what with sinecures and book-deals, speaking engagements and lucrative consultancies. And Blair, unlike Goodwin, leaves behind him a heap of dead bodies in Iraq. Also, as Randall reminds us,


John Prescott is demanding that there should be no reward for failure. Quite right, too. So might we, the taxpayers, expect a partial refund of his pension pot, worth the equivalent of more than £1.5 million? That's a lot of money for a pathetic Lothario whose greatest contribution to public life, a proposal for elected assemblies in the English regions, was laughed into oblivion.

And what about Mr Brown? Will he merit a £130,000 pension? Having appointed himself chief executive of UK plc (the shareholders were not consulted), does his record bear scrutiny? Gold reserves sold at rock bottom prices. Unemployment higher than when Labour came to power – and rising. Bankruptcies soaring, so too home repossessions. Border controls abandoned.


In comparison with New Labour's record, Sir Fred's stewardship of the Royal Bank of Scotland has been (until world events intervened) a model of success.

Before becoming chief executive Goodwin had already masterminded the Royal Bank's takeover of the far larger NatWest. He followed that with a string of acquisitions, including Churchill Insurance and Direct Line, until by 2008 RBS was the fifth largest banking group in the world. Profits soared, reaching £9.2 billion in 2006.

There's no doubt that Goodwin was a superlative exponent of banking as it has been practised during the past decade. The kind of banking that Gordon Brown extolled throughout his reign at the Treasury, the kind of banking that formed the beating heart of the financial services industry that paid for some of the government's spending splurges. He overreached himself, of course. But so did many bankers. It was because he flew closer to the sun that, when his bank fell, it made a bigger splash. But that calamity was not entirely his fault. He bought ABN Amro at the top of the market, and an inflated price. But many ordinary citizens bought their houses at the top of the market at inflated prices, and now face negative equity. One could blame bad planning, or hubris, or stupidity - but one could equally well blame bad luck.

And there are far worse things to be done than letting Goodwin keep the money. Like following Prescott's advice, of refusing to pay and challenging him to sue. Since his entitlement to the money would appear to be legally watertight, that course of action would enrich only lawyers - who would, of course, be paid for with taxpayers' money. Great idea, John. Still, illegally depriving Fred of his pension and being forced to pay up by a judge would be better than the alternative that has been proposed by some of the unreconstructed class warriors among Labour's backbenches: passing some sort of Bill of Attainder. That would be clean; that would be legal. It would even be constitutional: for is not Parliament sovereign? Cannot Parliament legislate anything it likes?

This may be what Harriet Harman has in mind. Interviewed by a typically supine Andrew Marr on TV this Sunday morning, the deputy leader (currently running a stealth leadership bid of her own) made the extraordinary pronouncement that "Sir Fred Goodwin should not count on being £650,000 a year better off because it is not going to happen." She elaborated:

"The prime minister has said that it is not acceptable and therefore it will not be accepted". Come again? "The prime minister has said that it is not acceptable and therefore it will not be accepted".

Translation: Gordon Brown is above the law. As that venerable text of Roman jurisprudence, Justinian's Institutes, has it, Quod principi placuit legis habet vigorem. "The emperor's word is law". No wonder some of my readers' jaws dropped. And, just in case the message hasn't got through, she continued

"It might be enforceable in a court of law, this contract, but it is not enforceable in the court of public opinion and that is where the government steps in."

There is no "court of public opinion".  The law is above public opinion. As a trained lawyer, Harman ought to realise that. She ought to be proud of it. It is the law that preserves society from mob-rule; mob-rule that some sections of this government, now in its death-throws, seem bent on unleashing. What next can we expect? People's tribunals? Show trials? A Cultural Revolution?

That may be over-egging things slightly. But Harman's policy, however popular in the short term, would lead to disaster. Even if Goodwin was unable to invoke the Human Rights Act in his defence, the quasi-legal expropriation by the government of a citizen's lawfully-acquired assets would set a terrible precedent. In terms of the rule of law, such a move would reduce Britain to the status of Zimbabwe.

