Any other business

Which behaved worse: callous Thomas Cook or cynical Barclays?

Plus: My pick for the next Greek PM, London property madness, and a path not taken

30 May 2015

9:00 AM

30 May 2015

9:00 AM

Which is worse, morally and reputationally — to be Thomas Cook, shamed by its refusal to show proper human concern, for fear of being taken to admit responsibility, over the death of two children by carbon monoxide poisoning from a faulty boiler while on holiday in Corfu; or to be Barclays, fined almost $2.4 billion (heading a list of banks fined more than $9 billion between them for similar offences) for conspiring to manipulate the foreign exchange market over a five-year period? Ethicists could agonise over that one for weeks.

But in terms of customer response, it’s clear that the travel agent — whose mistake was not to reject legal advice that made it look so callous — will suffer more long-term damage than the bank, whose reputation for cynical rule-bending was already both well established and commonplace in its sector: Barclays shares perked up 3 per cent on news of the fines, the market presumably hoping that the Augean stable is now definitively clean.

The fault of Thomas Cook was to make a bad judgment call in the first place, then fail to work out how the story would look when it all became public — including the chilling fact that substantially more compensation was paid by the hotel owner to the company than to the parents of the dead children. The fault of Barclays in the Bob Diamond era was to nurture a bad culture — ‘If you ain’t cheating, you ain’t trying,’ as one manager put it — then fail to work out how the story would look as retrospective fines continued to pile up long after Diamond’s successor Antony Jenkins claimed the culture had changed. In corporate life, the past is always there to haunt you.

One last breath

The climactic moment of the Greek cliffhanger really can’t be far away, even if we’ve all been saying that for months. What will happen if Athens fails to find the €304 million it owes the IMF next Friday, or one of three further instalments, amounting to €1.4 billion, due later in June? Formal default is not immediate, but follows a month later — on 5 July at the earliest — and the IMF can choose to delay the process for a short period beyond that. But the Greek banking system could suffer a heart attack anyway, hit simultaneously by a run on deposits, the imposition of emergency capital controls by the Syriza government and a reduction of liquidity support from the European Central Bank. Meanwhile, European Commission prince of compromise Jean-Claude Juncker will redouble his effort to persuade other EU leaders to face down Angela Merkel and Wolfgang Schäuble of Germany, and Christine Lagarde of the IMF, by agreeing to let Greece off the hook with a release of bailout funds in return for minimal reforms.

Syriza’s desperados may appeal to their electorate for a new mandate, and may even win one — but their regime will surely be short-lived, and we must hope that sensible technocrats of many nationalities are already working on Plan A, how to rebuild the Greek economy from the rubble, and Plan B, how to bring back the drachma without chaos if continued membership of the euro is impossible. This column will declare, with no satisfaction, Σας είπα έτσι — I believe that’s ‘I told you so’ — and will launch a campaign for a new Greek government of national unity led by Eurovision chanteuse Maria Elena Kyriakou, whose well-titled ballad ‘One Last Breath’ attracted a modest 23 votes but still looked like compensatory moral victory over Germany’s nul points.

The shoebox market

Where will London’s property market head next? Here’s a glimpse. Last week, my post-election glow prompted me to make an offer for a tiny flat near Oxford Street — at £50,000 below what seemed to me an inflated asking price, though it was £200,000 less than the stratospheric figure the vendor had first asked six months ago, before election jitters cooled the market. My proposal was carefully calibrated against properties for sale nearby, and the estate agent did not demur. The response of the Scandinavian vendor was not just to tell me to försvinn —I believe that’s ‘get lost’, in Swedish — but to jack his price up again by £100,000. Evidently he believes the market will soar between now and the autumn, and in the meantime he can earn £250 a night renting out his West End shoebox on Airbnb.

Another estate agent remarked to me recently that ‘a house is only ever expensive on the day you buy it’ — meaning that if you pay up to get into the game, you will rarely regret it. I read of property professionals who think their sector is about to enter a 15-year boom, though if it really lasts that long even oligarchs will be bidding for shoeboxes. One thing’s for sure, I picked the wrong week to try to nudge the market the other way.

Postcard from Filey

Here’s another cameo of the roll of life’s dice. Twenty years ago, I thought I might like to be a Conservative MP and was trekking round northern selection committees; Boris Johnson was about to embark on the same trail, and it was me who arranged his first speaking engagement as a Tory hopeful — though the event was wiped out by a Yorkshire blizzard. Last week I was playing Victor in Noël Coward’s Private Lives in a hotel at Filey on the coast. There I was, in costume and waiting to go on, when in comes Kevin Hollinrake, our new MP for Thirsk and Malton, which includes Filey. To his credit, Kevin built (and rebuilt, post-crash) a very successful business before entering politics even later than I might have done if I had persevered; excitedly, he tells me he has just been to a reception at 10 Downing Street for the 74 new Tory MPs including Boris, who made a point of introducing him to David Cameron. Ah well, in a parallel life… but I’m sure I’m happier as a seaside entertainer.

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Show comments
  • Frank

    John Varley, Marcus Agius, Bob Diamond, etc, all the big boys seem to have avoided the Libor and Forex issues?
    As for clearing out the old skeletons, one assumes that at some stage a group of private clients will go after Barclays and the other banks over Forex rigging (eg buying a house abroad) and that yet more fines will be incurred.

  • WTF

    Until bankers who commit fraud are held accountable in the same manner as drug dealers, nothing will change their ‘work ethic’.

    If they knew their personal assets were at risk of confiscation and they’d serve time for PPI, rate rigging and money laundering, we wouldn’t need an FCA as once the first banking pimp was put away, they’d be a panic from all bankers to clean their act up. Setting an example like this would do wonders for sorting out the banks current image !