Category Archives: Mark Carney

Paragraphs redacted from P&N Turner submission to PCoBS 24/08/12

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These are the paragraphs which were redacted by the Commission’s support staff.

  1. The example of bank misconduct we have lived through from 2003 (and continue to do so) is a microcosm of what happened to the whole sector. While we are not professionals in the financial sector, we have been forced to spend the last five years investigating aspects of the banking industry.
  2. Between 2002 – 2007 many SMEs whose accounts were ‘managed’ at HBOS Reading, were forced to use the services of a consultancy firm, Quayside Corporate Services (QS), or have their facilities withdrawn. QS had no affiliation to any trade body for consultants and employed the services of known embezzlers. The cost to the SMEs for these services were between £2000 and £30,000 per month + VAT and expenses. In many cases HBOS insisted QS personnel or its Director became directors of the SMEs and were given full fiduciary control.
  3. Once QS representatives had control of the SMEs, the Bank then ploughed millions of pounds into them. A lot of this money was used to facilitate luxury lifestyles for Bank employees, QS staff and the QS Director. Many of the companies subsequently failed and their assets were sold in pre-pack administration to new companies ultimately owned by The Sandstone Organisation (we are reliably informed as being controlled by the Bank) but run by the Director of QS and/or his staff.
  4. In late 2006 the Bank sent a team from Edinburgh to investigate the loan book at HBOS Reading. In early 2007 the manager responsible for most of the loan book was suspended and subsequently resigned. Between 2002 and 2008, the Bank caused at least 80 SMEs who had the involvement of QS personnel, to go into administration and/or liquidation. We are told the overall losses to the Bank because of events originating at HBOS Reading, runs to billions of pounds.
  5. In April 2007 HBOS closed the business accounts of P&NT who had also been made to use QS and had complained of serious irregularities between 2004-2006. They became suspicious of the Bank’s sudden and aggressive stance towards them and, because any investigation promised by the Bank had not actually been done, they commenced their own investigation into HBOS Reading. By August 2007 they had uncovered evidence of systemic fraud and identified other victims.
  6. In September 2007 P&NT wrote to the entire Board of HBOS setting out their findings to date. The Board rejected the allegations. Also in September 2007, P&NT tried to inform the FSA of the fraud. The FSA did not start any investigation until mid 2009. In November 2007 they reported the fraud to the Cambridge Police who were persuaded by HBOS not to investigate. In May 2010, Thames Valley Police (TVP) and SOCU initiated ‘Operation Hornet’ to investigate what happened at Reading having, by chance, come across the case at a routine meeting at the FSA. They were not asked to look into it.
  7. 9 people have been arrested thus far as a result of Operation Hornet and charges are expected in September 2012 for ‘Corruption’, ‘Money Laundering’ and ‘Conspiracy to Defraud.’ TVP have said HBOS Reading is potentially the biggest banking fraud in British History. The Bank (now Lloyds Banking Group (LBG)) still denies the Turner’s allegations and have refused to compensate any of the SMEs destroyed as victims of the fraud.
  8. HBOS/LBG have tried to evict the Turners from their family home 22 times between 2007 – after they started their investigation – and 2010. Legal costs for a senior Solicitor to attend 5 of the eviction hearings and to deal with matters relating to HBOS Reading, have been paid via a false account opened by the Bank in the name of the Turner’s business, Zenith Cafe Ltd (ZC). Neither the Solicitor nor his Firm were instructed in the eviction proceedings. Approximately £363,000 has been paid from the account to Denton Wilde Sapte (now SNR Denton). By August 2011, circa £250,000 in penalty interest and charges had been added to the account which then showed ZC owed over £600,000. LBG have said this is not a case of false accounting and the Turner’s should never have been sent details of the account. The FSA is still investigating the circumstances of this account over a year on.
  9. The Turner’s have spent the last 5 years investigating the fraud at Reading and other bank frauds. Despite the thousands of factual documents establishing irrefutable evidence of fraud originating at HBOS Reading they have supplied to the police and the FSA, it is a sad fact no authority has had the power or, it seems, the appetite, to make the Bank deal appropriately with the matter. LBG remains in denial and the victims have remained in limbo for years hoping the authorities would act.
