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Financial Dramas

December 31 2018

2018 has been a year for anniversaries, September bringing forth a slew of articles about the financial crash 10 years on and a number of books by learned professors (to add to the ones already written about the fall of individual institutions) seeking to make sense of it all.  See, for instance, Adam Tooze’s “Crashed: How a Decade of Financial Crises Changed the World”.

But despite the colourful characters, scandalous activities and stories aplenty, it is curious that in the last decade novelists and playwrights have largely shied away from writing about the world of finance.  It is an odd omission.  19th century writers were much less shy: see William Thackeray’s Vanity Fair with its wonderfully sardonic and cynical and oh so apposite to our times take on a world where “everyone is striving for what is not worth having“.  Or Balzac with his tales of how money – having it, not having it, wanting more of it – corrodes personal relationships.  And not forgetting our very own Dickens, whose every novel is stuffed with characters for whom debt was an ever-present – and often malign – reality.  Mr Micawber stands as an object lesson to those who think that living beyond your means indefinitely is sustainable.

There have been a few attempts to make a drama out of a crisis: Caryl Churchill’s expletive-ridden “Serious Money”, written in 1987, just after an earlier stock market crash (and featuring the International Tin Council litigation, the very first case I was involved in as a junior solicitor) was one of the earliest.   Not a play likely to feature in the repertoire of amateur dramatic societies, given its colourful language.

A few years later “Capital City” was a TV series based on the lives and loves of City traders in the late 1980’s when Britain learnt to fall in love with making Loadsamoney, as much and as fast as possible and with precious few scruples about how it was done.  This was the era of the Guinness affair and Robert Maxwell and BCCI.  Enough larger than life characters and juicy stories and morality tales there for even the most mathematically challenged writer.  But even that great State of the Nation playwright, David Hare, whose plays in the 1990’s: “Pravda” (journalism), “Racing Demon” (the Church of England), “Murmuring Judges” (the law) and “The Absence of War” (the Labour Party) sought to take the moral temperature of contemporary Britain and its institutions, ignored the tumultuous changes in the world of finance and how they were changing British society more radically than even the most provocative newspaper or campaigning politician.

Lucy Prebble’s “Enron” in 2009 succeeded in London but failed in NY.  More recently, the BBC’s McMafia series focused on Russian money laundering.  John Lanchester’s 2012 novel, “Capital”, was set around the time of the 2008 crash but mainly showed the mysterious alchemy whereby ordinary London homes turned into money-making machines for those lucky enough to acquire them when they were, well, just houses. Sebastian Faulks’s “A Week in December” from 2009 had as one of its main characters someone rumoured to have been based on a well-known – and once successful – trader and featured a naive junior FSA regulator (the resemblance being purely coincidental in the latter case, one assumes).  But whatever the books’ other merits, the characterisation of the bankers, traders and regulators was cartoonish and one-dimensional.

Lanchester’s “Whoops: Why Everyone Owes Everyone and No One Can Pay” was a better attempt to understand the mysterious world of finance.  As was the US documentary “Inside Job”.  Maybe only Michael Lewis has been able to present the human stories present in the financial world in a way which feels like fiction.  Perhaps the dramatisation of real life events (“The Big Short” and Massini’s “The Lehman Trilogy”) is the only way to make sense of this world.  Perhaps.

It is too easy to think that no-one will understand – or care – about the technicalities and complexities and arcane language of modern finance, let alone about the people whose lives revolve around it.  A pity if so.  It is not the numbers which matter but the instincts, proclivities and emotions – what Keynes called “animal spirits” – which determine what people do.  There is little that is more emotional than people’s behaviour around money.

If the range of human behaviour on show in the run up to, during and after any financial scandal is not a subject for writers, it is hard to know what is.  All human life is there, after all.

 

Photo by Aaron Burden on Unsplash

At last……

November 14 2018

2,185 days after he was convicted of two counts of fraud by abuse of position at Southwark Crown Court on 20th November 2012 after a 10-week trial, and despite a shamelessly self-pitying and self-justifying campaign to avoid the consequences of his actions, Adoboli has finally been deported to his home country, Ghana.

The wheels of British justice grind exceedingly slow but they do – eventually – get there.

Let’s put those 2,185 days into a bit of perspective.

  • Amount of money lost by his fraudulent trading: US$2,500,000,000.  (If the sums spent by UBS on remediation and dealing with the consequences of this loss were added in, the totals would be truly eye-watering.)
  • Days spent on remand before his trial: 267
  • Days spent by my team and others working on the investigation: 438
  • Sentence: 7 years or 2,556 days
  • Time actually spent in prison following his sentence: 946

As the City of London Police said following his conviction: “This was the UK’s biggest fraud, committed by one of the most sophisticated fraudsters the City of London Police has ever come across.”  The trial judge, Mr Justice Keith, admirably summed up his character when he described him as a gambler, arrogant and in denial and said that he was: “profoundly unselfconscious” of his own failings.

But despite his masterly conduct of the trial, Mr Justice Keith did not explain in his sentencing remarks why what Adoboli did was so wrong, why fraud – of any type – is so damaging and this lacuna is perhaps symptomatic of our failure to take fraud as seriously as we should, as some other countries do.  After all, if the UK’s biggest fraud does not result in the maximum sentence, what will?

Fraud is too often seen as a victimless or somewhat technical crime or, perhaps more accurately, the victims, especially institutions, are seen as unsympathetic and partly responsible for their plight.  After all, who cares if an arrogant bank loses some money.  They are not like some naive widow conned out of her life savings.  Who gets hurt, really?

