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02 February 2012


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John G. Stewart

Yes, Terry, hindsight is a wonderful, but surely you are being as inconsistent as your ' target '. You cannot be both against withdrawing Goodwin's award for bad judgement, while advocating the same for Greenspan.

Terry Smith

John Stewart,

Maybe I did not make my point clear: I think either Fred Goodwin should not be stripped or if he is, so should Alan Greenspan, and many others.

Patrick Lyster-Todd

Terry - I think the real lesson here is that our Honours system needs comprehensive reform and modernisation. It's bad enough that some people 'aspire to honours' (which, to me, merits an automatic disqualification for consideration) but that they receive them for doing nothing more than their paid job well (while, in many instances, being over-rewarded financially). So much better if awards were linked to genuine philanthropy, extraordinary sacrifice of personal time and energies and the betterment of society generally. Then Fred Goodwin wouldn't have been knighted in the first instance and this dichotomy wouldn't have arisen. Eg I'd far sooner see you honoured for your work on the Sir Keith Park Memorial (something done well if long overdue) than for your financial endeavours!


Interesting point of view Terry. What bothers me is who was responsible for the mandatory due diligence that should have been deployed prior to the shareholders being asked to make a decision?

Was that diligence carried out? If not, is there a collective responsibility attributable to the board for which they should be penalised.

If due diligence was carried out were the shareholders made fully aware of the negative issues which subsequently emerged?


How about rewarding people towards the end of there careers (or days) when the fruits of the labours are more apparent.fred should have kept his knighthood and hester should have kept his bonus.parliament seeks NOT to legislate retrospectively so why do they seek to meedle in such a fashion.


An extremely valid and interesting point.

Similarly, we should not accept the given excuse that it is not possible to remove from the upper house, Lords who have served time in prison, because it would require a change in law!

Changes in law really ought to be sort of their specialist subject.

Russ H

I am not sure that the banking industry is "highly regulated", if it was we would not be in the worst financial crisis for a hundred years. Although the financial services authority undoubtedly needs more power its not ultimately responsible for RBS business decisions. As I understand it FTS had a reputation for being very arrogant, as you know the first rule of investment is "do not bet more than you can afford to lose" and as a Banker it should should be written in his DNA. Now since FTS managed to achieve damage traitors can only dream about, I have no problem with him being put in the same category. If someone appears to run a Bank into the ground through arrogance and failing to observe basic investment rules, what punishment do you suggest?

Terry Smith


I couldnt agree with you more.

Terry Smith


Banking is certainly highly regulated. I say that from my experience of having worked at a bank for nine years and been the No. 1 rated bank analyst for seven years. It just may not have been well regulated. Regulators are well able to prevent major transactions which they do not think should happen. So can politicians: it is quite clear that Alastair Darling blocked Barclays bid to acquire Lehman and equally clear that the government promoted Lloyds disastrous acquisition of HBOS. The difference between Fred Goodwin and the traitors is that he has not been found guilty of anything. If he’s committed a criminal offense then let him be charged and tried by a jury. If it’s a civil matter maybe that he is responsible for losses to shareholders and taxpayers then he could be sued for damages and the burden of proof would be lower than in a criminal case. Then if he is found to have done wrong, strip him of his honour. But you need a due process to do so not a politically inspired kangaroo court which meets in camera. I am all in favour of blame and punishment for wrongdoing but everyman is entitled to know what he is charged with and to be fairly tried for it. To by-pass that is a slippery slope.

Terry Smith


I have already replied to a similar comment and agreed with it. I think you are right: just doing your job albeit well should not lead to honours and aspiring to gain honours should automatically disqualify anyone. You may not be aware but I was honoured in the New Year Honours List becoming a Member of the New Zealand Order of Merit.

Terry Smith


I’m not sure it needed a lot of due diligence to avoid the ABN Amro disaster. It just required two things: a) an awareness of how perilous the banking system was-bear in mind that the run on the Northern Rock had already occurred when Royal Bank bought ABN so it didn’t require a crystal ball to figure out there was an unusually severe problem; and b) a lack of ego mania.

Terry Smith


I agree. The church wisely does not allow anyone to be canonised until after they are dead. This is probably extreme in terms of honours but the end of someone’s career would clearly avert the problem which has occurred with Fred Goodwin. The political meddling in this case is reprehensible: there has been no due process to show what Fred Goodwin is alleged to have done wrong and neither is there any consistency-several others who were culpable have retained their honours. The politicians have behaved like playground bullies-picking on an easy target. I bet they won’t touch Alan Greenspan’s knighthood and he did more than any other individual to cause this crisis.


«there has been no due process to show what Fred Goodwin is alleged to have done wrong and neither is there any consistency-several others who were culpable have retained their honours.»

While I agree that withdrawing the honour was done in part for base political reasons, and of all people Greenspan should not have a honour for fostering «stability», your argument is quite weak.

The main reason is that a honour is not something that is owed to a banker as a matter of right, but as a special distinction based on a call of judgement that the recipient surely made a big and special contribution to the country. Bringing to failure one of the largest banking conglomerates in the country makes that call of judgement questionable in the extreme.

Withdrawing the honour is not a conviction for a crime, and does not need to meet the same standards; Goodwin does not deserve a honour as a matter of right unless he can be convicted of a crime.

But the worst bit of your argument is:

«He shared responsibility with the board chaired by Sir Tom McKillop, and the fateful acquisition of ABN Amro was approved by the RBS shareholders. Banking is also a highly regulated industry and his actions were supervised by the Financial Services Authority, then chaired by Sir Callum McCarthy.»

