The bank executive & the super-injunction

Sir Fred Goodwin, the former chief executive of the Royal Bank of Scotland, came under public scrutiny when it emerged that he had allegedly had an affair at a time when the bank was heading for collapse. Maryam Omidi asks whether there was a genuine public interest in details of the alleged affair being revealed.

Royal Bank of Scotland (Photo by Dan Kitwood/Getty Images)

The case

Sir Fred Goodwin, the former chief executive of the Royal Bank of Scotland, a British bank bailed out by the taxpayer during the 2008 financial crisis, came under intense public scrutiny when it emerged that he had allegedly had an affair with a senior colleague at a time when the bank was heading for collapse. On discovering that a tabloid newspaper was planning to publish an exposé, Goodwin obtained a super-injunction from a court to prevent the media from reporting not just on the alleged affair but on the the gagging order itself.

The super-injunction was partially lifted in May 2011 – the media are still banned from naming the woman – after Lord Stoneham, a Liberal Democrat peer, used his parliamentary privilege to out Goodwin in the House of Lords. The rules on relationships at RBS require staff to alert managers if there is a “conflict of interest”. It is not known if Goodwin disclosed details of the affair to managers.

Author opinion

While public figures have as much of a right to privacy as ordinary citizens, those in powerful posts must accept that they will be subject to greater scrutiny. As RBS was bailed out to the tune of £45.5bn by the taxpayer and forced to make thousands of job cuts, it is in the public interest to know the full array of facts that led to its near-collapse.

The issue at the heart of this case study is not whether it was right or wrong for Goodwin to engage in an alleged extramarital affair – as head of a bank, his remit was not to preach morality. Similarly, to those who argue that the public have a right to know whether the alleged affair distracted Goodwin from his duties and contributed to the demise of the bank, I would say mismanagement was the likelier cause. However, the affair moves into the realm of public interest – especially that of shareholders – if Goodwin was in breach of the bank’s internal corporate governance rules.

- Maryam Omidi

Published on: January 13, 2012 with 1 Comment Print

Money Privacy United Kingdom

Comments (1)

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sahloul81 January 24, 2012 at 5:19 pm
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Did the newspaper editors who ran the story honestly believe Goodwin’s affair had a bearing on his ability to manage a bank – thus making it a matter of public interest? I doubt it. Were these editors 100% certain the story would sell? Absolutely!

RBS failed so spectacularly largely because it bought a Dutch bank in a deal that sent its exposure to complicated structured debt products through the roof. The FSA’s report into the failure of the bank revealed some jaw-dropping details on management’s understanding (or lack of) of the markets the bank was operating in. Goodwin can be, and should be, taken to task over this (as should the other bankers and executives in senior positions who failed to manage their books).

But unless Goodwin’s mistress was a mole for ABN Amro, who gently whispered the endless possibilities of a merger into his ear, his extra-marital dalliances are neither here nor there.