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Sunday, 17 December 2017

Whatever you do, don't rock the boat

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SwissInvest strategist Anthony Peters suggests Christine Lagarde’s honesty is an example to be followed

Anthony Peters, SwissInvest Strategist

I TAKE MY hat off to Christine Lagarde for her pretty frank comments on the Greeks and the need for them to pay their taxes. I equally question the comments of the 20,000-odd Greeks who roared in protest on her Facebook page (I understand that since the bodged IPO, it is known in the trade as Failbook).

According to the press, the Greeks were “outraged” by her observations or, perhaps more precisely, by her decision not only to observe but to verbalise what she has seen.

What part of “Please help your country by paying your taxes” is there to be outraged about? Yes, we know that there is unutterable hardship in Greece now but had the people of Greece – all of them – spent more of their time filling in their tax forms correctly and less of it eyeing up powerboats and Porsches, then they might not be in quite the mess they are in now.

However, it is not the issue of Greek debt and default that is exercising my mind, but the way in which the popular press seemed to attribute more value to the 20,000 faceless Facebook posters than to the managing director of the IMF.

I know that she is right and you know that she is right. In fact, we all know that she is right. But there appears to be something in the water that makes the inconvenient and unpalatable truth wrong if enough people object.

There was a time when political correctness was about dealing with racism and sexism, but it seems to have grown to such an extent that anything that might be regarded as an insult by just about anyone has become unspeakable. And that includes the truth.

THIS IS NOT only the case in the public domain, but across the board and in our industry in particular.

Henry Kissinger was once asked why politics at Harvard was so fierce. He famously replied that it was because the stakes were so small. In banking over the past decades the stakes were pretty high, especially at a personal level, but this did nothing to make the politics less rigorous.

The equation was simple. In order to advance and to find a position closer to the trough, it was important to stay close to one’s boss or mentor. Staying close meant approving of everything and anything, irrespective of how sycophantic one might need to be.

So those who rose to the top had their fair share of “yes men” riding on their coat tails. In fact, it demanded more than simply saying “yes”; it required the discipline never to say “no” as well. “No” was a bonus-killer, even a career-killer. We all watched on as those who dared question the actions of the superstars were cast aside.

Think Barings. Think SocGen. Think UBS. Now think JP Morgan.

Whatever you do, don’t rock the boat.

Many of us have worked with those who had an air of being “not quite right” – chaps who didn’t break the letter of the law, but certainly contravened the spirit.

I worked with a trader who was reportedly very profitable and who, in the age of suits and ties five days a week, always turned up dressed casually. If questioned as to his attire, his stock answer was “ … and how much have you made for the bank today?”. Eventually, he too came unstuck over irreconcilable differences with accounting principles, but, in the way of the City, he went on to make several fortunes in other incarnations.

IT IS FUNNY how keen bankers were to congratulate Madame Lagarde on her frankness when she reminded the Hellenes of their misdemeanours, but how resistant they are to facing up to criticism themselves.

What is worse, however, is the fear bankers have demonstrated when it comes to standing up and being counted. The cost of honesty was simply too high for most to bear. Let’s face it, if honesty doesn’t make friends, then it certainly doesn’t pay any mortgages or school-fees either.

The Greeks might, in my view, have been wrong in what they said, but too many bankers were wrong in what they didn’t say. Perhaps if the financial stakes had not been so high, the tendency to raise doubts might have been stronger.

I wonder whether, now that bumper bonuses are finally part of history for many, those in the industry will be more willing to ask sensible questions of those who run the industry.

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