Fundamental questions need to be asked about the kind of financial system Scotland needs. We rarely ask them.
I have always had an interest in ethics in business. Some people see ethics as simply about following the rules and regulations. That can be important, but rarely is sufficient. I’m also concerned about outcomes.
Anyone familiar with the rapacious behaviour of RBS towards SME customers will be only too aware that here was a bank enriching itself by destroying many viable small and medium sized businesses and stripping them of their assets. Judged by outcomes, regardless of their claims to follow the rules their actions were wholly unethical. The same for other banks too: RBS has not been alone in destroying many Scottish businesses.
Little wonder that trust in banks has been so low in recent years. Some of the loss of trust is of course related to the catastrophic financial crash of 2008 when banks were bailed out in multiple £billions for systematic failures of leadership. However, the culprits got off, and in many cases left posts with eye watering pay offs. Who would trust in such corrupt practices?
I would want to see limited liability removed from banks and expose directors to the consequences of their actions, just as thousands of small business owners in Scotland have to be accountable for theirs. Remember too, such bad behaviour of RBS continued long after it was effectively under state ownership.
Corruption and criminality
But it goes even deeper. Particularly around some elements of the financial sector in London, the lack of effective ethics has led to the UK (London in particular) being a world leading centre for the attraction of the financially corrupt. Such corruption is just as much a function of the state sector as the private sector. What the state enables in terms of corruption is at the heart of many of my concerns. My campaign in parliament against Scottish Limited Partnerships is a case in point. It is the state that set up SLPs (in 1908 although it is since 2008 they have been captured by the corrupt and criminal) and turned a deliberate blind eye to their use for tax evasion and money laundering of corrupt assets.
Scotland does not need to be like this. It is quite possible to be relatively free of corruption and be financially successful. (Indeed, a lack of corruption is helpful for free markets)
Measures of state corruption
One of the most regularly referenced sources of information on corruption, including by the World Economic Forum, is the annual reporting of Transparency International and its index of corruption. I reference this in my latest article for iScot magazine on international trade.
Transparency International’s Corruption Perceptions Index ranks 180 countries and territories by their perceived levels of public sector corruption. It should be noted that the United Kingdom is one of the 180 countries. Scotland does not have its own index rating.
The top ten least corrupt countries and their estimated population size in 2020 are as follows:
Denmark (5.8 million)
New Zealand (4.8 million)
Switzerland (8.6 million)
Sweden (10.1 million)
Singapore (5.9 million)
Finland (5.5 million)
Norway (5.4 million)
Netherlands (17.1 million)
Luxembourg (0.6 million)
Canada (37.7 million)
When independent, Scotland should aspire to be one of the world's leading countries in terms of least corrupt. Look too at the population sizes of the least corrupt countries. It is countries of comparable size to Scotland that dominate the rankings. Furthermore, these are highly successful countries in many cases significantly outperforming Scotland. The UK it would appear is too big and too corrupt to appear in the top ten.
Scottish Limited Partnerships
But back to my campaign on Scottish Limited Partnerships. They are at present under the control of the UK government. However we need to ensure we put in place policies that prevent corrupt practices continuing in the name of Scotland from day one of independence.
I am often asked are SLPs really that bad? My answer is not only yes, but that they are running the very serious risk of undermining Scotland’s reputation as a place to do open and honest business. As I point out in my forthcoming iScot magazine article, there is a huge opportunity to position Scotland as a trustworthy, ethical and successful place. However, all that is put in jeopardy by the likes of Scottish Limited Partnerships.
So, as from tomorrow I am starting my long read blog for the weekend. I have invited the wonderful Richard Smith, who knows more about SLP abuse than anyone else, if he could explain how bad the situation with SLPs continues to be. I am also delighted to announce that should I become an MSP Richard has agreed to join my group of policy advisers.
So I make an appeal. Please make sure you read Richard’s blog tomorrow and understand the problems we face and the challenge to Scotland's reputation if we do not act.