Fred Goodwin: final insult as he is stripped of his title

DISGRACED banker Fred Goodwin has been dealt a final humiliation for his role in the collapse of Royal Bank of Scotland with the announcement that he has been publicly stripped of his knighthood.

Mr Goodwin, whose professional reputation already lay in tatters, had his prized honour “annulled and cancelled” by the Queen on the advice of the Honours and Forfeiture Committee on the grounds that his conduct as chief executive of RBS brought the system into disrepute.

The move follows intense pressure on the government to punish Mr Goodwin, who is still in possession of an £8 million pension, for his role in the current financial crisis. Last night the man dubbed “Fred the Shred” by his staff for his ruthless approach to cost-cutting, was left bereft of all the trappings he enjoyed as one of the most powerful bankers in the world.

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He has no job, he has separated from his wife, Joyce, and he is living in the family’s second home in Edinburgh.

The announcement came 1,205 days after the former chancellor Alastair Darling, was forced to step in with a £45 billion bailout to rescue one of Scotland’s most venerated institutions from collapse.

For some, however, the removal of Mr Goodwin’s knighthood was not enough, with unions branding the move a “token gesture” and Tory MPs calling for him to face criminal charges for his actions at the helm of RBS, when he oversaw the largest corporate loss in British history.

The £24bn loss followed RBS’s takeover of Dutch bank ABN Amro in 2008, which was celebrated at the time as an audacious move intended to cement RBS’s reputation as a global institution. Instead it led the bank to the brink of ruin and forced Mr Goodwin to go cap in hand to the government in 2009. RBS is now 83 per cent owned by the taxpayer.

Last night’s announcement came after Prime Minister David Cameron referred the matter to the Whitehall committee. The government has faced calls from all sides to strip Mr Goodwin of his honour at a time when all bankers’ bonuses are under unprecedented scrutiny.

A damning report by the Financial Services Authority (FSA), which was highly critical of Mr Goodwin’s tenure as RBS chief executive, paved the way for the knighthood to be annulled after one of the report author’s said it amounted to professional censure.

A spokesman for the Cabinet Office described the decision as “exceptional” but said that members had been “advised that Fred Goodwin had brought the honours system in to disrepute.”

He went on: “The scale and severity of the impact of his actions as CEO of RBS made this an exceptional case.

“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 2008-9 which, together with other macroeconomic factors, triggered the worst recession in the UK since the Second World War and imposed significant direct costs on British taxpayers and businesses. Fred Goodwin was the dominant decision maker at RBS at the time.”

Until yesterday all but one of the individuals who have lost honours previously have had them taken away after being found guilty of a crime like the former jockey Lester Piggott or after treason like the spy Anthony Blunt.

The one exception was Jean Else, a former headteacher in Manchester who lost her Damehood last year, five years after she was dismissed as a result of a report into her school by the Audit Commission.

Yesterday, Mr Goodwin left his home in Edinburgh about an hour before the announcement was made public, driving himself in a black Jaguar. At his second house, his wife, Joyce, arrived home without speaking to waiting reporters.

Last night, the First Minister Alex Salmond said: “Scottish ministers are in the fortunate position of making no nominations for honours – unlike our predecessors, who did nominate Fred Goodwin for a knighthood – and therefore have no involvement in their cancellation.

“The Forfeiture Committee were tasked with considering Fred Goodwin’s honour, and this is the correct decision, given that his knighthood was for ‘services to banking’ which could not therefore be sustained.”

The recommendation was welcomed by Mr Cameron, who said: “I welcome Forfeiture Committee’s decision on Fred Goodwin’s knighthood. 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.”

Chancellor George Osborne added: “I think we’ve got a special case here of the Royal Bank of Scotland symbolising everything that went wrong in the British economy over the last decade. Fred Goodwin was in charge and I think it’s appropriate that he loses his knighthood.”

Mr Goodwin’s neighbours offered no support. Ian Revie, who lives opposite, said the right decision had been made. The retired 66-year-old said: “I think it was entirely proper that this decision was made. I’m glad it’s come to this. They’ve done it and that’s the main thing. He may have appeared to have earned the honour some time ago but the truth eventually came to light.”

Mr Goodwin received his knighthood under Labour after it was recommended by the former Labour/ Lib Dem Scottish executive led by Jack McConnell.

