Sunday, 28 October 2012

Even crooks deserve a fair deal

Remember Jérôme Kerviel  ?  OK, very excusable if you have forgotten who he is. He was the rogue trader who almost brought Société Générale ( a reputed French bank) to its knees. This happened in 2008. Kerviel was a trader who punted like crazy in the casino, that is euphemistically called financial markets - he was making gigantic bets that involved European stock index futures. The whole thing unraveled, he was fired, Société Générale tottered and ultimately lost € 4.9 bn.
 
Criminal proceedings were launched against Jérôme Kerviel  and he was sentenced to prison and a fine. He appealed, and, on Friday, lost his appeal. What caught me was the quantum of the fine. He was fined € 4.9 bn, the quantum of the loss that Société Générale incurred.  A fine of € 4.9 bn ???? Kerviel has no money and is unemployed and probably unemployable. How on earth is he expected to pay  € 4.9 bn ?
 
This is outright crazy. The judges have fallen hook line and sinker to Société Générale's assertions that it didn't know what was happening and that Kerviel acted alone. PPPPlease ........ That, to put it mildly, is nonsense.  His bosses must have been cheering loudly as long as he made profits and have thrown the book at him, when the whole thing collapsed.  The bank didn't know ??????? Baloney.
 
Société Générale , and the judge, argue that the massive fine is to prevent him from capitalizing on his story by writing a book (which he has done) or making a movie. That is extreme logic. Every crook tries to make money from his infamy. Jeffrey Archer wrote a whole book about his prison experience and sold God knows how many copies. The fault is not that of the crook - the fault is with those who buy the book or go see the movie. 
 
Kerviel is not your ordinary villain. Sure he broke company rules and did unauthorized trading. But then a few thousand bankers have done the same . He made no money personally - even his bonus wasn't obscene. He was a case of gambling instincts gone completely out of control. Does he deserve a € 4.9 bn fine ?
 
The logic that employees are personally responsible to make good the losses that arise if they violate the rules is a dangerous one. Sometimes company rules are not explicit. Sometimes bosses nod and wink when they expect employees to do things that are shall we say, fifty shades of grey ! If I were to calculate the possibility of personal liability, when taking a business decision, I would never make a decision in the first place. Something like this is what is happening in Indian government circles today - no babu is making any decision for fear that Kejriwal will allege that he is corrupt. Everything has ground to a complete halt.
 
It is a reflection of the anger against bankers that public opinion has no sympathy for Kerviel. Nobody, but a few busybodies have raised a whimper. I however think this is an outrageous court decision. Kerviel deserves to be punished. He deserves to go to jail. But he should not be fined € 4.9 bn.
 
It is a mark of civilized society that even crooks are given a fair deal.

Wednesday, 24 October 2012

Bir Hakeim - A Guest Post

Readers of this blog would be familiar with Ravi Rajagopalan. Ravi is a very dear friend, a brilliant guy, with an incredible array of interests and knowledge. His cover drive might not have the silken grace of a David Gower, but that's the worst you can say of him. As you might have gathered from comments on my previous post, he is a military buff too and he was motivated enough by my take on El Alamein to write a guest post. As you will see, much better content, much better prose and much better pictures than I am ever capable of. So here is the story of Bir Hakeim , as told by Ravi.



The River Seine cuts through Paris, dividing the city neatly between the elite and the hoi-polloi.  Northwest of the city lie the salubrious environs of the 16th Arrondisement. The Passy metro station serves the inhabitants of this quarter, connecting Line 6 from the North to the 15th Arrondisement across the river  over a double-decker bridge built in 1904. The beautiful wrought-iron columns of the bridge would be familiar to movie enthusiasts.  Marlon Brando and Maria Schneider are pictured walking separately and unknown to each other on the bridge one cloudy Paris morning in the opening sequence of “Last Tango in Paris”. As you start walking on the bridge towards the South, you cannot miss the spectacular rise of the Eiffel Tower on the left. No matter how many times you cross the bridge in a day, the sight of the Tower will never fail to make you sigh at its sheer beauty. You reach the Ile de la Cygnes (Island of Swans) in the middle of the river.  The bridge widens out on the left hand side into a balcony popular with lovers. On the corner of the balcony is affixed a bronze plaque completely ignored by resident and tourist alike.

