19/11/2015 Scotland 2015

A catastrophic banking collapse that cost the taxpayer ?20 billion.

Will the men responsible finally take the rap?

Responsibility for the collapse of the high street bank HBOS

in 2008 rests with the board and senior management,

It recommends the regulator considers banning ten

former senior managers from ever working in the City again.

As politicians in the US vote for a temporary ban on refugees from Syria

and Iraq entering the country, a project here in Scotland is trying

to make those who've fled war-torn countries feel more at home.

And as Nicola Sturgeon is in the running to be crowned Scottish

Politician of the Year for the fourth year running, we look back on

The long awaited review into the collapse

The report conducted by the Bank of England is highly critical of those

who were in charge of HBOS and the Financial Services Authority, who

HBOS was crated by the merger of Halifax and bang of Scotland in 2000

is. Seven years of risky investments and complacent management followed.

The bank collapsed in 2008 and was taken over by the Lloyds banking

group. More than ?20 billion worth of

taxpayer money was used to try and prop it up. The collapse hit

Scotland hard, with the shedding of jobs and Edinburgh lost the status

and benefits of hosting the company headquarters.

There have been several investigations into what went wrong.

This one is from the new financial regulator overseen by the Bank of

England. The report found that the ultimate responsibility for the

failure of HBOS rested with the board and senior management.

It was highly critical of the Financial Services Authority, the

old regulator, the people who were meant to be keeping an eye on the

bank. The regulator did not appreciate the full extent of the

risks HBOS were runs and weren't in a position to intervene before it

was too late. Only one person was penalised by the FSA as a result of

the demise of the bank. Peter Cummings was given a lifetime ban

from the city and fined ?500,000. The report recommends that the new

regulator should consider banning ten former executiveles from working

in the city. That includes former HBOS chief executives Andy horny,

chief executive of Gala Coral. James Crosby and former chairman Dennis

Stevenson. Today's review is one of several investigations into what

Joining me now are Ian Fraser and Ray Perman both of whom have written

lessons be learned Good evening to you both. I mean, the authors of

this report are pretty critical, do you think they go far enough? I

think the report can you start, I have. I was very disappointed in the

report, it doesn't tell us anything that we don't already know, but it

doesn't tell us crucially, how we are going to avoid a banking

collapse like the collapse of HBOS in the future, what are the lessons

to be learned, have they been learned? We need to be reassured

about that. A lot of it was familiar territory, but the green report is

critical of the old regulator. Why do you think that the FSA failed so

badly to investigate senior management? First of all it was

understaffed. It had a massive job, all financial service companies,

anded it didn't have enough people. Secondly, the people put into HBOS,

were relatively juniors, they were probably able but relatively junior

and they were easily bullied by the management of HBOS and fobbed off,

so they never really got to the heart of the problem, that was

waiting to collapse the bank. It seems incredible after seven years,

that it has taken so long for criticism of the regulators' role in

this? If this had been Iceland, at least 15 directors would be in jail

for certain crimes that were, that I believe were committed by the

directors and other executives at the bank. Part of the problem, I

think, is the closeness, this clubbiness, the cosiness of the

regulators, the banker, and the auditors. There is three pillars

here. And they are all, you know, there is a constant revolving door

between the three groups where by an auditor was suddenly moved to the

regulator, or a banker would move to the regulator or vice versa, one of

the things that happened was in, in about December 2003, Gordon Brown

who was the Chancellor then, he appointed the chief executive of

HBOS, James Crosby, to become the a non-exective director of the regular

lay to, that seems wrong because HBOS was a bank that was out of

control and the man supposed to be running that bank but not doing it

very well was allowed to sit on the main board of the main regulator the

FSA, and you know, what is interesting is from that moment on,

which was January 2004, there were no more public criticisms from the

regulator of HBOS, was Crosby subverting the process? I don't

know. You mentioned the auditor, obviously, the auditor comes in for

criticism in this report. Rightly so do you think? Rightly so auditors

have not been held to account over this. It took the chairman of the

Commons Treasury Committee to actually call for the auditor to be

investigated. Auditors are supposed to represent the interests of

ordinary shareholders and they failed in this case, and ordinary

shareholders have lost a huge amount of their savings and investments.

