Terry Murden: Anti-business attitude will only harm our economy

Published on Sunday 5 February 2012 00:00

IT HAS been a bad week for business, or at least attitudes towards business. The political elite, spurred on by the burn-the-bankers mob, is now hell-bent on punishing anyone who is rich or, worse, a rich failure.

I argued here two weeks ago that removing Fred Goodwin’s knighthood was wrong-headed and unjust as he was guilty only of reckless arrogance and poor decision-making. It may have proved calamitous, but mismanagement is not a hanging offence. Not yet.

There was an even more spurious case for Royal Bank of Scotland chief executive Stephen Hester to forfeit his bonus. He was hired to fix the bank and it will not happen overnight. He cannot be blamed for the mess he inherited or for the euro crisis (caused by reckless governments) that dragged down the bank’s shares.

Comparisons have already been made with the way in which BT, formerly state-owned, lifted itself through dreadful debt problems and expansionist mistakes to become an efficient industry leader, partly by returning to its core business.

Hester may take comfort in such an example, but he’ll now have to compete in a sector in which he could be earning considerably more and without the hostility that goes with running RBS.

Of course the public is rightly outraged by the way in which executive remuneration has accelerated way beyond the pay scales of the average worker. In particular, the bonus system has become detached from reality, creating a culture of entitlement rather than a process in which rewards are based on performance.

The problem for Stephen Hester is that these issues have become muddled so that no-one wanted to hear about how his bonus had been agreed. As far as the public and the politicians were concerned, he simply had to forego any payment because he’s already rich and everyone hates the banks. It seems to have slipped the memory of those who blame the banks for “causing the recession” that the public were also guilty of greed and excess in their willingness to build up personal debt.

Some argue that removing Goodwin’s title and forcing Hester to give up his bonus shows that Britain retains a sense of fair play and will not throw a protective blanket over the elite, whatever they do.

But in the absence of a crime, or intent to create mischief, the forfeiture committee’s decision on Goodwin amounts to a punishment for failure.

As such, it is a slap in the face for anyone who has dared to take a risk. Whatever else is said about Fred Goodwin, he built RBS into one of the biggest banks in the world that poured billions into the Exchequer and into the economy.

Sir Tom Hunter? He is feted as one of Scotland’s most successful entrepreneurs, but he’s also had his setbacks. Stagecoach boss Sir Brian Souter? He had problems in America.

The City is now concerned that international bankers are beginning to take a dim view of Britain as a place in which to do business as they regard government ministers as anti-business. It’s time to take stock of where this is leading us.

No ‘journalistic shot in the dark’

Last week I revealed that the undisclosed offer from Scottish Equity Partners for IndigoVision was 400p a share. The board declined to put the offer to shareholders. It has been stated that this figure is a “journalistic shot in the dark”. I can assure shareholders that it was no such thing.

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Gavin1979

Thursday, February 9, 2012 at 10:27 AM

We live in a country where those at the top look down there noses we all got put on this earth to do well but those who get rewards just to continue looking down there noses such as Fred the shred Goodwin who now works for a company who staff at the top have walked other have set up fighting against company's the same company that gets government contracts so long as them at the top are rolling in it

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George

Wednesday, February 8, 2012 at 12:20 PM

So Fred was guilty ONLY of reckless arrogance and poor decision-making. Clearly the knighthood was awarded wrongly, consequently it was right to withdraw it - and there are a few others similarly deserving of cutting down to size. Fred was guilty of more than recklessness, arrogance and poor decision making. He threw thousands of not particularly well paid staff on the scrap heap - with scant consideration for them and their dependents. I wonder how many suicides there have been. As for Jackie Stewart's comments on Fred the other day - stick to driving Jackie.

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derekafarmer

Monday, February 6, 2012 at 09:48 AM

#1 andyglasgow is absolutely right. Jack mcConnel proposed this knighthood for services to banking, and Gordon Brown agreed with it being apparently ignorant of the scale of risk being taken on by a banking group that was wildly over trading in its business. As was proved, this ex-Deloittes accountant actually was a dis-service to the industry. He destroyed the share price and pitched thousands of staff onto the job centre queues. It's true, that there was no crime proven and therefore no criminal prosecution. Maybe there should have been. However Fred was not sacked, as most people would be for such a monumental screw up. He was allowed to resign with pension intact, and a very generous one at that. I have worked in the intl banking industry for some 40 years, including a 6 year stint as CEO of a City bank. A difficult job, and rewarded to only a fraction of the salaries now being earned by senior executives in the industry. I,m afraid the industry and it's Regulator, have been seriously led astray by their own hubris and, unfortunately, the shareholders in the industry, largely composed of professional investment funds have totally failed to keep the executive body in check. If you look at where are the highly remunerated Directors of RBS who presided over the scandal, you will see that they are alive, well and prospering in different fields. Only poor old Johnny Cameron has been barred from the Industry by the Regulator. I'm afraid, Terry, that you have totally lost the plot on this one. Business failure on such a scale as this should have had even greater retribution than that so far seen.

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andyglasgow

Sunday, February 5, 2012 at 11:58 AM

Oh and Terry, we are not anti business. Most of work in business. Lumping your greedy banker mates in with hard working business people won't wash any more.

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andyglasgow

Sunday, February 5, 2012 at 11:54 AM

Typical right wing capitalist propaganda here. Goodwin got his knighthood for services to banking. He was subsequently found out to be terrible at banking. By any measure he was the worst banker ever in history. Capitalist often use the shareholder value arguemnt to justify the worst sort of business practices. Fred was ruthless at this, shutting down businesses and laying people off if it meant a bit extra shareholder value. He took a stock worth many pounds and turned it into a junk penny stock. So by his own measure of success he is an unmitigated failure as a banker. We could all be successful gamblers for a spell with enough money and being safe in the knowledge that it's not your money that you are gambling. The skill is being able to stay on the table for an extended period. On that basis the error was giving him his knighthood before we saw him play out his hand. I believe we have Jack McConnell to thank or this. I would argue a knighthood should be given at the end of a long and successful career not at the beginning of one. In the round then, he didn't deserve it and we took it back. As for Hester, his business traded at a loss of over £1bn last year. Wait until they at least hit profit before paying bonuses. He his a wealthy man, deferring the bonus for a couple of years is going t do him no harm at all. It just smacks of greed to me.

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