“What the FERC” – or some such choice words could no doubt be heard echoing around the corridors of power at Barclays Bank’s head office yesterday. The United States of America Federal Energy Regulatory Commission (FERC for short, yes seriously) issued a report ordering Barclays and four of its staff to ‘show cause’ why they shouldn’t pay massive fines.
Four traders named in the report are alleged to have been instrumental in causing Barclays to manipulate electricity markets in and around California from November 2006 to December 2008. The result says FERC, of its ‘findings of fact’ is that Barclays must pay a civil penalty of $435m and ‘disgorge itself’ of $34.9m unjust profits plus interest. The four traders meanwhile face penalties of $18m in aggregate, unless they are in a position to say why not.
Nice work for FERC you might think. You probably also won’t be surprised to hear that a quick tour of the internet comments sections of various media outlets this morning does not reveal a great outpouring of sympathy for Barclays and the boys over this; bank and banker bashing is pretty popular nowadays.
But why is no one outraged about the way the bank and its staff have been treated? It is a distinction without merit that the fines being levied are described as civil penalties rather than criminal ones – the fact remains that the imputation here is of dishonest activity and it is thoroughly iniquitous in my view in a free society for organisations and individuals to face sanctions for wrongdoing without any semblance of due process or the right to first be heard in their own defence.
FERC’s so called findings of fact are based largely on interviews with Barclays staff – the report notes that Barclays has ‘exhibited full co-operation to date’ – presumably because it had very little choice but to co-operate, but that is not the same at all as having the right to put its side of the story to an independent judicial authority BEFORE any findings of fact are made.
Barclays and its traders may well be in the wrong. They may deserve to be punished. But they do not deserve to be pre-judged by a prosecuting authority which is judge, jury and executioner all rolled into one. Justice means innocent until proven guilty not guilty unless you can prove you are innocent.