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Brown’s adviser ‘sacked banker who got it right’
Paul Waugh10.02.09
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One of Gordon Brown's key City advisers was today accused of sacking a whistleblower who warned that risky bank practices would "lead to disaster" years before the financial meltdown.
Sir James Crosby was named in bombshell evidence submitted to a Commons committee investigating the near collapse of the banks.
He is currently deputy chairman of the Financial Services Authority, the chief regulator of the industry, and one of the Prime Minister's favourite private sector advisers.
But it was revealed today that as chief executive of HBOS, one of the banks crippled by the credit crunch, he allegedly dismissed a senior official who raised fears that the bank was growing too quickly and putting itself in danger.
The whistleblower was Paul Moore, former head of group regulatory risk at HBOS, and the official directly responsible for assessing the correct balance between risk and safety.
Mr Moore's account of his warnings and his alleged treatment by Sir James was disclosed in a public session of the Treasury select committee this morning, where bankers including former HBOS chiefs Andy Hornby and Lord Stevenson were giving grovelling apologies for bringing the bank to the verge of collapse.
Mr Moore claimed that "anyone whose eyes were not blinded by money, power and pride" would have realised problems were buildng up for HBOS and other banks.
In a letter to the committee, published by chairman John McFall, he said: "I certainly knew that the bank was going too fast (and told them), had a cultural indisposition to challenge (and told them) and was a serious risk to financial stability ... and consumer protection (and told them).” After accusing Sir James of personally sacking him, Mr Moore added: “One final observation I would make about the HBOS disaster is this: wasn't it actually Sir James Crosby rather than Andy Hornby who was the original architect of the HBOS retailing strategy?
“Sir James is still the deputy chairman of the FSA and advises the Government on how to solve the mortgage crisis.
“Some might now also question what his contribution to financial services' has in fact been when this will have led to millions of people in excessive debt, 10,000s who will lose their jobs and many more whose balance sheets have been impacted by precipitous fall of the HBOS share price.”
Mr Moore alleged he had to take up “numerous issues of actual or potential breach of FSA regulations” and had to challenge “unacceptable practices”, some by very senior executives.
Former HBOS chairman Lord Stevenson insisted there had been a nine-month independent probe into Mr Moore's claims and rejected them as untrue.
However, Mr Moore suggested there had been attempts to cover up his concerns, by failing to minute his comments at a formal board meeting.
Mr Moore had signed a gagging clause after he was made redundant and allegedly received “substantial damages”. But he broke his silence to lift the lid on the internal practices of what he said took place in one of the banks at the heart of the economic crisis.
His team was allegedly met with “threatening behaviour” from some executives when they sought to raise their concerns. Mr Moore, who held the post of risk chief at HBOS between 2002 and 2005, was replaced by an individual who had primarily been a sales manager, he claimed. He said his replacement had “never carried out a role as a risk manager before”.
Mr Moore's main claims were denied by the bankers as they gave evidence to the Treasury select committee.
His written evidence gave an insider accounts of the banking industry in the final months before boom turned to bust.
He claimed it was like the story of the “Emperor's new clothes.”
He added: “Anyone whose eyes were not blinded by money, power and pride (hubris) who really looked carefully knew there was something wrong and that economic growth based almost solely on excessive consumer spending, based on excessive consumer credit based on massively increasing property prices which were caused by the very same excessively easy credit could only ultimately lead to disaster. But sadly, no one wanted or felt able to speak up for fear of stepping out of line with the rest of the lemmings who were busy organising themselves to run over the edge of the cliff behind the pied piper CEOs and executive teams that were being paid so much to play that tune and take them in that direction.”
Mr Moore told the MPs that during his time at HBOS, the FSA had assessed key parts of the group as posing high or medium-high risks to the “achievement of its statutory objectives of maintaining market confidence and protecting consumers.”
The FSA also warned, regarding the Halifax retail part of the group, that “there is a risk that the balance of experience amongst senior management could lead to a culture which is overly sales focused and gives inadequate priority to risk issues”, he added.
Reader views (30)
I it me or is the real question how did these people with no qualification s and from current view no idea ever get entrusted with so much power ???
