Crime and punishment in the banking sector

Crime and punishment in the banking sector

November 2013, London

Every week now we hear of yet another ‘record fine’ imposed on one bank or another for their role in the financial crisis and the more recent rigging of benchmark interest rates in the Eurozone. We know that Brussels is preparing to fine six more banks for the latter, and that JP Morgan is about to agree a $13 billion settlement for the former. (This relates to the sale of mortgage-based securities that contributed to the near collapse of the banking sector in 2007).

What ARE these fines, other than an exchange of money? What do they amount to? What do they mean? What do they set to achieve? Surely not anything moral – neither apologetic nor in any way restorative – as they are not accompanied by any attribution (and even less acknowledgement) of guilt. In fact, if anything, they represent a settlement stricto sensu – being meant to settle (or put aside) any investigations by the Justice Department and other regulatory bodies. How is this good for anyone, I am curious to know, other than the banks themselves?

Compensation, or the beginning of justice

Compensation, or the beginning of justice

October 2013, Oxford

While we are having lunch at Eagle and Child, one court back in London is busy deciding how much Shell should pay the thousands of fishermen from the Bodo community for destroying their livelihoods when its pipes burst five years ago, causing giant oil spills that devastated the Nigel delta. Last month, the company offered around £1,100 per person affected. The whole community perceived this more as an insult, than compensation. Therefore, the offer was rejected – so the courts will now decide the right level of compensation.

But what does that mean – and is money ever enough to compensate for such loss? A whole community devastated, and the Bodo creek out of action for a quarter of a century; forests and swamps thick with oil; water wells polluted; 11,000 people left without electricity, habitat, and source of income. Is money all they deserve in return for everything but their life?

Surely compensation should be just the start of justice for that community and the region. This should be accompanied by an apology and an admission of guilt on the part of the largest company on the London stock exchange. A thorough clean-up process should follow. Both people and the environment need help to recover – and this cannot or should not be just a one-off derisory lump-sum.

£1,000 per life destroyed… I wonder what CS Lewis would make of such an offer, or his fellow ‘Inklings’ who were dining at Eagle and Child a hundred years ago.

Migrant workers’ motivation

Migrant workers’ motivation

April 2013, London

What is it that attracts immigrants here – benefits, culture, location, or something else? I doubt we will ever agree on any of these answers, but whatever each of us happen to believe (which is largely influenced by personal experiences) it is only fair to remember some facts. For example, the fact that countries like Italy and Spain have always been and will continue to be Romanians’ preferred destination, because of language and cultural similarity.

And it has already been established, both by political leaders and by academic and practitioner research (such as the Centre for Research and Analysis of Migration, the Migrants Resource Centre) that immigration motivated by benefits is a myth (please click here and here to see two examples).

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Trading values?

Trading Values

January 2013, London

Pascal Lamy was busy this month. From Davos, the Director General of the World Trade Organisation went to Bangladesh, where he visited the busy Chittagong port and gave a speech at the Chamber of Commerce on 1 February. On both occasions, he reiterated the importance of removing barriers to trade and establishing a multilateral trade facilitation agreement, which could save up to $1 trillion for the global economy. Apparently, nowadays border crossing cost 10% of the value of trade and average customs transaction involves 20–30 different parties, 40 documents, and 200 data elements, a third of which must be repeated several times. The World Economic Forum estimates that by reducing these barriers — many of them regulatory in nature — global GDP would increase by 4.7%, by contrast to only 0.7% gain if the focus was just on removing tariffs.

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The flipside of corruption: transparency?

The flipside of corruption: transparency?

December 2012, Romania

For twenty years, Transparency International has been trying to identify, measure, and tackle corruption in over 100 countries and across industries. Now the organisation has decided to try a different angle, and ask how transparent (rather than how opaque, or unaccountable, therefore potentially corrupt) some of the world’s largest companies are.

The report, published six months ago, tries to ‘shine a light’ on the issue by looking at three criteria: a company’s anti-corruption programmes; the transparency of its governance structure; and whether or not it publishes detailed financial information in all countries where it operates. While most companies score reasonably well on at least one of the first two criteria, the third one proved to be a deal-breaker. And the reason for that is that the country-by-country financial reporting the research looked had to include not only general levels of income and expenses, but also details about taxes paid, community contributions, and any “special arrangements” the company may have entered into with local governments. Or, such things tend to be kept behind a veil of secrecy across the world and in all languages. The average score on this criterion was a mere 4%, while nearly a half (41%) of the companies scored zero.

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