This isn't the first time they have failed to carry out the job they are

paid to carry out, is it? No KPMG were the auditors from its creation

until its collapse in September 2008. So for a seven year stretch,

and they failed to properly audit the bank. We need a full inquiry

into that failure, we haven't had one, this report skirts round the

auditors' role. There is a huge amount of conflict of interest

within the awe difficult profession and the accountancy profession

generally, where by for example in the case of Paul Moore who tried to

warn the board of HBOS they were set on a suicidal course, in 2004, he

was fired by James Crosby, and the same firm, who were auditing the

bank and earning about ?70 million I think in audit fees over the course

of their period they audited it was asked to produce an independent

report into the reasons for the dismissal of Mr Paul Moore,

obviously the report wasn't independent, it was a totally skewed

report, which it, had KPM, had another firm examined the situation

round the circumstances sur surrounding Paul Moore's departure,

they might have thought, well maybe he is right, maybe the board is

wrong and perhaps we should stand up to the board and the issues would

have been addressed earlier. They weren't because KPM were conflicted.

The report is cemeding that the regulator look at taking enforcement

action against the senior managers. ?20 billion of taxpayer money was

used to prop up this bank, do you think the public are right to ask

why this sort of suggestion hasn't been made before now? The suggestion

has been made before now, but it was never taken up. The, there is

palpable anger among the people who lost money or their jobs, let us

remember 40,000 bank employees lost their job, some were shareholders in

the bank, through the share save scheme, they lost their savings as

well as their jobs. The people who caused this bank to

collapse, by reckless policies they were following have not been held to

account. Indeed we see, one senior manager is chairman of a building

society. Other is director of a bank, a third chief operating of a

big betting company. It doesn't sound like their reputations have

been too tarnished by this? It beggars belief that somebody who was

the finance director after bank that went spectacularly bust should be

the chairman of a mortgage lender, even now, authorised by the same

people who produced this report. In 2011 the Financial Services

Authority were asked to prove whether Mike Ellis was a suitable

person to run the Skipton Building Society. He has two stints but in

the latter stint he was on the bridge when it hit the iceberg and

sank, and he was the Financial Services Authority at that juncture

waved it through and said it was perfectly fine for him to become the

chairman of Skipton Building Society. That is unbelievable. So

when you read this report, alongside all the others, do you think enough

lessons have been learned that means this sort of thing couldn't happen

again? No, I am not confident we will not see another banking

collapse, perhaps not as big as this, perhaps not soon, but I am not

not confident we have that frankly fear of the regulator, which is

needed in financial service, to keep the banks on the straight and

narrow. Particularly in the past, in the past six month, since the

general election, the Tory Government has been slowly

inunwinding the reforms, the very minor reforms that were put in place

under the previous regime with the coalition, so we have seen the city

minister unwinding a lot of good, of valuable reforms, including watering

downed the ring-fence and the senior persons regime, and that is just

wrong. That gives the impression to the bankers they have got away with

it. We will have another crash in five or ten years as a result. Thank

Nearly a week on from the Paris attacks, the House

of Representatives has voted to ban Syrian and Iraqi refugees

from entering the US until stricter screening measures are in place.

A move that some are describing as xenophobic.

Meanwhile, in Glasgow, a project is trying to help refugees who're

It's using the experiences of Europeans fleeing the First World

War to help modern refugees adjust to their new lives in Scotland.

Mike Grundon has been finding out more about how it works.

T. We will have another crash in five or ten years as a result. Thank

you. This week Scotland has taken in the

first group of Syrian refugees from camps in Lebanon and Jordan. They

are in a safe place to live, but while they find their feet they face

a great many personal challenges. It is all very current but it is

nothing new. 100 years ago refugees from the First World War were

brought to safety here in Scotland. Then, just as now, they were

welcomed into the community, and their experience is now helping

their 21st equivalents. The Scottish Refugee Council has

begun this project called Lest We Forget it brings together refugees

from countries all round the world. There are people who have been

forced to flee from Eritrea, Iran, north and South Sudan and Syria.

Through this project we are bringing together a group of refugees, and

local Scottish people to look back at the heritage of the Belgian

refugees who came to the UK, and came to Scotland at the beginning of

the First World War, and we are looking at those experience with the

group, exploring what the parallels are, and through the project, the

refugees will be telling their stories, and adding, adding to that

as well. There are many frighten and heartbreaking tales to be told by

the people here. They have been looking at historic posters which

encouraged Scots to welcome Europeans who had their own horrific

stories. The parallels are not lost on these most recent arrives. I left

all of my family behind. I am here with my sister, my parents, my Kos

cousin, extended family. Not only family, friends, the communityty

oily. -- community obviously. I haven't seen them for four years

almost now, and they obviously miss the country, you miss the people,

the food the streets. You you would like to go back bun fortunately, it

is not possible sometimes. I hope to be a chance to be like Belgians, to

go back and to rebuild our country. A second time. Those here are

practising language skills, sharing their stories and learning that

despite being isolated from their homes and their families, they are

not the only ones. This project tackles many of the problems faced

by refugee, clearly there is a social element to it but just

knowing that this is nothing new and their they are part of an ongoing

tradition that can be helpful as well. As the organisers say Scotland

has a long tradition of helping and welcoming people fleeing violence in

their home countries, these refugees are finding that out for themselves,

and they have been telling me that that tradition is still strong.