- Ade Tomlinson, london area
This headline was made for a comments board 'Brown’s adviser ‘sacked banker who got it right''
Talk about planting a seed into an anti-labour/anti-Brown crocodile pit of resentment! This kind of headline will shock nobody as Brown (the unwanted, unelected, unskilled) has made gaff after gaff after gaff. This country will continue to plummit into unprecendented levels of decline until confidence is restored in the Government. The only way this will happen will be the removal or resignation of the useless fool that is Brown.
I hope everybody who voted Labour is both very happy and very poor.
- Jerome Moore, London
We need the answer and perhaps this paper can get it -is it true that his replacement had “never carried out a role as a risk manager before"? In that case it would seem that he may well be correct, regardless of the smoke screen that the bank is trying to create.
- Coylum, vancouver, Canada
I think he suits Brown and NuLab perfectly. They will surely be rewarded at the next election for their astuteness.
- Frederick, London
Is there ANYONE out there who will still defend Gordon Brown as a financial wizard? The man is finishing what Tony Blair started: the destruction of British society and the establishment of a tiny elitist ruling party - a dictatorship in fact.
- Alf Bennett, London, England.
In my old firm, some unfortunate (an actuary) asked each of us yearly and in private what we thought could upset things. We thought carefully. He then cobbled together a report for the Board, using half of what he'd heard (probably the less-hysterical half). Consequently, things quietly happened, and that firm is still riding high. You don't need drama, just good sense.
- Steve, London, England
How many had A.C.I.B. Qualification ?
This is the basic qualification for Bankers.
Or it used to be in my day.
Jobs for the boys ?
- Bernard Parke, GUILDFORD
I am amazed that Brown and his cohorts expect the Bankers to say sorry for their mistakes when they cannot say sorry for the terrible mess they have got our economy into.It was Brown who watched borrowings reach unsustainable levels and he who put in a regulatory system that completely failed.Having been personally involved in earlier banking failures the handling of Northern Rock was a total disaster.In the seventies and eighties The Bank of England who then handled these problems were highly regarded.The same cannot be said for the FSA.It seems incredible that Brown has made Crosby the FSAs No 2 bearing in mind his previous involvement with HBOS.
On the question of bonuses in my day my company preferred to remunerate a percentage of ones earnings in this manner as such payments were not pensionable.Of course the amounts and manner in which they are now paid is wrong but how can the politicians sit in judgement when they are fleecing the taxpayer by claiming expenses which are not remotely justifiable.
- Brian Clare, Sevenoaks, Kent
Brown and his Government are up to their armpits in this mess. Brown set up the whole regulatory framework, which has been proven to be wholly useless. The country pays a hugs price for the FSA et al and as has been shown by this banking fiasco, Maxwell, Madoff, et al, when it comes to the really important rip off's these agencies are totally useless yet they are a very great burden to legitimate small businesses, which do not have the capacity to cause great harm.
- William, London
The Crash Gordon bunch is the most incompetent possible and they are not going anywhere as they are un-elected. They should be deposed - WHY WE HAVE A HOUSE OF PARLIAMENT IF THEY CANNOT GET A DECENT EXECUTIVE?!??
- Phil, Islington, London
The last thing the Brown Government wants to be in touch with is economic reality.
- Brian Edmonds, Farnham UK
This country is corrupt! It’s been slowly going down the pan since WW2 ended in 1945. The incompetent FSA officials sit in the lap of bank executives and probably don’t have a clue how the banking system really works. If there was any real justice most of this lot would be in prison… but it seems recklessly betting billions of pounds of other peoples money in get rich schemes is not illegal.
If any individual did something similar with someone else’s money outside the world of banking they would be done for fraud. I urge anyone in the EU to rush over and take advantage of our cash hand-outs, free housing benefits and hospitals while there is still some money left; just don’t laugh at us too much.
