Financial Times Europe - 12.03.2020

8 ★ FINANCIAL TIMES Thursday12 March 2020

Time to end corporate

impunity for fraud

As Caroline Binham and Jane Croft’s

excellent overview of the Barclays case

shows, the UK’s antiquated laws for

holding companies to account are due

for a major and urgent overhaul (“The

legal fight over a company’s

‘controlling mind’ , The Big Read,”

March 10). Large corporates, from

banks to large public contractors, are

in effect beyond the law when it comes

to fraud and false accounting. This

undermines the UK’s reputation for

fairness and integrity, as a place where

everyone plays by the same rules.

It also creates risks for the

government. If large companies

engaging in public contracts know they

are beyond the law if they commit

fraud, it poses real and substantial

risks to public procurement and the

public purse in this country.

As the Bribery Act has shown, having

legislation in place that makes

companies criminally liable if they fail

to take reasonable steps to prevent a

crime is the surest route to

incentivising companies to ensure they

have the procedures in place to do so.

Creating such an incentive for

companies to put procedures in place

to prevent fraud would be a major

contribution to the fight against fraud

that is now a critical key priority for

this government.

Maintaining the status quo or

pushing the issue off to the Law

Commission would be a missed

opportunity. We urge the government

to bring orward draft legislation forf

consultation so that we can highlight

and resolve any issues and then end the

current state of corporate impunity for

fraud.

Kevin Hollinrake MP

Conservative, Thirsk and Malton,

House of Commons, UK

That’s two black swans —

is a third imminent?

The average investor was not expecting

crude oil o return to the epicentre oft

financial markets, having viewed the

Opec oil cartel as a remnant of the past,

when oil prices exerted influence on

economic activity and consumer

prices. This second black swan has

come hot on the heels of Covid 19 —

will there be a third?

Past years have seen alternative

energy and US shale fields competing

with Opec+ producers as Donald

Trump was intent on reducing US oil

imports and substituting them with

shale. Since Russia suffered badly from

sanctions imposed by the US

government for its aggressive flouting

of international law in Ukraine, its

recent actions to renege on oil

production limits agreed with Opec are

not wholly surprising. They represent a

calculated act of one-upmanship by a

newly-emboldened President Vladimir

Putin.

Russia’s strategy of targeting shale

producers to push back against

sanctions stands to reason. But its

ruthless disregard for the collateral

damage on weaker Opec oil producers

will probably wreak havoc on those

countries’ finances and their

international investors if low oil prices

persist.

As tensions spark media coverage,

the recent (and unusual) drop in the

US dollar’s external value will inject

liquidity into international markets at

the same time as oil prices collapse.

This unusual combination should

counteract the double black swan

effects and be viewed as a positive for

financial markets.

If international co-ordination grows

to fight the effects of the coronavirus,

economic damage could prove

shortlived. Investors with cash and

strong nerves should look across the

valley.

Peter Seilern

Seilern Investment Management,

London W1, UK

An inflation-producing

option is available...

Cathal Rabbitte writes (Letters, March

6) that Fed governor Lael Brainard

“has no way to produce inflation”.

Adding face masks, hand sanitiser and

a stockpile of toilet paper to the basket

of goods measured should do the trick

in the short term.

George Horsington

Edlibach, Switzerland

Lessons of the financial

crisis have not been learnt

The lessons of 2008 are not being

applied to the pendingCovid-

pandemic. In 2008 the authorities

wasted many months doing everything

except addressing the fundamental

problem of bank solvency. Market

participants lost confidence and the

resultant economic cost was worse

than it needed to have been.

Today the failure of many

governments to buildfirewalls to

prevent this infection from spreading

risks leading to a similar loss of

confidence among market participants

and the general population. This will

result in the human, social and

economic costs being far greater than

they need have been. Nowhere is this

more apparent than in the UK and US.

Damian Chunilal

London W2, UK

Means-test parents and

get them to contribute

Charles Clarke (“British universities

need a new funding settlement”, March

9) flags up an important issue and

makes a number of proposals for

change that are well worthy of

consideration. But he glosses over one

significant aspect.