If Goodwin is not responsible or only partially responsible for his major decisions as CEO, why ever has he been paid so fabulously well when things were good?

The case should be strong then that he should share that fantastic pay with his chairman and banking regulators.

You cannot use the argument that the RBS CEO is in part a figurehead taking direction from several people he has to obey to exculpate him when things go bad, you have to follow it also when things go well.

My personal opinion is that the principal responsibility of the CEO of a large bank conglomerate is to invest the conglomerate's capital prudently and productively, and Goodwin did that very very very badly, betting the conglomerate on some amazingly dubious stories. Buffett has repeatedly stated that he does not invest capital in stories that he cannot understand. Goodwin could have taken that advice.

His call, his success or shame.

Unless really it was not his call, and he really was mostly a figurehead. In that case he does not deserve performance related pay either, and shareholders should have been told that he was not fully in charge.

Terry Smith


Thank you for taking the trouble to write. I am not defending Fred Goodwin or suggesting that he or anyone else has a right to an honour; and I agree with you wholeheartedly that individuals should experience the downside when their decisions prove to be wrong, just as they get the upside in the form of rewards and honours when they are right. There is a Lucy Kellaway article for the Financial Times (Lucy Kellaway: “Assign blame where it’s deserved” 8th January 2006) which I often cite to some of the whiners I encounter who want huge bonuses when things are going well but can’t see why they should see them cut when it isn’t, or who moan about “A culture of blame”. I agree with Lucy, blame can be good unless you want to live in the nanny state where everyone is a winner. However, what I would suggest is that if someone is to be stripped of an honour a) there should be some consistency about the grounds and manner in which this is done; and b) there should be some due process. We accord that even to perpetrators of the worst crimes. Historically honours have been removed from traitors, despots and convicted fraudsters. Mr Goodwin clearly does not fall into any of those categories. I agree that a criminal prosecution may be inappropriate or too difficult but there has been no civil or regulatory action against him either where the burden of proof would be much lower. So what is he alleged to have done which is so heinous that he must be condemned to join the traitors, despots and fraudsters but which apparently requires no action against him? I agree that the CEO of any commercial organisation bears the greatest responsibility for its performance and his single most important task is the allocation of capital, and Fred Goodwin got that spectacularly wrong. But Fred Goodwin operated within a corporate governance and regulatory framework and it seems unreasonable that he alone should therefore be punished and others who played a prominent role in this disaster should hold onto their honours. Fred Goodwin has been victimised for political reasons. This will be proven by the facts that the Forfeiture Committee will not strip an honour from any other individual for their role in this crisis such as Sir Tom McKillop (Chairman of the Royal Bank of Scotland). Sir Callum McCarthy (Chairman FSA), Lord Stevenson (Chairman HBOS), Sir Victor Blank (Chairman of Lloyds) or “Sir” Alan Greenspan, Chairman of the Federal Reserve who must surely bear the greatest individual responsibility for this crisis. The government acting like a playground bully has singled out Fred Goodwin for punishment because he is an easy target.


Lets be honest here: stripping Fred the Shred of his knighthood (which he arguably never deserved in the first place) is a poor substitute for what should have happened.

The man belongs in prison.

There is no difference between what Goodwin did to RBS and what Dennis Koslowski did to Tyco a few years earlier.

The difference is that Koslowski went to prison once he was caught.

Goodwin belongs in prison as well.

Before you start defending this loser, explain why he continues to get 400,000 pounds of welfare payments in retirement -- when bank tellers and loan officers through out England no longer have jobs.

Stealing from the qualified to benefit yourself is not something a true knight would ever do.

Terry Smith


I am not attempting to defend Fred Goodwin, and I agree that it’s at least arguable that he, and many other recipients of honours should never have received them in the first place. But everyone is entitled to due process and Dennis Kowslowski was imprisoned after a trial by jury. If you or others think that Fred Godwin is a thief he is entitled to have charges laid against him and to be tried by a jury of his peers. We grant that right to perpetrators of much more heinous crimes than theft.


I agree completely with what you say in your letter. As a layman, I am not really qualified to have an opinion about the really important question (although I will probably allow myself that indulgence.) I would be interested in your view as to whether the statements that were made about the state of the RBS balance sheet during the rights issues conducted by the bank in 2008 were accurate, bearing in mind what they then knew about RBS exposure to the sub-prime mortgage scams and associated insurances in the US. If they weren't accurate did someone commit a crime?

I, like many people, dislike the English establishment. The decision to keep secret the PWC report following its 17 month study into the failure of the FSA to regulate RBS properly adds to suspicion of a cover-up.

At first I was surprised that Cameron wanted to strip Goodwin of his knighthood and now I can't help wondering if it would have been a different decision if Goodwin was of English public schoolboy provenance. I think it's reasonable to conclude that the evidence of a crime having been commited must be quite compelling to embolden Cameron to behave as he has done. He probably thinks that while it's proper to pursue benefits fraudsters with the full force of the law, it's not desirable to have long drawn out court cases about the crimes of senior figures in the banking industry, even if they are smart-arse bullies from Paisley. Doubtless Cameron is hoping he's done enough to head off a media and public demand for the full force of law to be applied to Sir Fred now he's been so ritually humiliated.

For me it would be far more civilised to take him through the courts. But if it does happen Fred, don't worry. The great English establishment might decide to look after you. Remember the other great corporate criminal: Ernest Saunders. I believe he's still a medical miracle. He was released after 10 months of his 5 year term as he was suffering from Alzheimer's Disease. Moments after leaving prison he fully recovered. He remains the only recorded case of recovery from Alzheimer's.

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