Of heroes and superheroes
Foreigners and the City
As soon as I find it, I shall briskly dust off my Canadian passport and claim kinship with Mark Carney, the next Governor of the Bank of England. It is now fashionable to come from the frozen north, while interlocutors express condolences at an admittance of warm Spanish blood. Yet this hero worship of the Goldman Sachs alumnus will not last.
A couple of years ago Sir Howard Davies, former chairman of the FSA and deputy governor of the Bank of England, co-authored Banking on the Future. His book called for the end of the central bank and central bank governors as we know them.
“The past model – a secretive institution little inclined to explain itself and maintaining an air of mystery, cloaked in constructive ambiguity, and led by a philosopher king – has run its course… The new model central bank will be led by an individual who is skilled in chairmanship and communication and one who has a deep understanding of the financial sector and the wider economy, on a global scale. Taciturn autocrats need no longer apply (my italics).”
Mr Carney fulfils these conditions and is the antithesis of outgoing Governor Mervyn King. Yet before we elevate him to superhero level, it is worth remembering that he has been in charge of the straightforward Canadian financial system. He will soon be overseeing the most international financial system in the world.
Having said that, his work as Chairman of the Financial Stability Board, which attempts to coordinate disparate financial sector regulatory reforms, will have given him a taste of the global complications involved, while his appetite and awareness of the scale of the task is evident.
“I’m going to where the challenges are greatest,” he said.
Another difference in scale is that Canada’s financial sector employs 274,000 people. The UK employs around a million.
Many of them are foreign, proof of the City’s meritocratic nature and of openness. At a couple of Robinson Hambro dinners, I looked around the 10-seater table at what others might call the Financial Establishment. At least half were not English. We had a French Chairman running a major part of the global financial system, an Indian economist working as the head of an important unit within the regulator, an Israeli founder of a financial boutique, the South African CEO of a natural resource company, the American Chairman of a UK-based hotel group and the Anglo-Danish Chairman of a number of companies. The wine came from the vineyards of the Group CEO of the London Stock Exchange, Xavier Rolet, a Frenchman (Chenebleu).
Yet UK immigration policy is a shambles.
At a 2010 gathering for FTSE-350 chairmen soon after the UK government took power, the consensus was that the Coalition had already made two major mistakes that would harm business. One was its stance on immigration, which continues to be a rampant sore. The government needs to stand up to those who believe that kicking out foreign employees at Pret-a-Manger and the like will result in a rise in UK employment. Too many CEOS of both local and larger businesses swap tales of bending over backwards to employ British low-skilled labour and of the sorry consequences.
The government also needs to sort out its cap on visas for qualified professionals. Lastly, it must allow students who come to the UK for degree studies to work in this country. Many will go back to their countries of origin after a few years, attracted by the positive growth prospects lacking in the UK. From their positions of influence they will favour a BUY UK policy due to familiarity with the system and, naturally, the rosy glow which generally surrounds those university years.
The Germans and other states have been following this policy for years.
The second criticism at the 2010 gathering was on aviation policy. The incoming government had ruled out a third runway at Heathrow airport. As a West London resident who is regularly woken at 4:50am by BA 12 from Singapore or BA26 from Hong Kong – not that one cares which it is at that hour – I am well aware of the downside. But ask any UK or foreign businessman where they prefer to land in London and the majority answer Heathrow, with City Airport a close second.
In any case, setting up an aviation enquiry led by Sir Howard which will not report until 2015 is a cowardly and harmful move. It is extremely doubtful that the decision will be politically easier after the next election, whatever the political make-up of a new government.We need political leaders with the guts to stand up for what they believe will benefit their country. The popularity of many of them is at historic lows even as they equivocate on many crucial decisions for fear of losing votes. Surely it might be worth a try to take a stand? The result might surprise our representatives. Voters are not as naive as politicians assume.
One man with enough guts to spare for a whole political party is Michael Woodford, the President and CEO of Japan’s Olympus Corporation who turned into a whistleblower in 2011 when he discovered a $1.7 scandal. Speaking at a Pi Capital (Pi Capital) lunch, he took us through his personal hell when the Chairman of the company fired him and he feared for his life and that of his family due to Yakuza (Japanese gangster) involvement in the company.
As he himself writes in his thrilling autobiography Exposure: Inside the Olympus Scandal: “I thought I was going to run a health-care and consumer electronics company but I found I had walked into a John Grisham novel.”
The Japanese establishment had never been that welcoming of the gaijin (alien) from Liverpool. Following the disclosures, it slammed the door in Mr Woodford’s face. With only a handful of foreigners running companies in Japan, this tactic was possible. If we tried the same thing in London, the financial sector would close down while the racket from the slamming doors would cause an earthquake