When I went through the university

system in the 1970s, part of the burden

of funding my education fell on my

parents, providing they had the

wherewithal to pay. If my children go

through the UK university system in

the 2020s no burden will fall on their

parents, unless we volunteer to support

them, regardless of our ability to pay.

This has been a most untimely burden

shift, when a solid phalanx of boomer

parents (like me) have accumulated

considerable wealth through the

inflation of property prices and

generous pensions, while the young

generation now face a tough task even

getting into property owning, and will

have to fund at least part of their no

doubt much less generous pensions.

As it happens, the one child I do have

at university so far is in the US, where

the college continues to means test

parents and get them to contribute at

an appropriate level. Mr Clarke wisely

nods in this direction by suggesting

that maintenance grants for students

from poorer backgrounds should be

reintroduced; I would argue for a more

general reintroduction of the

assessment of parental wealth and

income as a source of funding

undergraduate courses. It works in the

US, why not here?

Derek Marshall

Watford, Herts, UK

Not since Liberal party leader Jeremy

Thorpe was tried for attempted

murder in 1979 has British politics

been gripped by such high-stakes

court proceedings. Alex Salmond,

once Scotland’s first minister and the

leading campaigner for independence,

is facing charges of sexual assault. The

four-week trial, which may air the

Scottish National party’s dirty laundry

in public, has begun just as the

prospect of “Scexit” is back.

Scotland appears to be shuddering

towards another referendum which

could see it leave the UK’s union,

prompted by arebellion against Brexit

north of the border. The issue was

ostensibly “settled for a generation” in

a 2014 “Indyref” vote. But the Scottish

nationalists did not have to wait long

to inject new life into their cause. The

2016 vote to Leave the EU — in which

62 per cent of Scotland voted Remain

— produced new fractures nda

reignited the constitutional debate.

Campaigners for the union were

complacent last time around,

assuming a “safety first” message on

the economy would deliver victory —

until a shock poll emerged in the final

stages with Yes to independence

ahead. Only a last dash impassioned

intervention by former prime

minister (and ardent Scottish

unionist) Gordon Brown delivered a

55:45 victory for No. Next time,

avoiding Scexit will beharder, even if

the SNP’s embarrassment over Mr

Salmond’s trial, and a series ofother

scandals, fades. Last month in

Newcastle — the nearest English city

to the border — unionists met to

explorehow to save the UK. Hosted by

These Islands, a forum founded to

heal divisions sown in the Indyref and

Brexit campaigns, their discussions

were mbued with a sense of urgency.i

How could ritishness be made toB

feel relevant after the Brexit

polarisation?Strategists, pollsters and

politicians who attended all

recognised that they need a fresh

emotional message. Dry arguments

about currency and trade may not cut

it in an age in which the heart

triumphs over the head.

Unionists have yet to find this

elusive compelling story, however. Mr

Brownstomped across the stage with

his giant hands firmly in his suit

jacket, delivering a keynote speech

about how “empathy and solidarity”

naturally leads to “co-operation

between different nations”. The

National Health Service, he argued, is

“one big British idea”.

Douglas Alexander, a former

Labour cabinet minister and central

to the last Indyref campaign, grasped

the challenge. “We need to get a lot

better at storytelling,” he said.

“Turning up with facts is like turning

up to a knife fight with a teaspoon.”

Last time around, the Better Together

platform was nicknamed “project

fear” because of the dire economic

consequences of leaving the UK.

“We can’t scare people into staying

in the UK, it’s ever diminishing

returns. I can’t see it winning again,”

one donor told me.

Unionists at least know who they

need to convince. The Brexit

reconfiguration has seen voters in the

2014 Scottish referendum switching

sides based on their 2016 Remain-

Leave preferences. Of pro-UK Remain

voters — the lawyer living in an

Edinburgh townhouse for example —

pollsters YouGov ound 27 per centf

now back independence.

Unfortunately for pro-UK

campaigners, just6 per cent of pro-

independence Leave voters — a

fisherman in Aberdeenshire, for

example — have switched to

supporting the union.

