VW, News UK, Barclays Bank: ignorance isn't cheap

On 3 July 2012, we learned that Bob Diamond had stepped down from his position as Chief Executive of Barclays Banks. The Bank was beset by scandal, specifically charges that it had rigged the London interbank lending rate LIBOR.

A week later, we learned that he had generously waived his right to some £20 million of bonus payments, so he would be leaving with the pittance of a year’s salary, amounting to £2 million. That would barely cover the pay of 195 people on minimum wage, such as the cleaners who made sure that he had a physically clean environment to work in, however morally polluted it might have been.

Diamond made it clear that he knew absolutely nothing about the LIBOR rigging.

In 2002, the voicemail of a missing thirteen-year old schoolgirl, Milly Dowler, was hacked by journalists working for Rupert Murdoch’s News of the World. Because they were listened to, messages on the voicemail were automatically deleted, giving Milly’s parents the hope that she might have deleted them herself and therefore still be alive, when in fact she had already been murdered.

In July 2014, Rebekah Brooks, editor of the News of the World at the time Milly Dowler’s and great many others’ phones were hacked, was cleared of all charges arising from the criminal activity. She claimed that she knew nothing of the practice, although she was editor at the time it happened.

Despite her blessed ignorance, Rebekah Brooks had to suffer the indignity of seeing the closure of the newspaper that she edited while it was hacking phones. She also had to step down as Chief Executive of News International, the representative on Earth, or at least in Britain, of the equally blessed Rupert. In consolation, all she could turn to was the £10.8 million payoff that Murdoch’s organisation gave her. That’s quite a long way short of what 1000 workers on minimum wage might make in a year.

Fortunately, however, the Sun on Sunday has filled the gap left by the loss of the News of the World. And, equally fortunately, we heard just this month that Rebekah herself was to be appointed as Chief Executive of News U.K., as News International is now known. It seems that the industry she graced for so many years is not to be deprived of her special skills any longer.

VW: a dirtier story than we'd been led to believe

On 23 September this year, the then Chief Executive of Volkswagen, Martin Winterkorn, stood down from his post, following the scandal over emissions test rigging. That took the form of fitting special software on the emissions monitoring system of diesel VW cars, so that it could detect when tests were being carried out, and run emission control systems that were turned off in normal driving.

He went despite claiming that he had absolutely no knowledge of the fraud. He was paid a little more than 15 million euros last year. That’s the equivalent of around 850 German workers on minimum wage.

What do these cases all have in common? They involve people who took massive salaries. Such payments are generally justified by the responsibility accepted by the senior executives who are paid that much. Responsibility, some might feel, requires an understanding of the organisation these people lead. But that’s the other point all three have in common: on their own admission – claim, actually – they had no knowledge at all of the wrongdoing in their teams.

Still. Who are we to question whether our major enterprises are making any rational link, between the remuneration they offer their top people, and their competence?