  10. A Parliamentary Commission on Banking Standards can only be of service to the Nation if the submissions and evidence it receives, is acted upon and not discarded because it comes from those who have individual and profound experiences of what has occurred over the last decade plus.
  11. From 2007, we have contacted (and in most cases submitted a lot of copy documentation to) nearly every agency and authority including the Treasury Select Committee, Constituent victims’ MPs, Government Departments, the Insolvency Service, the FRC, the CIB, HMRC, the senior Executives of the three Banks involved, the Financial Ombudsman Service, the FSA, the SFO, 3 police forces, two Prime Ministers and two Chancellors. Apart from Thames Valley Police (TVP) and specifically the ‘Operation Hornet’ Team, all have failed us with vigour.
  12. For example, we were recently told by a senior enforcement officer at the FSA, the Final Notice Public Censure of BoS, published on 9 March 2012, could have been published two years earlier but for the difficulty the FSA had getting the Bank to agree to it because of FSMA 2000 provisions.
  13. In an e-mail of 9th March 2012, Hector Sants personally advised us the 6 redacted paragraphs in the BoS Public Censure Notice, relate to HBOS Reading. Obviously we have not read the paragraphs and TVP have confirmed they have not read them either, though they were redacted to protect their investigation. The Bank has read them yet it continues to deny any malpractice at HBOS Reading over 5 years after it reported it as a ‘control issue’ to the FSA in ‘early 2007’ (see FSA ‘brief’ to TSC, March 2010).
  14. As a very serious example of how professional standards have reached rock bottom, we would ask the Commission how senior bankers: who are fully aware of the details of the fraud at Reading; who have read the redacted paragraphs in the FSA Public Censure; who have no doubt read Hansard on the debate about HBOS Reading of June 2009; and, most importantly, have clear evidence of how the billions of pounds the Bank lost because of the practices utilised in the HBOS Reading debacle, are able to repeatedly deny the fraud and therefore not compensate but persecute its customers?
  15. We give as an example of this, UKFI which, although it is not a bank per se, it was charged with protecting the interests of the public’s share in two of our biggest banks.
  16. We can confirm that, when we attempted to approach UKFI in 2009 to make them aware of the serious criminal activity in HBOS, which has since resulted in a 2 year major criminal investigation which could potentially damage the reputation of Lloyds Banking Group, we met with a number of hurdles – not least that UKFI has no contact phone number in the public domain.
  17. After a series of e-mails to the PR Company (who were very polite but who would not give us contact details for John Kingman or Glen Moreno) we eventually worked out the e-mail addresses and sent the information, which was in the form of a copy of a letter to Eric Daniels detailing the Reading fraud.
  18. Our letter, which gave explicit detail of fraud and corruption in a then bailed out bank, was ignored.
  19. In 2010 we attempted again to give information to UKFI.
  20. Again it was impossible to make direct contact and we were told (politely) by their PR company, it is because “UKFI do not have time to deal with the general public.”
  21. We are not surprised they have little time for the public as the senior executives of UKFI appear to feature very heavily in any number of bank hospitality situations. We use one of many links as an example: http://www.ukfi.co.uk/images/dynamicImages/Hospitality%20table%20April%2010-%20Mar%2011.pdf
  22. We understand ‘hospitality’ is now accepted as entirely normal in business. However, the millions of people who were severely affected by the events at RBS, HBOS and its parent Lloyds Banking Group, may quite rightly consider the remit of UKFI is to dine well – courtesy of the banking industry – while ensuring they have little or no contact with the shareholders they represent.
  23. We eventually wrote to Sir David Cooksey and Robin Budenberg copying them in on a letter to Sir Win Bischoff. We made the point a Parliamentary Authority Member had advised us to do this.