Economist Kevin Hague floated a

slogan for targeting the Remain voters

who will ultimately decide whether

Scexit happens: “Two wrongs don’t

make a right.” Unionists can argue:

“We understand you didn’t want

Brexit but leaving the UK’s single

market would be even worse.” Can

this rational “head” argument work

against the nationalists’ promise to

rejoin the EU?

Unionists tend to feel

uncomfortable discussing identity.

The whole idea of Britain is to envelop

and so dilute the coarser feelings of

nationalism in England as well as

Scotland (and Wales). Six years after

Mr Salmond’s near victory, a shared

future has become even harder to sell.

And unless campaigners can find an

emotional message to convince

themselves, they have no hope of

convincing Scottish voters who are

giving up on the UK.

[email protected]

Wanted: shared

vision of

Britishness to

sell to the Scots

Notebook

by Sebastian Payne

The EU’s failure to establish a fair and

effective asylum policy is rooted in the

unwillingness of its member states to

share responsibility for people who

have fled conflict and persecution

(“ Europe cannot ignore Syrian migrant

crisis”, editorial, March 7). It is the

reason that tens of thousands of

innocent people — over a third of

whom are children — are trapped in

inhumane conditions on the Greek

islands.

This is not a “migration crisis” — it’s

a political crisis, whereby European

ministers have abandoned their

leadership responsibilities as well as

their commitment to international

and European law. These laws were

born out of the horror of the second

world war and have saved millions of

lives.

EU leaders’ actions suggest that they

do not understand the scale or

consequences of inaction. Moreover,

this failure has been obscured by the

crass rhetoric issuing from Brussels

and EU capitals. Ursula von der Leyen,

president of the European

Commission, described Greece as a

“shield” defending the EU border

against migrants — as thousands of

refugees struggled to survive the cold.

This dangerous rhetoric fuels the

narrative that migrants are a threat,

inciting racism across Europe. On the

Greek islands last week, refugees were

attacked, vital services burnt down and

humanitarian workers threatened.

It is hard to see how the EU can

develop a fair asylum system that

respects human rights when

commissioners and leaders in national

governments talk as if they were going

to war.

Marissa Ryan

EU Director,

Oxfam International,

Brussels, Belgium

EU leaders have made migrants the ‘enemy’

Letters

THURSDAY12 MARCH 2020

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OPINION ON FT.COM

Biden versus Trump in the age of contagion

Welcome to politics in a time of recession and

epidemic fears, saysEdward Luce

http://www.ft.com/opinion

‘There’s so much money around now

we’ve started using it as toilet paper’

Justthreeweeksago,JoeBiden’soddsof
securing the Democratic presidential
nomination seemed feeble. Now, after
freshvictoriesinprimariesinMichigan
and three other states, he is not just the
overwhelming favourite for the nomi-
nation. With Covid-19 upending
politics and economics, his chances of
winning the presidency itself look
increasinglystrong.
At other times, Mr Biden would be
underwhelming. He is a political
insider, in a country that despises
Washington DC. He is 77 years old and
is showing his age. President Trump,
73, has already implied his likely oppo-
nentinNovember’selectionissenile.
But recent events have added to the
anti-Trump appeal of the Democratic
nominee in waiting. Under normal
circumstances, a president running for
asecondtermagainstthebackdropofa
strong economy and a stock market
near record highs would be a shoo-in.
But, even before the coronavirus
struck, Mr Trump’s approval ratings
were almost invariably below 50 per
cent — with opinion polls often show-
inghimlosingtoagenericDemocrat.
Thehealth emergency has show-
cased the president’s defects as a
leader. Mr Trump’s egotism and his
inability to face facts have been on full
display. Confronted with a global crisis
onthisscale,theworldwouldnormally
look to the White House for a lead. Mr
Trump has singularly failed to rise to
the challenge. Nonetheless, Mr Biden
still faces a struggle over the coming
months: the president is a formidable
politicalcampaignerandhasabedrock
ofdevotedsupporters.
One problem for the Democrats —
and one that does not currently afflict
the Republicans — is the party’s bitter
internal divisions. That places a
significant responsibility on the shoul-
ders of Bernie Sanders, standard-
bearer of the Democrats’ progressive

wing, if as now looks likely he finishes

once again as runner-up in the

Democraticcandidacy.

