Panorama should turn its lens to the real corrupters

There was a delightfully old-style piece of television last Sunday night. It was a pre-Birtian, Pilgeresque Panorama, with lots of wobbly hand-held camera shots (with obligatory extra hands being thrust over the lens) and, in the style of the great genre of Roger Cook – much satirised since – the earnest reporter addressing questions pointlessly to slammed doors.

It was all about corruption in horse-racing and featured a whistle-blowing former head of security at the Jockey Club, Roger Buffham, who had handed the BBC’s fearless investigators his evidence on a plate, which was appreciatively swallowed whole.

My involvement with racing is limited to losing money at the flat courses in the summer months, but I readily concede that Panorama – or, rather, Buffham – had a good and engaging story. The gist of it was that a number of trainers had enjoyed “no-lose” accounts with a book-making magnate, so that their betting habits would indicate to his bookies the inside information that buzzes around the stables.

This information, you may not be horrified to learn, had less to do with fetlock-injury recovery rates and good-to-soft going than with jockeys who were being paid by betting syndicates to pull up their horses or slip Prozac in their oats.

The first thing to get out of the way here is the investigative reporting of what an old tabloid editor of mine called “the bleedin’ obvious”. Some races are fixed. Horses get doped. Well, knock me down with a betting slip.

While I lose that money at racecourses, it has never crossed my mind that I am dealing in a market in which the same investment information is available to us all. What are we meant to make of all that tic-tac sign-language between bookies? Are we meant to suppose that they are just conveying strictly arithmetical information to each other regarding the movement of prices?

I’ve never been racing with anyone who didn’t know that we casual punters aren’t at a considerable disadvantage to the professionals and the racing industry itself. But I don’t care. It’s part of the fun and makes a win all the sweeter.

This is not a defence of “institutional corruption”, as it was called in the programme. All I’m saying is that there are better scoops to be had than the exposure of horse-racing as corrupt. It would have been nice, for instance, if the BBC – or anyone else for that matter – had exposed Robert Maxwell, or Enron, or Barlow Clowes or any other of the nasty enterprises over the years that have lost real money for proper investors in industries that were widely considered to be respectable.

So, horse-racing was an easy target. But there are more important commercial points to be made. The first is about industry regulation. The Jockey Club was the target of Panorama’s incisive reporting. It was wonderful to watch the club’s representative explain repeatedly that betting wasn’t under its jurisdiction – one had to remind oneself that we weren’t watching a spoof.

Meanwhile, as the Government proposes to relax gambling legislation to bring it out of its sleazy ghetto, the Gaming Board, which currently regulates the industry of games of chance, may be replaced by a Gambling Commission, or some such.

Now, this could repeat one of the great errors of governments in recent years. You relax the market, but then shackle it with overbearing regulation. This happened in the early days of privatised telecoms in the UK. There is no point in bringing gambling into the light and then regulating its dark excitement away.

There is a further point. And we’re into dangerous territory here, because you’ll never get a regulatory official to concede this point on the record. But I’ve met regulators who tell me that they have to leave policy reasonably relaxed in order not to destroy entirely the inside information on which some markets rely.

I have spoken to one official who told me that government authorities and the Stock Exchange are never going to be as diligent in the pursuit of insider-dealers in equities as they could be because, frankly, the markets are always going to rely for their positive volatilities on some investors knowing information that others do not.

The consequence is that the Department of Trade and Industry and the Stock Exchange surveillance departments know of any number of individuals, in the City and elsewhere, who have been “insidering” and who have not had their collars felt. Occasionally, they’ll nick one just to show that they’re still there and that they’re watching, but largely they leave the small operator alone.

What the authorities are really interested in is the big game, where markets are manipulated for significant institutional gain. In other words, people are trousering illicitly gained cash at the expense of other shareholders on a regular basis but, so long as they don’t alter the characteristics of the overall market, the regulators aren’t that bothered.

There is a lesson there for the horse-racing authorities. And for Panorama and other investigators. What we need exposed are corrupt institutions that we would otherwise expect to be respectable – such as the financial houses that mis-sold pensions.

What we don’t need to be told is that some methods of gambling are dodgy, any more than we need to be told that double-glazing salesmen sometimes sell windows that their customers don’t need, or that Jeffrey Archer tells fibs.

George Pitcher is a partner at communications management consultancy Luther Pendragon