Loss of trust is the biggest flaw at the heart of our culture, and must be repaired

It isn’t often that a senior executive in a major company contradicts what the chief executive says about the honest and honourable management of the company.   Compare this, Stuart Gulliver, chief executive of HSBC since 2011 telling the Commons public accounts committee in February: “In terms of actually tightening HSBC, making it a business that actually follows the highest standards of money-laundering controls, knowing our customers and tax transparency, substantial root-and-branch reforms have taken place”.   That’s the public face of capitalism.   Now compare that with what Lee Hale, global head of sanctions at HSBC, told a confidential meeting (at which a recording was taken) with independent lawyers monitoring HSBC as part of a 2012 deal with the US Department of Justice in which the bank avoided prosecution over sanctions-busing and money-laundering in its Mexican branch in exchange for paying a £1.3bn fine and being made subject to additional regulatory scrutiny for the next 5 years.   Hale told them: “Given the size and scale of HSBC, it’s a cast-iron certainty that at some point in the future we’re going to have some big breach, some regulatory breach”.   So who do you believe –  Gulliver?   Nor do I.

The latest report to the US Department of Justice, 3 years on, raises several concerns about HSBC’s progress, including still about its corporate culture and stating “Some of HSBC Group’s historical cultural deficiencies continue to pervade its operations today”.   HSBC’s response to this was to say “We do not recognise these comments, which contain inaccuracies and have been taken out of context”.   However, when pressed they were unable to detail any inaccuracies.   This typical of how so many banks and large companies today seek to avoid any sense of culpability, produce a carefully prepared patter of warm words without any relevant evidence to back them up, take a bit of a public drubbing, and then carry on heedless much as before.

This is extremely serious.   Two things have happened in the last 30 years to make this much worse.   One is that many of Britain’s biggest companies have been privatised, thus removing any direct line of accountability to elected authorities.   The other is that the marketplace has become much more dominant and unregulated, the biggest firms have grown even more unwieldy and unmanageable, and the drive to maximizing profits has marginalised any sense of moral responsibility.   How should this be corrected?   Partly by restoring public ownership (the banks, notably HSBC and Barclays, and some or all of the energy companies), and partly by giving powers of enforcement to parliamentary select committees to give a public warning notice to failing chief executives where appropriate (yellow card) and where that still fails to bring about the improvements the national interest requires, the power to issue a red card subject to a confirmatory vote on the floor of the House of Commons.


9 thoughts on “Loss of trust is the biggest flaw at the heart of our culture, and must be repaired

  1. sadly you not going to do has iceland did jail em all that will make others think before they commite fraud but untill they brought to justice this will just carry on with them still doing the fraud and big bonuses yes being icelandic could make em think jeff3

  2. It nice to finally read a more balanced and analytic piece about the banks, for a change rather than the constant, strident caricature of the tabloids.

    This has been and still is; a massive problem for both the Americans authorities, (whose response to it has been able, effective and robust,) and also for us here in the UK, (where our response if any has been anything but that.)

    Having read many of the details of the American prosecutor’s case against HSBC and the details of the charges, it’s hard to avoid the conclusion that what happened was done entirely deliberately, was fully premeditated and was deliberately sustained that the company’s management up to and including it’s most senior officers were absolutely responsible for it.

    It must therefore be both puzzling and of great concern to the American government that we are so out of step with them on this issue particularly as we are increasingly tied to them financially, commercially and legally.

    If I was an American businessman I’d be asking myself this; is the UK a country that I really want to do business in and are these the kind of people I can trust with my money?

    Nonetheless the world is as it is and we urgently need to develop effective political, legal, financial and even perhaps cultural, tactics and strategies to address the challenges that such people and organizations, (Stephen Green and HSBC,) present to us a society and as a democracy.

    If nothing else the American’s actions have proved once and for all, that these organization are not simply too big and powerful to ever be brought to book.

    Nor do I believe that a fine of the magnitude of the one that was levied by the US, coupled with a very real threat of worse still if they persist didn’t, “hurt.”

    The banks aren’t simply going to go away but, we; as a society desperately need to develop a far less abusive and masochistic relationship with them and if that means we bang up a few of the wost offenders, to encourage the others; well that’s often proven to be a useful first step.

