Libor Scandal: Are Fines Alone Enough?

Corruption in the financial sphere is as old as capitalism itself. Historically, the British East India Company is credited with shaping the modern corporation: it was a wholly unethical business structure which, in its quest for profit, amputated the hands of Bengali muslin weavers, made the Chinese peasantry addicted to opium, facilitated slavery and, in the interests of its ownership and directors, imposed astronomical taxes on the people living under its writ. UBS does not have a lot to do with the Company in that way. But through its rigging of global financial benchmarks such as Libor and Euribor, the bank’s corruption matches the historic treachery and corrupt practices adopted by the most venal of capitalists – such as Robert Clive and his friends.

Adam Smith, Karl Marx and Edmund Burke, albeit for their different reasons, will have the last laugh on this. But this post is not about them. As indicated in the title, it is about the fines imposed on UBS for eviscerating any residual trust which common people had left in the world financial system. Is our trust in the banks worth nothing at all?

Describing the abuse as “widespread”, the Financial Services Authority (FSA) said that “UBS’s breaches of the FSA’s requirements encompassed a number of issues, involved a significant number of employees and occurred over a period of years in a number of countries.” The FSA went on to explain that “between 1 January 2005 to 31 December 2010 the misconduct included”: