Phone-hacking, then rate-fixing – which industry is next?

The anatomy of a modern-day scandal.

Regardless of the outcome of the Leveson inquiry, one of the most long-lasting effects of the revelation of the phone-hacking culture in the tabloid press seems to be the creation of a blueprint for how to overhaul an industry.

In that respect, the revelation that Barclays had been systematically lying to the British Bankers Association about the rate they thought they could borrow at is just the latest step in a process that we have all been through before. Not for nothing have bankers been talking, in private and ever more frequently in public, about the Libor manipulation being a "Milly Dowler moment".

For years now – ever since the crash, but even before then – there has been widespread belief that the daily grind of a banker's life involves dishonesty. The popular understanding of the financial crisis is that it involved misselling of complex financial instruments (the infamous collateralised debt obligations, which allowed sub-prime mortgages to be sold in tranches disguising the inherent risk in owning them) causing a crash which the perpetrators didn't suffer from due to their closeness to the sources of political power. Not only were the institutions bailed out, but the allegations of widespread criminality resulted in not a single British prosecution, despite the pre-election talk of David Cameron.

Just as phonehacking was never confined just to the News of the World, despite the fact that it was their hacking of a murdered teenager's phone which brought the scandal into homes nationwide, so the Libor manipulation seems extremely unlikely to be just the work of Barclays. The Financial Times reports, for instance, that 

[Barclays] admitted that [it] understated its borrowing costs during the financial crisis because it believed other banks were doing the same.

And a post today from ZeroHedge claims that the Libor manipulation was common knowledge. "Everyone knew" and "everyone was doing it", apparently:

Everyone knew we couldn't borrow at Libor, you only needed to look at CDS to see that... with real Libor rates 3 to 4 per cent higher than the BBA's submitted Lie-bor.

The "everyone knew" defence was trotted out under similar circumstances for the phone-hacking scandal, seemingly in an attempt to minimise the perceived transgression. There at least it was easily proveable. Journalists seem to find it much harder to keep quiet about these sort of things than financiers, for some reason. So we have Piers Morgan's infamous passage in his autobiography from January 2001 revealing that:

Apparently, if you don’t change the security code that every phone comes with then anyone can call your number and, if you don’t answer, tap in the four digit code to hear all your messages.

And nearly every celebrity who has given evidence at the Leveson has given evidence of stories being published which couldn't have come from any source other than phone hacking.

In both cases, everyone did know, and it really did mean that the average person finding out afresh was less shocked. After all, if you and the fifth person in a room finding out something that everyone else already knows, it hits a lot less hard than if everyone finds out all together.

Even worse, the structure of both industries lends itself to minimising harm (harm, that is, caused to the industries). Newspapers inculcate an attitude that the scoop is all, that it should be earned at any cost and that the editors won't ask questions beyond whether it is true or false; banks want their traders to earn money and don't particularly care how its done. In each case, it is easy to pass anyone caught in the act as a rogue reporter or a rogue trader.

So in the end it takes a single, uncontrovertible piece of evidence to shake the foundations of the industries. The hacking of Milly Dowler's phone showed the nation that, even if it was just one rogue reporter, the structures that let it happen couldn't be allowed to continue; and when the thread began to be pulled, the whole thing unravelled, and the idea that it could ever have been "rogue reporters" looked laughable. With the Libor scandal, a similar process seems to be under way; the story that it was junior managers acting illegally looks unlikely to last the week, given we now know that Bob Diamond and the Bank of England's Paul Tucker had conversations which somehow metastisized into instructions to give fake submissions.

And we seem to be reaching the apotheosis of the scandal: the chancellor is expected to announce a full inquiry into Libor this afternoon, which he is hoping to keep one step short of a complete Leveson-style investigation.

The uncanny similarity between the two events raises two questions: can we handle them better? and where is the next one coming from?

After all, the idea that endemic criminality in an industry can just be "talked out" seems absurd; and yet it is looking less and less likely that the Leveson inquiry will result in anything other than a light being shone on the industry. Damaging for those used to operating in the dark, but a far cry from justice. And holding a Leveson-style inquiry up as the best outcome for the Libor scandal, when we don't even know how the Leveson inquiry itself will end, seems foolish.

But the bigger question should be attempting to pre-empt the next scandal. We don't have to leave it until the event which shocks everyone into action, if we learn to recognise the signs. Large amounts of independence on the ground, a culture that emphasises no-questions-asked successes, and the dismissal of anyone revealed to be acting out of line as a "rogue" element are the warnings we should be looking out for. And personally, if I were the Metropolitan Police, I would be wondering who my Clive Goodman is going to be. 

 

Former News International Chief Executive Rebekah Brooks leaves her lawyer's office in London. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Rarely has it mattered so little if Manchester United won; rarely has it been so special they did

Team's Europa League victory offers chance for sorely needed celebration of a city's spirit.

Carlo Ancelotti, the Bayern Munich manager, memorably once said that football is “the most important of the least important things”, but he was only partly right. While it is absolutely the case that a bunch of people chasing around a field is insignificant, a bunch of people chasing around a field is not really what football is about.

At a football match can you set aside the strictures that govern real life and freely scream, shout and cuddle strangers. Football tracks life with such unfailing omnipresence, garnishing the mundane with regular doses of drama and suspense; football is amazing, and even when it isn’t there’s always the possibility that it’s about to be.

Football bestows primal paroxysms of intense, transcendent ecstasy, shared both with people who mean everything and people who mean nothing. Football carves out time for people it's important to see and delivers people it becomes important to see. Football is a structure with folklore, mythology, language and symbols; being part of football is being part of something big, special, and eternal. Football is the best thing in the world when things go well, and still the best thing in the world when they don’t. There is nothing remotely like it. Nothing.

Football is about community and identity, friends and family; football is about expression and abandon, laughter and song; football is about love and pride. Football is about all the beauty in the world.

And the world is a beautiful place, even though it doesn’t always seem that way – now especially. But in the horror of terror we’ve seen amazing kindness, uplifting unity and awesome dignity which is the absolute point of everything.

In Stockholm last night, 50,000 or so people gathered for a football match, trying to find a way of celebrating all of these things. Around town before the game the atmosphere was not as boisterous as usual, but in the ground the old conviction gradually returned. The PA played Bob Marley’s Three Little Birds, an Ajax staple with lyrics not entirely appropriate: there is plenty about which to worry, and for some every little thing is never going to be alright.

But somehow the sentiment felt right and the Mancunian contingent joined in with gusto, following it up with “We’ll never die,” – a song of defiance born from the ashes of the Munich air disaster and generally aired at the end of games, often when defeat is imminent. Last night it was needed from the outset, though this time its final line – “we’ll keep the red flag flying high, coz Man United will never die" – was not about a football team but a city, a spirit, and a way of life. 

Over the course of the night, every burst of song and even the minute's silence chorused with that theme: “Manchester, Manchester, Manchester”; “Manchester la la la”; “Oh Manchester is wonderful”. Sparse and simple words, layered and complex meanings.

The match itself was a curious affair. Rarely has it mattered so little whether or not United won; rarely has it been so special that they did. Manchester United do not represent or appeal to everyone in Manchester but they epitomise a similar brilliance to Manchester, brilliance which they take to the world. Brilliance like youthfulness, toughness, swagger and zest; brilliance which has been to the fore these last three days, despite it all.

Last night they drew upon their most prosaic aspects, outfighting and outrunning a willing but callow opponent to win the only trophy to have eluded them. They did not make things better, but they did bring happiness and positivity at a time when happiness and positivity needed to be brought; football is not “the most important of the least important things,” it is the least important of the most important things.

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