LIBOR, bankers and South Staffs – a tale of our times

RBS chairman Philip Hampton and chief executive Stephen Hester gave evidence to the Committee on Banking Standards recently.

MPs and Peers on the Joint Committee quizzed both men on the LIBOR scandal, after the Bank was fined £390m by regulators for its part in the systematic manipulation of inter-bank lending rates by some of its traders. The UK banking sector’s reputation has suffered from a wave of scandals, starting of course, with the taxpayer-funded bailouts in 2008 following the GFC.

Bonuses, PPI mis-selling, dodgy deals with Qataris (Barclays), money laundering (HSBC), and a seeming refusal to lend to UK businesses, have all served to make bankers public enemy number one. But now consider the impact: Barclays boss Bob Diamond (and chairman Marcus Agius) forced to resign, other senior bankers – most recently RBS investment banking head John Hourican, stepping down despite being cleared of accountability for LIBOR.

For PPI and other instances of mis-selling, the banks will pay billions in fines. Heads have rolled, bonuses have been cut, banking will restructure following Government legislation to ring fence riskier investment banking from [supposedly] less risky retail banking. A vast number of inquiries – including Vickers and Banking Standards – have placed bankers firmly in the public spotlight day after day, week after week.

Banks are continuously stress tested by regulators. Their IRRs have been cut dramatically to account for the post-GFC world, hundreds of thousands of FS staff have been made redundant. Capital requirements have increased exponentially. Truly, banking is undergoing its very own bonfire of the vanities.

Sure, it is appropriate that banks behaving badly – which they did, and maybe still do – should reap what they sow. City AM editor Allister Heath, among other City commentators, argue that bankers who manipulate LIBOR have committed a criminal offence and should go to prison. And so say all of us. But banks have reacted to public opprobrium, and if Barclays new CEO Anthony Jenkins is to be believed, and I do, he is serious about his desire to lead a cultural revolution at Barclays to regain public trust.

NHS chief executive Sir David Nicholson was, in a previous life, head of the strategic health authority which oversaw the sinister and disastrous regime at South Staffs hospital. A hospital whose staff were responsible for the deaths of hundreds of people in their care. The Francis report paints a bleak picture of life in this particular corner of the NHS. Fearful staff were dissuaded by bullying bosses from complaining; nurses and doctors who passed by the other side of the road while elderly patients starved to death or rotted in their own excrement, drinking water from flower vases.

The NHS is notorious for silencing whistleblowers with gagging orders. The culture of secrecy and self-interest would make any self-respecting investment banker blush. The cost of the NHS to the public purse is over £120bn each year (banks were bailed out to the tune of £65bn).

Yet in the aftermath of one of the most shocking reports into mass-medical negligence in this country, there is no accountability. As far as I’m aware, nobody has resigned, and if they have, we don’t know about it thanks to those infernal gagging orders. Sir David says sorry – and then continues in post with the excuse that someone i.e, him, needs to put things right.

No one has gone to jail, nobody is identified – clinicians, nurses or management – and the families of those who died have to continue their fight for justice. Some of those bosses have left with payoffs (courtesy of the taxpayer) for well-paid jobs elsewhere.

Where is the next South Staffs going to come from? Recent news reports list around 20 hospitals where their own staff would avoid sending members of their families for treatment. The very same administrators and managers who turned a blind eye while South Staffs failed its patients are, in the person of David Nicholson and no doubt others, running the NHS.

Who will clean the Augean stables that is the NHS? Commentators bemoan the vested interests which hold back reform of banking, but those interests are rank amateurs beside the people who are remunerated by the taxpayer to send patients to an early grave. Attempts at NHS reform are stymied at every turn.

And, as Phil Hammond (Private eye’s MD columnist and himself a medic), persuasively argues in the Times, it’s not as if the NHS hasn’t had to face up to many other scandals before, including the disastrous performance of Bristol Royal Infirmary’s cardiac unit, which he was the first to bring to public attention.

A few years ago I attended a lecture by an investigative journalist who had exposed the extent to which German businesses operated with forced or slave labour during the Second World War. Many of these companies continued to prosper after the 1945 and are, even today, contributing to the health and welfare of the German economy.

He believed that these businesses were so tainted by their past that they should simply be closed down. It was simply not acceptable that they had been allowed to continue.

Is the analogy with South Staffs unfair? One patient – a Polish lady - who died from neglect in South Staffs hospital was quoted in the Times. Her son noted that when she was a girl in Poland, she was put in a concentration camp. He went on: “On Ward II she told me in Polish so that the nurses wouldn’t hear, ‘at least in Auschwitz I have friends. In here I have nobody.”