Sunday, 5 December 2010

Integrity (what are you doin' to me)

An enquiry is a powerful means of giving the impression you’re doing something about something. Thankfully if it’s set up right at the outset you can sound all hard and (Spanish) inquisitive in a we're going to cluster-fuck you like hedgehogs on a broom kinda way and yet guarantee nothing actually happens and no one is found to be at fault.

Some obvious ways of doing so include:

1) Making sure the remit of the enquiry is so narrow it can’t enquire into anything that matters
2) Ensuing its status is such that you can’t place too much faith in the answers given to its questions e.g. fibbing isn’t a crime and/or there’s no immunity for witnesses
3) Get as many placemen on it as possible, ideally starting with the chair so no nasty questions get asked
4) Conduct it in secret so no-one is aware of what actually gets said
5) Drag it out for as long as possible to the point where everyone loses interest and rather than the results getting scrutinised the cost and time spent becomes the story.

Those things certainly sprung to mind when I read the Financial Services Authority notice that it’d completed its enquiry into the Royal Bank of Scotland and that no further actions were to be taken. Rather, the biggest fuck up in British corporate history was due to “bad decisions” and most definitely “not the result of a lack of integrity by any individual and we did not identify any instances of fraud or dishonest activity by RBS senior individuals or a failure of governance on the part of the Board. The issues we investigated do not warrant us taking any enforcement action, either against the firm or against individuals”. So there you are then.

Alternatively, lets tick off, which of the above techniques for guaranteeing no action apply here. Definitely 1) given the reference to “(t)he issues we investigated” is clear code for if there are other things that fucked it up well tough tittie cos that wasn’t in the enquiry’s remit and is fuck all to do with us give or take the FSA was responsible for regulating the whole shebang regardless. Don’t know about 2), but 3) definitely does apply given PWC was used to investigate the fecker i.e. a company that makes its living selling accountancy and consultancy services to banks was used to investigate a bank that its business development managers (i.e. salesmen) regard as a major customer/cash cow, which in turn means there was one fucking monster of a conflict of interest. 4) also applies in spades given “The FSA cannot publish the content of the RBS review as information gathered from the bank during the course of the review remains confidential under the Financial Services and Markets Act 2000” and 5) also, but to a lesser extent given in enquiry terms 21 months is kinda quick.

Except, I think the FSA fucked up big time because they’ve created a ginormous, humungus hostage to fortune that should (emphasis on the should) apply in spades to all their other reviews by stating there wasn’t a lack of integrity. Now, integrity is a powerful word; its use here is intended to convey the impression that the RBS executive and board made honest mistakes i.e. they may be utter fuck-ups, but they were fuck-ups who fucked up in good faith.

Fair’nuff, except how the FSA defines integrity can be publically stated because it is in no way a commercial secret, rather it’s a generic quasi-legal notion. And the notion of integrity in British banking, or at least parts of it is open to serious question.

In the absence of an FSA definition I looked up a few definitions of integrity and would say wikipedia’s is the best (for my purposes anyhow). It goes on about how integrity as a concept concerns consistency of actions, values, methods, measures, principles, expectations and outcomes. It continues to describe how in ethics, integrity is regarded as the quality of having an intuitive sense of honesty and truthfulness in regard to the motivations for one's actions. Moreover, integrity can be regarded as the opposite of hypocrisy, in that it regards internal consistency as a virtue, and that parties holding apparently conflicting values should account for the discrepancy or alter their beliefs. …… As such, one may judge that others "have integrity" to the extent that one judges whether they behave according to the values, beliefs and principles they claim to hold.

Now that is some powerful shit for a regulator. Put simply did senior bods at RBS and all the other banks being looked at actually behave according to the values, beliefs and principles they claimed to hold and/or espoused? More straightforwardly, and relevant here, did they behave in line with their company’s stated policies and processes when they lent money or did they do things like lean on more junior staff to do what they were told and not what they thought was right, did they take short-cuts when it came to following documented and established credit sanctioning procedures, did they "finesse" the analysis of financials and subsquent fulfilment of post-sanction drawdown conditions, beforehand did they always emphasise the positive as opposed to the realistic when it came to assessing a proposition's propsects despite credible, contradictory views being readily available and so on and so on etc., etc., in ways that are fuck off easy to find out given credit applications are well-documented things people remember?

Hmmmm. By this definition most lenders know for a fucking fact some senior bods did not behave with integrity and made lots of bonus cash for themselves by doing so. There again given the FSA said everything about British banking was hunky dory until it wasn’t it's got a mucho vested interest in its utter fucking shiteness not being disclosed, In fact I'd guess there’s no chance any of its enquiries will generate anything other than more whitewashes. Rather the best we can hope for is for the UK economy to not end up like Ireland by default and for only a few million more taxpayers’ fivers getting pissed away proving the great and the good might not be great, but at least they had integrity.

A Dec 6th P.S. - aside from revisions to the above that friends of Sir Fred Goodwin are asking for the report to be published lets you know how fucking shite it is. There again he's probably hacked off with being the scapegoat, which is fair play cos then mebbe some of the other fuckwits who fucked things up would start getting scrutinised. Except given what actually passes for scrutiny that'd simply generate more expensive wastes of time give or take pointless op-eds by financial commentators so clued up they keep forgetting/don't know Sir Fred first earned his "Shred" nickname when he was at Clydesdale Bank.

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