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Poor old Diamond Bob – a martyr to Barclays’ brand values

June 28, 2012

BarclaysA lot of people are accusing Barclays Bank and its chief executive Bob Diamond of racketeering. Acting like white-collar gangsters, in other words. They say the bank and its principal directors colluded in serial distortion of the interbank rate, Libor. What this means in plain English is that they beggared us – the saps who are their customers – with artificially inflated interest rates on loans and mortgages  – in order to enrich first themselves, through bigger bonuses, and then their shareholders, through bigger dividends. Barclays has been fined a total of £290m by the regulatory authorities on both sides of the Atlantic. But it’s the thin edge of a very thick financial wedge. Once the lawyers get weaving on behalf of aggrieved customers, who knows where the liability will end up?

Martin Taylor, a former Barclays CEO himself, summed it up best on this morning’s Today Programme. He said that Barclays had engaged in “systematic dishonesty” between the years 2005 and 2009. While he didn’t explicitly link Diamond – who then happened to be head of BarCap, the division most closely tied to the scandal – with the gigantic swindle, he did say that chief executives set the cultural tone of the businesses they run. Implication: Diamond should retire to the discreetest room in his penthouse suite and make good use of a service revolver. Diamond – Taylor implied – may, or may not, have colluded in such corrupt dealing practices; but because they happened on his watch, he was at very least grossly negligent.

Now I know what I’m about to say isn’t going to be popular, but I’ll say it all the same. Was Bob so very wrong in what he did – or rather, for the sake of any legal eagles looking in – er, what he didn’t do? I mean, at least Barclays Bank co-operated with the investigative authorities, whereas other banks did not. Barclays is paying the price of being first to fess up: a media Exocet amidships.

Then again, the bank took not a penny of public money in the wake of the Lehman Bros collapse. All right, it was pretty stupid to allow such an unredacted and inculpatory email trail to get into the hands of the regulators. But at least you won’t hear any trading floor intercepts along the following lines: “Dude, thanks a billion in Treasury credits. I owe you big time. But not as much as I owe the taxpayer. Come over after work and let’s break open the Bollie.”

I’m not sure the same will be said of RBS and Lloyds. Both were big recipients of taxpayers’ bail-outs, and both – along with HSBC, Citigroup, JP Morgan, UBS, Deutsche Bank and others I probably don’t even know of yet – are, so it seems, up to their gills in interest-rate-rigging mire too. Poor old RBS. Talk about reputational damage: it’s not only guilty of systemic incompetence with customers’ direct debits, but of “systematic dishonesty” in charging them higher interest rates as well. Will this publicly-owned company owned by the public ever recover?

But I digress. Bob’s is the head that everyone wants to stick on a pike over Tower Gate. That’s because everything about Bob is Big and Boastful. Biggest salary, biggest bonus, biggest ego. He is, in short, the archetypal arrogant, swaggering, fat cat.

And as such, he has been entirely consistent with Barclays brand values over the years. Do you not remember Barclays brand ambassador Anthony Hopkins telling us how, if you weren’t big, you were nothing in banking circles? You don’t, do you? So, here as an aide-memoire is a superbly-crafted ad by Leagas Delaney, dating from 2000:

Sometimes, you see, advertising really can convey complex, uncomfortable, inner truths – without the client even noticing. Bob did, of course. He’s been a part of Barclays’ cultural furniture since 1996. He took the message very seriously indeed and acted out the part. What a brand martyr the man is!

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Bad news for Rebekah Brooks, but good news for BSkyB’s Jeremy Darroch

July 6, 2011

Jeremy Darroch, chief executive of BSkyB, now looks in an even more powerful position to inherit the News International mantle of power (should he wish to) than when I flagged up his significance to the Murdoch empire in my last Marketing Week column.

Rebekah Brooks, NI’s current chief executive, is terminally damaged goods, in the wake of ‘Millygate’. Not to mention ‘Jessica-and-Hollygate’ and ‘7/7-gate’.

For the moment, of course, it’s Andy Coulson, ex-News of the World editor and David Cameron’s former director of communications, who has been thrown to the lions. Thanks to some NI emails which have mysteriously surfaced just in time, Coulson is now a proven liar. He procured, or authorised procurement of, paid information from the police while he was News of the World editor – something he has previously strenuously denied. And for good reason: it is quite illegal.