  24. The reply we got from a UKFI representative informed us: ”We would direct you to note our Framework document which governs the relationship between UKFI and HM Treasury as sole shareholder of investee companies. This document clearly sets out the requirement of the independence of the Boards of the banks; in particular, that UKFI ‘will manage the investments on a commercial basis and will not intervene in day to day management decisions of the investee companies’… UKFI operates as an active and engaged shareholder. We have no regulatory powers, and no power to demand any information from the banks which would not be usually be provided in discharging our duties…As you may have read in our Annual report and accounts, our remit is to manage the investments to create and protect value for the taxpayer and to devise and execute a strategy for the disposing of investments……
  25. UKFI, as part of their remit to protect value for the tax payer, did not feel a massive fraud in a bank the public bailed out, was of any interest to the organisation working on behalf of the public.
  26. Similarly, the BBA told us in 2009 that, if what we were saying was true, it was very worrying but they could do nothing about it.
  27. The FSA, when we first contacted them in 2007, would not give us anything other than a generic e-mail address to send sensitive and personal information of many of the victims of HBOS Reading – which, understandably, we would not and could not do.
  28. The FSA did not get involved in any investigation regarding HBOS until April 2009 and just before the Debate in Westminster on the Reading
  29. We have spoken to many people in the banking profession since we started investigating HBOS Reading and many of them have confirmed to us they work under a regime of fear where missing targets would severely affect the bonus structure which, many of the public do not realise, goes right through the banking system and is not limited to senior executives and traders.
  30. For example and notwithstanding the Reading fraud, HBOS informed us in 2004 they were sending an accountant to review our figures. They did not inform us this would cost us over £1000 for a one hour visit. Neither did they advise us before deducting this amount from our account.
  31. Another example is how the banks’ lawyers charged us £3000 for a standard debenture document while our own lawyers charged £270.
  32. In the case of the Reading victims, all of whom were/are Company directors, the losses to their businesses and to themselves, far exceeds £150,000.
  33. In our case, corporate governance has allowed an internal fraud to progress to a major police operation and FSA investigation because no one at Board level would deal with the matter appropriately, in either HBOS or LBG.. Or so it would seem given the repeated denials for 5 years that anything was wrong.
  34. We have pointed out to the various Boards under various stewardships (Andy Hornby, Eric Daniels, Antonio Horta-Osorio) and on various occasions, the potential damage to the reputation of the Bank because of the scandalous proportions of the HBOS Reading fraud, should have been curtailed and minimised by proper adherence to the Law and sensible damage limitation.
  35. We have no doubt the Bank executives considered it impossible we, as customers, would ever have progressed the investigation of the fraud this far. But that is no excuse for their lack of corporate governance which: a) allowed such a huge fraud to be perpetrated against the Banks’ clients and its shareholders in the first instance and; b) exposed an extreme lack of corporate governance which would put the good name of the Bank at risk and further penalise the victims of an internal bank fraud, by attempting to cover it up rather than exercise proper management, governance and damage limitation.
  36. We advise the Commission, a former HBOS Executive has confirmed to Paul Moore that, in the over £1 billion Reading fraud, only a minority of the Board were “in the know” in 2007 while the others were told HBOS Reading was a minimal problem concerning amounts up to £49M and it had been dealt with.
  37. Clearly this was a case of executive and non executive directors being kept “in the dark” as to the true events concerning the Bank’s risks. Again we would suggest non executives, because of their other commitments, are unlikely to seriously challenge reports from executive directors or committees.
  38. It would be wrong for us to go into any great detail of how we feel the internal audits and controls at HBOS between 2002 and 2007 were a total misrepresentation of the true facts, as we would go into territory that could be harmful to Operation Hornet. However, there is absolutely no doubt that, overall, HBOS and particularly Bank of Scotland had, by 2004/5, become the ‘basket case’ of banking. This is not a term we invented but a term we have heard used by many people in the banking sector.
  39. It could (reasonably) be said we are not the biggest fans of the FSA. However, we can only conclude that, in the case of HBOS, the information given to the FSA with regard to internal audit and control between 2002 and 2007, was, in many instances, a work of fiction – the Arrow Reports.
  40. This was clearly evidenced in 2010 when the FSA sent the TSC a document detailing their version of events originating at Reading and based on a ‘control issue’ reported to the FSA in ‘early 2007’. It was fortunate the TSC copied the ‘brief’ to us so we were able to amend the document with the true facts.
