|Former RBS chief Fred Goodwin (R) was knighted in 2004 for ‘services to banking’ [GALLO/GETTY]|
London, United Kingdom – He is now, for all the right reasons, just plain old Fred. But plain old Fred will now go down in British history for all the wrong reasons. The former Chief Executive of the Royal Bank of Scotland, Fred Goodwin, is no longer a Sir, no longer a knight of the realm.
This is, of course, the man who kept himself firmly above water as his bank began to sink, saved only from drowning by the British taxpayer. A rescue operation that cost us £45bn ($71bn), triggering the worst recession in the UK since the Second World War.
The now Mr Fred Goodwin was knighted in 2004 for “services to banking”. A completely unnecessary gesture in the first place as “services to banking” is surely part of his job description. Knighthoods should be reserved for people who are altruistic, go beyond the call of duty and make an exceptional difference to society and their community.
According to the British monarchy, a would-be knight would have to prove himself worthy, according to rules of chivalrous behaviour, such as “faithfulness to his Saviour and his Sovereign, generosity, self-denial, bravery and skill at arms”. No surprises then that the British monarchy gushes that a knighthood is “one of the highest honours an individual in the United Kingdom can achieve”.
So, with all that in mind, why on earth was Fred honoured for running a bank? His salary rewarded him enough financially with a reported £4.2m ($6.6m) in 2007, including bonus and an obscene £16m ($25m) pension pot – more on that later. Speaking of perks of the job, Mr Goodwin obviously wasn’t a fan of public transport, preferring, instead, to be flown around in his private jet and chauffeured to work, which incidentally isn’t your average office block, but a plush £350m ($550m) base. And I just dread to think about all those expenses.
But all that extravagance is now history. Fred Goodwin has joined a disgraced club, sharing membership with Robert Mugabe who was stripped of his honorary knighthood in 2008 over his “abuse of human rights and abject disregard for democracy”. Also joining them is Nicolae Ceausescu; the Romanian dictator was knighted to build relations with Romania in the Cold War, but was stripped of his knighthood in 1989, the day before he and his wife were executed by the Romanian army.
Anthony Blunt, who was knighted for services to art, but named in 1979 by Margaret Thatcher as a spy for the Soviet Union and Jack Lyons, a financier who was convicted for illegally boosting the share prices of Guinness, have also had their knighthoods revoked by the Honours Forfeiture Committee.
The Queen was acting on the advice of Prime Minister David Cameron, who revealed after his speech calling for popular capitalism that the government had asked the committee to strip the then Sir Fred Goodwin of his knighthood. The first thing that sprung to my mind as Mr Cameron crowed about “the proper process being followed” and “ending up with the right decision” was what took him so long to get the ball rolling on this? Surely he wasn’t bowing to pressure that he should demonstrate some form of accountability over one of the government’s most grotesque examples of rewards for the rich.
“Here we have a situation where achieving the largest loss in UK corporate history, the CEO was allowed to stay in post ‘until his successor was appointed and available’.”
RBS collapsed back in 2008 after posting the largest loss in UK corporate history – a record £24.1bn ($38bn). In the Financial Service Authority’s 452-page report into “The Failure of the Royal Bank of Scotland” many factors are blamed, but the stand out one is the acquisition of Dutch bank ABN Amro in a £49bn ($77bn) deal. The report states: “RBS’ decision to proceed with this acquisition was made on the basis of due diligence which was inadequate in scope and depth given the nature and scale of the acquisition and the major risks involved.”
Who was at the helm steering that acquisition? Chief Executive Officer Fred Goodwin was. He was the highest ranking executive in that company and should and must be fully accountable for everything that happened under his watch. If Goodwin’s decisions are “inadequate in scope and depth” then he is not trustworthy enough to be allowed to make decisions that require “scope and depth”. He can’t enjoy all the privileges and perks that a top corporate position brings and then not take full responsibility when aggressive expansion goes wrong. This is a man that had no duty of care or regard in his reckless decisions towards his business, his shareholders, his staff and customers.
There’s always the pension
So the knighthood is gone, but really how much of an impact of losing it is really going to have for someone primarily concerned with one thing: money. Taking it away shows accountability on a “public level”, that the “right thing has been done”, but strip that away and nothing has changed. There has been no disciplinary action towards Fred Goodwin and – on a wider scale – no signs of accountability towards ruthless, reckless bankers that “do exactly as they please”.
And of course, Mr Goodwin still has his pension. Originally awarded a yearly £703,000 ($1.1m) allowance, aged 50, he now draws an annual £342,500 ($541,000) – after taking a £2.8m ($4.4m) lump sum of his pension pot – on which RBS paid the tax. To add insult to injury, the obscenity surrounding his pension arrangements make for astonishing reading. Here we have a situation where, after achieving the largest loss in UK corporate history, the CEO was allowed to stay in post “until his successor was appointed and available”. Astonishingly, no-one seemed to consider sacking him would be a more than appropriate move.
In a letter from the Royal Bank of Scotland to the Treasury Committee, the bank attempts to explain Goodwin’s absurd pension entitlements “estimated in the range of £15m [$23m] to £20m [$31m]”. RBS are forced to admit that his pension was so high as he was not dismissed, stating: “If Sir Fred had been dismissed in circumstances which were not characterised as retirement at the request of the employer, he would have received a deferred pension, payable at age 60, or, with consent, payable at an earlier date but subject to an actuarial reduction. The value of Sir Fred’s pension is £703,000 [$1.1m] per annum as at 31 January 2009. The approximate value of a deferred pension payable would be £416,000 [$617,000] per annum”.
To attempt to show some kind of remorse and dignity it would have been reasonable to expect Fred Goodwin “to do the decent thing” and give that pension back. But that wasn’t going to happen without a fight. When asked to not take all of his pension entitlement to “acknowledge the level of government support being made available to RBS”, Goodwin wrote back arrogantly refusing to do so. However, after continued public pressure and reports that his family’s safety was at risk, he agreed to say goodbye to £200,000 a year of Britain’s most controversial pension.
One former banker, who didn’t want to be named, told me that, as Goodwin hadn’t “broken any rules as such” he wouldn’t have seen any “financial justification” in reducing his pension entitlement. When I asked him about the morality of taking it, he said: “Principle in finance is a completely different issue.”
He also told me that he believed current RBS CEO Stephen Hester should not have been pressured into forfeiting his £1m bonus. “It was obviously just done to be seen to be doing the right thing publicly,” the banker said. “If you think about the job he has to do in turning that bank around, then £1m bonus isn’t that much in such a competitive industry. What people need to realise is that Hester being pressured into not taking his bonus runs the risk of forcing Hester and senior management out. Government interference creates uncertainty, which hurts the share price, making it harder for the government to recoup its investment.”
Reflecting back to a certain Mr Fred Goodwin, there are two important words which he has never ever said: “I’m sorry”. “Sorry” for forcing British taxpayers to bail him out (who now own 83 per cent) of the business he arrogantly and aggressively destroyed. “Sorry” for disappearing into the sunset with his taxpayer funded retirement. Or “sorry” for leaving thousands in Britain scrabbling around for work, forced to pick up the mess that is showered on us from a culture of greed and excess at the top.
Siobhan Courtney is a British freelance broadcast journalist and writer. She is a former BBC World News presenter and BBC News journalist who has reported and written for BBC Newsnight.
The views expressed in this article are the author’s own and do not necessarily reflect Al Jazeera’s editorial policy.