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.