On weakening the leadership at RBS (or Luke’s Gospel)

 economic blackmail, Luke Bozier, RBS, Stephen Hester, unclassifiable  No Responses »
Jan 312012
 

Luke Bozier, the Tories’ most recent recruit from the Labour Twitterverse, has this to say this morning on the RBS row:

It’s counterintuitive to weaken the RBS leadership. It makes sense that they have the best possible people making it viable again.

It does make me wonder where Luke’s moral compass lies – if, indeed, it lies anywhere.  Requiring someone to tighten their multimillion-pound belt in hard times such as these, when others are losing their entire livelihoods as a result of the mess the previous regime and CEO left behind them, is surely not weakening the current leadership but, rather, giving it the opportunity to show how intellectually coherent it jolly well can be.

As well as socially sensitive – and relevant to boot. 

I am minded, as a reminder of exactly where we find ourselves, to dig up a tweet of my own from yesterday.  This was where I wondered the following:

Is there an #economicmodel which indicates exactly when you pass from needing less to work harder to needing more to work harder? #justaskin

Perhaps Luke can explain when this happens?  And precisely why we should be so unambitious as to go along with its consequences?
____________________

Further reading: according to Wikipedia, Hester joined RBS in 2008.  In 2009, under the aforementioned leadership (in this case, the RBS board), this happened:

In November 2008 he left British Land and on 21 November 2008 replaced Sir Fred Goodwin as Chief Executive of the RBS Group. Hester is paid an annual salary of £1.2 million by RBS.[1] Alongside this, he took home £7.7m in bonus and pension payments [6]

In December, 2009, the board of RBS, in which the United Kingdom government has an 84% stake, threatened to resign unless they were permitted to pay bonuses of £1.5bn to staff in its investment arm.[7] The matter received heavy criticism because it followed a £850bn taxpayer bailout of the banking sector.[citation needed] The Chancellor of the Exchequer, Alistair Darling, said he would not be “held to ransom”.[8]

Ring any bells Luke?  Weave any patterns?  Examples of what you might term the kind of behaviours we would wish strong leadership in Britain to acquire?

If you ask me, and you don’t have to, this company – as well as its wider sector – has a history of doing just what it wants.  But, in my opinion, that’s not a sign of strength.

Rather, it’s the sign of a bully.

My magnificent RBS cheque for 89 pence!

 bad capitalism, RBS, Richard Branson, Stephen Hester, unclassifiable, Virgin mobile, Zavvi Retail Limited  No Responses »
Jan 302012
 

Whilst Stephen Hester, the man at the helm of the Royal Bank of Scotland, has just decided under enormous media pressure to forego his almost-million-pound bonus for last year, I received today the following RBS cheque for the magnificent sum of 89 pence.

Now the story behind this cheque is a little involved, so first I’ll get you all up to speed by referring you to a previous post of mine from 2008.  And whilst I’m on the subject, I’d like to underline, of course, that neither that story nor today’s follow-up implicates RBS itself in the financial difficulties the cheque both relates to and attempts to compensate for.  Nor, would I also hasten to add, does the company named on the cheque – Zavvi Retail Limited (in Creditors’ Voluntary Liquidation) – have anything to do with the website you can find at the address Zavvi.com, a company which I understand belongs to a completely separate owner.

Anyhow, if my calculations are correct, of the ten quid I was originally owed by the company in question (via a voucher deal it was running with our dear Richard Branson’s Virgin Mobile franchise) – and between the last payout and this – I will have received the grand sum of £2.39.  As you can see, a princely percentage indeed – and, we might also argue, a perfect example of how an unhappy capitalism often takes full advantage of its undeniable legal right to sidestep a moral liability for all it should pay back.

No wrongdoing here, either.  All according to the rules.

Just the faint feeling that the rules are skewed too much in favour of the already mighty – as well as, incidentally, despite everything, those who would still like to be.  Whilst, when push comes to shove, the long-suffering consumer can do no more than literally whistle in the wind.

Chaos at RBS: good, bad and very very ugly

 a con, chaos, corporate hooligans, economic blackmail, latterday capitalism, RBS  No Responses »
Jan 292012
 

This, from the BBC last November, reminds us how chaos is in the eyes of the beholder:

Eviction notices have been attached to tents at a protest camp outside St Paul’s Cathedral.

The City of London Corporation notice tells Occupy London Stock Exchange (OLSX) activists to clear the “public highway” by 18:00 GMT on Thursday.

The “public highway” being the land occupied by the protest at the time which did not belong to the Cathedral.

Obviously, the kind of chaos this was leading to – on a shared “public highway” – was considered by those who we presume should know more about these things as completely unacceptable in a modern civilisation.  Two reactions then: first, this was chaos; second, we should not tolerate it.

