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.