Tuesday, 3 July 2012

“Well, Ted, like I said last time, it won't happen again” Bob Diamond and the culture of corporate repentance

Imagine, if it is not too disturbing, being romantically enmeshed with capitalism. Apart from living in an absurdly cluttered house full of gadgets you were persuaded to buy on your credit card, you would, by now, be sick and tired of same lame excuses for errant behaviour. And the clockwork promises of a fresh start.

Bob “the time for remorse is over “Diamond is angrier than anyone at the rigging of interest rates, he assured Barclays staff in a memo. The guilty ones will be asked leave, he pledged, before leaving himself. Barclays will reorient its business around “clear principles”, we are promised.

This, little more than year after Diamond made “good citizenship” a corporate priority.

By a strange coincidence, Diamond resigned on the same day that giant UK pharmaceutical corporation GlaxoSmithKline was fined $3 billion for “the largest healthcare fraud in US history”.

GlaxoSmithKline admitted trying to get American psychiatrists to promote anti-depressants to children. GSK staff also bribed doctors to prescribe GSK products by, amongst other methods, paying them millions of dollars to go on speaking tours and giving away tickets to Madonna concerts.

“I want to express our regret and reiterate that we have learned from the mistakes we made,” said chief executive Andrew Witty. “When necessary, we have removed employees who have engaged in misconduct.”

Last year, Rupert Murdoch offered sincere apologies in full-page adverts in UK newspapers for the phone hacking undertaken by News of the World staff. “We regret not acting faster to sort things out,” he said, before promising that his papers would become a “positive force in society”.

It might sound irredeemably cynical, but each time I hear corporate promises of reformed behaviour, the immortal words of Father Dougal McGuire spring to mind: “Well, Ted, like I said last time, it won't happen again”.

Even if one is very, very generous, and not at all credulous, and takes at face value the strenuous official denials of knowledge of wrongdoing (in the cases of Barclays and News International), one question does arise. Why do corporations always find themselves chock full of people who undertake anti-social actions which result in more money for them and higher profits for the corporation?

It couldn’t have anything to with the fact that corporations are legally obliged to maximize profits. That they are institutionally selfish organisations, dedicated to destroying the competition? Could it?

But because the current British political discourse cannot make 2 and 2 equal 4, politics inhabits a fairly tale landscape of one public inquiry after another into the moral failures of corporate culture, each promising to “restore confidence”. George Osborne’s “age of responsibility” has about as much chance of coming about as England do of beating Spain in the next World Cup Final.

Even the pale pink Polly Toynbee, who in today’s political culture probably counts as a dangerous leftist, can’t avoid making the obvious connections.

Rupert Murdoch, she pointed out, has done what all businessmen do, given the chance – strive to gain a monopoly. The consumer and morality can go whistle. “The success of his business was built on gaining the edge by evading regulators and avoiding taxes, as all companies will unless stopped,” she said. “So let's not obsess over his character.”

But we are obsessing about Murdoch’s character and Bob Diamond’s character and the cultures they propagated. All this obsessing, consciously or unconsciously, evades an understanding of a structural explanation for corporate crimes

It was not ordained by Yahweh on tablets of stone at the dawn of time that the economic organisations humans depend on for their livelihood should be run for the exclusive benefit of small groups of owners. Or that those enterprises should compete for their survival with similarly constituted rivals in a market. But contemporary politics and culture acts as though it was.

It really is time to see through the excuses.


  1. Stephen Gulliver, chief exec of HSBC, after the bank was fined £1.2bn for laundering money for drug cartels: "We accept responsibility for our past mistakes. We have said we are profoundly sorry for them, and we do so again," he said, insisting Britain's biggest bank was "a fundamentally different organisation" now.

    Those words remind me of something. Can't think what.

  2. From an article by BBC business editor, Robert Peston, about Barclays closing 400 branches http://www.bbc.co.uk/news/business-25549660

    "There are official probes into whether they have rigged other benchmarks, in foreign exchange trading and in so-called swap rates for derivatives (the benchmark price for complicated deals worth trillions of dollars).

    What some have found particularly shocking is the allegation that the rigging of some of these markets - in foreign exchange at Barclays for example - may have been taking place as late as last summer, long after the top brass of banks said very publicly that such behaviour was unacceptable"

    But I thought Barclays' business was reoriented around "clear principles"

    Obviously ripping people off is one of the principles

  3. Sorry! (again) - http://www.theguardian.com/business/2014/nov/12/banks-fined-record-2bn-foreign-exchange-rigging