When high finance fails it affects us all
Howard Williamson
Tuesday, January 13, 2009
The few hundred pounds that can be so important to a local youth project might appear to have very little connection with the multi-billion pound dealings about which we have become accustomed to reading over the past few months.
The credit crunch has almost certainly left many of us aghast at the wheeler-dealing that goes on. Most of us probably didn't really care; it literally did seem to be a world apart, until the failures, collapses and market exposure started to touch our lives, as savers and as taxpayers.
And then we read about the remarkable case of Bernard Madoff, who ran a billion dollar scam for half a century. Still, Madoff lived in the US and his clientele were investors and celebrities. Or were they? Slowly it emerges that a number of charities had their own money tied up in Madoff's fraudulent activities and Madoff was himself a generous benefactor (with his dodgy money) of various charitable foundations. So presumably young people, somewhere along the line, will suffer from the situation.
All this has given me a sickening feeling of deja vu. Not that I or the young people I worked with ultimately suffered when Nick Leeson did his now famous rogue trading over a decade ago, which led to the collapse of Barings, the bank for which he worked. But we nearly did.
I have written about the cottage in this column before. It was acquired by Cadbury in 1961 for the benefit of its youth club. From 1979, I used to hire it from Cadbury for residential weekends for my youth club members. By the mid-1990s it had become a company asset that could no longer be sustained, and it was put up for sale.
The price was modest, but beyond my personal means. I rang Tom Shebbeare, then head of the Prince's Trust, to take advice on possible sources of capital funding. He recommended The Baring Foundation, which I had never heard of. When I called, the voice at the other end was Mike Butterfield, former director of the National Association of Youth Clubs and, by then, the part-time grants officer for the foundation. I explained my situation and Mike said he would send me the application forms; in principle, he said, the idea seemed eligible, and so he saw no reason why I should not be successful in my application.
Then, as I was completing the forms, I watched the unfolding saga of Leeson and the Barings Bank. A couple of months earlier I would probably have dismissed it all as the rarified world of high finance. Now my request for a few thousand pounds was in total jeopardy as The Baring Foundation put its grant-giving on hold.
The good news is that I was up against a number of deadlines that forced me to turn my attention elsewhere. The bad news is that other youth groups that may have been expecting, and perhaps dependant on, a Baring Foundation grant never got their money. Leeson messed up lives at this lower level too.