Of course it would be an easy enough thing to gather together an angry mob an burn Fred Goodwin's house down. Perhaps, if predictions of a "summer of rage" are to be credited, that will in due course happen. But in the meantime Goodwin can hardly be blamed for clinging on to the money. Of course, were he to give the money to charity loud would be the applause, certain would be a rehabilitation. But charity, if it means anything, should come from the heart. If Goodwin's heart is as black as Ebenezer Scrooge's there is little, legally or morally, that can be done about it. Besides, unless he turns the cash into gold bars and buries it all in his garden, he will be spending the money. With the economy in the state it is, we're going to need all the big spenders available. If I were running a struggling business in his neck of the woods, I would be salivating over the prospect of his custom. And I can't help thinking that even Sir Fred Goodwin would spend the money rather more wisely than Gordon and Alastair.

5 comments:

Peitha said...

Well said Heresiarch, I was looking around for someone with the common sense to ask the obvious question about what Harman's comments meant for quaint little traditional principles such as 'the rule of law' and whether or not law should be retrospective. Should have come here first, I suppose.

Now in a few cases retrospective legislation may be justifiable. For example if it becomes apparent that everybody had acted based on a common understanding of what turns out to be a defectively drafted law. In such a case, retrospective legislation to correct the defective drafting and bring the law into line with everyone's prior understanding, and hence create the legal basis on which everybody had acted anyway then that might be acceptable.

But this is almost the opposite case.

The suggestion of a specific Act of Parliament is simply political revenge sanctified by legislation. About the best that can be said for it is that the Lords should have a field day ripping it to shreds.

Even if they don't I'm sure Sir Fred would still be able to pay the costs of taking it to the European Court with every possibility of winning there.

How bizarre that an administration stuffed to the gills with lawyers could come up with such a ridiculous suggestion. On the other hand, given the history of this administration's disrespect for the legislative process, a torrent of badly drafted, only partially debated legislation rammed through by the Whips under guillotine motions, perhaps we should not be surprised.

Of course, one also wonders if the principle behind such legislation is acceptable, depriving an individual of contracted payments on the basis of political expediency, perhaps the principle might be extended after the next election to simply remove any penalty clauses in supplier contracts for, say, the ID card scheme if it is cancelled. That should cause some head scratching in the bidding teams.

Isn't life fun if the law can be retrospectively rewritten so lightly against specific legal entities?

'Peitha'

Elephant said...

The law is above public opinion. As a trained lawyer, Harman ought to realise that. She ought to be proud of it.

What, Harriet Harman? The Harriet Harman whose first public act was to send to the press confidential legal documents, and get herself fined for contempt of court? The Harriet Harman who thinks that election rules are for other people? That Harriet Harman?

Edwin Moore said...

Still shocked by Harman - how did we get here?

Some merry wag once quipped that Raymond Baxter had let us all down - where is the Tomorrow's World we were promised? But more importantly, where is the politics we were promised? How did that old Tory election ad manage to get it right with that 'demon eyes' poster we all laughed at?

Och let me just quote Dryden, haven't done that for ages -

All, all of a piece throughout:
Thy chase had a beast in view;
Thy wars brought nothing about;
Thy lovers were all untrue,
'Tis well an old age is out,
And time to begin a new.

Matt said...

Quite right.

But that's not to say that now would not be a good time to examine the system that allows this kind of thing to happen at all.

"Of course Goodwin doesn't "deserve" a pension of getting on for £700K at the age of fifty. But nor would anyone else."

Precisely; so why should society have to put up with it, when the self-same system does so well at throwing it's begging bowl book at those at the other end of the spectrum.

Anonymous said...

Response from Amused Cynicism if you haven't seen it yet:

http://cabalamat.wordpress.com/2009/03/03/fred-goodwins-pension/