Leading article: A state-owned bank should be setting an ethical example

News that the Royal Bank of Scotland helped to raise bonds for Europe's last dictatorship earlier this year provides fresh, depressing confirmation of the curious ethics, or rather the lack of them, operating at the heart of what is in effect a state-owned bank. As this newspaper reports today, RBS has now agreed not to do any more deals aimed at alleviating the growing financial difficulties besetting the authoritarian regime of Alexander Lukashenko in Belarus. But this is cold comfort, as RBS has only budged in response to sustained pressure from human rights groups. In other words the bank appears to have been shamed into abandoning a policy it was otherwise content to continue with.

The scandal of raising bonds for Belarus, a country with by far the worst human rights record in Europe, cannot be described as a one-off lapse of judgement on the bank's part. It follows earlier revelations RBS formed part of a syndicate that invested in companies which make cluster bombs, in spite of the global ban on the production and trade in such weapons. Nor was the money RBS helped to raise for the Lukashenko regime in Minsk a symbolic sum. The deal agreed with Deutsche Bank, Russia's Sberbank and BNP Paribas was worth $800m.

The bank's apologists, no doubt, will note that it did not act alone and that it has done nothing illegal because the government of Belarus is not under international sanctions, apart from a feeble EU travel ban placed on top officials. That is technically correct but it is still a poor excuse. The Belarusian government's tendency to set the secret police on all who so much as criticise the dictatorial President must be well known to the bank. So is the fact that the regime in Minsk has only escaped more serious international penalties as a result of Mr Lukashenko's sycophantic relationship with the Kremlin, which over the past 17 years has thrown the equivalent of a security blanket over its protégé.

What is doubly shocking is that the bond deal reached in January took place directly after a presidential election that was blatantly fraudulent, and which was followed by a severe crackdown on those who pointed this out. Police arrested hundreds of people in Minsk for staging a peaceful protest against the result of this rigged poll. During the course of this it was reported that they also broke the leg of an opposition presidential candidate. Some of those arrested face up to 15 years' jail for the offence of riot. Even Mr Lukashenko's friends in the Kremlin are growing tired of his squalid, neo-Stalinist regime, which explains why the Minsk government has started looking elsewhere to raise the cash that once flowed smoothly from Russia. This is where RBS, and others, stepped in. When they did so, one wonders how they squared this with the bank's own human rights code, which starts with the impressive-sounding claim that "The Royal Bank of Scotland Group is committed to respecting and upholding human rights in all areas of our operations and within our sphere of influence".

The people of this country await signs that it is dawning on the banks that receipt of huge sums of public money brings extra responsibilities. As with the payment of huge bonuses to bank chiefs, so with the deals with Belarus, that sign has yet to come.