70 Whitehall, London SW1A 2AS
From the Secretary of the Cabinet and Head of the Home Civil Service
16 October
Dear Frank,
I do not regard this situation as my problem. As you know, sixty per cent of Phillips Berensons outstanding loans are with a mere three foreigners of dubious repute. The Bank of England was charged with the responsibility of supervising Phillips Berenson, but the supervision was a farce. That is why the bank of England wants a cover-up -- to disguise the undoubted truth that their investigators are a bunch of amateurs.
I understand that you want a clean-up. But I bet you to consider the full implications. The Bank of England may have been responsible for supervising Phillips Berenson, but the Treasury is responsible, in turn, for supervising the Bank of England.
If we have a clean-up, therefore, which would inevitably be a very public affair, the Chancellor might ultimately find that he were held responsible. Then he would be defending the really indefensible this time.
In order to survive the stirring up of this hornets nest the Chancellor would need considerable support from the P.M. But, strangely, the P.M. isnt all that keen on defending the indefensible.
In fact, the only way that the Chancellor could persuade the P.M. to rescue him would be to convince the P.M. that he (the Chancellor) had been let down by his senior permanent officials.
Think it over, Frank.
Yours ever,
Humphrey Appleby
[Sir Humphreys deadly threat won the day. The Treasury stopped pushing for a clean-up and Jamesons chances of becoming Governor of the Bank of England were significantly reduced to almost nil. Sir Humphrey, acting for once in what he believed were Hackers best interests, had ensured that Sir Frank would now also oppose Jameson if and when it were necessary.
This development was not, however, known to Hacker. His diary continues Ed.]
October 17th
I discussed, with Dorothy Wainright and Bernard Woolley, the report I received yesterday on Phillips Berenson.
Dorothy had been absolutely right. Its deeply shocking. Full of irregularities and malpractices. Im not sure exactly what the difference is by the way, but Phillips Berenson appears to have an awful lot of malpractices even for a merchant bank. [Irregularity means theres been a crime but you cant prove it. Malpractice means theres been a crime and you can prove it Ed.]
It seems that we have got hold of a confidential auditors report. Actually, its more than confidential -- nobody has seen it. [In Whitehall, confidential usually means that everyone has seen it Ed.]
I asked Dorothy how we got hold of it.
The Senior Partner at their accountants is a friend of mine.
Just friendship? I wanted to be quite clear about this.
She smiled. Apparently hes looking forward to reading the New Years Honours List.
That seemed a fair deal. I asked her how wed do that. In which section?
Bernard leaned forward confidentially? How about through the Welsh Office? For services to leaks? He is irrepressible.
What really surprised me about the whole business is that a High Street clearing bank like Bartletts should be so deeply involved.
But it didnt surprise Dorothy. Look at their Chairman -- Sir Desmond Glazebrook!
You mean, hes a crook too? I was amazed.
No, she explained. But hes a bumbling buffoon.
Shes right, of course. Ive had dealings with him before. [See The Complete Yes Minister Ed.]
Dorothy said, Its easy to see how he became Chairman. He never has any original ideas, he speaks slowly, and because he doesnt understand anything he always agrees with whoever hes talking to. So obviously people think hes sound.
Shes dead right. And the trouble is, Ive been invited to consult him about appointing the new Governor of the Bank of England. Not that its necessary to consult anyone -- I still intend to get Jameson, even if he is a lay preacher. Hes the only chap who could do the thorough clean-up of the City that we need.
I think you may find, said Dorothy, that Sir Desmond doesnt want you to appoint Jameson to do a clean-up.
Do I have any alternative? I asked rhetorically, tapping the Phillips Berenson audited accounts. After this!
She could see the point. No not if it gets out.
Some of it is bound to get out!
Dorothy wasnt so sure. If it gets to court, all of it will come out. But if the Bank of England does a rescue they can probably keep the worst of it quiet. The bribery and embezzlement, anyway. And the directors investing all the insurance premiums in their private Lichtenstein companies just before the insurance business crashed.
I wasnt quite clear at first what she was recommending. Prime Minister, appoint Jameson right away. Then you are protected if it all comes out before he starts. And its something good to announce at Party Conference
[Interestingly, on this rare occasion Dorothy Wainwright and Sir Humphrey were both doing all that they could to protect Hacker -- and yet their recommendations were totally opposed. She wanted Jameson appointed for Hackers immediate protection, and he wanted to avoid at all costs the loss of confidence in the economy that would inevitably accompany doing the right thing, i.e. cleaning up the City. She believed, on the other hand, that before you can increase confidence you must first reduce it.
The crisis festered on, undiscovered by the public, and unreported by the Press for fear of libel actions. Two days later Sir Desmond Glazebrook paid his unwelcome visit to Number Ten Ed.]
October 19th
Dorothy and I were again discussing the vexed question of the Governorship of the Bank, when the intercom buzzer rang.
Who, I asked, will Desmond Glazebrook want me to appoint?
Sir Desmond Glazebrook, said Bernard from beside the intercom.
Youre absolutely right, Bernard, said Dorothy.
He looked blank. What about? he said. It wasnt surprising he was confused, hed merely been announcing Sir Ds imminent arrival. But Dorothy, I realised, was not joking -- she meant that Glazebrook would be recommending himself for the job.
I asked if she were serious. She nodded. After all, who has the most interest in a cover-up?
A good point. I took a deep breath and told Bernard to send him in. Bernard reported that Sir Humphrey was with Sir Desmond and that they were both on the way up to the study.
While we waited I asked Dorothy if Sir Humphrey and Sir Desmond knew about the auditors report on Phillips Berenson. Yes, she said with a warning look. But they mustnt know you know. Or youll have to make the senior party an Earl.
When Desmond arrived it was easy to see what made him such a success in the city -- tall, distinguished-looking, a full head of white hair, droopy Harold Macmillan eyelids with a moustache to match, casually elegant, the epitome of the English gentleman with all that implies -- amateurism, lack of commitment and zero intellectual curiosity. He arranged his impeccable self in my chintz floral armchair and stared at me with his air of baffled amusement. Most people believed that the look of amusement was an act -- I knew that the bafflement was as well.
How good of you to come, I began. As you know, I have to appoint a new Governor of the Bank of England. Id welcome your views.
Desmond answered with confidence. I certainly think you should appoint one. Bank needs a Governor, you know.
Humphrey was not unaware that Desmonds confidence was misplaced. I think the Prime Minister has more or less decided that. Its a question of who.
Ah, said Desmond wisely, as a little light penetrated into his grey matter. Ah, he said again, processing this information. Thats tricky, he went on. Its a question of who, is it? he verified. Well, he concluded, it needs to be someone the chaps trust.