Sir, Patrick Hosking (“Bloodhounds should be auditing the high street banks, not poodles”, Mar 5) questions the role of a bank’s auditor. The directors of the failed City of Glasgow Bank were jailed; proprietors had been bankrupted. Limited liability and surrogates insulated from malfeasance have since been introduced. Britain’s great 20th-century bankruptcy had Lord Kylsant behind bars but his auditor got off scot free. Profit does not materialise until a commercial commitment is fulfilled for a bank when its loan is repaid though provision for anticipated loss is required as a contract is executed. Premature bonuses on illusionary profit smack of butlers swigging the port their masters laid down.
Appointed to the then essentially supervisory board of Britain’s second oldest bank, I was to be proud of its progressive success. With proven principles and “strict rules” subsequently abandoned, intellectual incest brought ruin. The imprudence of the surrogate herd has buckled the world’s “great wheel of circulation” impoverishing countless millions.
Sir William Lithgow, (Director, Bank of Scotland, 1962-86)
Lochgilphead, Argyll