columnibus

Tuesday columns for Newcastle Journal by George Hepburn

Month: February, 2014

How many of us would want to hug a banker, as Ed’s been told to do?

First, it was David Cameron hugging a hoody.  Now, Ed Miliband has been told to hug a banker. The Leader should charm the City , one of his MEP candidates advises,  as Gordon Brown did before him.

I can think of a few bankers I could hug. Fred Parker was the first manager to look after my business when I came to Newcastle in 1988. He took me out to lunch and showed a genuine interest in the newly founded Community Foundation. A man of propriety, known affectionately to his staff as Mr Parker, he might have been surprised by a sudden embrace.

His boss, John Ward, deserved at least a pat on the back. As Regional Director of Barclays, he played a leading role in civic life and fought many a battle for the North East. His counterpart at Northern Rock, the late Chris Sharp, did the same. But those days of bankers who lunch and lead are long since gone.

I could hug a number of bank staff who work hard in the depths of their vaults and privately confess to be embarrassed at the public demise of their businesses. But I would find it hard to reach out to their bosses, who have taken  away a total of  £80bn in bonuses since 2008,  and whose antics have  brought the economy to their knees. That is £1250 for every man, woman and child in the country.

Mark Carney  doesn’t strike me a huggable type  and chooses his words carefully. He  told Andrew Marr last weekend  that “Compensation of bankers should be held back and deferred for a very long time. There should be an ability and an expectation that a firm takes back compensation if an individual is found to have taken risks or if there are conduct issues. More pay should be deferred for a longer period.”

Bankers need to take a long term view and  regain their wider sense of their social responsibility if they are to move up the hugging charts again.

It is incredible that the bonus culture continues unabated and that government cannot or will not do anything about it. Personally, I don’t believe for a minute that the banks’ investment arms will fall apart if high fliers driven by bonuses moved abroad. I would have much more confidence in a future Prime Minister who got to grips with the abuses in the banking system than in one who shimmied up to them.

Would a  commitment to a Robin Hood tax  be a more likely  vote winner for the Labour Party?  Eleven European countries are negotiating for this tax on financial transactions that could raise £20bn a year but the U K government is going to the European Court of Justice to make sure the City of London is exempt.

If you feel the same about cavalier attitude of our major banks , then why not move your pennies  out of one of the big four into a mutual banker?  Moveyourmoney.org.uk, which is backed by ethical consumer, ranks all the main banks and shows  there is a choice. With the  new 14 day scheme to move a current account, it really is easy to do.

Strange to say, another banker I could hug is the discredited Paul Flowers, latterly Chairman of the Co-operative Bank. I still think he was the fall guy. If everyone whose previous misdemeanours were held against them or whose predilections for sniffing cocaine  debarred them from office, the corridors of Westminster and Canary Wharf would empty fast.

There was just a hint of smug satisfaction that a bank which tried to be different was found out.  

The Co operative Bank services  small  charity accounts  whilst others, in my experience, would love to be rid of them. So I did spend twenty minutes this week filling in the Co-operative’s questionnaire about its  future direction. Despite recent difficulties, I hope the Co op (old habits die hard when you can still quote your parents divi number ) persists in taking an ethical, community minded and  environmentally conscious stance.

The sleeping giant of the retail world has 7 million members.  It is interesting to hear Ed Miliband this week extolling the virtues of broad based mass membership in an attempt to re engage us all in the political process. Although the Flowers episode might suggest the need to revisit the election process,  there could be something to be said for greater participation in business too.

One person both Dave and Ed should be hugging is Alex Salmond.  It doesn’t take a Relate counsellor to tell you it is not going to help your cause to hector and bully a long term partner who is thinking of moving out. When it comes to dividing up  the family silver, a counsellor would recommend being even handed in order to keep on good terms for the future.

Rory Stewart, the up and coming member for Penrith, has a better idea. He is organising a human chain across the length of Hadrians Wall on July 19th  to show we love the Scots. The odd hug might be called for too.

I  have booked my place  in front of the television for voting day. We are in uncharted waters on an issue that could fundamentally change our lives. It is much too serious for tub thumping and there are as yet no signs of dispassionate facts and figures to help those with a vote. Those without a vote can only  sit and watch in trepidation.

Readers of my last column will not have been surprised to hear that during the Prince of Wales’s  private visit to Saudi Arabia, a long standing dispute over the price of 72 Eurofighter Typhoon jets for the Saudi air force was resolved. The Prince’s office was quick to point out that BAE ” did not come up in any of his conversations” with members of the Royal family.  Nevertheless, every reason for hugs all round.

 

 

 

 

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What will happen next in the shadowy arms trade?

