As I See It: Terry Murden
Scotland’s new National Investment Bank is not yet in business but is already attracting some unwanted attention, not least from those who have an issue with its top appointment.
Scottish Labour is questioning the hiring of Willie Watt, veteran of the corporate finance and fund management industry, as the new bank’s chairman.
Mr Watt was, until earlier this year, chairman, and before that a former chief executive, of the Edinburgh boutique investment manager Martin Currie. An unsavoury episode nearly a decade ago involving Martin Currie’s business in China has been dug up and is prompting questions about Mr Watt’s fitness to hold his new role.
Neil Findlay, Labour’s combatant-in-chief (at least until he leaves office), wants to see the parliament’s economy committee bring the Minister responsible and Mr Watt before them for questioning.
Scrutinising candidates for high office should, of course, be a given and, as Mr Findlay points out, no one is above it, although he claims in his statement that Mr Watt was fined £8.6 million for the China incident which came to light at the end of 2010.
This is incorrect. The fine was levied on the company, not Mr Watt, and the case – involving a conflict of interest in an investment of an unlisted convertible bond from a mainland company – led to an investigation by the regulators which resulted in Martin Currie’s China fund manager Chris Ruffle leaving the firm.
I covered this story extensively at the time for The Scotsman and it is a moot point about where executive responsibility lies in cases where an employee fails in his or her duty and the company’s reputation takes a hit. While Mr Ruffle took the bullet, Mr Watt and the company hardly came out smelling of roses, which he would surely be the first to admit, though it took some probing to draw out the detail of what had been going on in China.
The case attracted added attention because it resulted in the largest fine ever imposed by the Financial Services Authority (forerunner of the Financial Conduct Authority) in a conflict of interest case. An additional penalty was imposed by the Securities and Exchanges Commission in the US.
The FSA said Martin Currie’s misconduct breached principles of skill, care and diligence, management and control, and conflicts of interest. As it happens, these are all qualities which will be required by Mr Watt in his new job.
My former colleague at The Scotsman George Kerevan, also a former SNP MP, has written an article on Mr Watt’s appointment for Bella Caledonia in which he correctly asserts that the new SNIB chairman will oversee the bank’s governance and probity. He states that it is vital the public has faith in such an appointee and can hold them, in turn, to account.
The China incident emerged in the months following the banking crash, adding to the public’s distrust of those in senior financial positions. In the years that have followed there have been various calls for a tougher crackdown on governance matters, and this includes greater scrutiny of those in key positions.
In Martin Currie and Mr Watt’s defence, the China case was a one-off incident, rather than a symptom of the kind of systemic cultural poison that scandalised the banking system. It was investigated by the firm and the regulator, and the appropriate action was taken.
It is, to that extent, an open and shut case, though MSPs should have been mindful of it when making this appointment, if only to satisfy themselves that there are no outstanding concerns. A statement from the committee confirming that to be the case would therefore be in order.