The title was then supported by the Treasury when Gordon Brown was chancellor and confirmed by the Honours and Decorations Committee. Mr Brown later appointed Mr Goodwin as a government advisor.

Yesterday, Labour leader Ed Miliband, who was a Treasury advisor when Mr Goodwin got his title, said: “It is right Fred Goodwin has lost his knighthood but it is only the start of the change we need to see. We need to change the bonus culture and we need to change the rules so we see real responsibility across the board.

“As I said in my conference speech we should not have given Fred Goodwin a knighthood but this should not be about individuals, it is about taking the right steps now to create a more responsible capitalism.”

Mr Goodwin was also courted by Mr Salmond, who wrote a letter to him, ahead of the bid in 2007, saying that RBS’s successful takeover of ABN Amro was “in Scottish interests” and offering “any assistance my office can provide”.

Others felt that Mr Goodwin should have been facing criminal charges instead of just losing his knighthood.

Tory Treasury Committee member David Ruffley, who has been one of the most vocal critics calling for the knighthood to be removed, argued that from now on knighthoods should be conferred at the end of a career when an individual’s work can be properly assessed.

“He [Mr Goodwin] proved a huge disservice to the banking industry and I think what people wanted to hear was that this man was held to account.

“Bizarrely there’s been no criminal charges against the man, so he’s not going to be in front of a jury, and there was a sense that this guy had got away scot-free and the only thing left really to show the public opprobrium was for the knighthood to be stripped.”

But there was criticism of the decision from former Labour trade minister and the former CBI director general Lord Digby Jones. He 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.”

He asked whether others responsible for the crisis such as other board members of RBS or those responsible for financial regulation at the time would be pursued in the same way.

However, he added that Mr Goodwin “deserves what’s come to him” after his pension deal worth £950,000 a year sparked public outrage. He said he thought it was wrong for Goodwin to take the pension “at a time of austerity” when others were being forced to tighten their belts.

David Fleming, national officer of Unite, 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.”

A spokesman for the Confederation of British Industry (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.”

Simon Chouffot, spokesman for the anti-poverty Robin Hood Tax campaign, said: “This is clearly the right decision, but removing one man’s gong won’t repair the damage done to our economy by the financial sector.

“We need our leaders to move beyond tokenism, tackle the unjust financial rewards still rampant in the City, and ensure the sector pays its share to help people hit by the economic crisis.”

Scottish Lib Dem leader Willie Rennie said: “Sense has prevailed. This sends the right message that those who have let so many of millions of people down, cannot expect to retain the trappings and baubles of office.”

Scotland First Minister Alex Salmond said the decision to strip Mr Goodwin of his honour was a “distraction”.

He said: “On the one hand, if you’re on that forfeiture committee, and you get asked the question, ‘does Fred Goodwin deserve a knighthood for services to banking?’ clearly the answer is no - so their decision is correct.

“I suppose I’m not the only person to whiff some humbug in this whole business for two reasons.

“What about all the other people who are keeping their honours who were also involved in the financial collapse? Are they going to have their honours withdrawn?

“What about the folk in the House of Lords who have been convicted of serious criminal offences? Why are they still in a legislature?

“Secondly, isn’t this a bit of a distraction from moving ahead with the key issues at the present moment: the restrictions, the cuts in public spending that’s taking place; the lack of capital investment in the economy.

“I’m a bit suspicious that this is a convenient distraction, talking about one individual instead of facing up to the challenges that we as a community should be facing up to.”

The University of St Andrews said it would not be making the “precipitate gesture” of revoking Mr Goodwin’s honorary degree.

“Fred Goodwin was given an honorary degree in good faith by the university in 2004, shortly after he had been knighted and in the same year that Forbes Magazine had made him Businessman of the Year and Scotland on Sunday declared him ‘Number One Scot’,” a spokeswoman said.

“Clearly a great deal has changed since that time. The university is very sensitive to the varied opinions expressed about Mr Goodwin’s part in the collapse of RBS and its damaging effects on the economy and the lives of many thousands of people.

“Revoking the degree however cannot change history, nor ameliorate the harm done by the banking collapse, for which many people and institutions, not just one man, are responsible.

“In these circumstances, the university will not be pressured into making the precipitate gesture of revoking Mr Goodwin’s degree.”