Regulation ain’t enough for banks

Since it is about rates between banks, at the time of writing this article, other banks involved in the scandal had not yet been disclosed. This is in the United Kingdom, where business laws including contract, bankruptcy and property laws are often regarded as well developed and reliable.
Many reviews to that banking system refer to the independent judiciary operating under a mixture of common law and statute law, the accounting, auditing and legal professions as having been long established, well resourced and well regulated.
Furthermore, there is the UK Corporate Governance Code (formerly the Combined Code), which contains broad principles and more specific provisions. Listed companies are required to report on how they have applied the main principles of the Code and either to confirm that they have complied with the Code’s provisions, or where they have not, to provide an explanation. These are rules which are complied with.

The banking system in Zimbabwe has had its fair share of scandals, with the latest corruption being reported within the Interfin group. Reports into the operations of Interfin Banking Corporation and Interfin Securities, revealed, poor corporate governance, presence of non-performing insider loans of US$60 million, and general abuse of depositors’ funds by the bank’s shareholders and related individuals.
Although, corporate governance legal and regulatory framework in Zimbabwe is not up to date, as shown by the current proposals to review the Banking Act and the ongoing development of the National Code on Corporate Governance, there are workable standard guidelines towards good governance within the system.

I believe that Zimbabwe’s legal and regulatory environment is of good standard, just in need of being updated. It is certainly above average. Governor Gideon Gono and his team are doing their best to ensure sanity prevails in the banking sector.
In both, the Barclays and Interfin cases, it is evident that regulations and supervisions alone are not enough, for banks to stop the rot. Laws and regulations will not work, to force constraints on the few, who intentionally cheat the system, or those who force their way into illegal, forbidden or frowned on policies and business practices.

Despite the well-regulated environment, someone at Barclays still found a loophole to manoeuvre and sway interest rates, which of course resulted in financial gains to the bank and good bonuses. A small group of staff at Barclays chose to circumvent a well developed regulatory system. Interfin shareholders and management also had a way of avoiding the limitations of law, in pursuit of financial gains.

Although, the CEO of Barclays, Bob Diamond, disassociated himself with what he described, as acts against values at Barclays, the damage has been done — loss of confidence. It is the lost confidence, of politicians who are calling for his resignation, the market and other stakeholders.
Confidence and trust are social factors emanating from behaviours of people, which are fundamental to the banking system, but cannot be regulated. There is, however, a law upon which the Golden Rule is based.

The Golden Rule, is often quoted and used to describe ethical conduct, but the law upon which it is based is often ignored. The Golden rule, taught by Jesus Christ, Plato, Socrates and others, is based on a law, which says that we reap what we sow.
Modern education and professions, upon which, bankers and many others are trained, have systematically ignored educating people, about the power, which is set in motion through transactions with others, through this law. Indeed, the world economic systems including banking are in crisis.

Throughout the crisis we see laws, upon laws and regulations after regulations, being added, subtracted, divided and multiplied. New and revised laws and regulations are intended to arrest manifestations of unruly behaviours, among people.

Manifestations, or symptoms, are what we see in the various corporate scandals. What is missing in the crisis is to identify root causes to these behavioural traces. It is not lack of education, no. It is not poverty, neither is it what people lack, but what they have and chose to do, or not to do with it.
In each person, is creative power, which when applied through thought process, will achieve for each one of us, our destinies?

Corrupt and massive unruly behaviour, manifesting in the banking and corporate scandals, are a result of a thought process, devoid of knowledge on how to gainfully apply the universal law, in the Golden Rule, reaping that which one sows.

For instance the manipulation of interest rates at Barclays is premised on struggles within individuals, whose endgame is gaining, at the expense of others. Mastery of this universal law would instruct our bankers and professionals that they can actually create what they want, without stealing from the market or depositors.
Statistics say that about 80 percent of the population in Zimbabwe is Christian, and almost 99 percent belongs to some sort of religion including Rastafarianism, and others.

The underlying law, taught in all these religions, is faith or belief in God, which basically mean our thought of God. This means 99 percent of Zimbabweans have been instructed and given keys to shape destinies through, thoughts of God.

This key could unlock solutions towards the alleviation of poverty, strife, sickness and the many conflicts we see around.
For it is written, “According to your faith be it unto you”. Few have chosen to apply or use this life key, not just for their benefit but for the good of all. What would happen if 99 percent of us decided to use, each of our keys, as instructed through the law in the Golden Rule?
There is gross underestimation of the creative power in people.

Summits and conferences spent discussing laws, regulations and policies, are numerous, but seldom are people invite to be trained in creative thinking.
As a result, our executives are forever stressed and on anti-stress medications, because they lack true peace, which only comes through active faith. What would happen if our bankers, executives and employees would engage in workshops or seminars on creative thinking, not creative accounting?

Reports in the Interfin saga, suggested that problems at the bank arose primarily because the boards of the parent company, Interfin Holdings Ltd and the subsidiary bank were compromised by the presence of controlling shareholders on both boards.
This severely limited the board’s independence and compromised their oversight and that of management. There was a deliberate thought, which sought to create

just that, lack of independence and oversight. Rather than repeal and revise and amend laws to arrest this tendency, what would happen if these shareholders were

taught to think differently?

It was, certainly, in pursuit of success and happiness that these gentlemen at Interfin gave themselves massive loans, the same as at Barclays, manipulating interest rates. Success and happiness are good. But in all corporate crises, there is a desperate deficiency in the reasoning, which says that no man can be happy without deliberately, dispensing happiness to others. This is not just to one’s close friends and relatives, but just for the sake of creating goodness and lightness to those who are heavy laden.

I am sure those that are close enough to these three gentlemen at Interfin and to Mr Diamond at Barclays, will testify that there is not as much happiness in these men, now, as before.

The goodness and fairness of the laws of universe is that they allow, new ways of thinking into the process, thereby allowing one to change course. Banks do not have to continue in crisis, but can apply higher thoughts to create better fortunes for themselves, and their markets.

This is why I am advocating change in how regulators respond to corporate governance scandals in the banking sector and indeed other sectors, too. Men and law always dare each other. When man sees law, in his animal spirit, he gets drawn to test it and soon break it. His mind is what he respects, he will not break it.