guardian.co.uk,
Patrick Wintour, political editor, Tuesday 31 January 2012
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Fred Goodwin, the former chief executive of RBS, has been stripped of
his knighthood by the Queen. Photograph: Murdo Macleod
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The former
chief executive of the Royal Bank of Scotland, Fred Goodwin, has been stripped
of his knighthood by the Queen for his role in the creation of the biggest
recession since the second world war.
With
unceremonial haste, a committee of five senior civil servants took away the
knighthood given to Goodwin by the last Labour government in 2004 for services
to banking.
The
chancellor, George Osborne, welcoming the move, said: "RBS came to
symbolise everything that went wrong in the British economy over the past
decade."
The move
provoked a cacophony of calls for honours to be stripped from other miscreant
bankers, politicians and regulators. The campaign to humble Goodwin was
reignited by the Daily Mail a fortnight ago and then hastily backed in a highly
political move by David Cameron as he sought to show he will side with the
public against crony capitalists and bonus-seeking bankers.
Normally an
honour is only taken away if someone has been guilty of a criminal offence
punishable by longer than three months in jail, or has been stripped of their
professional status by their regulator.
Goodwin has
suffered neither fate, but had been sharply criticised for excessive
risk-taking in a report prepared by the Financial Services Authority in
November into the RBS collapse.
He now
joins an ignominious list of individuals stripped of their honours, including
Robert Mugabe, the president of Zimbabwe, and Anthony Blunt, who spied for
Russia. Goodwin has no right of appeal, and in accordance with custom was given
no right to make representations to the forfeiture committee, a group of five
permanent secretaries. The authority to rescind an honour rests with the Queen
alone.
The
unprecedented decision, and the corner-cutting in the procedures, helped fuel
calls by Tory MPs for peers and other bankers to have their honours subjected
to review by the previously obscure forfeiture committee chaired by Sir Bob
Kerslake, head of the civil service.
Goodwin was
telephoned by Kerslake in the afternoon to be told the news. In an unusual
public statement, the committee justified its decision, stating: "The
scale and the severity of the impact of his actions as chief executive officer
of RBS made this an exceptional case.
"In
2008 the government had to provide £20bn of new equity to recapitalise RBS and
ensure its survival and prevent the collapse of confidence in the British
banking system. Subsequent increases in government capital have brought the
total necessary injection of taxpayers' money in RBS to £45.5bn.
"Both
the Financial Services Authority and the Treasury select committee have
investigated the reasons for this failure and its consequences. They are clear
that the failure of RBS played an important role in the financial crisis of
2008-09, which together with macroeconomic factors triggered the worst
recession in the UK since the second world war and imposed significant direct costs
on British taxpayers and businesses."
It added:
"Fred Goodwin was the dominant decision maker at RBS at the time. In
reaching this decision it was recognised that widespread concerns about Fred
Goodwin's decision meant that the retention of a knighthood for services to
banking could not be sustained."
The
Conservative MP Mark Field called for the forfeiture committee to be given
powers to strip peerages from miscreants, such as those peers found guilty of
fiddling their expenses. He said: "I hope that now, if this committee
feels so strong about Fred Goodwin, [it] will want to look at the various peers
who have gone to prison, or who have abused their expenses.
"Let's
get them booted out of the House of Lords, they have a lifelong peerage and a
place in our legislature. So I hope that we will now very rapidly move to
getting these people expelled from the House of Lords. Because if we're looking
at the sanctity of honours, their abuse is far more serious than the mere
bauble of a knighthood."
David Ruffley,
a Conservative MP on the Treasury select committee, said other risk-taking
bankers and lazy regulators should also be examined. "We need to look at
other parts of the City, business and politics. We are talking about honours
given by her majesty. Members of the public should write into the forfeiture
committee. This should not be a one political gimmick."
The
Conservative MP Matthew Hancock backed the forfeiture committee decision but
called for the heads of banks responsible for systemic failure also to be
subject to criminal gross negligence charges.
Political
leaders rushed to welcome the decision, announced just as the prime minister
was being scrutinised in the Commons over his diplomacy at the EU summit on
Monday. David Cameron said: "The FSA report into what went wrong at RBS
made clear where the failures lay and who was responsible. The proper process
has been followed and I think we've ended up with the right decision."
Ed Miliband
said the decision should be the start of a wider reform of the culture of
banking.
The CBI
said: "The business community will understand the Queen's decision to take
away the knighthood awarded to Fred Goodwin for services to banking in 2004.
Such an annulment is exceptional but unsurprising, given all of the
circumstances."
The CBI's
former head, Lord Digby Jones, said: "I think there is the faint whiff of
the lynch mob on the village green about this, but that isn't to say that the
end result isn't what is right."
The
forfeiture committee is chaired by Sir Bob Kerslake, the head of the civil
service. The other members are Dame Helen Ghosh, permanent secretary at the Home
Office, Paul Jenkins, the Treasury solicitor, Sir Peter Housden, permanent
secretary of the Scottish government, and Sir Jeremy Heywood, the cabinet
secretary.
David
Fleming, Unite's national officer, said: "It is a token gesture to strip
Fred Goodwin of his knighthood, but one which will be well received by the
thousands of workers who lost their jobs during his rule. Nonetheless this will
do nothing to bring job security to the staff across the banking sector who
continue to work under a culture of excess and greed at the top. Action from
the government is needed in banking reform, not simply empty rhetoric on
knighthoods or shareholder activism."
RBS said it
would not make any comment, but Sir Jackie Stewart, the former motor racing
driver, was one of the few people to speak up for his friend last night.
"The recession did come, it was a global recession – it wasn't one man or
one bank who created this," Stewart said.
Related Article:
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A newspaper tracked down former RBS boss Fred Goodwin
at his French hideaway. Photograph: Murdo Macleod
|
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