City of London sackings ‘at five-year high’ – but when will the Bankers go to Jail?

The City of London and Canary Wharf by EG Focus on Flickr

The City of London and Canary Wharf by EG Focus on Flickr

Are we, as a society, getting tougher on white collar crime? Are the bankers responsible for the credit crunch getting a good rap on the knuckles and being carted off to jail?According to this BBC report, 1,373 people were sacked last year for disciplinary reasons – up 76% from 2011. The total number of job losses in the sector – including redundancies, resignations and retirements – was also at a five-year high, of 177,697.

These figures are taken to mean that the Financial Services Authority (FSA) has been getting increasingly tough on financial shenanigans. This is what Helen Farr of law firm Pinsent Masons has to say:

“The FSA has increasingly shown that it is cracking down on financial crime and market abuse”

Sounds great. Finally, the baddies get their comeuppance. Until you come to the list of financial scandals mentioned in the BBC article – the implication being that these cases herald the dawn of a new era – an era in which the FSA actually does its job. Here is the list:

  • the manipulation of Libor – an international benchmark interest rate set by the London banks and used for trillions of dollars’ worth of financial contracts
  • the mis-selling of payment protection insurance to mortgage borrowers
  • the mis-selling of interest rate and currency hedging products to small businesses
  • a string of insider trading cases
  • the conviction of London-based rogue trader Kweku Adoboli, who lost $2.3bn (£1.5bn) for Swiss bank UBS

But when is Mister Big going to jail?

Harry Houdini by  Snapshots of The Past on Flickr

Harry Houdini by Snapshots of The Past on Flickr

All these cases are important. No one questions that. But what I want to know is, where are the high profile prosecutions? The people who tend to get caught nowadays are fairly junior staff. What about more senior staff? You know – the ones who sit on the Board, the ones who make the decisions? The ones who are responsible for the company’s business policy, risk control and oversight – the ones who sign the cheques – where have they been all this time? Why don’t we ever hear about the handcuffs being clamped on their wrists?

Once upon a time in this country, it was different. You could be put in the stocks, or even executed for being naughty – and it didn’t matter whether you were a little grunt or a big cheese.

Have people forgotten what happened to Admiral Byng? Just for losing Minorca during the Seven Years War, he was court martialled and shot by firing squad on his own ship. And he was only negligent, not dishonest.

Admiral Byng

Admiral Byng

Of course, this was hundreds of years ago. We don’t chop people’s heads off, or shoot them anymore. But surely, we can still send the Big People to jail when they’ve been dishonest. Does anyone remember Guinness? Blue Arrow? Ivan Boesky, Michael Milkin? Enron? Not everyone landed in jail – some people got off, or had their sentences reduced on appeal, but AT LEAST THERE WERE PROSECUTIONS AT SENIOR LEVEL.

And this is normally what happens. In the past when the economy crashed and the s hit the c, and all the dirty laundry began to appear in public, the law enforcement people would start their investigations and the public would be told that bad people would be prosecuted, convicted and sent to jail. And these bad people would include the bigwigs – after all, it stands to reason that if junior staff are doing something wrong, their supervisors must either know about it, or be turning a blind eye about it.  It didn’t even matter if you had a title like Sir Jack LyonsLord Kylsant, or Lord Kagan – you do the crime, you do the time.

Not anymore. We’ve gone soft. For some reason, no one has the guts or the willpower to go after Mister Big.

Does Mister Big have too many friends in high places? Does Mister Big’s organisation spend huge sums of money on government lobbyists? No, no of course not. I’m just being naive.

Further reading

Has the UK rediscovered its appetite for prosecuting white collar crime? By Ian Fraser.

Mitch Feierstein at  Planet Ponzi agrees that bankers should be going to jail: LIBOR “Fixing” – Why is Too Big to Fail, Too big for Jail?

 

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