This is the Pont de Bir Hakeim.



Bir Hakeim has disappeared from maps today. It was an abandoned oasis and former Turkish fort south of Tobruk in the Libyan desert.  South of Bir Hakeim lay one of the great empty stretches of sand in the Libyan desert impassable to man and beast. In 1942, with war having come to North Africa, it was the last of the points on a line drawn from the Mediterranean Coast south towards the Libyan desert west of Tobruk where the Allies girded themselves against General Rommel’s Afrika Korps and Italian Armed Forces.  Tobruk was one in a line of ports which would be staging points for the Allies to try and hold off Rommel as he drove towards the Suez Canal in British-held Egypt to cut off the sea route to India and the Persian Gulf to the Allies.

France prepared for the Second World War with a strong Air Force and an impregnable set of defences along with Ruhr called the Maginot Line.  In May 1940, after eight months of relative quiet, German forces attacked north of the Maginot Line driving west. By mid-May the British Expeditionary Force was encircled and heroically escaped through Dunkirk in Belgium on anything that could float. The Wehrmacht swung south and raced towards Paris. The French armies fought as best as they could but were defeated by superior tactics.  Eight weeks after the Blitzkrieg began, in June 1940, France surrendered.  The German Army entered Paris and marched down the Champs Elysees.  General Charles de Gaulle escaped to England rather than surrender to the enemy. 

Outside France, most French forces surrendered to the Germans once the homeland fell. Except for small groups of stubborn men. None so stubborn as General de Gaulle, who repeatedly called on the French to fight and pleaded with the Allies to take these small groups of men seriously, to take France seriously.  With military losses mounting all over the world, there was no room for sentiment.  Some French forces were allowed to fight alongside the Allies wherever they could be found.  General de Gaulle had symbolic value and emotional significance, but no military value. He was tolerated.

In February 1942, Rommel began his drive towards Tobruk from the west.  Facing him was the British 8th Army under General Sir Claude Auchinleck, consisting of British, Australian, Indian, New Zealand, South African and (a few) Free French regiments.  Large parts of the Libyan desert cannot support heavy trucks and tanks. The plan was to move along the coast as far south as possible, surround Tobruk and take it.

Bir Hakeim was allotted to a couple of thousand assorted French troops and Foreign Legionnaires. In overall command was General Marie Pierre Koenig – a colourful character.  Knowing that the Germans would hit Bir Hakeim to take Tobruk from the south, he prepared as best as he could, laying minefields and hidden explosives and preparing fortifications.  He had about 3000 men, and was vastly outnumbered.

The assault began on the night of May 26, with the Italian armored regiments leading the attack.  Successive waves of Stuka dive bombers pounded the French positions.  German tanks soon joined the attacks. The attacks were non-stop, the fighting was hand-to-hand at places.  Water was short – a situation made worse when Indian POWs released by the Germans in the desert a few days before wound up at Bir Hakeim needing medical assistance.  General Koenig kept his position resupplied as best as he could, and he held off the Germans.

Rommel now turned his full attention to Bir Hakeim by the first week of June, realizing that he had a serious problem with his supply lines if he did not take the position.  Respectful emissaries were sent to General Koenig under white flag, offering fair terms if they surrendered.  The emissaries were respectfully spurned.  The fighting resumed with renewed ferocity.  Fresh German forces now surrounded Bir Hakeim and it was clear that the position would not survive.

General Koenig realized he was done for.  He then did something remarkable.  He asked wounded French soldiers to man defensive positions and to continue to fire on the enemy.  The rest of his troops essentially drove through the French minefield in a daring move to escape north towards British positions.  Men and vehicles were lost but the vast majority made it through.  General Koenig was driven by Susan Travers, a British woman serving in the Foreign Legion in Bir Hakeim!

On the night of June 11, German forces broke through to Bir Hakeim, only to find a couple of hundred wounded Frenchmen. They had been delayed by three weeks. History says Rommel ignored an order to kill all prisoners and ensured these brave men were treated well in captivity.

Tobruk did fall to the Germans.  The German forces did reach El Alamein, to be met by General Montgomery, the new commander of the Eighth Army, who then famously “hit Jerry for six”.