Now this may come as a surprise, but when it comes to alcohol, whisky

Unsurprising then, that it's a big market for Scotland's distillers.

But as our business reporter Simon Atkinson has been finding out, trade

Whisky is one of Scotland's most valuable and famous exports.

About 90% of what it makes is sold abroad.

France and the US are the biggest markets, but India's catching up.

Nearly 80 million bottles of Scottish whisky were shipped to

India last year, and demand is growing.

But there are limitations on that growth, not least price.

Here in Mumbai, local taxes and import duties mean

that this bottle of Scottish whisky costs 5,900 rupees - that's

about ?60, and more than twice what you would expect to pay in the UK.

And the Scottish whisky industry says that will only change if a free

trade deal between India and the European Union gets back on track.

The talks are on pause at the moment, but we really hope

they will get going again, and one of the reasons we want that

is that it should reduce the customs duty into India 150%.

It is way out of line with others in the region.

That will make scotch whisky more affordable for the middle classes.

For now, the bulk of whisky sold in India is the much cheaper

But some are trying to look at Indian-made whisky

A decade ago, the Amrut distillery in Bangalore started producing

single malt, initially aimed at the international market.

Half of what it makes here is sold in places like Europe,

But Amrut is now seeing more locals give it a try.

We never thought it was going to be a very large market in India.

There's an element of snobbery that scotch malt whisky

But nevertheless, when I see people drinking malt whisky in India today,

they are the younger people, people in the age bracket of 30s and 40s.

The bias which my generation has is probably not there any more,

The humidity of southern India helps the whisky mature more quickly than

But it also means more is damaged in the process,

Amrut says that means prices will never be much cheaper than imported

rivals, even if it doesn't have to contend with heavy import taxes.

First Minister, your anniversary in is what more of India's whisky

First Minister, your anniversary in this job coincides with horrific

events in Paris, and there are a number of consequences

events in Paris, and there are a the dangers are there, but I do

believe we have to address the concerns that people might have

about that. I thought Argyll and Bute expressed that in an

unfortunate way. These refugees are some of the most vulnerable to have

come out of Syria. They are fleeing the same kind of people that carried

out the atrocities in Paris. It is right that we play our part in

giving safety and refuge to people. But we have to address the

understandable human anxieties that people have in the aftermath of what

happened in Paris. That is why, I think, people have a right to say to

their governments, are appropriate security checks in place, are people

being appropriately screened before they come into the country? The Home

Office and the Scottish Government have been able to give those

assurances in the last few days. More powers on the way to the

Scottish Government, in terms of taxation and welfare spending. Hard

decisions which will come with those responsibilities, if they come. Is

there any chance that you might veto the Scotland Bill? I've been clear

if there is not a fiscal framework that is fair to Scotland,

accompanying those powers, but without a fair fiscal framework,

powers are not as usable as they would be, I'm not going to sign up

to that. It would be unfair to the country to do that. I hope we are

not in that position. We are negotiating around the fiscal

framework right now and negotiating with the view to getting a deal

which is satisfactory. The Institute for Fiscal Studies suggests that

Scotland's finances would be 7 million, ?8 million worse off if we

were independent or have full fiscal autonomy, compared to if we were in

the UK. Alec Bell says, the fact is, a gap exists. That is true of the

cave. Hang on, he says Scotland does not earn enough to pay for the

current level of spending. The UK does not earn enough, that's called

a deficit. I would like to see us use the economic levers that would

come with greater autonomy to grow out of deficit. Not by cutting

spending? The idea of being in deficit, you take budgetary

decisions at the time, based on the circumstances of the time. Hold on,

we are facing spending cuts right now from a UK Government. The idea

that independence would pose these great threats of spending cuts, that

somehow we are protected from right now as part of the UK, it is simply

a fallacy. You have set a target to reduce

inequality as First Minister, how can you measure success? One of the

things I am doing in education is introducing, controversially in some

quarters, introducing in, primary and lower secondary school,

assessments that will allow us to make sure that the judgments

teachers are making about pupil progress are based on hard evidence.