  41. On a specific note and given it does not fall within the remit of Operation Hornet, we would draw to the Commission’s attention the false account HBOS set up in the name of our Company, Zenith Cafe Ltd., to pay the Bank’s legal expenses relating to HBOS Reading. These fees were nothing to do with Zenith.
  42. The account was opened in March 2008 and we were not aware of it until we started to receive interest statements from January 2010 and letters advising a ‘£30 Excess Overdraft fee’ had been added and would we bring the account into line with its facility. In June 2011 and after two requests from the Company’s Accountant, we received all the historical statements which itemised debits and the interest and charges applied. We believe they were sent by a whistleblower and the Bank have since confirmed we were not supposed to have sight of this documentation.
  43. The bank have said this is an ‘internal account’ to keep track of the costs relating to Reading and they never intended to ask us, as Directors, for the money back. We already had letters asking for the money.
  44. Additional to the £372,000 for debits made from the account, predominantly for fees to Denton Wilde Sapte (now SR Denton), the Bank have added approximately £250,000 in penalty fees and interest thus eliminating the possibility this was an internal ‘managers obligation account.’
  45. The account clearly shows a £372,000 debt of the bank as also being a £600,000 debt of our company, so a credit of the Bank. Clearly it is false accounting which we have reported to the FSA and the police.
  46. The FSA, after one year of investigation, say they have not got to the bottom of the matter. We bring it to the Commission’s attention because we do not consider it is at all likely this account is in isolation.
  47. As external whistleblowers, we would warn anyone pondering this route to consider carefully what they are doing before they start. In 2007 when we first uncovered the Reading fraud, we believed it would be quickly remedied for the victims by reporting the matter to the Board of the Bank. Nothing could have been further from the truth.
  48. As noted in para. 13 above, we have, since 2007, contacted every agency and authority possible alerting them first to the fraud and secondly, to the untenable consequences for the victims.
  49. Five years on, the situation remains the same for the victims. The Bank remains in denial despite a two year criminal investigation; we have undergone 22 eviction hearings in 3 years in an attempt by the Bank to silence us and which the Bank paid its additional legal costs via a false account in the name of our company (the actual legal costs were added to our mortgage) and; we continue to live like paupers.
  50. Finally on this aspect, we have personally seen some extraordinary fantasy accounting and conclusions from the Big 4 auditors in the HBOS Reading scenario, including serious breaches of accountancy standards and breaches of the Law. We are not at liberty to evidence these breaches to the Commission at the present time but we certainly will be able to when Operation Hornet is concluded.
  51. In June 2011 we prepared a dossier establishing a ‘time line’ of the conduct of the FSA in relation to the HBOS Reading fraud. This document was copied to the Treasury Select Committee and we would be happy to submit the same to the Commission, if requested. It is a detailed example of the conduct of the FSA in relation to established criminal activity in a bank. Over a year later, nothing has changed for the victims of HBOS Reading and the FSA has taken no enforcement action against the individuals at any level and who enabled the Reading fraud to happen.
  52. At all costs banks will not admit any fault or accept any responsibility even where the evidence clearly promotes a different approach. We cannot calculate how much money HBOS and subsequently LBG have spent defending their position regarding HBOS Reading but almost certainly, the end tariff will cost much more than it would have cost had the Bank dealt appropriately with the matter back in 2007.
  53. We use this question to highlight all we have said in our document and, in order to give the Commission perhaps the most blatant example of just how low professional standards have gone in banking, we use the Farepak debacle as an example.
  54. Our interest in this case dates back some time as the HBOS employees tasked with the Farepak problem, are the same team charged with dealing with the SMEs whose accounts were held at Reading and whose businesses had Quayside Corporate Services imposed upon them.
  55. We have read some of the transcripts of the Farepak trial (May to June 2012). The case against the Directors of EHR was brought by the Secretary of State. It claimed those directors were responsible for 133,000 people on low incomes unwarrantedly losing money they had saved for Christmas vouchers.
