URSABLOG: Mutual Trust Incorporated

I called a friend earlier this week and after we exchanged pleasantries he said:

“I’ve just been reading about you.”

“Oh really?” I said.

“Yes, you are mentioned in a ruling by the English courts concerning HSBC and a ship finance case where they were trying to enforce personal guarantees.”

“Really?” I said, more than somewhat taken aback.

“Oh nothing serious about you, but you certainly have a walk on part.”

He sent me the link of the ruling, and I speed read through it. Indeed it was nothing serious: the few lines I am mentioned are in passing and even if the facts were not entirely correct – I was not consulted, and therefore had no chance to correct them – I doubt whether any contribution I could make would’ve made much of a difference. It would’ve been nice to be asked though; it left a slight but definite bad taste in the mouth.

This has happened before. I was mentioned in an affidavit buy one major shipbroking company when they brought a breach of employment case against a former employee who had jumped ship to an even bigger shipbroker. The facts are largely relevant now, and indeed were mostly relevant irrelevant them, but the fact that I was not consulted at all resulted in a rather difficult conversation with the former employee with him wondering, quite naturally enough I suppose, what the hell I’d got against him. I reassured him when we met for drinks; at least I think he believed me. In any case we have since done a deal together so any loss of trust has been rebuilt for both our benefit.

It is the currency of trust, rather than hard cash however, that is hard to re-establish once it has been abused. The sense of betrayal is palpable and real: it hurts, almost physically, because the trust, the emotional bond, has been broken. This explains the problem facing banks and other financial services even after most of the other effects of the financial crisis have been forgotten. This is not just the trust placed in them as institutions by the general public, but also the trust between them and their clients, between themselves or even amongst themselves.

Trust has degenerated from relationship banking into a box ticking exercise whereby ‘scientific’ methods rather than personal judgement decide whether things progress or not. So we have a situation where uncreditworthy people (both morally and financially) with an ability to play the game succeed whereas those without these weapons fail. The banks think they are better off without less risky, more reliable, balance sheet, until something appears on the radar that rings alarm bells, and by then it is usually too late to do anything about it. If this sounds like credit data swaps to anyone, it should: what goes around usually comes back around, but this time in a different packaging.

A lot of the time, in the heat of the moment, we do things that spin out of our control very quickly. Reading through a contemporary report of the “Torrey Canyon” disaster in 1967 makes for sober reading. Due to an initial lack of hands on supervision a decision is made which once acted on makes every subsequent event more difficult to deal with until, with dreadful inevitability the tanker ends up on the rocks. There may be factors that exacerbate this: incorrect charts, faulty equipment, inexperienced crew, but it was the initial decision of the master – to pass inside the Scillies rather than on the seaward side – that started the whole process off, creating an atmosphere of uncertainty and mistrust which led to chaos. It is easy in retrospect to say that this is when decision-makers should take a little time to consider their options wisely. Alas, we are all too human.

When making decisions – in whatever area of our lives – we should not ignore the element of trust, a currency that can be easily debased by incorrect (or uncorrected) information and then amplified into outright conflict. The recent anti-establishment gilets jaunes protests in France are a good example of this: decisions to crack down on the protests proved fruitless until a conversation, in the form of a national debate, took place. The grievances, often irrelevant to the original problem – in this case the rise of fuel duties - had a chance to be aired and some of the pressure dissipated.

This maybe one reason why the shipbroking profession perseveres, despite the many accusations, false or otherwise, levelled against myself and my brother and sister brokers: we remain indispensable in building the trust required to negotiate and agree a binding contract. Computers have so far been unable to replace that. The fact that some  do their best to ferment distrust amongst us only serves to illustrate how important trust is to start off with.

We can all be knocked off course when we feel trust in us has been taken for granted, or worse, is abused: betrayal is the worst of social sins. Building and maintaining trust, and consequently mutual respect, seems a good place to start when considering our place in the world. Without trust in our institutions, in our businesses, and indeed in ourselves, we may find ourselves all at sea very quickly.

Simon Ward

www.ursashipbrokers.com