When the Financial Services Authority said it wouldn't publish its report into the failure of RBS - on somewhat debatable legal grounds - it provoked howls of protest. One justification provided by the regulator was that nothing dishonest went on, just a series of very bad decisions. But one of the latest cables published on WikiLeaks suggests otherwise: apparently, Philip Hampton, the man installed as RBS chairman after its failure, told US diplomats that the RBS board had breached its 'fiduciary responsibilities' by failing to question the takeover of ABN Amro.
Cue another storm of protest - though since Hampton's refusing to comment, it's a bit hard to see the FSA changing tack purely on the basis of the cable...
The cables were sent from the US embassy in London, and report that Hampton told a visiting delegation of both Democrats and Republicans that the bank made ‘several enormous mistakes’, not least the failure to do ‘proper due diligence prior to the purchase’. ‘The board of directors never questioned this purchase,’ state the cables, ‘which Hampton termed a failure of their fiduciary responsibilities.’
As scoops go it may not have the same gloss as the one about the first lady of Azerbaijan who apparently can’t move her face for all the plastic surgery; but since the FSA had just come out saying it hadn’t found ‘a failure of governance on the part of the board’, it will cause its share of furrowed brows.
Hampton is quite wisely staying out of it, saying he’s not going to comment on someone else’s report of a meeting. It’ll be interesting to see how well such a stance will stand up in a post-WikiLeaks world. He’d said something different to the press before, telling the Guardian that it was merely ‘big bad business judgments’ that had caused the near-collapse of RBS – which as well as stating the obvious is notably less of a mud-sling. But the modern world is becoming one where what you say behind closed doors may have to marry up to what you’re saying in public. Otherwise people will call on you to pipe up and clarify.
Unless it really has to, the FSA isn't going to rush to reopen a book it had already deemed closed. But the watchdog can still expect a great deal of pressure: shareholders trying to bring legal action for the losses they sustained on their shares during the £12bn cash call may leap on what Hampton is claimed to have said, as potentially crucial for their case.
On the plus side, not all those involved in the UK banking sector have come out badly from the latest round of Wikileaks cables. Another reports that Bank of England Governor Mervyn King tried to organise a global bailout fund to recapitalise the banks a full six months before the banking crisis. Threadneedle Street's own PR department couldn't have come up with a better testimonial to King's judgement and prescience...