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Lloyds Banking Group (LSE:LLOY) share price reached a 52-week high of 40.01 pence just a week ago on September 14th. Despite dropping back modestly during the week, it has pushed back to 40.02 at early afternoon today following news that former exec Jessica Harper has sold her home and is moving into a prison cell for the next five years. Ms. Harper pleaded guilty to defrauding Lloyds of nearly £2.5 million of our money.
In her position as head of fraud and security for Lloyds online banking, Ms. Harper used a system of falsifying invoices to divert £2,463,750 that she rationalized that the company owed her for the long hours she was working whilst drawing a salary of £60,000, 38% of which, technically, was funded by our bailout money. She told the judge: “I saw the opportunity and thought: “‘Given the hours I work, I deserve it. If I went to work for another company I would probably be earning four times as much.” It also seems that she thought her brothers deserved a cut, as she freely gave about a million of our money to the three of them to invest in real estate, apparently in France.
Let’s see how this all works out for her. For the next five years she will be enjoying a private room, warm meals served three times each day, free medical care, and access to exercise equipment without having to pay a fitness club membership. Her expenses for the next five years will be funded by our money. She has already made restitution in the amount of £709,000. Her attorney indicated that there may be about £1 million gone missing. So, as it stands, she will have “earned” about £1 million net. That’s £200,000 per year for five years. That’s almost, but not quite, four times what she was making at Lloyds. Whilst it looks like she fell £40,000 short of her desired annual income, when you figure time-off the jail sentence for good behaviour, she could be out in about three years. And that changes the math heavily in her favour.
What really sticks in the craw, is that this woman, who felt so sorry for herself for having to work so hard to safeguard our money which we worked so hard to earn, was willing to work a lot harder to steal our money. All the defrauding she did between 2007 and 2011 was probably the reason she had to work so many hours.
Let’s Get Real
Okay. The 52-week high for Lloyd’s share price was probably not due to Ms. Harper moving to a new residence. But a lot of modest ups and downs of stock prices are blamed on things that didn’t really affect the share price. That’s especially true if you believe that cause and effect are not closely related in time and space. But, on the other hand, the stories could be more related than we think.
Getting to the Point
Jessica Harper is a personal example of what the public needs to see in order to regain confidence in the banking sector. Face it, we do not trust bankers, especially after the bailouts and the scandals of the last several years. We don’t even trust the honest one. (I withheld the “s” on purpose). IMHO, if the UK banking execs would confess to their wrongdoing, pay back 2/3 of the outrageously exorbitant bonuses and golden parachutes they were paid with our money, and spend a meaningful amount of time in a quiet 6 x 8 room contemplating their misguided actions, there is a chance that public confidence would be restored – at least until they were released from jail. Oh yeah, no time off for good behaviour. There is no behaviour that is good enough to compensate for what the banking sector has done to us and how they have handled our money.