And I can live with that conclusion – even where my instincts are not to approve.

This morning, meanwhile, we have another example of chaos – this time as defined by Iain Duncan Smith:

Iain Duncan Smith has said there would have been “chaos” if ministers had overruled the board of RBS and vetoed a £963,000 share bonus for its boss.

The government has come under pressure to act over Stephen Hester’s bonus as it owns 82% of the bank’s shares.

Cabinet Minister Mr Duncan Smith told the BBC “nobody would be happier” than ministers if Mr Hester declined it.

But it had been up to the RBS board – if they had gone, it would have had a huge impact, he said.

The kind of huge impact – on an 80 percent state shareholding, on tens of thousands of workers and on millions of customers – which no one in our society is willing to do anything about, at least in the sense of proactively preventing its occurrence.

Except, of course, by not only giving entirely in to but also sanctioning fully the rights of those making these implicit threats of executive blackmail.

Again, my reactions are twofold: first, as in the case of St Paul’s, this was chaos; second, we have no alternative but to tolerate it.

Oh, people! 

Really! 

How do you expect us to believe in a socioeconomic environment which behaves like this? 

I really find no other way of describing this second example than to call it economic blackmail by corporate hooligans of the very lowest order.  And these are the captains of industry whose behaviours we are being asked to support and even emulate?

How very very short the modern representatives of capitalism are happy to sell their baby these days.

RBS and politics: two conundrums quite beyond me

 bankers, banking, banks, capitalism, hierarchy of power, politicians, politics, pyramid politics, RBS, reward, unclassifiable  No Responses »
Jan 212012
 

I’m finding all this difficult to understand and would like someone to explain it to me (the bold is mine):

Last week, after delivering a speech on “popular capitalism”, the prime minister refused to say whether he would block a bonus for Hester, who is widely seen as having done a good job at RBS, after taking over from the much-maligned Sir Fred Goodwin in 2008. The board of RBS, which is 83%‑owned by the taxpayer, is said to be considering a bonus of £1.3m to £1.5m for Hester, on top of his £1.2m annual salary. A final decision from the company’s remuneration committee is expected on Wednesday.

But Miliband, who is determined to define his leadership around the issue of “fairer and better capitalism”, said it was entirely wrong for a bank, majority-owned by taxpayers, and which is making thousands of people redundant, to pay its boss a £1m-plus reward in such circumstances.

The Labour leader told the Observer that the public would not regard it as “fair or right” for the head of a company whose share price had halved in the past year and which had missed its target for lending to small businesses to cash in when so many hard-working people were struggling to make ends meet. [...]

A good job?  A bonus equal to his salary?  Thousands of people redundant?  A share price which has halved in the past year?  A bank which has missed its target for lending to small businesses?  A good job?  A bonus equal to his salary?  Thousands of people redundant …?

And so the circle continues.

I don’t know.  I mean I understand – but I don’t know.  There is nothing unusual, of course, about top-flight executives being paid enormous amounts of money to fire thousands of workers, not hit targets and fail their shareholders.  Nor is there anything unusual about large companies believing that to retain such leaders – allegedly able to stand usefully on the pinnacle of these pyramidal organisations – they will need to reward them whatever they do because reward is the preserve of such beings.

It seems natural, in fact.

Even so, I don’t know.  Why can we not agree on something as simple – and as key – as remuneration policies in industrial relations?  Why has it become so natural for money to accumulate more money – and for its relative absence, as time goes by, to lead to even lower incomes for everyone else?  As I am clearly ignorant of the technical aspects of the conundrum under discussion, all I can do is presume that it’s because we don’t all value the same things.  Balance sheets in such times are incompatible with full employment: those of us who want a job will never appreciate the intelligence required to slash a workforce by frightening percentages. 

How can we ever possibly agree under such circumstances?

Meanwhile, Chris points out most accurately that capitalism is no longer efficient – not even on its own terms.  Its ever-concentrating circles of wealth have meant that the money which used to swill more broadly around the economy now spends far more of its time in the pockets of the incredibly wealthy.  Innovation and renewal – the opportunities for business ingenuity – are falling dramatically as fewer are able to get a sniff at that cash which once flooded our hopes.

The conundrum that is RBS, then, is but an element of a wider conundrum: how do we agree on what our society should value?  Are we finally condemned to permanent disagreement?  Are resolution and cooperation – words which we manage to value in other contexts – not to have their place in business and politics?

And how is it possible that governments themselves are never more firmly in place than when they break their election promises, ruin entire communities, send unemployment rates soaring and make a society more conflictive?

Why – essentially – do we reward so generously bad behaviours like these the higher up the hierarchical scale we go?

Why is it so good to be so bad when you’re at the top?