Occupy movement helped shift thinking about the ethics of banking

November 30, 2012

Posted by Tudor Rickards

Andrew HaldaneAndrew Haldane, [image supplied] an executive director of The Bank of England, recently told a meeting organised by Occupy, that the protesters had touched a “moral nerve” for the financial sector. He might also have been referring to the Church of England

A year ago, the direct action group Occupy had targeted the London Stock Exchange [15 October 2011] then formed a protest camp at nearby St Paul’s Cathedral, until their eviction by police.

In his speech on socially useful banking as reported by the Bank of England, Mr Haldane said:

“Occupy has been successful in its efforts to popularise the problems of the global financial system for one very simple reason: they are right …
There is the quiet, but unmistakable, sound of a leaf being turned. If I am right and a new leaf is being turned, then Occupy will have played a key role in this fledgling financial reformation. You have put the arguments. You have helped win the debate. And policymakers, like me, will need your continuing support in delivering that radical change.”

An independent voice

Haldane has been speaking up in an independent fashion for a Bank of England director for some years. In 2009 at the hight of the credit crisis he challenged the argument that measures to restrict banking bonuses would lead to an exodus of talent from the UK.

His independent views have been aired from his position as executive director for financial stability of the Bank of England. He is known to oppose high velocity trading [HVT} practices which involve a form of computer-aided trades in micro-seconds. [A brief insight into the mind-boggling nature of HVT illustrates the arguments for a small financial transaction levy. This remains a controversial issue favoured by many European bankers but anathema to the City of London where it is seen as another potentially damaging Euro-scam]

Meanwhile, a new leader emerges

Now Andrew Haldane pepares for a new chief, Mark Carney, appointed this week [Nov 26th 2012] by the Chancellor George Osborne. Mr Carney is the governor of the Canadian central bank and will have new powers as Bank of England governor by the time Sir Mervyn King steps down [in June 2012].

Carney a former Goldman Sachs banker had previously ruled himself out. This, and his non-English status, made him an outsider for the post.
Sir Mervyn said Mr Carney represented “a new generation of leadership for the Bank of England, and is an outstanding choice to succeed me”

Carney is widely seen as a brilliant and independent minded figure, who will have his own ideas about a range of issues on which Andrew Handane has commented, maybe including the moral high ground held by the Occupy movement.

For students of leadership

For students of leadership, this transition of institutional power from one leader to another will make an interesting and living case study.


Is there a Watergate Scandal Emerging at Volkswagen?

February 25, 2008

watergate.jpg

Watergate is shorthand for a gradual but remorseless process through which a powerful leader becomes destroyed. Are there parallels in the current scandals at Volkswagen which have resulted in imprisonment for several middle-ranking executives? Will the very top leadership in Germany eventually be brought down?

Earlier this week [February 2008] Klaus Volkert, the former head of Volkswagen’s employee council, was jailed for his role in a corruption scandal.

According to The BBC, Volkert

was found guilty of incitement to breach of trust in the case, which involved employee representatives getting illegal privileges.

We have commented over the last year of the leadership troubles that have been hitting the corporate reputation of Europe’s premier car manufacturer.

I picked up the scent of something of interest, because of a little surge of numbers of visitors to this site searching for news about the VW company. That’s when I came across a Reuters report

Volkswagen supervisory board member Guenter Lenz has resigned his seat, becoming the latest casualty of a scandal involving the use of corporate funds to bribe the carmaker’s senior labour leaders. According to a statement from the Hanover works council, Lenz told employees on Tuesday at a plant staff meeting that he would now resign his board seat and his post as the site’s works council boss after previously ceasing to actively execute his duties. The public prosecutor’s office in Brunswick accuses him of aiding and abetting fraud and partaking in parties with prostitutes paid for out of a VW slush fund. Lenz, who has also resigned from the Lower Saxony state parliament, would accept a court sentence for his wrongdoing, the Hanover works council said.

The scandal has already cost the jobs of VW management board member Peter Hartz, group works council chief Klaus Volkert, as well as a member of the German federal parliament.

An earlier post [updated in October 2007] looked at the history of leadership problems at VW, concluding that
… the financial markets have absorbed the uncertainties regarding VW’s less secure future when and if the Volkswagen protection laws are removed. They are also unshaken by the leadership scandals, and by the risk that VW is falling behind Toyota in the development of its hybrid car range. (Strictly speaking, that is a wider concern for the future success of the German premium automobile marques, VW’s Audi, but even more so, BMW and Mercedes). At least Martin Winterkorn seems to be enjoying a leadership honeymoon.

Martin Winterkorn appears to have been parachuted in as someone untained with earlier scandals.

Back to Watergate

President Nixon’s downfall is now a classic of modern cultural mythology. The great leader is brought low, despite all efforts he made to protect himself.

At first, only the minor players in the drama are attacked. But as each each in turn is weakened, it becomes easier for a more important figure to come under attack. The drama is sustained with the prospect of defeat for the most powerful figure of all.

Forward to Volkswagen

Are we witnessing at Volkswagen a story that is gradually working its way towards the very highest of executives associated with the scandal?

I can only observe that denials are being made. The denials may be a necessary strategy to protect individuals from the hints that are emerging in the press.

Until something more substantial emerges, I shall not be naming names.

Acknowledgement:

Image of Watergate was downloaded from Professor Olsen’s fascinating history site