The significance of Bir Hakeim is that France was able to tell the world its spirit was not dead.  The fighting soul of France was alive and well.  The easy contempt with which some Allied commanders treated the French due to their spectacular defeat turned to grudging respect. About 3000 Frenchmen held off 45000 German and Italian troops. By delaying Rommel for three weeks, the French ensured that the British were able to reinforce their positions east of Tobruk.  And ultimately, it contributed to Rommel’s defeat.

The plaque at the Pont de Bir Hakeim is simple and moving.



“At Bir Hakeim from May 27 to 11 June 1942, the First Free French Brigade repulsed furious assaults from two divisions of the enemy and affirmed to the world that France has not ceased combat”.

Sunday, 21 October 2012

The Battle of El Alamein


We should not forget.

We are a generation that, thankfully, has not seen war. But the baser instincts of man are never very far from the surface. Even in our lifetimes we have seen horrors - Afghanistan, Iraq, Yugoslavia, Rwanda, Congo. But thankfully, nothing on the scale of World War II. Mankind should never forget the horrors of war.

This week is the 70th anniversary of the Battle of El Alamein, one of the turning points of World War II. El Alamein was a dot in the Egyptian desert. Today it is a beach resort, then, it was in the middle of nowhere. But on the unforgiving desert sands was fought one of the most important wars of World War II. The Afrika Corps of Field Marshal Rommel was winning everything in its path. All through Europe, and elsewhere, the Germans and Italians were winning everything and the Allied Forces couldn't seem to do a thing about it. But at El Alamein, the tide was turned. Montgomery's forces defeated Rommel and the Germans were pushed back, and from then on it was only retreat. There were more important and strategic battles, like Stalingrad, or brutal, like Kursk, or impacting the whole population like the Battle of Britain, or remote and miserable like Guadalcanal but the two battles of El Alamein will remain one of the most important of the World War. It prompted Churchill to say those famous words - " This is not the end, it is not even the beginning of the end. But it is, perhaps, the end of the beginning." Church bells were ordered to ring all over England. And Churchill said, " Before Alamein we never had a victory, after Alamein we never had a defeat." It was one of those rare battles that was made into a movie, The Battle of El Alamein,  showing the Italian side of the battle, rather than the British or German side.

The current generation of Indians may not remember that World War II touched India as well. Of course, many Indians fought with the British and Allied Forces all over the world. But the Japanese invasion came to India's shores. In the battle of Kohima, the Japanese were halted and turned back. Even today, the exact spot where the Japanese were stopped - the tennis courts of the Commissioner's bungalow and an old tree that was shot out are still preserved as memorials of the War. You can see them if you go to Nagaland. Commonwealth war cemeteries dot the region - in Kohima, in Imphal and a few other places. They are immaculately preserved and the epitaphs on the tombstones will bring a tear to the eye. They were all 19 or 21 years old, they were from far away - Scotland or Australia and they fell defending India. On many of their tombs are inscribed the poignant lines - "Go back home and tell them, for your tomorrow, we gave our today "

There are about 60 or 70 veterans of El Alamein who are there today to commemorate the 70th anniversary and to remember their fallen comrades. It is unlikely that there would be another event of this nature - for the veterans are all in their mid nineties.

Which is why it is all the more important that we read about the War. To be told of the horrors.

We should never forget. For, if we do, we will repeat it.

Sunday, 14 October 2012

Spare a thought for the poor Iranians

There is economic cataclysm going on in Iran. What guns and rhetoric have failed to do might be achieved by grubby old economics - the downfall of the nut cases who have been ruling Iran for sometime.

The Iranian rial has plunged into free fall. It declined by 25% in one week in October against the US dollar. Since the beginning of 2011 it has fallen by 70+%. It was some 10,000 rial to the US $ in 2011. Its now around 30,000 rials to the US $. The rial is now virtually worthless. Inflation by official estimates is some 25%, in reality more like 70%. There is economic chaos.

Why is this important ? You only have to look towards  the street protests that have sprung up in Iran to see how this is affecting everybody in Iran - the rich, the poor, and yes, even the mullahs. But, wait a minute. Iran is oil rich, right ? It should be rolling around in wealth. And yet, the country  is in deep crisis and the population is suffering.  Why ?

