Barclays bank's $2.0 million fine for duping customers into buying mortgages on the premise they were safe investments, is one of the last to have been settled. The brilliance of western legal system is that out of court negotiations result in hefty fines, without any admission of palpable wrong-doing. The pre-economic crash of 2008 did much more damage than the kind of figure Barclays will part with. Others have paid sterner penalties for other misdemeanours including HSBC, Deutsche Bank, Wells Fargo and Bank of America (BofA). Several CEOs lost their jobs as did others down the line. Fretting shareholders had little else they could do.
There are two ways to approaching existential risk. Litigious American society rarely allows for a cautious approach and companies prefer to take hit and move on. Not so in the UK. For Barclays the strategy of 'wait and see' has worked. It's nothing close to the $ 17 billion that BofA paid out, but in terms of reputation hit, it was as damaging. The bank may be hoping that such a turn of events may restore investor confidence in it. That may well be true, time will tell. It is up to the shareholders to decide whether or not more needs to be done to fix whatever loopholes allowed this to pass. Humans will make errors when it comes to calculated risk and even gambles. Mark Zuckerberg's defence on leaked data has been that 'measures taken at the time were implemented, but they weren't enough'. That beggars the question whether enough of 'what if' scenarios were pre-empted? Shareholders and societies must also decide whether it is acceptable to admit shortcomings and just roll over. Increasingly, we see such apologies. Just as Tony Blair's tearful comments can never undo the destruction of Iraq and the heavy and what we now know as meaningless deaths including children over blatantly misconstrued and attractively packaged allegations to Kobe Steel's admission of quality compromise, it's as hollow as can be. Will Kobe Steel take responsibility or ever do an audit of where such steel was used and the future potent for disasters? Will international courts take note of the vastness of implications?
These are questions that come to mind even as the government decides to bankroll Farmers Bank with Tk 7.31 billion (731 crore). Without steps to take people to task, including the beneficiaries of murky loans and processes for disappearing money to re-emerge, the concept of placing public sector cash-troves in irresponsible hands is a nightmarish prospect. Especially when such a decision comes within days of the Finance Minister saying executives cannot be held responsible for private banks. Bank executives are paid employees, most of whom can't visibly oppose dictatorial and smelly directives from their directors. They are the names on the growing list of wrong-doers. It's one matter if they have personally benefited; why directors and Chairman aren't being held accountable, is befuddling. Zuckerberg's comments may be good for now. Come tomorrow and a new leakage, the excuse will be repeated, that is if Facebook survives the storm.
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