TERRY MURDEN: Few emerge with credit from HBOS debacle
THE Financial Services Authority delivered both barrels at the former management of HBOS on Friday, though it resisted turning the gun on itself. Fred Goodwin may be the fall-guy for the mistakes of the banking sector, but the FSA’s damning verdict on the failings at Bank of Scotland’s corporate division make it clear that poor governance was widespread, not least among the regulators who failed to stop them.
The FSA’s report did not name anyone, as there are outstanding investigations, but we all know who was in charge at the time. There was a public censure for the bank but no fine, because that would have meant double punishment for the taxpayer.
We must await the next instalment in the HBOS inquiry to find out if individuals are to be held to account. In the meantime, those who ran the bank between 2006 and 2008, the period referred to, will be feeling a little more nervous after it was accused of “very serious misconduct”.
Peter Cummings, who led the corporate division and is now living on the Mediterranean coast, dished out millions to the likes of Sir Tom Hunter and the Top Shop tycoon Sir Philip Green, mainly to fund property and retail transactions. Through increasingly complex and bigger loans he fuelled an artificial boom that ultimately contributed to the bank’s crash.
Cummings’ boss Andy Hornby would have been grateful to Cummings for covering up shortcomings in the retail business. He was shattered by the collapse of HBOS and struggled with stress while running Alliance Boots. He is currently in charge of bookmaker Coral. Lord Stevenson, the HBOS chairman of whom we hear little, sat alongside Hornby, Goodwin and the former RBS chairman Sir Tom McKillop at the infamous Treasury Select Committee hearing. Stevenson was famous for telling shareholders that he couldn’t work out how to pronounce HBOS.
It seems there were other things the senior management struggled with, including its statement of provisions in the prospectus to its £4 billion rights issue in 2008. First given as £370m, the figure rose within six months to £3.3bn and two months later to £7bn. Some say the true amount is more than twice that sum.
The only person emerging with any credit from this mess is Paul Moore, the whistleblower sacked by HBOS for questioning its risk management practices. How events may have turned out differently if management had listened and acted on his warnings.
Soames speaks up
BUSINESS leaders have been queuing up to question the Scottish Government on the independence issue. It’s clear they don’t like the uncertainty and utility firm SSE warned that it could affect its investment plans.
Rupert Soames, boss of temporary power provider Aggreko, is the latest to speak up, saying he’s concerned about the uncertainty of the analysis. He wants the constitutional issue put through the same process that preceded the Westminster government’s decision on entering the euro which depended on five tests.
Speaking to me on Friday, after he’d delivered another robust set of figures, he said he can’t see how any business can hold an opinion either way on the constitution “given the lack of detailed analysis of the implications”. Soames is not afraid to take on the political establishment and has spoken about the need for a mixed energy policy.
I dare say we’ll be hearing more from him before anyone casts their vote in the referendum.
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