Mr Sanders says his overwhelming

priority is to defeat Mr Trump. But he

has stoked the contempt his core back-

ers feel for the Democratic establish-

mentepitomisedbyMrBiden.Howand

whenMrSandersconcedesdefeattoMr

Bidenwillbecritical.FortheDemocrats

to beat Mr Trump in November, Mr

Sanders needs to endorse his middle-

ground adversary in magnanimous

fashion. His “Bernie Bros” must also be

urged to support the Democratic

nominee,ratherthanabstain.

Mr Biden knows that voter turnout

willbecriticaltohischancesagainstMr

Trump. That fact — as well as his age —

makes his choice of vice-presidential

nominee even more crucial than usual.

If Mr Biden wants to reach out to the

progressive wing of the party, there is a

strong case for SenatorElizabeth War-

ren. On the other hand, given the cru-

cial role that African-American voters

have played in reviving Mr Biden’s

campaign — and will play again in the

election — he could plump for a promi-

nent African-American, such as

Kamala Harris, Stacey Abrams or Cory

Booker. Alternatively, ideological com-

patibility and the importance of swing

states might incline him to aMid west-

ernersuchasAmyKlobuchar.

Most fundamental of all will be Mr

Biden’s selection of the right issues on

which to focus his campaign. Mr

Trump would love to fight the presi-

dential poll as a culture war. By con-

trast, the Democrats know that their

strategyforthe2018midtermelections

— which focused largely on economics

and healthcare — worked well. As he

looks to November, Mr Biden should

craft a campaign pitch that stresses

those same issues while also underlin-

ing his competence and his ability to

restorethedignityofthepresidency.

Joe Biden, with solid backing, has a chance to unseat the president

Democrats must unite if

they are to defeat Trump

European leaders are being shaken out
of their complacency. With news that
coronavirus infections have been iden-
tified in every EU country, the eco-
nomic outlook is worsening as fast as
the disease is spreading. The Bank of
England’s emergency stimulusyester-
day, as well as actions taken by EU gov-
ernments, put the onus on the Euro-
peanCentralBanktodoitspart.
Radical policies are being rolled out
across the EU. Quarantine measures
now apply to thewhole of Italy. Spain,
which has seen the sharpest accelera-
tion of infections in recent days, has
closed one chamber of its parliament
and banned direct flights from Italy.
Austriaisimposingbordercontrols.
These disruptions, along with the
effectonconfidencefromtheintensify-
ing siege mentality, are rapidly causing
economic damage. The eurozonewas
already suffering a slowdown. This
motivated theECB’s easing package ni
September, which helped arrest if not
reverse the industrial recession. But
any stabilisation has now been under-
mined by the Covid-19 crisis. Some
observers suggestthe eurozone could
see its sharpest economic contraction
sincetheglobalfinancialcrisis.
EU member states are stepping up.
Welcome measures to support busi-
nesses if they temporarily reduce
working hours, or to postpone tax pay-
ments, have been put in place in
France,Germanyandelsewhere.Butto
be fully effective, national measures
must be complemented by action at
theEUandeurozonelevel.
The European Council was right on
Tuesday tocall for the flexible applica-
tion f financial rules. Brussels shouldo
now suspend fiscal constraints, as the
rule book permits in emergencies
beyond governments’ control. More
funding for businesses and govern-
ments can be mobilised through Euro-
pean official lenders and the EU

budget: a common public good such as

healthiswhatjointspendingisfor.

But the most effective action needs

to come from the ECB, which meets

today. Unless it acts forcefully, it risks

falling further behind the curve.

Despite US president Donald Trump’s

castigation of the “slow-moving” Fed-

eral Reserve, the US central bank has

already taken dramatic action, deliver-

ing a large emergencyrate cut astl

week. The euro has since risen relative

to the dollar, adding disinflationary

pressuretotheeurozoneeconomy.This

isreinforcedbytheplungeinoilprices.

