Sir John Gieve and jobs for the boys

On my morning walk into work I happened to tune into a radio 4 program by Robert Peston called Peston and the Money Men in which he talks to four key individuals who were in the eye of the storm of the global financial meltdown. Today's episode featured Sir John Gieve who was Deputy Governor for Financial Stability before and during the financial crisis.

Clearly his time at the Bank was not a roaring success as the one thing he certainly did not ensure was financial stability. However the question that immediately popped into my head was how he was offered the job in the first place.

Before taking his place at the Bank he had been Permanent Secretary at the Home Office (for those not in the know this means he was the non-political civil service head and "accounting officer" of the Home Office, in effect the Chief Executive) and his time at the Home Office was pretty much an unmitigated disaster, with crisis and failures including:


The lost prisoner scandal, where it emerged that more than 1,000 foreign national had been released from British prisons without being considered for deportation.


The Blunkett nannygate scandal where Gieve and other civil servants were criticise for failing to recall how the visa for Mr Blunkett's ex-lover's nanny came to be fast-tracked.


and most damningly the 2006 National Audit Office's report, Home Office: 2004-05 Resource Account which was highly critical of Home Office’s accounts during the period of Gieve's tenure; the accompanying press release stated that:


“Sir John Bourn, head of the National Audit Office, reported to Parliament today that the Home Office had not maintained proper financial books and records for the financial year ending 31 March 2005. Sir John Bourn therefore concluded that, because the Home Office failed to deliver its accounts for audit by the statutory timetable, and because of the fundamental nature of the problems encountered, he could not reach an opinion on the truth and fairness of the Home Office’s accounts.”

Shortly after Gieve left the home office in 2006, Charles Clarke was dismissed as Home Secretary and replaced by John Reid, who after his appointment made a statement to Parliament in which he described the Home Office as "unfit for purpose". While a succession of incompetent Labour politicians certainly share some of the blame for this, particularly on the policy side, the man responsible for the day to day running must surely foot the majority of the blame for any operational failings within the department.


Knowing that Gieve had failed totally to run a department of state with anything approaching competency, one would assume he would have been retired off or demoted to the level of his competency, but as we know this was not the case. Instead he received another top job at The Bank of England charged with maintaining Financial Stability. To give Gieve is due credit he was certainly consistent over seeing the near total melt down of the financial system.

Gieve's ability to obtain a top job after his abject failure at the Home Office brings me to my last point, the worrying fact of the top jobs being dished out to a small number of people with experience in top jobs, whether or not they have be competent in previous jobs. Examples include:

Andy Hornby, who as CEO of HBOS led the bank to near bankruptcy and the its eventual take over by Lloyds TSB. Mr Hornby is now happily the boss of Alliance Boots on around £1 million a year. I am sure the investors in Boots are very happy.

James Crosby, who just happened to be Hornby's mentor and who had an equal hand in the near collapse of HBOS and of course now is Chairman of a leading multinational software company,Misys. Of even more concern with Crosby was his appointment to the FSA initially as a non-Executive Director in 2004, while still running HBOS. After stepping down from HBOS he was made Deputy Chair of the FSA in 2007. Clearly, even if all else was equal there was already the potential for a serious conflict of interest with Crosby's role at the FSA even after his resignation from HBOS. However all else was not equal and the FSA has admitted that is had worries about the HBOS business model (In other words Crosby's business model for HSBO) at the time of Crosby's appointment. If the FSA had worries how did they allow the Treasury to appointment such a man to the FSA.

With both these cases it can be seen that the mere ability to obtain a top job seems in and of itself a qualification for any other top job that comes along whether or not you have shown any competency or integrity in your previous positions.