  56. What the case actually exposed was how the HBOS team used ‘hard nose tactics’ to block any solution the Directors of EHR proposed in their attempts to save the depositor money and keep Farepak trading.
  57. We don’t intend to go into great detail and we do not believe the Farepak injustice is a closed book.
  58. EHR requested additional funding of £5M in April 2006 to trade the company out of a problem caused by the demise of its main voucher supplier. In its attempts to source this shortfall, which the Bank would not facilitate, EHR was made to spend well over a million in fees to accountancy firms.
  59. HBOS, who refused to ring fence any of the savers’ money already deposited, received a further, circa £18M between April and October 2006 from the Farepak savers. This cashflow was used by the Bank to reduce EHR’s borrowings and allowed the business to carry on trading.
  60. The EHR Directors pursued at least 7 different avenues to secure the funding during this period, none of which were acceptable to the Bank and the Company was put into a pre-pack administration at the beginning of October 2006 causing the savers to lose all their money.
  61. As a PR exercise, HBOS initially put £2M into the ‘Unfairpak’ campaign and more recently they have added an additional £8M. We believe the winding up of the Business will finally cost circa £9M.
  62. Therefore a total of at least £10M has been paid in fees by a business that was looking for £5M additional funding; the whole exercise has cost HBOS itself £10M plus a serious loss of reputation; 133,000 people lost a net total of approximately £25M of the £37M they thought they had saved to ensure their families had a good Christmas plus they suffered all the anxiety caused by this conduct.
  63. A team of 3 or 4 people under the ultimate leadership of Peter Cummings, who was CEO of Bank of Scotland in 2006, brought about this shameful situation. We would make the point; in the transcript, one of the 4 describes his job as being part of the ‘High Risk’ team in 2006.
  64. When we dealt with the same team of people in 2007, their title was ‘Impaired Assets – Structured.’ The difference between High Risk and Impaired Assets is very clear. High Risk may look at resolving a situation by the addition of extra funding. Impaired Assets has a remit which does not include the possibility of any additional funding whatsoever and almost always, unless the clients themselves have a financial resolution, has an insolvency outcome.
  65. The Bank’s position and conduct is laid out very clearly in the transcripts of the case, days 11, 12 and 13. We believe it begs a question of whether HBOS ever intended to find a solvent solution for Farepak or whether the team from HBOS was, in fact, the ‘Impaired Assets’ team who always intended to put Farepak in Administration and simply allowed the directors of EHR to go through the process of finding a resolution in order for the Bank to get in all the savers’ money?
  66. Having met this ‘team’ and having seen how the SMEs associated to HBOS Reading were dealt with by this team, we suggest there was never any intention of saving Farepak. And while we fully appreciate a bank has every right not to extend further credit to a customer (business or individual), we would point out to the Commission that, simultaneous to the Bank’s refusal to assist Farepak with further, minimal funding, it was ploughing tens of millions of pounds into a business with almost no turnover and which had been put under the control of the Bank via its consultants.
  67. In July this year we sent information to a representative of Unfairpak who attended a meeting with Dr. Vince Cable MP after the Farepak trial had concluded and which placed no blame on the Directors of EHR. Our purpose was to evidence the blatant ‘double standards’ the Bank was applying to businesses at the time of the Farepak demise. Following is an extract from our e-mail and the figures are factual:          “..The other thing we think you should know is that contemporaneously to EHR going into liquidation for the lack of £3M to £5M, BoS was ploughing millions of pounds into a company called Corporate Jet Services (CJS). Looking at their accounts and giving a rough calculation, we can see the Bank allowed CJS to increase its borrowings by £19.671 million between April and September 2006 and the turn over for the same period in the cash book was £497,770 of which just over £125,000 was a repayment of VAT from HMRC.
  68. The Bank would say of course, it is down to their discretion how much money they give companies. However, it should be noted the Bank owned all the shares in Corporate Jet Services and despite the tens of millions of pounds they put in to the Company, it went into Administrative Receivership on 26th September 2007 owing the Bank £113M, according to PwC’s Administrator’s Report. Post the appointment of PwC, the Bank allowed the Company to pay £26, 244,708.73 to one subsidiary which was then sold to the now ex directors of the company for £1.00; £2,407,314.31 to another subsidiary that was also sold to the ex Directors for £1.00 and also £333,912.40 to PwC, who had already received £160, 054.84 a month before the Company went down.
