Sigrún Davíðsdóttir's Icelog

“If bankers who act fraudulently are not put in jail with their bonuses returned, assets confiscated and banned from future practice, we will only give a green light to similar risk-laden behaviour in new forms.”

According to The Guardian, Gordon Brown adds, in a convoluted way, that if the conduct of bankers was dishonest judging from what would be considered reasonable and honest, then there was a case for Britain following the example of Ireland, Iceland, Spain and Portugal and in launching prosecutions.

So, now we know: Gordon Brown former prime minister and leader of the Labour Party now thinks banks and bankers should have been investigated and prosecuted in connection to the financial crisis; the crisis that struck in August 2007, when Brown had been prime minister for only a few months. He had however been Chancellor of the Exchequer for a decade.

We know of his change of heart because this is what he writes in his coming memoir, My Life, Our Times.

He’s right that something has been in Ireland, Spain and Portugal but only in Iceland were the banks investigated in a fairly concise way. So far, over twenty bankers and others connected to financial wrongdoing in the months and years up to the 2008 banking collapse have been sentenced to imprisonment.

Better late than never – but this is a staggering admission from the man who more than anyone formed that atmosphere that allowed the banks to act with impunity. From his seat of great power he watched the crisis unfold and followed its aftermath until the Labour party lost the elections in the spring of 2010: Brown first had ten years as a Chancellor and then three years as prime minister to shape the banking environment.

Soon after the events in the UK in early October 2008, when the Icelandic banks, also operating in the UK, collapsed and British banks like RBS, HBOS and Lloyds TSB were bailed out, the Serious Fraud Office, SFO, started scrutinising the ongoings. It did look at the Icelandic banks but it had its eyes also on the interaction between the Icelandic banks and international banks operating in London. One case was mentioned in The Guardian in June 2010, focusing on an intriguing connection between Kaupthing and Deutsche Bank. Nothing has apparently come of that investigation.*

We know that the SFO was suffering at the time from lack of funds which in turn led to difficulties in attracting highly skilled people who would always be able to get better paid jobs elsewhere. Gordon Brown, as Chancellor and as prime minister, did little to nurture the SFO.

It’s good that Gordon Brown has seen the error of his earlier days, an error that profoundly shaped the atmosphere of impunity the banks operated in – but it’s very very sad that he totally wasted the opportunities he had to stimulate a healthy atmosphere where banks, like any other business and bankers, like any other persons, would be scrutinised, investigated and, if needed, prosecuted, without fear or favour.

*This case touched an Icelandic criminal case, the so-called CLN case. More evidence has come up on this lately, more coming soon on Icelog.

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