But the damage that fraud does is not the loss of money, bad as that can be.  Nor is it even the damage to reputation – and that can be very bad indeed and much more long-lasting than most think.

Fraud is damaging because it is so corrosive of the trust that is the essence of banking, that is – or should be – at the heart of any working environment, at the heart of any good relationship with colleagues, bosses, clients, the public, at the heart of any well-functioning community.  Fraud breaks those bonds of trust.  When someone is trusted and they let you down by lying, by cheating, by taking advantage, by behaving like Adoboli did, like many other fraudsters have done, real people are hurt.  Worse – the very idea of having confidence – in the institution, in your colleagues, in banking as a dependable underpinning of our society – is damaged and takes time to rebuild.  A fraudster does not just destroy their own reputation.  Their actions chip away at the reputation of everyone else in their sector.  And they make it just that bit harder for those people – however good, however hard-working, however trustworthy – to be trusted by others, by the public.

That is the real harm that fraud does.  We would do well to take it more seriously than we do.

 

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Remembrance

November 10 2018

7 May 1912: The University of Cambridge grants Stephen Michael Barry-Walsh, a 31 year-old Irish doctor from Kilmallock, a certificate stating that he had proved himself by “his KNOWLEDGE and SKILL in SANITARY SCIENCE, to wit in Chemistry and Physics in the causes and prevention of Epidemic and Infectious Diseases and in the means of remedying or ameliorating those Circumstances and Conditions of life which are know to be injurious to health as well as in the Laws of the Realm relating to Public Health is CERTIFIED to be well qualified in respect of Knowledge and Skill aforesaid to fulfil the Duties of a Medical Officer of Health.”  With this certificate he became Dr S.M. Barry-Walsh, M.D., B.A. and D.P.H. (National University of Ireland), D.P.H (Cantab).

August 1914: His brother, Eugene, a Kilmallock farmer, sits on the sandy beach at Youghal, Ireland with his 15 month-old son, born in April 1913, between his legs.  Eugene is in his Sunday suit, crisp white shirt with wing collar and neatly knotted tie, a smart hat on his head.  Propped up against his knee stands a small boy in a white short and shorts with wide braces fixed with buttons, a sun hat on his head as he squints into the sun.  That boy, also named Stephen, later became a doctor.  There are 7 more brothers and sisters, the last of whom dies in 2013.

On this day, however, Ireland was still part of the British Empire, whose monarch had made a successful visit to the oldest and nearest part of their Empire three years earlier.  No-one could foresee the type or length of war that was about to start.  Nor that barely 6 years later in May 1920 Kilmallock Barracks would be the subject of one of the largest attacks by the IRA in ferocious fighting during an Irish civil war.

 

8 September 1915: Dr Stephen Michael Barry-Walsh, by now a Lieutenant 1st Cavalry, Field Ambulance, Royal Army Medical Corps, dies of his wounds aged 34.  He is buried in Calais Southern Cemetery.

The first entry in his war diary is on May 27th.  “12 noon. Message. “Send officer able to ride to report A-D.M 8 for service with 1st Cavalry Division.” Me.  Pack up. Send one box and one parcel of clothes home via Military Forwarding office Southampton.  Something will get there.” His first posting is in Rouen.

His last entry in his war diary is on July 26th 1915.  He has drawn a map of his camp near the Yser canal north of Ypres.  He writes: “Just before arriving…a motorcar overtook us and in it the D.A. DMS – to say that a note had been received from the General countermanding the previous day’s order.  It had rained very heavily all night and until about 6:30 in the morning.  So that we men had to strike camp in a deluge and of course got promptly soaked in the process.  We marched home on foot arriving shortly after nine.”

October – November 1917: Carlo d’Ayala Valva, a young engineer from Naples, fights in the battle of Caporetto, one of the bloodiest battles of WWI in the front between Italy and the Austrian Empire, a front at least as bloody as the trenches of Northern France.

 

 

1939 – 1945: Dr Stephen Barry-Walsh joins the RAF and becomes a Squadron Leader.                      

 

19 August 1944: It is the 17th birthday of Maria-Teresa d’Ayala Valva, the eldest daughter of Carlo d’Ayala Valva.  She, her 3 brothers and sisters, mother and grandmother, have been hiding in Rome (the family split up) to escape the bombing of Naples (the most bombed city in Italy) by the Allies.  Her father has remained in Naples in the family home; it too is bombed.  Her half-French mother, Jeanne, writes in a book (Ernest Daudet’s Jeunes Filles d’Autrefois”) she gives her daughter as a present: “A tes 17 ans qui fleurissent en un climat tragique de guerre, l’histoire de cette heroique jeune fille.” (For your 17th birthday which comes during a tragic time of war, this story of a heroic young girl.)

Many years later Maria-Teresa d’Ayala Valva and Dr Stephen Barry-Walsh marry.  They are my parents.  They have two children and three grand-children.

Those grand-children have a grand-father born before the start of WWI to parents who grew up during the Edwardian era.  But they will live the majority of their lives in the 21st century.  Both they and me and my brother have had the inestimable good fortune of living our lives without having had to fight or endure the agonies of war or its consequences. Our birthdays have not been against the background of tragic times.  We have been fortunate to live in a region and at a time when war in Europe has been unthinkable.

On this 100th anniversary of the Armistice which brought the First World War to an end, let us remember all those we have lost, all those who did not share our good fortune.  Let us remember our blessings.  And let us hope that the peace we enjoy now continues.

 

 

 

Photo by James Wainscoat on Unsplash