TheBoE’s package s particularlyi

impressive. Beyond a large rate cut, a

new targeted liquidity facility gives

banks incentives to sustain business

lending, and bank capital require-

mentshavebeeneased.Themosthelp-

ful thing the ECB can do is to emulate

theBoE’sactionstoensurecreditiseas-

ily available to offset any tightening in

businesses’cashflows.

Like the BoE, the ECB can design a

refinancing operation to give banks

generous incentives to lend to exposed

businesses. It can even go further than

Threadneedle Street in boosting asset

purchases, in particular for corporate

bonds. The ECB should also endorse

regulatory forbearance and fiscal guar-

anteesforcredittoaffectedbusinesses.

While the ECB’s already-negative

deposit rate makes it hard to match the

Fed and the BoE’s rate cuts, it should at

the very least not disappoint market

expectations: futures pricing implies a

0.1 percentage point cut to the deposit

rate now, with more to come in the

spring. This would ease overall finan-

cialconditionsandsupportdemand.

EU bodies have a history of waiting

too long to act in economic crises. The

ECB acquitted itself well in September.

It would be tragic if the first big deci-

sion on president Christine Lagarde’s

watchwasareturntobadhabits.

EU bodies have a history of waiting too long to respond to crises

ECB should act forcefully

to offset virus effects

The world has changed,

but not beyond recall

In doubting whether a prospective

Biden administration can return the US

to the status quo ante, Gideon

Rachman seems to argue against a

straw man (“Biden cannot turn back

the clock”, March 10). Of course the

world has changed beyond the control

of any new administration (and

beyond the damage President Donald

Trump has inflicted), such as in Xi Jing

Ping’s neo-Maoism and Narendra

Modi’s authoritarian Hindu

nationalism; and Mr Biden will have to

chart policies to deal with them. But on

fundamentals, one can anticipate a

curative return to normalcy, such as in

the restoration of the “dignity of the

presidency”, as Mr Rachman asserts,

and respect for “expertise and

professionalism in public life”. The

damage to constitutional practice,

inflicted by Mr Trump, as well as to the

intelligence services, will be radically

reversed. The US, as he notes, will

rejoin international efforts to combat

climate change and will restore

relations with traditional allies. All of

these endeavours would fall deeply

within the US national interest.

Yet even in crucial foreign policy

areas that Mr Trump has severely

maligned, such as the Iran nuclear

deal, a dialectical return can be

imagined. Mr Biden might reappoint

John Kerry, an early supporter of his

campaign, as secretary of state. Mr

Kerry retains a large reservoir of

goodwill with the Iranians. Given the

drubbing they received at Mr Trump’s

hands, they may be open to a return to

the accord, modified even to account

for its initial deficiencies, such as

agreement on ballistic missile testing.

Competition with China will proceed as

Mr Rachman avers, but with greater

nuance and subtlety; and Vladimir

Putin will mercifully be placed at arm’s

length. One can expect a better, more

effective approach to North Korea than

Trumpian appeasement, to be further

at hand.

In domestic policy as well one can

expect a return to a balanced economic

and social approach: a readjustment of

the tax system to address inequality

and to further reform the healthcare

system. And while social divisions can

never be eliminated, Mr Trump’s

electoral defeat, especially if it is a

drubbing, will spell the end of

Trumpism, or at least its severe

dampening, and a welcome revival of

moderate Republicanism, a return to a

meaningful two-party system. In this

regard, look for the resurgence of Mitt

Romney as a beacon. Mr Biden offers

greater hope for the future than even

Barack Obama did in his first

campaign.

Albion M Urdank

Los Angeles, CA, US

Promises, promises

When Gideon Rachman writes that

“Biden cannot turn back the clock”

(March 10), I can’t help but think of

Ralf Dahrendorf’s assessment of the

UK’s Social Democratic party in the

early 1980s: they’re promising a better

yesterday.

Henry D Fetter

Los Angeles, CA, US

MARCH 12 2020 Section:Features Time: 11/3/2020- 18:44 User:alistair.hayes Page Name:LEADER USA, Part,Page,Edition:USA, 8, 1