If ever there was an example of how a rotten government can destroy its people, it is Iran.  By all rights Iran should be a rich country. It is an ancient and rich culture and full of extremely bright people. And above all, it is swimming in oil. But unfortunately it has a government that must surely compete with North Korea and Zimbabwe for the title of the worst government in the world. It exports terrorism, it dips its fingers into every trouble spot in the region - it finances the Hezbollah in Lebanon, it backs the Syrian regime, it supports the Hamas in Gaza........ It is trying its best to build a nuclear bomb.

Consequently it has pissed off the world. Crippling economic sanctions have been the result. Nobody bar Russia and China, and to some extent India, is trading with it. It has been kicked out of SWIFT - the international banking settlement system. Therefore everybody, including Russia and China have to deal with it via the back door.  If anybody trades with Iran he has to virtually receive suitcases of cash in return. That's not easy to do on scale. So even exporting oil has become difficult.

End result is that the rial is plunging like a stone. So everything becomes incredibly more expensive. Food prices are doubling. Luxuries, which might even be necessities in other parts of the world, are becoming unthinkable. The common Iranian, like most others in the world, cares two hoots about religious purity and dogma. He wants to fill his stomach. And then wants to buy a mobile phone. After that he wants to post on Facebook. Simple.  If you deny that from him for too long and make him slide backwards, his patience will break and he will burn the beards of those who are stopping him. 

So for Israel and the hawks in America, here is a pleasant thought. You don't have to nuke Iran to stop them from acquiring nuclear weapons. The rial is doing the job for you brilliantly. With a bit of journalistic license I say, the bill is mightier than the bomb !

Tuesday, 9 October 2012

Economics Gangnam Style

What ?? You don't know what Gangnam Style is ? It is the K-Pop (Korean Pop) sensation that has taken the world by storm. It  is No 2 on the UK and US pop charts, watched on You Tube some 400 million times . Everybody , it seems, wants to prance like a horse . Even the West Indies team, on winning the T20 World Cup, gave an energetic rendition of Gangnam Style (note the absence of the word cricket in this sentence !). Well, if you haven't heard of the original before, you can add to the 400m+ views by watching it here - beware, you have to practice prancing like a horse while doing so.

This blogger is seriously musically challenged and has no qualifications to write a music post - that being the domain of experts like Suja.  Or like another esteemed reader of this blog who runs his own radio station. Instead he shall demonstrate his "hipness" by linking economics to Gangnam Style !

HTC (a Taiwanese company) just declared its quarter's results announcing a 80% drop in profits. At the same time Samsung (a Korean company) announced a 85% rise in profits. You see its all got to do with Gangnam Style coolness. Galaxy S3 is cool, HTC Desire isn't. Five years ago, you wouldn't dream of owning a Hyundai car. Today, its quite OK to park your Equus next to a Japanese or German equivalent and not be subjected to hoots of derision. Or consider Amore Pacific an increasingly successful cosmetics company - after all if South Korean girls can look so young and pretty, there must be something in the cosmetics they use ! South Korea is just not ships or steel anymore. Brand South Korea is going places - Gangnam style.

The country which has the biggest lessons to learn is China. China desperately wants to be loved and is nonplussed when nobody seems to love it. It would dearly love to export "soft power" in addition to its undoubted "hard power". But it tries to do that by pouring money into CCTV globally- now it must take a seriously self flagellating masochist to watch CCTV for more than 1 minute. It shoots itself in the foot by going after anybody who said hello to the Dalai Lama. It threatens war over a few rocks in the middle of the sea. It stands no chance of global embrace by doing such things. It only results in Huawei not being allowed to sell much in the US. Nobody is going to proudly claim to own a Haier washing machine or even a Lenovo laptop. Instead it should unleash the creative forces of its wonderful people. Make them prance like a horse. Or if they like, maybe waddle like a panda. Preferably Gangnam style !


Tuesday, 2 October 2012

Stooping to conquer

I am getting tempted to write political posts, despite all my resolutions to stay away from that area. The culprit is my good friend Sriram who continuously tempts me in that direction with incisive writing in his excellent blog. We then debate and counter debate on email !!

So made a guest post there - taking the crazy liberty of  writing a letter to the President of the United States !

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