Bankers jailed and PM faces charges – can Iceland happen here?


If there was any doubt of the toxic relationship between London’s political and financial rulers, then this latest Libor scandal involving conspiracy, theft and fraud, blows it out of the water. Whichever way you look at it, in a scandal which dates from 2005, Labour’s Treasury Ministers in charge at that time are guilty of either complicity or incompetence. With leaks of memos suggesting that those at the very top in Whitehall had full knowledge of these malpractices, it seems increasingly like the former.

Following the 2008 financial crash, Iceland, a state that had pursued light touch regulatory policies just like the UK, have decided to purge their country of the economic and political elite. Bankers have been jailed. The then prime Minister is currently facing charges of gross negligence. In the UK, these very same politicians continue to lead Labour, the official opposition. Their leader, Ed Miliband, and shadow chancellor, Ed Balls, were key economic advisers when this scandal was taking place.

One of the big lessons I have learnt since being elected, is the incredible ability of politicians to re write history. Less than four years later and in light of the revelations about LIBOR rate rigging, calls for the prosecution of those individuals responsible for the rot at the core of the financial sector are reverberating through Westminster and beyond. London politicians have been jumping to the defence of ‘ordinary, hard-working people’ swindled by the City spivs while seemingly adopting a convenient amnesia surrounding their own parties’ part in the bigger picture.

While a first glance at the situation suggests the coming of a new age of responsibility, and the resignation of Barclays Chief Executive Bob Diamond signals a step in the right direction, the real detail of what is being proposed in order to tackle the City’s systemic corruption indicates a sloppy and half-hearted process that will most probably generate more heat than light.

George Osborne’s announcement that the inquiry into the LIBOR scandal will fall short of being transparent and public shows a lack of commitment to addressing the structural and cultural problems with the UK banking industry. This is no surprise from a party who receives half its funding from the sector it’s about to investigate. Now though is not the time for the politicians responsible for the mess to be doing the investigating. After all, some of them should be in the dock with the bankers.

However, the last few days have seen the Conservatives’ complacency trumped by the Labour Party’s fake moral outrage over a scandal which is deeply rooted in a time when they were in government. While Plaid Cymru claim that only a full public inquiry would offer an adequate response to a scandal on such a scale, we would insist that a parliamentary inquiry should at least call senior figures from the last Labour administration to the dock under oath, so that Gordon Brown and Alistair Darling, alongside their former economic advisers Ed Balls and Ed Miliband can be held to account.

Ignore the bluster of the London parties – this week’s political developments have all the hall marks of the political elite closing ranks and pulling down the shutters, rather than shining a light on the City’s murky dealings. The difference between Labour and the Conservative Party’s attitude towards financial regulation and responsibility is paper-thin. Both parties are completely hooked on high finance – a dangerous addiction which results in high risk strategies with devastating social fallout. While the current Chancellor is fixated with putting markets before people, his predecessor adopted similar short-sightedness in giving the City free rein over the public’s finances and, ultimately, their livelihoods. Indeed, one needs only look towards the Square Mile to realise the infuriating irony in the Prime Minister’s talk of a ‘something for nothing’ culture.

Sadly, as is the case with most scandals, revelations leave us knowing more yet understanding less. Amid the frustration and anger at the magnitude of conspiracy, theft and fraud that has taken place, questions must be answered. In our society individuals responsible for cheating on benefits face criminal convictions and jail, whilst bankers who have rigged the market to the tune of billions of pounds go unpunished. This lack of accountability has convinced the public that the banks play by a different set of rules than everyone else.

Whereas we, the public, originally chalked up the banks’ failures to greed and incompetence, slowly a different story is coming to light. Unencumbered by his role at the bank, Bob Diamond can now tell the unvarnished truth of what took place during those years. We are five years on from the beginning of the banking crisis, but even after the Vickers report, so much information remains secretive and must come to light.

But while we are looking into the mistakes of the past, we must also secure the future – ensuring the separation of retail and investment banks, stopping the financial lobby from watering down the Vickers’ report recommendations and never again allowing a situation where the banks are too big to fail.

This article by Jonathan Edwards MP was first published in the Western Mail