Lord Jones: The Government Coddled Face of Bonuses
Lord Jones, chairman of British bank HSBC’s international advisory board, stated that London bankers deserved bumper bonuses this year because of the bonuses they were forced to forgo last year during the financial crisis. While I’m not going to delve into the contentious debate on Wall-Street and City bonuses, I will state a few of my beliefs about his particular situation.
Is this really the face that City (London) financial institutions wish to put forth when it comes to bonuses. No offense, but the Barron of Birmingham is not a good spokesperson when it comes time to argue that financiers deserve abhorrent pay relative to everyone else because they’ve earned it on their own merit and not due to the advantages the system gives them.
From an early age he was given every opportunity to succeed, going to Bromsgrove School one of England’s leading private schools on a state scholarship. Here he was “head boy”, a figure-head position in U.K. private schools which is responsible for ceremonial duties, prior to being kicked out. Later he attended a reasonably well-respected college in the U.K. paid for by the government due to his concurrent service in the Navy.
After college he then worked as a corporate merger and acquisition lawyer, and eventually worked his way from a local position to become head of the Confederation of British Industry (CBI), the premier U.K. pro-business lobbying group. Due to his position in the CBI, as the nation’s top lobbyist, he was able to secure work as a private sector advisor to Deloitte and Barclays Capital and obtain a variety of non-executive board roles.
In 2007, thanks to his entrenchment in England’s bureaucracy and work in the shady realm where government interests overlap with the private-sector, he became a Minister of State for Trade. After a one year stint as Minister of Trade and becoming “Lorded” he leveraged his connections to obtain positions as Chairman of the International Business Advisory Board at HSBC, Chairman of Triumph Motorcycles Limited, and Corporate Ambassador for Jaguar Cars and JCB. For at least one of these positions his hiring may have been an attempt to help the company obtain a bailout, and his political voting power as a member of the House of Lords probably didn’t hurt.
What I put forth is that while Lord Jones has worked reasonably hard throughout his education and career, his position and grotesque earnings have more to do with his ability pull-strings and move through bureaucracies; rather than any extraordinary ability as demonstrated academically or career-wise. His education was state funded, role in government obtained through connections gained as a lobbyist, and in a reversal of sorts his current appointment to various corporate advisory boards is due to political and industry-bureaucracy power.
What makes all this worse is that HSBC received $3.5 billion dollars of bailouts from the U.S. government indirectly through AIG. This accounts for more than two-thirds of HSBC’s net income in FY 2008. HSBC, like many other banks, also lost significant income between FY 2008 and FY2007, with FY 2008 net-income coming in at only 29% of FY 2007 income. So, without the bailout of AIG by the U.S. government HSBC’s revenue numbers in FY2008 would have looked absolutely terrible. Despite these facts, Lord Jones feels as though financiers earned their bonuses even though the FY2009 numbers were roughly as poor as those in 2008.
When your industry is being coddled by the teat of government, I don’t think you have the right to cry for more. Those who work in finance may deserve large amounts of money, if they’re making money. But when they’re loosing money its hard to see the argument, especially when their spokesperson demonstrates what is often true about survival and success in the business world… connections matter, a lot (for companies and people).