So, I am building into the system the way in which we can measure

success. Thank you very much. Well, joining me

in the studio are the journalists Welcome to you both. I want to talk

about that interview in a moment. We are hearing from the French

government that the alleged ringleader of the Paris attacks had

passed through Greece on his way from Syria. It is not clear if he

posed as a refugee. Do you think it will change the temperature of the

debate? It may do, but it probably shouldn't. In any group of people

there will be bad eggs, in any large group, it is how you manage that.

There is a danger, people campaigning about refugees, that

they portray them all as Saints. There is a warning that passport

free travel in the EU is in danger, that might get some popular support?

I think probably would come I think that is a step that ought to be

taken or considered before, for instance, you move into bombing

campaigns. It seems that the free movement of people around Europe has

meant that some of the people involved in the Paris attacks have

not been traced, have not been followed, have not been picked up as

they move around Europe. I think there is certainly issues about

that. I am sure that will rumble on. Let's go back to the Nicola Sturgeon

interview. I would what you made of it? Do you think she has shifted her

position on air strikes? The SNP has shifted position. Not that long ago,

you could imagine listening to a phone in from 2003, about the Iraq

war. Now, to some extent, David Cameron has also changed his

position. Who is he going to bomb now? The people he was going to bomb

before were different. Everybody has changed position, there is a new

reality out there. The Daily Mail on the front pages pointing out that a

poll has shown that 60% of Britons believe there should be a bombing

campaign. I agree with you, David, for what purpose? I think any

politician is going to be aware of that would. But I am not so sure we

have seen a change of position. Nicola Sturgeon is saying, I will

listen, of course, you would have too, why not? Alex Salmond has been

saying he will wait for UN approval. With Russia are involved, that's

probably not going to happen. He's taking a firmer line, he is saying

it is non-negotiable, a UN resolution would have to be passed

before they would consider it. It's unlikely to happen, Russia is not

going to join in. Do think we are seeing the beginnings of a rift

between Nicola Sturgeon and Alex Salmond on this? They have a

different tone to what they are saying. I think the Nicola Sturgeon

tone is interesting. I think most people are bewildered and horrified

by Syria and don't know what to do. By being open and saying, explain

what might happen, tell us the story, a lot of people will be able

to identify with that. A lot of people, and I am one of them, do not

know what to do. Nicola Sturgeon is a firm supporter of the EU, do you

think that might have influenced what might be eight softening on

this issue? I think it was an incredibly shocking attack on Paris.

It has brought it really close to home. When people are still

absorbing the shock and the grief of that, I think it is very difficult

to be, as David says, somebody who says absolutely one way or another.

The important ground TBN is the thinking, the listening, the

engaging with these issues and, critically, the asking of the

questions. For instance, what would bombing Raqqa achieve? Evidently,

there are civilians in Raqqa that have not been allowed to leave,

innocent people in Raqqa as well. They are being used by Daesh, as

Nicola Sturgeon so pointedly called them, as human shields. There has

been a lot of focus on Nicola Sturgeon, she comes up to her

anniversary as First Minister. It is her first year as First Minister,

how do you think a report card has been so far? It's interesting,

Scotland has not been marvellously transformed in the last year, and

yet Nicola Sturgeon is tremendously popular. She is referred to as

Nicola. But we don't see Scotland changing. She hasn't got the levers

that she might like to change Scotland, but there are still things

she could do. The report card, lots of ifs and buts, but she remains

incredibly popular. She is up for the Scottish Politician Of The Year

Award, it would be the fourth year in a row, do you think she has much

competition? Other names might include Mhairi Black, the youngest

MP, who gave a maiden speech that was viewed 10 million times in the

first five days. Within her own party, there is some competition

there. But I think she is flying so high in the popularity stakes, I

think there has been another poll that says she is the most popular

living person, which is quite a lot to live up to. It is indeed. Are you

surprised there don't seem to be any men in the running? That's a good

thing, isn't it? I don't know, you tell me! All of the Nordic

countries, which tend to have women in charge, ten to do better for

women and men. It's a new style of politics, very refreshing to

people. What ever party you personally support, Nicola

Sturgeon's style of governance has brought freshness. We must leave it

there. We will find out the results soon. Thanks for coming in.