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Emerald Group Publishing Limited
Article Type: Editorial From: Journal of Financial Crime, Volume 22, Issue 1
The latter years have demonstrated a remarkable incidence of financial crime in the banking sector.
So egregious has been the phenomenon that it seems as if banking professionals have lost the ability to be able to distinguish between right and wrong.
Every conceivable kind of banking malpractice has been committed, from wholesale fraud in the provision of personal protection insurance to literally hundreds of thousands of hapless customers; the fraudulent sale of interest rate swaps; the criminal intervention in the foreclosing of loans on assets worth significantly more than the amounts outstanding; the criminal manipulation of the Libor and Forex benchmarking rates; and last, but by no means least, the wholesale exercise in the breaches of sanctions and other money laundering prohibitions.
This era of banking crime has been coupled with an exercise in regulatory sclerosis, as the regulators have competed with one another to excuse and to ignore blatant criminal actions of the most egregious nature. The era reached its apogee after HSBC was fined $1.9 billion by US regulators for laundering the proceeds of the Mexican Cartels’ drug profits, and for other breaches of important sanctions, but no one in the HSBC hierarchy was investigated, prosecuted or went to jail!
It was as if to be a banker meant that one had become a member of a protected species, living in a world of arrogant affluence, where any form of ethical or moral constraint had been written off!
The message this has sent to the ordinary man and woman in the street, whatever the bankers may say, is that they are synonymous now with an organised criminal enterprise, entities whose entire moral compass is bounded by the need to make profits at all costs, regardless of the ways in which these profits are generated. The ordinary laws of the land are to be ignored, all conventional banking mores flouted and clients exploited at every stage.
The public have taken that message on board, and bankers are now held in lower esteem than at any time in living memory.
This message could be heard repeated time after time at the 32nd Annual Symposium on Economic Crime held at Jesus College, Cambridge, this September, and speaker after speaker referred to the need to return to an era of ethical standards and high moral values in financial services.
So, it was perhaps no surprise, in one sense, to learn that one of the most egregious of all the banking culprits, Barclays Bank, had most recently entered into an agreement with the esteemed Cambridge institution, the Judge Business School, to create the first executive education academy for compliance in a bid to change the way the financial industry is run. The Judge School was on record as saying:
[…] In a potential world-first academic and industry collaboration, the focus is on a values and judgement-based approach to compliance, leading thinking and creating understanding around the emerging regulatory regimes which are being developed around the world […].
The Cambridge–Barclays Compliance Career Academy is the first programme to be established under the school’s Centre for Compliance and Trust.
Its website announces that it will focus studies in three main areas, which include:
1. the function and value of the financial industry in today’s society;
2. the ways in which the sector responds to and acts within the regulatory environment; and
3. the behaviours and practices of organisations to respond to the need for trust and good conduct.
KPMG Professor Emeritus of Management Studies, Prof Dame Sandra Dawson said: “Working together, Barclays and Cambridge Judge Business School have created a programme that is world-leading and will take compliance to a new level […]”.
The Academy offers eight modules in total, delivered in a number of locations including Cambridge, New York, Singapore and Johannesburg. Modules covered topics such as The Global Financial System, Understanding the Regulatory Environment and Conflict of Interests, among others.
One would be forgiven for believing this to be nothing more than a cynical exercise in self-promotion, and indeed, I have said so in other publications.
However, Jesus College itself became the forum for a very important statement of intent from the Barclays Global Head of Compliance on this very subject!
At about 10.00 p.m. on Wednesday 3rd September 2014, Mike Roemer from Barclays Bank, who had been invited to be a keynote after-dinner speaker at the 32nd International Symposium, stood up and caused me to re-consider my views.
It is not often a man in Mike Roemer’s position comes to a public event and metaphorically takes off the protection of his corporate clothes! Mike Roemer did more than that, he delivered himself, philosophically naked to his opponents and critics (like myself), and he made a series of stark confessions for the sins of his corporate employers.
I listened thoughtfully, and I found myself, despite my initial scepticism and cynicism, warming to the man. When he had finished speaking, I had to go away and think very carefully about his well-chosen words.
And what a confession!
He sought not to mince his words. He said (and I am paraphrasing here and hoping to be accurate) that Barclays had done things badly in the past. That they had made serious mistakes and that they had got things wrong.
He gave a careful review of many of the ways in which Barclays had failed their customers, and had let down so many of their loyal staff and had lost their way, their moral compass and he identified not only the need for forgiveness but also the need to recognise that they had done bad things and needed to take the necessary steps to turn this sorry state of affairs around.
Mike Roemer went on to outline the plans that Barclays have to work together with the Judge School of Business in Cambridge, he talked about the need to rebuild trust, to recognise the need for ethical behaviour and to be in a position to expound these truths to new generations of young people who would be joining the Barclays family in the future.
At the end of his presentation, I found myself deeply challenged.
One part of me still believes that Barclays Bank is a capitalist enterprise still red in tooth and claw. That is the part of me that still believes that leopards and spots are not independently available. That is the cynic in me that says “Whatever”! That is the part of me that still believes that banks cannot deliver the level of profitable returns and enjoy the level of bonuses they have traditionally attracted, without committing the usual scams, fiddles and criminal offences.
But there is another part of me which wants to believe Mike Roemer!
He came into that dinner and he made a most powerful statement, and, grudgingly, I am forced, despite all my reservations, I am forced to believe him. What he did took raw, unadulterated, moral courage, and I have always admired that in a man or woman, despite what reservations I may hold.
So, we must live in hope.