Oh For God's Sake

[liadnan]

"It might be enforceable in a court of law this contract, but it's not enforceable in the court of public opinion and that's where the government steps in."

I'm not entirely sure whether Harriet Harman QC was being cretinously stupid or seeking to impress the ghost of Machiavelli when she said that the other day.

Fred Goodwin doesn't appear to be someone I would very much like if I met him. He also appears to have been the onlie begetter of RBS purchase of ABN Amro, which in retrospect was not a brilliant move. That, however, was not even the principal cause of the financial morass we are now in, any more than was Barclays' decision that after all they weren't so keen on buying Lehmann Brothers.

When it all went to pot, Goodwin agreed with the minister responsible in HM Govt, Lord Myners, that he would take early retirement. It's rather difficult to be sure in the welter of ignorant tabloidese, but it seems likely that the board of RBS, with Myners approval, agreed with Goodwin that he would be entitled to his full pension on early retirement, rather than it being discounted on the usual actuarial basis to take account of the unworked years (there are a host of tedious and obscure acronyms about this stuff, believe me you don't want to know how it works, just accept that it does). They presumably sorted out matters with the pension trustees in this regard. NB that RBS and the Trustees of the RBS Pension Fund are not at all the same thing (which is part of why Vince Cable is also being either appallingly ignorant for someone in his position or wilfully obtuse, but I'll come to that). If there was a discretion involved it has been exercised and at present I fail to see how it can be unwound: there doesn't in this situation seem to be room for the doctrines of mistake or misrep to operate. There is section 93(1) of the Pensions Act 1995 (forfeiture permissible by way of exception to the normal explicit and dogmatic rule "by reference to the person having incurred some monetary obligation due to the employer and arising out of a criminal, negligent or fraudulent act or omission by the person") but frankly I don't think it's a runner. For one thing they already knew about anything that might be said to be negligent by the material time.

So it is rather difficult to see how that agreement would not be contractually enforceable, though one really can't be sure without an awful lot more detail, it is certainly not outside the bounds of possibility that there is a case there. Harman, who has presumably had the opportunity to take advice from leading counsel, conceded that it "might be enforceable in a court of law" which indicates that she has been advised there is precious little chance of reopening the matter. So, the view of a government minister and former solicitor general is that "the government should step in".

You what? Are we to have some modern version of an Act of Attainder? Does Ms Harman know of some special exception to Article 1 of the First Protocol to the ECHR that will avoid an immediate declaration of incompatibility, bearing in mind that if we come to this point we must by definition have accepted Goodwin is legally entitled to his pension? Does the superiority of the court of public opinion to the rule of law apply across the board?

This is all so bizarre from a senior minister and former law officer that I wonder whether it is more a complex move in intra-Labour party machinations. Harriet goes further than Gordon, superficially seeming to endorse his position but in reality knowing it is probably a non-starter from which he will have to resile, thus looking weaker than her to the ill-informed public. In the meantime the observations of the chairman of the FSA in evidence to the Treasury Select Committee, to the effect that they were told to operate a light touch (see also this from 2005, via Capitalists@Work) seem to have gone missing. And then there's this...

Vince Cable suggested that "RBS" should just pay the £30k or so Goodwin might have received had "RBS" gone bust and the pension protection scheme stepped in, and leave him to sue. This is either more grandstanding or just stupid. Even at first glance this seems to be advocating that "RBS" breach its contractual obligations, which is unimpressive for someone who in theory, however hopelessly, seeks to be a minister of the crown one day. He doesn't quite explain what would happen if Goodwin sued, won, and sought indemnity and wasted costs, which would seem to be a quite likely result since no one has yet come up with anything that could amount to a defence to such a claim. I suppose one way of seeing it is calling Goodwin's bluff, which is a bit risky to say the least. This is a notably bullish man who has little or nothing to lose by fighting and over half a million a year to lose if he rolls over. He isn't running for election anywhere, he's retired, everyone hates him anyway, and he'd be looking at bringing a very strong claim for a very substantial sum. Second, it isn't RBS who'd be paying the money, hence my scare quotes. It would be the trustees of the RBS pension fund (one wonders, incidentally, how well funded that fund is, but that's not really on the point). Cable seems to be encouraging them to a blatant breach of trust with no clear idea of any remotely arguable defence. I hope he intends personally to fund their professional indemnity insurance.

While I was writing this I heard on the radio that Slaughters seem to have advised HM Govt that they do not have a decent case against Goodwin, as I suspected. And Robert Jones has, I see, written something on much the same lines as this already, but hey, his is a locked post. See also Charon, who may not have been formally appointed as one of HM's counsel learned in the law but seems rather more learned than, and indeed to recognise the whole idea of law better than, other candidates.

Apropos of something completely different, I have an apologetic email from the alumni officer of my former college, received shortly before the news broke generally, to the effect that we are not, after all, University Challenge 2009 champions but rather a bunch of cheats. Heigh ho.

ETA: Incidentally, this page on the RBS corporate site which appears not to have been updated since before Goodwin's departure, at present says that: "A funded, non-registered, arrangement has been set up to provide Sir Fred Goodwin's benefits to the extent they are not provided by the RBS Fund.". Footnote (4) records that all his benefits are in funded schemes. I can't (unsurprisingly) find the RBS pension scheme rules but The Telegraph seems to share my understanding: it is because Goodwin was encouraged to take early retirement that he became contractually entitled to a pension which was not discounted for early retirement, and that rule seems to apply in such situations across the board, rather than to have been individually negotiated. Had they sacked him, then assuming they could show cause things would have been rather different: he would have had to wait until 60 or accept the discount. Presumably this is where the waffle about it being discretionary comes in, though it is still all horribly unclear.

