Why a joint-parliamentary inquiry is not enough


Has Cameron learnt from Butler, Hutton vs Leveson?

Or rather: “Why the party politics needs to be taken out”.

Despite the above, I actually think Treasury Chair Andrew Tyrie is likely to do a reasonable job given how tied his hands are by the remit given to him by the Chancellor in today’s statement in the Commons. The terms of reference suggested by the Chancellor are:

Building on the Treasury Select Committee’s work and drawing on the conclusions of UK and international regulatory and competition investigations into the LIBOR rate-setting process, we should consider what lessons are to be learned from them in relation to transparency, conflicts of interest, culture and the professional standards of the banking industry. I propose that the Committee should be able to call witnesses under oath, including current Members of Parliament and of the House of Lords.

There are a number of reasons why I have issues with this.

1) Workload of the Treasury Select Committee

It is already bulging. Although the Chancellor indicated The Treasury would ensure that extra resources would be made available, it does not change the fact that the MPs on the committee have other demands stemming from being an MP – both being in the chamber and responding to constituents. I have already stated that I do not think select committees have nearly enough resources to carry out the jobs required by them. Given the scale of whats gone on, I am unconvinced that a joint select committee investigation will be enough to get to the bottom of what went wrong.

2) Narrow terms of reference

It’s all about LIBOR. These problems go far beyond LIBOR – which just happened to be the area where the top bankers got caught with their trousers down in public. As I made absolutely clear in my post The case for a Leveson style inquiry into banking, there have been a number of very big banking scandals in recent years – not least the one that led to the bailouts – that the cumulative impact of all of these calls for nothing less than the equivalent of Leveson.

3) There is a massive risk that it could get party-political

We have seen that in recent exchanges in the Commons. Both Gordon Brown and Ed Balls have questions to answer too. But I’d rather have them cross-examined by eminent QC rather than run the risk of non-Labour members of the Treasury Select Committee going partisan on them or have non-Conservative members doing the same thing on Osborne. That would serve no one and would undermine Parliament.

4) There is a conflict of interest

Political parties have received donations from bankers – the Conservative Party in particular but others too. Whether real or implied, in the minds of the public there runs the risk that individual members of the committee will be too soft lest it has an impact on political party donations. The assessment and questioning has to come from someone who does not have some sort of paid financial dependency on the banks. That rules out party-political figures.

What did you mean by Hutton, Butler and Leveson?

The first two were widely regarded as whitewashes. Even with the Chilcot Inquiry the impression with the Iraq-related inquiries was that they were set up in a manner that gave the feeling of political stitch-ups and essentially cover Tony Blair’s back. None had the combination of Leveson – judge-led with cross-examination of witnesses by counsel under oath in public along with powers to send for persons and papers – and electronic communications. That combination has been central to the success of Leveson – and the failures thus far of the other inquiries. The rise of digital and social media usage has allowed more people to examine and listen to the evidence as is (rather than ‘as spun’) and make their own conclusions.

Is an inquiry enough

No – it never will be. That’s only part of the solution. Some of Puffles’ followers on the Conservative-libertarian slant have said that an inquiry is too much: we know what went wrong, let’s use existing powers to deal with the wrong doers and carry on as normal. There are others who say the UK has demonstrated it is no longer competent to regulate London and that it should shift to a new international body. At the moment, we seem to have the worst of both worlds – as Alex Andreou in The New Statesman says:

It is a well established legal principle that there are two types of sanctions which have the capacity genuinely to change the behaviours of corporations. The first is a fine of a size which makes the infringement unprofitable. The second is legal action which pierces the corporate veil and apportions individual criminal responsibility.

We are doing neither. The FSA have fined Barclays the risible sum of £60m. George Osborne is saying that he does not think there are appropriate criminal charges to be brought, ignoring increasingly loud calls pointing to the general provisions of the Fraud Act 2006 and the insider dealing section of the Financial Services and Markets Act 2000.

I stand by my support for a judicial inquiry along the lines of the epetition. However, I fear that Osborne may well have conceded enough – a cross-party joint parliamentary committee with powers to take evidence on oath – to see off opposition from within Parliament. That is unless over the next few weeks we find out that Barclays was small fry in comparison to what the other bankers were getting up to, along with further action from regulators from the EU and the USA. Will we see UK bankers being extradited to the USA to answer for their actions? Don’t be surprised if we see a repeat of the NatWest/Enron Three.

[Updated to add]

Lucy Manning of ITN is reporting Labour are planning to block the motion setting up the parliamentary inquiry. Assuming they lose the vote, will they boycott it too?


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