ING’s former chief Ralph Hamers has been questioned by a Dutch court © Bloomberg

Since the financial crisis, the workings of white collar crime and punishment have been out of kilter. Crimes in the financial sector have continued — witness scandals over the rigging of Libor interest rates, money laundering, customer rip-offs and the rest. But punishment has been largely confined to companies, not top executives, with innocent shareholders picking up the bills for huge fines imposed by the judicial authorities.

Yet, suddenly, a hint of change is in the air.

Dutch bank ING paid €775m in penalties in 2018 for compliance failures that allegedly allowed customers, including a Russian mobile phone operator and a Curaçao lingerie company, to launder hundreds of millions of euros and pay bribes over a six-year period. The settlement appeared to ensure, in the ritual post-crisis pattern, that ING and its board were not saddled with criminal charges.

This immunity now turns out to be potentially flimsy. A Dutch court in The Hague recently questioned ING’s former chief executive Ralph Hamers to review whether the case should be reopened. In a statement last week, The Hague court of appeal said it believed grounds were, in fact, sufficient for a successful prosecution of Mr Hamers “as the de facto supervisor of the criminal offences committed by ING.”

It added: “The facts are serious, no settlement has been reached with the director himself, nor has he taken public responsibility for his actions.”

All very troubling for the Dutch executive and for Swiss bank UBS to where he has just moved to become chief executive. The Dutch court is nonetheless addressing the fundamental flaw in the judicial and regulatory response to the financial crisis — namely, that hitting companies, not individuals, fails to provide a deterrent to individuals’ bad behaviour. In practice, those few individuals who have been jailed were relatively junior employees or rogue traders.

In the US, the Department of Justice has tried to address the no-deterrence issue through a regime of non-prosecution agreements and corporate guilty pleas. These have been accompanied by fines and requirements that companies change their policies, corporate culture and internal incentives. Given the unending spate of scandals in banking, this has clearly not worked.

Jed Rakoff, a federal judge in New York, once argued that the use of deferred prosecution agreements to resolve criminal investigations without holding individuals to account is “technically and morally suspect”. In a speech before the New York Bar Association, he said that not prosecuting individual malefactors after the financial crisis, despite widespread indications of fraud, may be judged “one of the more egregious failures of the criminal justice system in recent years”.

It was not always like this. In the savings and loan crisis of the 1980s, where bailouts were estimated to have cost American taxpayers $124bn, the response of the Department of Justice was sweeping. Within six years of the crisis more than a thousand prosecutions had been brought against senior executives of collapsed S&Ls. Chief executives and presidents went to jail.

One reason cited for the lack of convictions in the financial crisis is that DoJ officials feared they might precipitate the failure of systemically important financial institutions. They were scarred by the collapse in 2002 of the big accountancy firm Arthur Andersen after it was found guilty of obstruction of justice over the audit of Enron, the fraudulent energy company.

Another explanation might be that the chief executives of S&L’s were smaller fry than the giants of Wall Street, whose lobbying power and contributions to politicians’ campaign finance are very substantial.

The interesting question now is whether the case of ING and Mr Hamers will prove to be a watershed, and whether top bankers not just in the Netherlands but around the world will be required to take personal responsibility for bad behaviour that takes place on their watch. Somehow I doubt it. Going for companies rather than individuals has been hugely lucrative for the US authorities, turning criminal justice into a profit centre. It also makes for a more comfortable life for officials than tackling the macho giants of Wall Street.

In debate with Bernie Sanders in 2016, Hillary Clinton famously responded to taunts about her close relations with Wall Street by saying: “there should be no bank too big to fail, but no individual too big to jail”.

A pious aspiration that will almost certainly remain unfulfilled.

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