 Lord Armstrong  had no qualms about manufacturing armaments or building warships.  He supplied guns to both sides in the American Civil War and built and equipped the Japanese warships  that won  the Battle of Tsushima in 1904.  Although his wealth, and hence Tyneside’s prosperity,  derived in no small part from the fortunes of war, Armstrong  seems to have been scrupulous in dealing with the government.

Would he turn in his grave if he knew about the shenanigans  of the  modern day arms trade? About 40% of the corrupt business deals around the world are related to sales of military equipment.

The writer and broadcaster  Andrew Feinstein argued at the Hexham Debate on Saturday that the arms industry is a perfect storm for corruption. It is  dominated by a few large companies who each year compete for about six major  contracts  worth on average $10bn. The decisions to award the contracts  are  made behind closed doors by between six and twelve people, creating the conditions in which it is all too easy to  shuffle the pack in your favour. 

Feinstein was an South African politician  who found himself, aged 29, chairing the Public Accounts Committee at the time  when Nelson Mandela handed over power to Thabo Mbeki. South Africa decided to spend $10 billion on fighter planes in a bid to become the top  military power on the continent. The contract was awarded to a partnership between BAE ( formerly British Aerospace and the world’s third largest arms producer) and Saab, although strangely they did not meet the original tender specifications and were  more expensive than their competitors.

 Feinstein’s committee was blocked by the ANC from questioning the deal. It was made clear to him that a promising political career was coming to an end if dug deeper.  Feinstein claims that 12 of the 26 fighter planes  have never flown though lack of pilots and funds and that in the  five years after they were the purchased, 365,000 people  in South Africa died of the AIDS virus primarily because the government could not afford the drugs to treat them.

To win the contract, BAE and Saab distributed £10m  in underhand sweeteners. An investigation by the Swedish government into Saab’s behaviour was dropped and BAE was  fined £250,000 on a series of deals  from which they profited by £1bn.

In his book ‘The Shadow World’, Andrew Feinstein chronicles  both legal and illegal arms deals  in the manner of a political thriller.  There are similar stories of trophy arms purchases and the equipping of militia by commercial arms dealers throughout Africa including Central African Republic where more horrific  violence has broken out this weekend. The consequences of a ready supply of arms in such countries is appalling but it is the institutionalised corruption  that incenses Feinstein.

All around the world, the connections between arms manufacturers and leading politicians are too close for comfort. Vice President Cheney continued his links with defence contractor Halliburton during his years in office and profited by $75m.  John Major joined the board of Carlyle Holdings, an opaque arms financier, once he retired. Helmut Kohl financed Christian Democratic Union from money from arms deals.

When questions are asked, the ‘get out of jail’ card  is played.  Arms deals must remain secret for reasons of national security.  The most spectacular instance of covering up a corrupt arms deal was when Tony Blair called off an investigation by the Serious Fraud Office into the Al Yamamah arms contract with BAE  under pressure from the Saudi Arabian government.

Robin Cook wrote in his memoires that he never knew the Prime Minister  “come up with any decision that was incommoding to BAE …. it was if they had the key to garden door of No 10”.

In 1985  Margaret Thatcher  broke off her holiday in Austria to secure the £43  billion deal. It included Tornado jets which were never designed to fly in the desert and broke down in the first Iraq war.  BAE allegedly shelled out £6 billion  in bribes to secure the contract over the French whose Mirage jet was technically superior.  The Saudi’s main negotiator, Prince Bandar creamed off £1bn plus  a private jet  decorated  by BAE  in the colours of the Prince’s favourite baseball team.

In defending Mrs Thatcher’s behaviour, Michael Heseltine told the Daily Telegraph that “if this is the way the Saudis want arrangements for their procurement programme , an international company would have no choice to go along with that. It’s massively important to us and the stability of the Middle East that we have those defence interests in Saudi.“

It is not as if backhanders are an occasional aberration in arms deals. There are structured into the bid price, condoned by governments  and squirreled away in off shore accounts held by intermediaries.  It still continues.  Only last month, Prince Andrew was in Bahrain promoting arms sales.

It is not clear why successive governments press the case of arms manufacturers. According  to Campaign Against the Arms Trade, the clams of jobs generated by defence industries are greatly exaggerated.  About 55,000 people are employed in the arms industry, which comprise less that 0.2% of the U K workforce and 1.5% of total exports. The industry’s  capacity to create jobs is in long term decline. ( visit caat.org.uk for the full story)

Promoting the arms trade skews foreign policy and affects the way we approach conflict around the world. Apparently there are more personnel involved in running and maintaining one U S aircraft carrier than are employed by the entire U S diplomatic service. As Andrew Feinstein pointed out, the U S Navy boasts 11 carriers.

One questioner in Hexham asked whether similar deals are struck in the nuclear industry. There is little public debate and more or less all party agreement  about building  a new generation of nuclear submarines at a cost of  £100 billion  for ill defined purposes. It makes you wonder what might be happen next in the shadow world of the arms trade.