News Analysis - The spread of bonuses
WORKERS, MARCH 2009 ISSUE
Newspapers daily report the banking employers’ bonus payments, now bankrolled by the taxpayer, and everywhere there is outrage, possibly tinged with envy in the case of some politicians at least.
The Royal Bank of Scotland, 68 per cent government owned, has lost £28 billion in bad loans. It got £20 billion from the taxpayer, so it is planning a £950 million bonuses payout. It paid its chairman £4.2 million in 2007, plus a bonus of £2.8 million. Yet it is trying to sack 2,300 workers.
Lloyds Banking Group got £17 billion from the government, and is 43 per cent government-owned. It is planning to pay its executives bonuses in the form of shares, not cash. Its chief executive Eric Daniels gets £1 million basic salary plus £1.79 million in bonuses. He said recently, “The recipients of bonuses that I am referring to are people like you and me. They have relatively modest salaries.”
Conflicts of interest
HBOS, having lost £11 billion, got £11 billion from the taxpayer. Its chief executive was paid £1.9 million in 2007. Its former chairman got £821,000, plus a £600,000 golden goodbye. KPMG was HBOS’s auditor, yet the Financial Services Authority commissioned KPMG to scrutinise claims about bad practices at HBOS, an obvious conflict of interest. Gordon Brown aided Lloyds’ disastrous takeover of HBOS by agreeing to waive competition rules.
Barclays gave its investment unit partners £642 million over the last 18 months, and is planning to give its directors another £600 million in bonuses.
Brown has pledged to ‘sweep away the bonus culture of the past’ – but not just yet. The government’s review into City bonuses will not be finished until the end of the year, so it cannot affect the bonuses paid for this year, or most likely those for next year!
In fact, giving the banks so much notice means that they will be able to write bonuses into contracts, making it illegal not to pay the bonuses. City lawyers are already claiming that withholding bankers’ bonuses would be illegal, ‘a violation of these people’s human rights’. So the whole political game with bonuses is a charade.
It isn’t just greed that we are up against, but shameless, habitual and mostly perfectly legal robbery. We can’t take over the banks as they are, as some suggest, but need to build up the kind of banking services we require from scratch.