ANY OTHER BUSINESS| MARTIN VANDER WEYER
A whistleblower mystery that illuminates
the inner turmoil of the banking sector
Fasten your seatbelts
Are you reading this in the departure
lounge, en route to an Easter break? If like
me you’ve chosen to fly with Ryanair, I sus-
pect you will judge the experience by the
ease of airport parking, the length of the
security queue and whether they play that
fanfare signalling ‘another on-time arrival’.
Anything approaching decent cabin service
will come as a bonus: you’ll hear things like
‘Gosh, these girls work hard considering
they’re paid next to nothing’ or ‘Actually,
this lasagne’s not bad for a fiver.’ Four years
into a marketing programme called Always
Getting Better, supposedly about being
nicer to customers, the genius of the Ryanair
model is that we still don’t expect pleasant-
ness so long as we get cheapness and punc-
tuality — and we laugh at the chutzpah of
chief executive Michael O’Leary when we
read headlines like ‘Ryanair threatens to
double passenger fee for babies’.
Compare all this with British Airways,
which long since ceased to be ‘the world’s
favourite airline’, but resisted the no-frills
revolution by continuing to present itself
as a paragon of customer care, maintain-
ing a slightly camp Home Counties tone
to its cabin service that can feel 30 years
out of date. Consumers’ criteria for judg-
ing BA are, I suggest, the opposite of those
for Ryanair: never mind the delay, enjoy
the in-flight entertainment and the elegant
crockery. But now the national flag-carrier is
reinventing itself as ‘British Bareways’ (says
the Sun) by selling M&S sandwiches instead
of offering free meals on short-haul flights,
and threatening to do likewise on long-haul
— while reducing leg-room and outdoing
O’Leary for brutality by barring an elderly
female passenger from using the toilet.
It’s a business-school case study in man-
aging expectations. If your hallmark is com-
fort and courtesy, lower fares will never
compensate customers for cuts and slip-ups.
If your selling proposition is ruthless low-
cost efficiency, play that on-time fanfare and
you’ll be forgiven for everything else.W
hat troubled places banks have
become, I thought as I listened to
two news stories, one concerning
a formal reprimand for Barclays chief exec-
utive Jes Staley after he tried to uncover
the identity of a ‘whistleblower’, the other
trailing new revelations about the Libor
scandal. But both, I’m afraid, were so badly
explained that the majority of listeners must
have been none the wiser.
The Staley episode is mysterious. Anon-
ymous letters to Barclays directors made
allegations about a recently recruited sen-
ior executive: Staley felt this was an ‘unfair
personal attack’, believed ‘honestly but mis-
takenly’ that it was permissible for him to
identify the author, and tried to do so with
the help of a ‘US law enforcement agency’.
This ‘error’ has cost him a big slice of bonus,
though it won’t cost him his job.
Whistleblowers are entitled to anonym-
ity under the Public Interest Disclosure Act
1998 as well as codes adopted by employers
such as Barclays. Across the financial sec-
tor, the Speak Up campaign has positively
encouraged them: HSBC chairman Douglas
Flint spoke of ‘rewarding and celebrating’
those who share concerns about colleagues’
behaviour, ‘even if they are sometimes
wrong’. One result was a cacophony of
whistleblowers contacting the Financial
Conduct Authority — up from 276 in 2009
to 1,376 in 2014 and 1,104 in 2015.
As with sex abuse allegations against
public figures, a portion of these complaints
are highly likely to be the inventions of poi-
son pens. It’s impossible to judge the mer-
its of the Staley case (regulators are still
looking into it) from Barclays’ veiled public
account. But what it clearly illustrates is the
inner turmoil of a sector plagued by misbe-
haviour, mischief and malice.
The wrong Libor scandal
Then there’s the continuing fallout from the
Libor scandal. The BBC made much this
week of a recording, from 2008, of one Bar-
clays manager instructing another to submit
artificially low rates into the daily interbank
Libor fixing because ‘we’ve had some very
serious pressure from the UK government
and the Bank of England about pushing our
Libors lower’. How shocking is that?
Well, perhaps not as shocking as it looks
— even if it appears to contradict select com-
mittee evidence given by the Bank’s former
deputy governor, Sir Paul Tucker. The latter
part of 2008 saw a liquidity panic in the City,
in which the interbank lending market all
but froze. Spikes in Libor would have given
the impression — or confirmed the real-
ity — that even the major banks involved
in the daily fixing were finding other banks
less willing to lend to them, amplifying the
panic. So it’s not hard to imagine some
officials believing that ‘pushing our Libors
lower’ was a justifiable pragmatic response
to an emergency in the banking system, even
if it meant asking ‘rate submitters’ to lie.
And in terms of the degree of sin
involved, that’s quite different from the
other Libor scandal in which, over several
years, traders in London, Tokyo and other
centres habitually pressured rate submitters
within their own and other firms, sometimes
through brokers, to falsify Libor in order to
favour their trading profits. That one really
is a shocker. In effect, it was the corruption
of an entire global market.
But attempts to bring justice to bear on it
have been patchy: a long stretch for the UBS
and Citigroup trader Tom Hayes, lesser sen-
tences for four Barclays men, acquittals for
everyone else collared by the SFO, includ-
ing the six money-brokers who allegedly
did Hayes’s bidding — and no taint on the
careers of senior executives anywhere, even
though the defence offered in every trial
has been: ‘Our bosses knew exactly what we
were doing, but turned a blind eye.’
The moral of these twin tales is that
banking’s cataclysmic boom and bust left
behind far too many allegations for them all
to be dealt with in a wholly satisfactory way.
Regulators and bank boards should focus on
what (and who) was really bad, and encour-
age the media to explain it all better.