Imagine if the BBC’s excitable commentators had been asked to cover the building of Sochi’s facilities, rather than the Winter Olympics themselves. ‘Yeesss!!’ Ed Leigh might have yelled, ‘That’s the 21st construction contract for the big lad from St Petersburg, Arkady Rotenberg. Seven point four billion dollars’ worth, a new Olympic record — more than the entire cost of the 2010 Vancouver Games! How cool is that for the 62-year-old who was Vladimir Putin’s boyhood judo partner? Up next, the $9.4 billion rail-and-highway link between Olympic sites: keep your eye on Russian Railways president Vladimir Yakunin, who used to be the President’s dacha neighbour…’
And so on through a roll call of Russian businessmen who have collected gold in Sochi, where the total cost of Olympic-related works is said to have passed $51 billion. Putin has personally driven the project, and when he fired one Olympic official — whose brother had the contract to build the ski jump — he declared: ‘The main issue is to be sure nobody steals anything.’ Allies claim he has made strenuous efforts in that respect, highlighting that as of last year Russia’s budget watchdog had identified a mere half-billion ‘misspent’ in Sochi. But opponents claim much larger sums have been siphoned off to favoured tycoons, and cast all sorts of aspersions on Putin himself. One campaigner, Alexei Navalny, described the Games as ‘a monument to embezzlement’.
Who to believe? Chatham House research fellow Andrew Monaghan warns that sleaze allegations are all too freely bandied between Russian political foes, and points out that a nationwide anti-corruption drive has been central to Putin’s policy agenda. Nevertheless, he writes, ‘corruption sits on the heart of the Russian body politic’.
Combined with Putin’s anti-gay stance, all this raises the issue of whether great sporting events should ever be awarded to regimes that fail basic tests of probity and human rights. Qatar, where 400 Nepalese contract workers are reported to have died in accidents on construction sites for the 2022 World Cup, is the next case in point. But on balance, the spotlight is a good thing. Just as ‘2012’ showed Britain to the world as a good-humoured nation that gets the job done, so Sochi is a useful reminder, especially to those who have swallowed too much ‘emerging market’ hype, that resource-rich Russia is still as rotten as it is repressive.
‘Yes we can,’ says Scotland’s increasingly desperate first minister. ‘No you can’t,’ chant Osborne, Balls, Clegg, Carney, Macpherson of the Treasury and Barroso of Brussels in response to Alex Salmond’s claims that an independent Scotland would have a right to share the pound and become an instant member of the EU. But yes, you can take a chunk of our national debt, George Osborne adds — and perhaps in a whisper, ‘Would you like your Royal Bank back as well?’ Salmond’s economic and fiscal platform is collapsing, and his last remaining option must be to drop the SNP’s aspiration for alliance with the Scandinavian nations and instead seek to emulate Liechtenstein and Andorra by turning Scotland into an impregnable tax haven. ‘Hide your fortune in the Highlands’ is a slogan that might win him new support, though much of it might come from Russia.
As with allegations against elderly celebrities of groping long ago, there must come a point when it is counterproductive to go on pursuing banks for every last instance of market abuse during the decade of folly. The tally of penalties on both sides of the Atlantic for Libor-fixing and product mis-selling continues to grow, as attention now turns to allegations of collusion and manipulation in foreign exchange markets by at least nine major banks. Martin Wheatley, head of the Financial Conduct Authority, has said that the forex scandal is ‘every bit as bad as Libor’, and another multi-billion round of fines is expected.
Of course wrongdoing must be chased, and no one has yet made a case for an amnesty to draw a line under a past era — because no one believes it can’t happen again. But some of the consequences are perverse. On the positive side, £10 billion of compensation for mis-sold ‘payment protection insurance’ boosted consumer spending last year. On the negative, money paid in fines is a deduction to bank capital that might otherwise be available, suitably multiplied, for lending to businesses — and relentless investigative zeal makes it tough for the sector as a whole to regain trust and play a positive role in a recovering economy.
Most perverse of all, as Spectator reader Andrew Fraser pointed out in a recent letter to the FT, fines are borne by bank shareholders but not by executives, who continue collecting giant bonuses. ‘If [fines were] properly assigned to the individuals responsible,’ wrote Mr Fraser, ‘no other measure could assure more responsible behaviour more quickly.’ An important point — and one that should be part of a wider review of how better to build an honest, productive financial community for the future.
Sharing the journey
More tech trouble at home. This time the Wi-Fi hub went on the blink, drawing me into an extended mystery tour of BT call centres. First a ‘diagnostic test’ from India confirmed that the hub was defunct, then I spoke to a couple of Geordies who sold me a fancy new contract but could not promise to get me back online for 48 hours. Persisting, I encountered another Indian voice who seemed to be following entirely her own script, ignoring my tetchy demands. Ram the end of a paperclip into a little hole on the side of the dead hub, she instructed. Sceptically I did so — and 30 seconds later it came back to life, stronger than before. I thanked her. ‘Oh no, Martin,’ she responded, ‘It is I who must thank you for helping me solve your problem and sharing this journey with me today.’ Give that girl a Bafta.