Ex-RBS CEO stripped of knighthood

2012-02-01 09:05

London - The former Royal Bank of Scotland chief who infuriated the British public by leading the bank to near-collapse and then walking away with a fat pension was stripped of his knighthood, a rare punishment that puts him in the company of criminals and dictators.

Queen Elizabeth II "cancelled and annulled" Fred Goodwin's knighthood for the key role he played in the failure of RBS, a financial disaster that helped trigger the recession in Britain and forced taxpayers to bail out the bank, the Cabinet Office said on Tuesday.

Knighthoods are rarely revoked, but the government said Goodwin "had brought the honours system into disrepute" and that the "scale and severity" of the impact of his actions made it an exceptional case.

After losing the honour, Goodwin, aged 53, joins a group that also includes the British spy Anthony Blunt, Zimbabwean President Robert Mugabe and Romanian dictator Nicolae Ceausescu.

"I think we've got a special case here of the Royal Bank of Scotland symbolising everything that went wrong in the British economy over the last decade," Treasury chief George Osborne said. "Fred Goodwin was in charge, and I think it's appropriate that he loses his knighthood."

Since he left RBS in 2008 with a multimillion-dollar pension as the bank was foundering, Goodwin has become a high-profile public villain of the financial crisis in Britain.

Bad decisions blamed

Goodwin built the Royal Bank of Scotland into one of the world's largest banks and was knighted in 2004 for services to banking. But four years later, he led the bank to ruin with a multi-billion dollar takeover of the Dutch bank ABN Amro just as the credit crisis was starting to bite.

Goodwin resigned in October 2008 as the bank was failing, provoking the public's ire by leaving with $25m in pension benefits.

The British government had to spend $71bn bailing out and nationalising RBS, and taxpayers now own an 82% stake.

A report on RBS published last year by the Financial Services Authority blamed the RBS debacle on bad decisions, rather than dishonesty or any violation of regulations.

Prime Minister David Cameron welcomed the move and called it "the right decision".

"The FSA report into what went wrong at RBS made clear where the failures lay and who was responsible," he said in a statement.

No comment from RBS

The queen removed Goodwin's title on the advice of the Forfeiture Committee, which usually acts only against people sentenced to more than three months in prison for a criminal offense, or who have lost their professional license or been censured by a regulatory or professional body.

Some believed that in the absence of a trial it was the appropriate penalty.

"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," said Conservative lawmaker David Ruffley.

RBS declined on Tuesday to comment on the decision and Goodwin was not immediately reachable for comment. But, not everyone saw it as fair for a man who has not been charged with any crime.

Simon Walker, director general of the Institute of Directors, said he did not approve of the decision and was concerned about "anti-business hysteria".

Fred to Shred

"To do it because you don't like someone, you don't approve of someone, you think they've done things that are wrong, but actually there's no criminality, alleged or charged, I think is inappropriate and politicises the honours system," he told the BBC.

Goodwin is likely to retain his other title - "Fred the Shred", a tribute to his aggressive cost-cutting while expanding RBS.

Public and political pressure has been mounting on the current executives of the bank to renounce hefty bonuses they were awarded at a time when many Britons face painful spending cuts and tax hikes.

Goodwin's replacement, Stephen Hester, announced on Sunday he would not accept a bonus of $1.6m in shares. The day before, RBS chairperson Philip Hampton waived his own bonus of 1.4 $2.2m in shares.