RUTH SUNDERLAND: America shows how to deal with corporate crooks

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Punishments are draconian in the US for corporate wrongdoing, unlike the UK, which is paradise island for the reckless, the incompetent, the charlatans, the sailors too close to the wind and the hype-merchants.

Decades in prison are looming for Elizabeth Holmes, the founder of Theranos, who has been found guilty of conspiracy to commit fraud against investors along with three charges of wire fraud.

Holmes must have been highly plausible. Those who backed her firm, which purported to have a test that could detect a variety of conditions from just a few drops of blood, included media mogul Rupert Murdoch and tech tycoon Larry Ellison.

Guilty: Elizabeth Holmes, the founder of Theranos, has been found guilty of conspiracy to commit fraud against investors

Guilty: Elizabeth Holmes, the founder of Theranos, has been found guilty of conspiracy to commit fraud against investors 

The case raises interesting questions over where boasting and over-confidence ends and deception begins. These are highly pertinent in Silicon Valley, where exaggerated claims are common currency. 

Who is a snake-oil salesman and who is the next Steve Jobs? Possibly even the individuals themselves don’t know.

At least the US justice system acts as a credible deterrent for those tempted to cross the line. One of those who passed away in 2021 was the infamous Bernie Madoff, who passed himself off as a legitimate asset manager while running a gigantic Ponzi scheme. He died in prison, having been sentenced to 150 years.

Domestic goddess Martha Stewart served time too, for felony charges related to a share sale, albeit just five months in a facility known as ‘Camp Cupcake,’ but even so.

The campaign to strip Tony Blair of his knighthood is a reminder that a similar demotion was one of the few penalties inflicted on the British bankers responsible for the credit crisis.

Fred Goodwin, the former chief executive of Royal Bank of Scotland, had his gong forcibly removed. 

But he is still in receipt of a handsome pension, courtesy in large part of British taxpayers, who were forced to bail out the bank he broke. 

There seems to be a distinct lack of appetite to investigate disasters, which means those at the helm walk away scot-free. Even when there is no suggestion of criminal accusations, such a culture of impunity is galling for victims.

The City watchdog’s probe into the downfall of fund manager Neil Woodford’s investment empire chugs along after more than two years, with no answers whilst our anti-hero is looking to start again.

At HBOS, there is still no sign of a report into senior managers five years after a probe was launched and 13 years after the bank had to be rescued.

Whenever there is talk of harsher penalties for corporate malfeasance, there are cries that it will spawn witch-hunts and deter talented people from taking top jobs. What nonsense: there is no shortage of CEO candidates in the US. Time we got tough.

Tempus fugit

It’s hard to believe now, but once upon a time a Blackberry was the ultimate business status symbol.

Harder still to imagine was the time pre-Blackberry when we could switch off on holidays because there was no little red light flashing to alert us to email messages. 

So addictive were the handsets they were named Crackberries, and in 2005, the then FT journalist Lucy Kellaway wrote a satire on corporate life ‘Who Moved My Blackberry?’ 

For anyone still using one, they will begin to stop working this week as the software supporting them is turned off, consigning them to history along with the Psion Organiser, the Amstrad and the Filofax.

A reminder of how quickly technology moves came for me over the holidays when I watched The Wire, a mere 20 years or so after it was first released. A couple of young stevedores at Baltimore docks steal some Japanese cameras and are amazed there is no need for film: cue wry smiles.

For Kodak, once synonymous with photography, it was no laughing matter: its botched response to the shift to digital plunged it from dominance to bankruptcy. Kodak has since attempted various activities from cryptocurrency to pharmaceuticals but never regained its status.

Another famous name, Gieves and Hawkes, the Savile Row tailor that dressed everyone from Lord Nelson to Noel Coward, has been put into liquidation after 250 years, though the name may live on.

Even that marker of manly authority, the suit, may be in danger of extinction, judging by the attire of CEOs I speak to on Zoom.

A new year reminds us how time flies. It should remind bosses that yesterday’s lucrative craze is tomorrow’s nostalgia.

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