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Immorality alive and well in banking sector

Standing up for poor people and against poverty was something Cardinal Tom Winning did with aplomb.  He was always at his most sure-footed when castigating the greedy and the uber-wealthy for not paying their fair share.  Somewhat belatedly, Cardinal Keith O’Brien has realised this is safe – or at least, safer – territory from where to make forays into public policy.

Don’t just protect your very rich colleagues in the financial industry, consider the moral obligation to help the poor of our country” was his call to the Prime Minister, David Cameron.  The remarks were made as part of an appeal to introduce the Tobin tax which taxes financial transactions and redistributes the income to some of the poorest here and abroad.  His timing was prescient.

Yesterday, the Sunday Times published its annual rich list.  Scotland now has five billionaires and 74 Scots joined the rich list this year, compared to 70 last year, highlighting how far and fast the gap between rich and poor has grown and is growing.  Inequality is rampant and it’s sobering to realise that the top 100 stops at £52 million:  there are many thousands more worth seven and eight figure sums.

It’s not just individual behaviour that is immoral:  the culture of greed is forged and reinforced in many corporate spheres and institutions.  The David and Goliath battle heading for the UK Supreme Court involving the Lloyds TSB Foundation for Scotland and Lloyds Banking Group points this up in sharp relief.  The foundation is a charitable grant-making trust which, through a legally binding covenant arrangement with the TSB and then the Lloyds TSB group, is entitled to a percentage share of the bank’s gross profits to be redistributed to good causes.  Over the years, this money has found its way into our poorest communities, mitigating against the symptoms of poverty while also being applied to finding some solutions.  Though its funding priorities and actions, it grasps the need to redistribute its wealth to the least well-off, working hard at reaching those most disadvantaged communities, individuals and organisations.

Crucially, the Foundation is independent of its financier, with its own trustees.  It decides what it will fund, when, how much and to whom.  The merger of Lloyds TSB and HBOS at the height of the financial crisis – in order to save the latter from failure – created the giant that is Lloyds Banking Group.  Little did we taxpayers who own 40% of the banking group realise that we had created a monster too.

It didn’t like that it couldn’t channel this money where it wanted to.  It didn’t see why it should continue to pay over a share of gross profits, preferring instead to provide funding after tax.  The difference?  Well, pre-tax the Foundation was entitled to receive millions;  post-tax and other liabilities, its grant amounted to under £40,000.  It didn’t like that it could not influence the funding priorities nor have its own people on the Board of the Foundation.  In short, it wanted control and to exert its influence.  And it wanted to rein in how much of its profit went to charities:  under the old HBOS Foundation, nearly £10 million annually was disbursed largely across Scotland and Yorkshire.  Since the creation of the bigger group, a new Bank of Scotland Foundation has been established and is given £1million every year to spend in Scotland.  Paltry in comparison.

The Board of the Lloyds TSB Foundation in Scotland has refused to cave into the bank’s bullying.  It took Goliath on and won on appeal to the Court of Session.  Has the bank – the bank which last year paid out £2.5 million in pay and perks to its top executive and has had to set aside £3.2 billion in anticipation of claims against it for mis-selling customers payment protection insurance – decided to accept its medicine?

No.  It is appealing to the Supreme Court.  It is costing millions in legal fees and meanwhile, the £3.5 million due to the Foundation is frozen.  The case has now dragged on three years, three years in which the Foundation could have disbursed that money to small charities all across Scotland, helping our communities get through the current hard times.

As a result of the banking group’s actions, the Foundation finds itself in limbo.  Its Chief Executive, Mary Craig, suggests that questions must now be asked “as to why a major institution of its size, owned in part by the taxpayer, feels the need to pursue a charitable organisation in this way. Three judges, including the Lord President, Lord Hamilton, ruled unequivocally in favour of the Foundation at the end of 2011….If we don’t have that income, we will be limited in what we can give by way of grants for the foreseeable future.

And she urges the bankers “to show their support for Scotland’s communities by withdrawing their appeal. I would also urge others to ask what lies behind this decision which is, at best, misguided and, at worst, ill-judged, oppressive and unnecessary.”

Will they listen?  I doubt it.  As Cardinal O’Brien’s intervention this weekend makes clear, there is immorality operating at the heart of our political and economic culture.  Lloyds Banking Group’s actions against the Lloyds TSB Foundation – and by default, against Scottish charities and their beneficiaries – demonstrates this in spades.

Alex Salmond suggested that Cardinal Winning would be remembered “as a fearless fighter for the poor and dispossessed”.  We need more such fighters.  To take on the might of the financial institutions, to challenge the wealthy to pay their dues, to insist upon fairness.

We need more like Mary Craig and the Lloyds TSB Foundation for Scotland.  And far fewer like Lloyds Banking Group.

 

 

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