Damian Reece in the Telegraph this morning gives the thumbs down to the FSA review on the goings on at RBS. He – rightly – excoriates the FSA for its egregious failure to nail anyone. He draws particular attention to the FSA assertion that the RBS debacle was not "a failure of corporate governance". Of course, the contents of the review are confidential so the taxpayer who, in the end, carried the can for all this non-failure is not to be told exactly why everybody concerned is exonerated.
No surprises that a regulator, mired in incompetence, finds itself and everybody else not guilty of anything. I'm only surprised that the FSA didn't lay the blame on "global warming". In other words, the RBS melt-down was an "accident"; one of those things that just happens: you know, like an uninsured drunk driving a car at speed past a stationary police car, skidding on ice and hitting a lamppost: avoidable and regrettable but the Motor Insurers' Bureau pays so nobody's hurt. No need for the driver to lose his licence. He won't do it again obviously.
I have personal knowledge of the gross ignorance of state functionaries which lies at the root of this crapola of a review. Part of my company arranges incorporations and administers companies in the UK for the legal and accountancy professions here and abroad: we rarely deal with the general public. One of those companies was used in an extensive fraud. I was interviewed (not under caution, I might add!) by a lawyer and accountant representing the FSA and the SFO. It soon became apparent that neither had anything except the haziest idea of the mechanisms by which companies incorporated in the UK (let alone abroad) function or are administered.
Accordingly, to explain how someone determined to operate a fraud could do so while ostensibly observing all the rules, I had to talk them through the mechanics of incorporation and other processes which neither they nor their employers had thought necessary to know in any detail. And no this wasn't a Columbo-like attempt at pretend-ignorance by experts to catch a lacuna in my understanding of corporate practice. FFS this stuff – tedious though it might be - is the nuts and bolts of corporate law and practice. It's not brain surgery.
If those organisations given the role of regulating outfits vital to the nation's wealth-creating capabilities as well as investigating corporate fraud have no idea of the basic mechanisms of how companies are formed and function then, without having to allege anything beyond simple incompetence, it's not surprising that the FSA review is rubbish.
Umbongo
5 comments:
I begin to suspect that one of the functions of the FSA, possibly the main one, is to give employment to friends and relatives of senior bankers and civil servants that are too dim to do anything else.
U: " I was interviewed by a lawyer and accountant representing the FSA and the SFO. It soon became apparent that neither had anything except the haziest idea of the mechanisms by which companies function or are administered."
This incompetence has no national boundaries. The most chilling experience was a form sent to a friend of mine for signing by the German equivalent of official receiver after his GmbH went bankrupt.
It listed the company's assets ('Akitva') with a box to enter the value for each: so it was desks - £50, computer - £100, bank balance DM - 73.42, and then it said 'share capital' and in the 'value' box was some officialese to the effect that 'The company has no assets and therefore the shares are considered to be of zero value'.
B - it was the function of the civil service before the Northcote-Trevelyan reforms of the mid-19th century to provide outwork for the progeny of the well-connected. I wasn't aware that these reforms had been abolished but, I suppose, direct appointment by ministers to quangos etc is a way of avoiding the messy business of getting the best (rather than the best connected by blood or politics) appointed to positions of authority and generous remuneration.
MW - I've had similar hair-raising experiences in the US but, for some reason, I used to expect better of home-grown bureaucrats.
I was saying this was all going to end in tears from around 2002 but no one listened! I was mocked!
U. I feel your pain.
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