On Wednesday 25 February the House of Commons Treasury Select Committee invited two bankers from HSBC, Douglas Flint, Group Chairman, and Stuart Gulliver, Group Chief Executive, to give evidence about alleged wrongdoings by their bank.
You can read everything they said in response to questions from the MPs on the Parliament website. It won’t take you long to realise that top bankers speak in a special language not easily understood by other people. I therefore ran some of their statements through Google Translate, by now a remarkably sophisticated automatic translation system, and this is what it suggested (in italics).
Stuart Gilbert: I welcome the chance to explain that situation but first, if I may, I would like to put on the record an apology from both myself and from Douglas for the unacceptable events that took place at our private bank in Switzerland in the mid-2000s, which is clearly an apology we would like to make to you all, to our customers, our shareholders and the public at large. It clearly was unacceptable. We very much regret this and it has damaged HSBC’s reputation.
You don’t seriously think I’d make this fake apology if we hadn’t been found out, do you? This was our mistake: not nailing the whistleblower before he blabbed to the press. If the point of our Swiss branch was to not help criminal and unprincipled types avoid prosecution, tax and worse, what was it?
Chair: My question was why you felt the need as a Hong Kong-domiciled person to create a Panamanian company [to hide your personal remuneration].
Stuart Gulliver: First of all, there was no tax advantage or purpose whatsoever to the Panamanian company. As a matter of fact, there was no tax purpose to it. It was a Panamanian nominee entity constructed purely to give me privacy … I was among the highest paid people and I wished to preserve my privacy from colleagues, nothing more than that … Nothing beyond the desire for privacy and for people to be unaware, other than the bank, the human resources department and the board of the day, as to what my compensation was. There was no tax purpose to the Panamanian nominee entity at all, none … I understand that it looks puzzling to people and it looks difficult and suggests that there might have been other reasons related to tax, but there were not.
I know it’s completely implausible to say that I hid my money in Panama because I was embarrassed about how much it was – we bankers don’t usually mind anyone knowing we earn in a month or two what most people earn in a lifetime, but if I say it often enough they’ll eventually stop asking.
Chair: You can see the concern that there will be among so many people who feel that a key problem in banking is that individuals even now are not going to be seen to be responsible for very serious banking failures and misdemeanours. The list that this bank has got involved in now is pretty long. I know it is a very large bank so there is plenty of scope. If I get any of these wrong, by the way, do correct me. This is the list of regulatory problems that you have on the go at the moment: interest rate derivatives misselling; LIBOR manipulation; you are under investigation by the European Commission on EURIBOR manipulation; misselling of mortgage-related bonds to Fannie Mae and Freddie Mac; forex manipulation; violation of international sanctions; weaknesses in money laundering controls; credit default swaps. You are under investigation by the US Department of Justice and the Commodity Futures Trading Commission for rigging gold, silver, platinum and palladium markets. You are facing class action lawsuits relating to similar things, class action lawsuits over complicity in the Bernie Madoff fraud. Are any of those wrong?
Douglas Flint: I think the only one that is not quite right is that we never faced any penalties or sanctions on LIBOR.
OK, I know that was a pretty weak answer, but really do you expect me to care about these petty misdemeanours? We might be fined a couple of million but what’s that besides the trillions we make through our dealings? What you people fail to grasp is that we’re not really immoral animals, just amoral: we don’t really recognise ‘good’ or ‘wicked’ means of making money, just effective and ineffective ones.
Chair: So it [restructuring the company] has not yet resolved all these problems?
Douglas Flint: It is a Forth Road type of job. It keeps going and then you start at the beginning again because circumstances change.
You naive buffoon. Do you really think banks can be made ‘clean’, or even that a spot of paint can make them look so? Oh, sorry, I meant the railway, not the road, bridge across the Forth. Should have known better, as a Scot. But these fools won’t have noticed.
Chair: What are the prospects of another bit of rotten HSBC popping out of the woodwork, as HSBC Switzerland did?