Comments

[matgb]

Agreed. I think Vince had a brain fart, or the media misquoted him, he's on record now as saying retrospective legislation against one man is potty.

It might be he meant to say (or did say?) that if the Govt wanted to reduce it, they should do so and see what the courts said—we all know what the courts would say if the contract is as solid as I suspect it'll be.

Brown has at least acknowledged it's impossible to do anything if the contract is signed, but wants to find out what it actually says.

Harman's grandstanding in the campaign to be next Labour leader. I can't see it doing her any favours with the rump of Labour members, but you never can quite tell. The whole thing is disgraceful.

[liadnan]

According to The Times

Meanwhile, the Liberal Democrat Treasury spokesman Vince Cable said that the Government should present Sir Fred with an ultimatum: accept £27,000 a year - the maximum pension available for employees of bankrupt firms - or sue for the rest.

The "potty" quote is recorded as a separate point, ie that a Goodwin Act would be potty. But this seems equally potty: say "bring it on" to someone who by every indication would be very likely to bring it on even if his case wasn't as strong as it seems to be. And where does he get the idea that HM Govt would be able to tell the RBS pension trustees to act in breach of their duty as trustees?

[matgb]

I don't know.

But, Jennie's interviewing him next Tuesday, and is looking for a decent question. I think this is a good one, she's a lot more hot on legal principles than I am (you know me getting carried away at times), so she knows contract law and retrospective legislation is wrong.

It's all a smokescreen, for once the Govt has managed to get the media spin out, distracting from the other issues. But distracting in a way that makes them look stupid to a big part of their former 'core' vote.

Everyone (including the sainted Vince) is allowed an off day, but this is a concerted media campaign, whihc is just smokescreen populism.

[knell.livejournal.com]

Hmm, it's useful to get comment on things like that from people who don't have to write "IANAL" before it. And glad that it wasn't just me who heard that particular quote and went "Uh, WTF?".

[major-clanger.livejournal.com]

I am now instituting the 'Spot the Court (http://major-clanger.livejournal.com/400991.html)' competition for those of us having more trouble than HH in locating this august body.

[liadnan]

Charon calls it "the Court of People who bray, have six fingers and carry flaming torches"

[clanwilliam.livejournal.com]

I just had a rather fascinating discussion on that subject with a couple of friends. One is a very senior bod at HSBC and the other is a newly very senior bod at the FSA.

They both looked rather intrigued when I pointed out that as a comparatively lowly earning person, I look at the Fred Godwin case and my automatic reaction is "what about my pension?"

The government has also pretty much guaranteed that Fred Godwin will not push part of his pension back into training/charity/generic third sector work.

Mind you, I also pointed out that a year ago, a headline such as "HSBC seeks £12.5bn from shareholders" would have been a positive headline - the non-HSBC person's immediate reaction to that was "oooh, warchest?"

[smellingbottle.livejournal.com]

Well, a change to hear from one's alumni officer on any pretext other than requests for large donations, maybe...?

[nicnac.livejournal.com]

Well exactly, but you've summed it up rather more elegantly than I could. It's the distinction between 'encouraged to take early retirement' and 'being sacked' that's the key and he (presumably) struck lucky by being in a final pay based scheme with a rule in place to award missing years in such an eventuality. Obvs I don't believe he should have been granted the pension in the first place, but it happened so tough cheese and the govt needs to stop whining and live with it.

I also read that he has been quoted as saying that he made other compromises at the time of the discussion. Clearly this is an ass covering exercise now that the size of his pot has become public; I wouldn't give it back either if I were him.

[qatsi.livejournal.com]

Thank you for the logical summary. Goodwin's pension appalls me, but the brouhahah the Government has generated appalls me just as much.

[greyarea.livejournal.com]

I was absolutely flabbergasted at Harman's line when I heard it. It's a quite incredible statement for anyone to make, let alone the Leader of the House.

It's an even more extraordinary statement for a QC to make, an appointment that had escaped my notice until now.

[liadnan]

Well, I'm not entirely sure she's a "real" silk as opposed to an honorary one (by virtue either of being an MP or of being Solicitor General)

[charonqc.wordpress.com (from livejournal.com)]

A truly astonishing saga.

I'm not surprised that Slaughter & May have advised no case. I would imagine that this point of law would not have troubled a partner there for too long - so... look on the bright side ... the fees will not be that high!

Grand standing and posturing... gesture politics... whatever you wish to call it just makes the whole ethereal mess more absurd.

Next week there will be yet more nonsesne for us to comment on. I have no inside information... but I am an optimist and one doesn't need to be 'Mystic meg' to predict that more bollocks is on the way. The only questions is - will it be Jacqui or Harriet... perhaps Mr Balls will pop back up... or even our suddenly furtive Foreign secretary (if he hasn't rendited himself).

I'm orf for a glass of wine... I do hope the government doesn't wish to take that away from us at some future date.

[liadnan]

Well, were you a Scot you'd be looking at minimum prices...

[liadnan]

NB the wording of the news article I heard last night was "[Slaughters] are understood to have advised that the case would be weak", I am extrapolating from that a bit but I think such is justified.