  3. you forgot the yanks have the biggest fraudster of them all they haven’t touch j d hasn’t or will not be jailed just like over here

  4. A point if I may: A 1.3 billion dollar fine represents but a fraction of the HSBC bonus pool in a “normal” years trading (fixing, laundering and creating unlawful financial instruments). Hardly punitive and certainly not robust. In any event shareholders take the hit. Oh I forgot, we are all considered shareholders now (so to facilitate theft of deposits) even though our new found bank “shareholder” status takes no note that our deposits do not result in shares being showered upon us. More scams.

    Banks enjoy carte blanche here in the UK Corporation. They deserve bashing: Usually once a crime is in the public domain the matters are dealt with: No more. The City of London along with their Gog and Magog yearly show are clearly above “The Law”. Whatever that is now. I watched a video earlier today on the David Icke site, where vanloads of corporate security thugs disguised as Police officers: There was one “warranted/Insured) Policeman present who did nothing to prevent or stop the ongoing criminality. A man, caring for his son, who had fallen ill had fallen around £6000.00 in arrears with business tax. The council (manchester) arranged with these criminals to evict the man from his house, so that the home could be sold to recover not just the £6000.00, but another 70,000 in unlawful charges. Despite laws dating back to Charles 1st exist to prevent such abuse.

    Thing are gone too far for band aids. I see no politicians with sufficient backbone to challenge the City of London or the degenerate criminals that run it, to restore this nation to morality. People must act: Politicians will not.

  5. Harry-

    “A 1.3 billion dollar fine represents but a fraction of the HSBC bonus pool in a “normal” years trading ?”

    True enough but scarcely relevant; I’m sure that like many people you’d much prefer these culprits to be dragged naked into the street by an angry mob beaten within an inch of their lives and then strung up from nearest lamp post.

    But after you’ve done that, what then?

    Sadly we need these organizations, (realistically,) and therefore the often personally wretched individuals who run them as well; so the challenge to us a a society is how to make them serve us better as accountable agents, which is what the American prosecution of HSBC was aimed at and £1.3 billion, (a statement of will and intent,) is sum sufficiently large to get everyone’s attention, but is anyway only one part of the differed prosecution arrangement.

    I completely fail to understand what the the real relevance to this discussion of someone being evicted in the way that you describe, although £70,000 in charges on £6,000 arrears, (which is quite a lot,) does seem kind insane, but that was seemingly actually a decision made by a local authority, but I’d need to know far more about it than just watching a brief and emotive video?

    It’s interesting and worth noting that after the war, (WWII,) all the Germans responsible for their country’s reconstruction were pretty much all of them, exactly the same Nazis, (former or otherwise,) that had so prospered and enjoyed leading positions of authority under Hitler and National Socialism, but realistically who else was there ever going to be, who had the skills and experience to run things ?

    You can’t, (unless possibly you’re a communist,) suddenly tear down all the major financial institutions and replace them by something else; better, (what,) magically untainted by the greed, corruption and criminality of the people who formerly operated them.

    Which leaves us with reform, accountability, better oversight and supervision as our only options which is what the Americans are doing, (The Sabines-Oxley act, passed after Enron is also worth reading as well,) unfortunately people like the bankers are rarely good of their own accord and will sometimes need to be encouraged with harsher measures.

    “I see no, (British,) politicians with sufficient backbone to challenge the City of London or the degenerate criminals that run it, to restore this nation to morality,” yet across the Atlantic the authorities and the government, (American,) are doing just that that and you’re still not happy?

  6. I see we leave the criminals incharge isnt this rather defeating the problem of corrupt banksters nay they need the full force of the law but untill that happens then more the same actions by them they proved this with the bail outs still taking high bonuses other ways yet you leave the foxes in the hen house then be prepared for more fraudulenttradings more high bonuses and us having to bail em out again has the ccollapse is that close by their fraudulent ways jeff3

  7. I get what your saying completely and your heart is always in right place; but OK so we get did of the Bankers and then what ?

    At least this way we know who the criminals are, where they are and largely speaking what assets they have, that’s an important first step towards making them behave.

    “For every complex problem there is an answer that is clear, simple, and wrong.”

    H. L. Mencken

  8. There are honest people and dishonest but leaving people like carney in the bank will cause more harm jeff3

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