It’s an astute, if cynical, sacrifice, and proves the Murdochs are still thinking on their feet. Coulson’s disgrace tarnishes both Cameron (by association – after all, he picked Coulson, despite his dodgy reputation, and then backed him to the hilt in his hour of need) and Knacker of the Yard (assistant commissioner John Yates, once the officer in charge of investigating the phone-hacking scandal at the epicentre of the Murdoch crisis, who is now looking woefully ‘under-informed’ and incompetent, after previously vociferously denying the merest scintilla of police complicity in the matter).

Even so the Coulson gambit is, at best, a delaying tactic. It will make our leading politicians and policemen tread a little more carefully, but it will not prevent them from taking decisive action. Public opinion is now too inflamed for them to do anything else.

Inescapably, the smoking gun is pointing at Brooks, née Wade, and editor of News of the World when – it now emerges – NI’s private investigator of choice Glen Mulcaire was hacking into the phones of Milly Dowler’s distressed relatives. She says she knows nothing about it. Do we believe her, any more than we believed Coulson’s protestations of ignorance? I’ll leave that one hanging in the air.

Ordinarily, implicated NI and former NI executives have been able to take refuge in prevarication, in the sure and certain knowledge that rapidly abating public interest will soon allow them to emerge from their burrows relatively unscathed. This crisis is different.

It has an unprecedented commercial dimension to it. Top advertisers, led by Ford, are boycotting News of the World, and that really will hit the Murdochs where it hurts. Ford is the single biggest advertiser, contributing about £4.5m annually to NoW’s £40m display advertising revenue. Halifax (owned by Lloyds Banking Group) has now joined Ford. Other major advertisers believed to be considering their options are T-Mobile/Orange, Vodafone and nPower. The danger, from the Murdochs’ point of view, is that this commercial contagion spreads to other NI newspapers, such as the Sun – which Brooks also edited. It could easily do so, given a swelling social media campaign goading consumers to boycott advertisers who refuse to align themselves behind Ford. (There’s a useful live update on the brands boycott at Marketing Week.)

All of which may well rapidly result in Brooks becoming surplus to NI requirements.

OK, you say, but what has this got to do with Jeremy Darroch? I’m coming to that. Whatever the backwash from the phone-hacking scandal, it will not prevent culture secretary Jeremy Hunt from giving his blessing to Murdoch-vehicle NewsCorp’s acquisition of the 61% of BSkyB it does not already own. Legally, a challenge to that assent is now well-nigh impossible. Indeed, Hunt and the Government would probably be on the receiving end of a writ it they were obstructive.

Let’s assume for a moment that the deal is done, that the Murdochs have pacified BSkyB shareholders with an eye-watering amount of money and are now the proud possessors of the rest of the organisation. What are the repercussions for NewsCorp and in particular its UK-centric arm, NI, in the wake of a full takeover?

BSkyB is one of the UK’s most powerful companies with, just to give the flavour, a marketing communications budget of £1.2bn a year. It is phenomenally cash rich. One estimate reckons that, once acquired, it would contribute 30% of NewsCorp’s cashflow. Like the Murdochs’ newspapers, it is UK-centric. Unlike the newspapers, it is highly profitable. Unlike the newspapers again, it is still a dynamic growth business, which has made good use of product innovation.

In short, it would be the jewel in NI’s crown. Who better to manage that jewel in the new, enlarged organisation – a man of untarnished reputation who intimately understands subscription TV; or Brooks, with her yesterday’s tabloids background?

Of course, I have no idea whether Darroch would actually be interested in such a proposition. He may well take his money and run. But it’s worth thinking about, isn’t it?

UPDATE 17.30 – 7/7/11: So, The News of the World is no more. The Sunday edition, shorn of advertising, will be the last in the newspaper’s 168-year history. Nothing could more graphically illustrate the gravity of the crisis engulfing NewsCorp than that its chairman and chief executive Rupert Murdoch should take the drastic step of closing his most profitable newspaper and the one – to boot – he started out with back in 1969. The suspicion lingers that a skeleton NoW staff will be retained to flesh out a 7-day version of The Sun. “The Sun on Sunday” has long been rumoured as a cost-cutting project. How typical of Murdoch that he should turn a disaster into a publishing opportunity.

UPDATE 7/7/11: Determination not to be the last advertiser at the News of the World has now reached frenzied proportions, as Vauxhall, Virgin Holidays, O2 (£1m), Boots (£800,000) and  Sainsbury’s stampede to the exit with Ford, nPower and Lloyds Banking Group. Morrisons next, I suspect. Will anyone be buying the paper anyway? Newsagents expect a boycott on Sunday.


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