Terry Murden: Fred was flawed, but not a Madoff nor a Maxwell

Fred Goodwin: a convenient scapegoat? Picture: Neil Hanna
Fred Goodwin: a convenient scapegoat? Picture: Neil Hanna
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AS A party of British media gathered in the lobby of a Beijing hotel, they were greeted by excited executives of the Bank of China who had just agreed a pioneering partnership deal with Royal Bank of Scotland.

They were keen to make welcome their new banking associates and media guests from the West, handing out business cards and copious gifts at the start of a week-long tour of their operations.

But the media were keen to know what the RBS chief executive himself had to say about the Scottish bank’s move into the world’s biggest economy. Unfortunately, he wasn’t available.

Instead of flying out with the dozen or so reporters on the 5,000-mile journey from Edinburgh and London, Fred Goodwin had arrived in the Chinese capital on the bank’s £17 million private jet. He had other commitments and was too busy to meet those who would be assessing his latest international deal.

As a result of some surreptitious persuasion, he grudgingly relented. It was, though, an own goal at a time when he should have been basking in another successful transaction.

Rather than Goodwin the Great, we got the banker who thought he was above everyone else. It was another example of his famous aloofness and arrogance, characterised in numerous tales of his management style at the helm of RBS.

Not least of these were the stories associated with his grandiose plans for Gogarburn, the £350 million Xanadu built on Edinburgh’s western fringe as a temple to Scottish banking and to himself as its chief architect. He took legal action against those who detailed his Citizen Kane-like personal demands during the building of the sprawling headquarters. Some saw it as paranoia, others as the first signs of the “megalomania” he was later to be accused of by a concerned City analyst in his pursuit of acquisition targets.

It was probably no surprise that Mr Goodwin tried to sidestep that 2006 meeting with the media in Beijing. He would meet journalists at formal RBS events and was able to share a joke, even engaging in gallows humour. But he often looked uncomfortable. His presentations were like those of a shy best man at a wedding reception eager to escape. Some claimed he despised the media – a little harsh – and only tolerated journalists at events he was obliged to attend.

In his earlier days he was a willing and polite interviewee, embarrassed to speak too much about himself, and preferring to explain what he was doing and why he was doing it. But his ambition was clear and he never faulted in his determination to get what he wanted. It would prove his undoing.

He developed a meanness, an authoritarian streak manifest in the popular image of him as a cold, ruthless and bullying boss who held meetings known as the “morning beatings” with his staff and clearly made enemies on his way to the top.

But he was also regarded as a rising star, sought after by those who led and advised the banks. He was regarded as a young talent with a gift for building a company and for extracting those infamous cuts in costs that earned him his nickname, Fred the Shred.

He had ideas, albeit sometimes gimmicky, and loads of energy. As chief executive of Clydesdale Bank he turned an also-ran into a major challenger, pushing it to the top of the savings account league, and making inroads into the market share of its bigger competitors.

It earned him a promotion to head office in Melbourne where he was expected to become the group chief executive of National Australia Bank. Even as he built his reputation Down Under, his rivals back home were lining up another big job for the banking world’s biggest catch.

Sir George Mathewson, who was preparing to become chairman of RBS, had tried to lure Mr Goodwin before he moved to Australia. Several months later he took a call from Melbourne. His man was heading home, ready to join RBS and to help lead the bank to its greatest height, only to oversee its calamitous fall from grace.

Sir George acknowledges mistakes were made, but is always keen to offer some counterbalance to those who regard Mr Goodwin as the ultimate sinner, the poster boy for greedy bankers.

In an interview with me in 2010, Sir George noted that Mr Goodwin, even as chief executive, was only in the top 20 of the highest paid at RBS. Some years earlier, reflecting on the £21 billion acquisition of NatWest, the biggest takeover in British history, he said Goodwin should take the credit for that deal and that he provided the bank with clear leadership.

“Everybody knows where they are going,” he said. “His grasp [of issues] is incredible. He was without doubt the best person on the NatWest deal.”

Mr Goodwin ran the bank on almost militaristic principles, insisting that his executives wore only white shirts and establishing strict routines for which he became known.

For years, the talk among the media was about how high he could climb. He had turned RBS into one of the world’s biggest banks while still in his early 40s. There was speculation he would move to America where Forbes magazine once named him businessman of the year. But he remained in Edinburgh, even after RBS had to be rescued and his home was attacked.

Fundamentally, he was an ambitious man who wanted to succeed, for himself and his family, for his employer and for Scotland. He built the country’s biggest company and based it here. There was never any doubting his commitment to his homeland and, even when his countrymen were throwing bricks at his windows, he chose to remain when he could have opted for the comforts of a villa in the Swiss alps or by the Mediterranean.

There is no denying Mr Goodwin made some bad decisions, and chose a style of management that intimidated those around him. But he was not fiddling the books nor his clients. He was not a Maxwell or a Madoff. But he has been made to pay a heavy price for failure.