Douglas Flint: In relation to not having line of sight to what is happening at lower levels in the organisation, I think the control environment, because of the progressive implementation of a single set of standards, is very much stronger than it was in the past. The simplification that has been going on is in eliminating countries where it is not possible to get the control information necessary to understand what is happening, simply because it does not exist in certain countries, and sadly also in relation to certain cohorts of customers where in fact the information may not exist to enable us to risk assess whether we can deal with those customers safely in accordance with the regulatory standards that are put in place, so we have come out of—
A trick question! I’ll segue into an interminable string of banker’s management jargon, and just carry on, with the minimum of full stops, until the idiot has forgotten what his question was. ‘Eliminating countries’ sounds a bit Hitlerian, but my banking brothers will know what it means. I’m quite proud of that phrase ‘cohorts of customers’. Nicely alliterative, and it suggests that our dubious clients are like an army of Roman legionaries, impossible to control.
Mike Kane: Would you consider yourselves fat cats?
Stuart Gulliver: You would have to define “fat cat” for me for me to be able to comment more meaningfully on that.
Waste of a question. Can’t he think of something less hackneyed to call me? Actually, I’m rather fond of cats, like most people, and it’s never done me any harm being likened to one. As for ‘fat’, OK, I’ve not seen the inside of a gym for a few decades and I need to buy extra wide shirts, but obesity is just a professional hazard. Ask Flinto, he’s as waistline-challenged as I am. Someone has to keep the best Swiss and Hong Kong restaurants in business. In any case, when insignificant people call important people by abusive names, it’s just a tacit confession that they can’t touch us in any real way.
Alok Sharma: You are not prepared to take personal responsibility for your part as finance director, as a member of the board? I have to say to you that people watching this in the court of public opinion, our constituents, your customers, will find you quite wanting in not being willing to take personal responsibility. I just say that to you. I will ask you one more time. Are you prepared to take personal responsibility for the part you played in what happened in your Swiss operations?
Douglas Flint: I am sorry. I think saying that I have shared responsibility does accept personal responsibility, but it does not say I am responsible for everything that happened in a subsidiary that represented somewhere between 0.5% and 1% of our business. I do not have that line of sight. I am ashamed of what happened and I was part of the management structure during that time. So I have a shared responsibility, which I accept.
Personal responsibility? What’s that supposed to mean? It’s so easy to defend yourself against this sort of empty moral posturing. Gully and I have a choice of so many defences. It all happened long ago, before our time. Standards were lower in those days. We’re trying our best, like noble Heracles, to clean out the Augean stables. The company is so large and complex, you can’t be expected to know everything. Responsibility was always shared, so it’s impossible to identify any single individual for blame.
‘I do not have that line of sight’ is a phrase I’m rather proud of. A 21st century version of the defence the Nazi leaders tried at the Nuremberg trials.
John Mann: A final question to you, Mr Flint, because it is in your power to either get rid of Mr Gulliver or go yourself. Let me put this statement from Mr Gulliver to you, “It seems to me we are holding large corporations to higher than standards than the military, the church or the civil service”. If there were this level of criminality in the Church of England, would the Archbishop of Canterbury be in his job or would he be in a monastery praying for forgiveness? If there was such criminality in the armed services, do you think that everyone in the top brass in the military would be keeping their job or do you think someone would be apologising and resigning for presiding over it? Therefore, why are you not resigning or sacking Mr Gulliver?
Douglas Flint: I think Mr Gulliver is doing an outstanding job and I have absolutely every confidence in him, as does the board. Many of the things you have talked about are not criminality. They become so, but they are wide-ranging investigations with many industry parties. I think it is beyond the facts today to say that those are evidence of criminal activity. They are evidence of regulatory investigation.
I’m not entirely sure, but I may have lifted that first sentence from a recent statement by the Chair of a Premier League football club, just a few weeks before he sacked his manager. Gully isn’t a bad sort, but if a sacrifice ever needs to be made, you can be sure it will be his, not mine.
‘Always deny any accusation of criminal activity’ was my dad’s advice, and I’m sticking to it. But I ask you, how many bankers have ever been prosecuted, let alone convicted, of any criminal act? Even Fred ‘The Shred’ Goodwin only had his knighthood removed, nothing more serious. ‘Regulatory investigation’ sounds innocuous enough. And we fat cats have sharper teeth and claws than most regulators. My name isn’t Flint for nothing.
Oh, what miniscule men these MPs are, trying to tie us to the ground with their feeble little threads and pegs! In their hearts, though, they know the truth. Despite the ‘crash’, despite attempts to blacken our name, despite the public bail-outs, despite our ever larger bonuses, they know we’re still untouchable – I’m still one of the ‘Masters of the Universe’ – or as Stuart’s famous ancestor was called in Lilliput, ‘the Great Man-Mountain’.