- Paul, London
As a socialist the evidence given to the Treasury Committee is appalling in its content and completely unreliable in that it is not given on any form of oath. I cringed as I watched these 'bankers' on TV give what is loosely called 'evidence'and I felt that they might as well have put two fingers up to the hapless M.P's who were no match for this bunch of financial operators. This tragedy is really Brown's alone because party politics and Parliament set the landscape in which the nation's finances are conducted. They allowed the Bankers to play fast and loose. I fear the Conservatives would have done much the same although they shout otherwise from the sidelines. Looking to the future another Conservative regime offers no real sea change because I reckon that they have not changed their spots. Another four year round with Brown is equally daunting. The nation is hobbled by the lack of an 'Obamha' figure who could at least restore honesty, responsibility and respect in a political system shot to pieces by a PM, Cabinet and others who have been found seriously wanting in those qualities. Brown is finished and we only have Cameron's version of Conservatism to look forward to. What a prospect for the Nation!
- John, Leighton Buzzard, Beds
Jethro Payne is right - once you get above a certain level in a company your opinions are no longer wanted - you are there to tow the company line not ask awkward (but necessary) questions!
- James, London
Just goes to show Brown does not listen to anyone but his own opinion-As a Historian why did this fabulous degree he worked so hard for and no doubt paid by the Taxpayer not tell him something.Even i learnt about the South Sea Bubble.He really is past his sell by date.
- Harvey Lawrence, london
Banking is no place for Mr Moore. He is honest.
- John Smith, London , England
Lets just look at the facts shall we, total collapse of the UK banking sector, now who do we believe about HBOS? Mr Moore has it bang on right.
- Stuart, UK
The FSA is unaffectionately known as the Flawed Standards Authority and it continues to be totally flawed and ineffective under Brown & Co
- Val Keller, London UK
Mr Moore was right and I am sure there are many others
who thought the same but did not care because of greed
i.e commission and bonuses etc. It was the prime resposibility of the Chancler to have checked the house
inflation because people were borrowing against their houses.How a Bank can justify that at one time they were
giving mortgage approval for £100000.00 and after a year
same house was being approved for 200,000. And our Chancler did not think and ignore assest bubble because
of getting a substatial stamp duties.
- Peter Robinson, Manchester Lancs
all buddy pals together probably in same lodge nice work if you can get it.
can wait till the next elections
- Edriordan, wisbech
"Mr Moore's main claims were denied by the bankers as they gave evidence to the Treasury select committee." -of course they deny the claims. Sir James Crosby (Knighted bu gordon presumeabley as was Sir Fred Goodwin of RBS)is a close friend and adviser to Gordon Brown - who denies that ANYTHING about the current appalling state of the economy has anything at all to do with his disgraceful stewardship of the economy.
- Malcolm, London
Why does this story not surprise me? Can someone please enlighten me as to why Sir James Crosby still holds such a senior post in the FSA.... clearly this organisation couldn't run a party in a brewery .... that is of course, unless they were to make some financial gain themselves. Jobs for the boys and the boys protecting each other backs. Not one of these individuals can be trusted. The whole sorry lot of them have brought this country to its knees and should pay the price and not be rewarded for such blinding failure.
- Sharon, London
that's not good.
- Scott, London
And now you understand the reason why Brown has managed to get it wrong for so long.
It seems it was not an individual decision but a collective, very myopic one, to spend above our means during a boom period catalyzing the depth of the bust period we are now experiencing.
Having taken the position of Financial God, I'm surprised he hasn't abrogated any blame to his advisors.
- Minnie Ovens, London, UK
So the deputy chairman of the FSA fired someone for predicting HBOS disaster. This just stinks that you can have someone like him being the banks regulator, talk about putting the fox in charge of the chickens.
He is a friend of Gordon Brown too so that explains the jobs for the boys approach by Brown. This whole scenario stinks with Brown as complicit and as the Scottish bankers he has saved with our money.
- Richard K, Nottingham
No good deed goes unpunished. Whistleblowers are treated abysmally, especially when they're right.
- Neil M., london uk,
Why isn't there whistlebower laws protecting people like this?
- Nick Nack Paddy Mac, Kilburn, London UK
Another win for the Government and its advisors. They continue to prove they are clueless. Go now before you do any more damage.
- Dave Davies, Basingstoke
Not much to add really exactly not remotely surprised?
- Marianne, SW France
Well, to be honest, whistleblowers always get sacked. It's the way of the world.
- Jethro Payne, Streatham Common
