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Why Stop At Mr Fred? The Time Has Come For Revenge For Darien.

Nik Darlington argues the case for stripping Sir William Paterson of his knighthood.

By Nik Darlington

1 Feb 2012, 10:30

The Queen has annulled the knighthood of the former boss of the Royal Bank of Scotland, Fred Goodwin, following the advice of the Honours Forfeiture Committee.

This committee of senior Whitehall mandarins determines their verdicts according to whether an individual has broken the law and been imprisoned for three months or more, or if they have been censured or struck off by a relevant professional or other regulatory authority. Other “compelling evidence” can be considered if the honours system has been brought into disrepute.

Mr Goodwin has not been convicted of any crime. Nor has he, as far as I can see, been censured or struck off. He is a qualified chartered accountant, though the Institute of Chartered Accountants of Scotland has not taken away his CA. He is a Fellow of the Chartered Institute of Bankers of Scotland (FCIBS), the oldest professional banking institute in the world, and his accolade still stands.

So Mr Goodwin must return his ribbons for ulterior and “compelling” reasons. Here’s what the Forfeiture Committee had to say yesterday:

“The scale and the severity of the impact of his actions as chief executive officer of RBS made this an exceptional case.

In 2008 the Government had to provide £20bn of new equity to recapitalise RBS and ensure its survival and prevent the collapse of confidence in the British banking system. Subsequent increases in government capital have brought the total necessary injection of taxpayers’ money in RBS to £45.5bn.

Both the FSA 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 2008-09, which together with 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 concerns about Fred Goodwin’s decision meant that the retention of a knighthood for services to banking could not be sustained.”

In short, Mr Goodwin has had his knighthood stripped from him because he turned out to be catastrophically bad at his job.

Once upon a time, everyone thought he was fantastically good at his job. It’s why the previous Labour government gave him the gong in the first place.

What has since happened opens up the most magnificent realm of possibilities. I imagine that the perspicacious Forfeiture Committee will today have on their desks the compelling case of a former England rugby footballer who led his national side to an unprecedented World Cup victory in 2003, but who only two years later masterminded one of the greatest humiliations in the history of the British Lions.

Alas, you may think me frivolous to compare the Mr Goodwin’s ‘crimes’ with those of a mere rugby coach. And you might be right. So here’s a much better idea: a mad grievance I and perhaps many others have harboured for far longer than people have despised Fred the Shred.

You remember that old chestnut from Mark Twain, that history doesn’t repeat itself, but it rhymes?

In the 1690s, there was a Scottish banker called William Paterson who, aside from founding the Bank of England in 1694, came up with the swish money-spinning ruse of establishing a Scottish colony in Central America.

Paterson compiled a vast personal fortune from foreign trade, particularly with the West Indies. After giving the English government a ready creditor, he turned his sights on giving the Scottish government an empire - and lucrative American trade routes.

Paterson and his fellow financial adventurers settled upon Darien, on the Isthmus of Panama, as the site of the brave new Scottish colony. The Darien Company elicited great excitement in Scotland and, as many people ploughed savings into RBS at its height, so many Scots invested their savings in Darien. Indeed, Scots chucked approximately one-fifth of the nation’s wealth at the venture.

To cut a miserable tale short, the failure of the Darien scheme bankrupted Scotland. Though rightly debated as to the extent, it can’t be denied that this contributed to the loss of Scottish independence and Scots’ financial and political bail-out by the English in 1706 and 1707.

Sir William Paterson, now a knight of the realm, likely saw Union as a chance to resurrect his fortunes following Darien, and he was instrumental in the events leading up to 1707.

The careers of Fred Goodwin and Sir William Paterson are closely aligned. Both Scots, both bankers, both brought their countries to their knees because of inept financial decision making.

Except disgracefully one of those men still has his knighthood. Remove that false bauble, and let justice be done.

And in the absence of a living figure to immolate, we should publicly flog Paterson’s descendants through the streets of Edinburgh.