UK Politics

Former RBS boss Fred Goodwin stripped of knighthood

  • 31 January 2012
  • From the section UK Politics
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Fred Goodwin
Image caption Mr Goodwin was in charge of RBS in the run-up to its near collapse in 2008

Former Royal Bank of Scotland boss Fred Goodwin has had his knighthood removed.

Mr Goodwin, who was heavily criticised over his role in the bank's near-collapse in 2008, was given the honour by the Labour government in 2004.

The Queen cancelled and annulled the title following Whitehall advice.

Party leaders, led by Prime Minister David Cameron, welcomed the decision. In the past, only convicted criminals or people struck off professional bodies have had knighthoods taken away.

Mr Goodwin oversaw the multi-billion-pound deal to buy Dutch rival ABN Amro at the height of the financial crisis in 2007, which led to RBS having to be bailed out to the tune of £45bn by taxpayers.

There had been a growing clamour for Mr Goodwin to be stripped of his honour following thousands of job losses at RBS and in the banking industry since then, and the impact on the wider economy.

'Exceptional case'

After the removal of the knighthood, a Cabinet Office spokesman said: "The scale and severity of the impact of his actions as CEO of RBS made this an exceptional case."

He added: "Both the Financial Services Authority and the Treasury Select Committee have investigated the reasons for this failure and its consequences.

"They are clear that the failure of RBS played an important role in the financial crisis of 2008/9 which, together with other macroeconomic factors, triggered the worst recession in the UK since the Second World War and imposed significant direct costs on British taxpayers and businesses.

"Fred Goodwin was the dominant decision-maker at RBS at the time. In reaching this decision, it was recognised that widespread concern about Fred Goodwin's decisions meant that the retention of a knighthood for 'services to banking' could not be sustained."

'Proper process'

The BBC's business editor Robert Peston said Mr Goodwin was in a "class of his own" in terms of the risks that he took at RBS - reflected in the size of the bailout required to rescue the company.

In 2009, Mr Goodwin, who received an annual pension of £650,000 - later reduced to £342,500 - after leaving the bank, told a committee of MPs he "could not be more sorry" for what had happened.

Media captionGeorge Osborne, Ed Miliband and Alex Salmond react to Fred Goodwin losing his knighthood

Both Mr Cameron and Labour leader Ed Miliband welcomed the decision.

"The FSA report into what went wrong at RBS made clear where the failures lay and who was responsible," Mr Cameron said. "The proper process has been followed and I think we have ended up with the right decision."

And Mr Miliband said the public wanted to see further sweeping changes to boardroom culture and remuneration.

"It is right that Fred Goodwin lost his knighthood but I think it is only the start of the change we need in our boardrooms.

"We need to change the bonus culture and we need real responsibility right across the board."

'Public opprobrium'

Deputy Prime Minister and Lib Dem leader Nick Clegg said Tuesday's announcement was the "right decision" while Chancellor George Osborne described the decision as "appropriate".

"RBS came to symbolise everything that went wrong in the British economy in the last decade," he said.

Scottish First Minister Alex Salmond said it was the "correct decision", since the knighthood "was for services to banking which could not therefore be sustained".

The Unite union also welcomed the move, with senior official David Fleming saying it was "a token gesture... but one which will be well received by the thousands of workers who lost their jobs during his rule".

Conservative MP David Ruffley, a member of the House of Commons Treasury Select Committee, said Mr Goodwin had acted "recklessly" and the public wanted him to be "held to account".

He told Sky News "there was a sense that this guy had got away scot-free and the only thing left really to show the public opprobrium was for the knighthood to be stripped".

'Politicising honours'

Media captionSir Jackie Stewart: "Fred Goodwin hasn't committed a crime of any kind"

However, the move was not welcomed by all. Simon Walker, director general of the Institute of Directors, did not approve of the honour withdrawal, saying he was concerned there was "a hysteria about the whole situation".

While he said that the system of stripping an honour for criminal offences was "appropriate", he added: "To do it because you don't like someone, you don't approve of someone, you think they have done things that are wrong but actually there is no criminality alleged or charged, I think is inappropriate and politicises the whole honours system."

The forfeiture committee - whose members include the cabinet secretary, the top civil servant at the Home Office, the top lawyer at the Treasury and the top official in the Scottish government - made the decision to recommend he lose the honour.

The Queen has the sole authority to rescind a knighthood, after taking advice from the government.

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