‘Shredding’ the rule of law?
3 Mar 09
The row over Sir Fred Goodwin’s pension is a convenient distraction from questions the government would rather we weren’t asking
The revelation Sir Fred Goodwin left RBS with a pension not far short of £700k per annum can’t help but leave a bad taste in the mouth. If, as the banking trade union Unite alleges, Sir Fred was at the forefront in introducing clawback provisions for his less well paid colleagues, it looks even worse.
What also leaves a bad taste, however, is the attempt to focus all the anger and resentment over the mess that has befallen the world economy on one man. First, to get matters in perspective, while there’s no doubt, with hindsight, that some very bad strategic decisions were taken at RBS (especially the acquisition of ABN Amro), many institutions and individuals had a hand in the boom and bust that has led us to worldwide recession.
Secondly, while “rewards for failure” are very hard to accept, they exist in many spheres other than banking. Chief executives, premiership football managers, prime ministers and other politicians very rarely take up a risky, high profile post without some kind of insurance built into their contract. We might not like it, but it is hard to recruit experienced people at that level without a “golden parachute” as part of the deal.
Thirdly, outrage on the part of the government looks like a knee-jerk response to bad headlines, especially as Sir Fred’s departure took place at the time RBS was being nationalised in all but name. When it comes to ousting a CEO under acrimonious circumstances, any serious plc would have had lawyers swarming all over the small print. If the government is now surprised at Sir Fred’s deal, that frankly smacks of incompetence.
Finally, am I alone in finding Harriet Harman’s comments on the Andrew Marr show (BBC, last Sunday) disturbing? She said: “It might be enforceable in a court of law, this contract, but it's not enforceable in the court of public opinion and that's where the government steps in".
So now we have a government that is ready to sweep aside the rule of law when things get tough? In a week full of alarming news, that is maybe the scariest so far.