If bankers want the gain, they should feel the pain

Rona Fairhead before the Public Accounts Committee
Rona Fairhead giving her ‘30,000 feet defence’ to the Commons public accounts committee: ‘If you can’t rely on experts, then what can you do?’ Photograph: AFP/Getty Images

Students at Harvard Business School probably know little of Millwall Football Club. Nevertheless the corporate titans of the future might do well to learn from the luckless London team, now sunk at the bottom of the English game’s second tier and set to be relegated to its third.

Which is not to say that the financial masters of the universe are not already expert in one aspect of Millwall lore. Paying themselves squillions and ignoring the protest and revulsion that come with it, they made Millwall’s chant – “No one likes us, we don’t care” – their own years ago. But the Millwall lesson I have in mind is more recent.

On Tuesday the club sacked its manager, Ian Holloway. After a run of defeats, Holloway lost the fans and was gone. It followed a brutal, basic logic: the boss gets the credit when the team do well, so he gets the blame when they do badly. That’s why he gets the big money. Here’s what Holloway did not say when challenged over Millwall’s terrible loss of form. “Ah, but that was nothing to do with me. As the senior management figure, I cannot be held responsible for every little transaction, every pass and tackle, on the pitch. I have to rely on those who report to me. If the team has been performing badly, prime responsibility lies with those on the ground, namely the players.”

If Holloway had tried that, he’d have been run out of town. No manager would dare utter the words. Bear that in mind as you recall the evidence given by HSBC’s top brasswhen they appeared before the public accounts committee of the House of Commons this week.

The star witness was Rona Fairhead, now chair of the BBC Trust, but crucially chair of HSBC’s audit committee until 2010 – in place during the period when, as the Guardian recently revealed, the bank’s Swiss arm was engaged in assisting clients with the most egregious tax evasion.

Asked why she hadn’t spotted this misconduct, Fairhead promptly passed the buck to the outside experts who were meant to keep her informed. “If you can’t rely on experts, then what can you do?” she asked plaintively, in a variation of that age-old complaint of the privileged, “You just can’t get the staff”. The notion that – for the £500,000-plus she was paid for doing between 75 and 100 days work a year for HSBC – she ought to have done her own digging to get to the truth seemed beyond her. Nor did it apparently cross her mind that if the information supply to her audit committee was wayward, that too might be her responsibility.

We shouldn’t single out Fairhead. Alongside her was Chris Meares, a past head of the bank’s private banking operation. As the man on the touchline, barking instructions to the players, surely he would admit responsibility. But no. MPs asked him again and again if he was culpable for what happened while he was at the top, but Meares conceded only that he may have been responsible for “control failings”. He was not in “day to day” charge of the Swiss operation and so couldn’t take the blame.

In the corporate universe, they call this “the 30,000 feet defence”. It argues that those who operate at such a high altitude can’t possibly be held to account for – or even know about – the antics of the little people below.

It made an early appearance 20 years ago, when rogue trader Nick Leeson brought down Barings. In those relatively innocent days, the bank’s chairman and deputy chairman felt compelled to resign swiftly – but they avoided punishment by arguing that they were far too senior to know what was going on. And who can forget the Murdochs, father and son, telling a Commons committee in 2011 that they were shocked, shocked, to learn how their bestselling British newspaper had been getting its front-page stories? They were far too elevated to know of such things. The courts eventually accepted that the same was true of the former News of the World editor Rebekah Brooks.

Other defences are available, of course. Some insist any failure is collective. Note the official report into the RBS disaster, and its verdict of “multiple poor decisions” by the whole board. That was handy. For if everyone is responsible, then no one is.

Or it somehow doesn’t involve human beings at all. It’s a “system failure”, akin to a computer breakdown. Stephen Green, the former HSBC head, spoke of “failures of implementation” when the bank was exposed for its regarding the bank’s role in Mexican money-laundering – a phrase conveniently free of human agency or culpability.

No wonder Andrew Tyrie, the Conservative chair of the Commons Treasury committee, speaks of an “accountability firewall” when it comes to the banking industry: you can’t get anyone to admit to anything. (Let’s hope Tyrie doesn’t give up on interrogating Green, if not in this parliament then in the next, no matter howembarrassing to a Tory leadership that made the former HSBC boss a trade minister.)

In a way, the buck-passing has a logic. In an organisation such as HSBC, with 300,000 employees, it’s a Herculean task for one individual to know what they’re all up to. But that’s why these top jobs get Herculean rewards. The implicit deal for top chief executives and chairmen should be quite simple. Either you’re blessed with an extraordinary managerial talent that enables you to watch over so many people at once that you deserve these stratospheric sums of money – or you’re not, in which case you should be paid on a par with lesser mortals.

At present the financial uber-class expect to have the best of both worlds – all the rewards of being in charge without paying the price of responsibility. It’s an individual version of the injustice laid bare during the great crash: that while gains are privatised, losses are socialised. The bankers get the big bonuses when things go right, the taxpayers bail them out when things go wrong.

All this only grows more infuriating with the knowledge that the public realm still insists on accountability from the person at the top: just ask the last director general of the BBC. Some parts of the commercial sphere are the same, as Ian Holloway can testify. But the upper echelons of corporate life remain out of reach. That feeds the deeper sense, which lingers still, that those responsible for the calamity of 2008 have never been held properly to account for the damage they wrought.

We have so few tools available to us – chief among them Margaret Hodge and her committee, committed to shaming the apparently shameless – that the high rollers can seem to be immune behind their accountability firewall. We need stronger weapons in our arsenal. To adapt the old Millwall chant: no one likes them – it’s time we made them care.

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