  69. In total, the Directors of the Company (one of whom is a main suspect in the Reading case) paid £7.00 and a promise to acquire all the assets of CJS leaving the Bank with a massive debt which, had they taken action in May 2007 when they first brought in PwC to produce a report on the viability of CJS, the amount would have been reduced by at least £6 million.
  70. Additionally, this company had a £800,000 agreed overdraft facility that should have been renewed on 27th November 2003 but wasn’t and by the end of April 2006 the Company had an unauthorised OD of £28.6M according to the accounts for the year ending 31st December 2004 filed at Companies House and which were signed off in June 2006.
  71. Some additional points to be noted from the above comparative scenario between CJS and Farepak. The person dealing with both situations for the Bank, was the same. The PwC person involved in both matters was also the same. The PwC person not only advised the Bank regarding the failed rescue packages in the Farepak debacle, he was also the Bank appointed Administrative Receiver of EHR.
  72. An editorial note concerning the above e-mail extract. It should be noted the sale of the CJS subsidiary Companies to the ex Officers of CJS for £7 and a promise, was completed immediately prior to the Company being placed in Administrative Receivership on 26th September 2007. The first payment stated above as being made by the Bank to one subsidiary Company for £26+M, was made on 27th September 2007 and the payment to a second and different subsidiary also sold on 26th September, was made on 9th October 2007. Both payments post date the appointment of PwC.
  73. We are now into our 9th year since we unwittingly became the victims of the HBOS Reading scandal. Even if we one day get to the end of it and receive the compensation we are undoubtedly due, no one can give us or our families back the 9 years we have lost.
  74. Similarly, no one can give back the Farepak victims’ Christmas of 2006. These are just two scandalous situations out of many caused by bad banking practice. The most worrying thing is – no one has done anything to curtail this sort of behaviour and it continues.
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“Ill Founded and Misconceived” versus 47 Years In jail. Updated #HBOS Reading

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I am adding this update to the blog I wrote last February and just after Lynden Scourfield and five others were sent to jail. That was over six months ago.

I was fairly optimistic throughout March and April that the Bank were going to do the right thing and swiftly even although I should have realised at our meeting with the Bank in March, the quest for justice and compensation from the Bank was going to be a long haul.  At that meeting the Bank’s representative expected us (Paul and I) to accept the statement “it is a fact that prior to the trial the Bank had no evidence of criminality.” He said this (and repeated it several times) to the people who have been sending evidence of criminality to the senior management of LBG and their lawyers since the merger with HBOS happened. So the statement was clearly a blatant example of “false truth” or whatever the latest fashionable definition is for “a lie” and it was never going to wash with us. You can’t rewrite history just the same as you can’t lie to yourself even if your bosses can insist you lie to others.

The latest hiccups include: the Bank are not (contrary to their reports to the media) prepared to pay the ‘reasonable’ costs for the victims lawyers/advisers unless they give the Bank chapter and verse on what they are doing for their clients. As if??? As if the advisers will tell the Bank the private and confidential details of the work they’re doing with the victims. Then, if the Bank’s faceless panel make an unacceptable offer of compensation and the victim has to litigate, the bank already have all their information supplied by the advisers. Do the Banks lawyers really think we are all that stupid? And of course the more obvious point – if the bank won’t pay the lawyers/advisers for the victims and the victims can’t pay them, the victims could end up with no legal advice vs the Banks magic circle lawyers.

Another hiccup: some victims who didn’t have dealings directly with Scourfield of Dobson but were in any event destroyed by their lieutenants,  acting on Scourfield /Dobson’s orders, have been told by the Bank they are not considered as victims. The criteria is you have to have dealt directly with Scourfield, Dobson or Quayside. But believe me, some of those working for Scourfield really enjoyed their jobs and were every bit as ruthless and criminal as he was – but they didn’t get arrested. Maybe they will one day but in the mean time I hope the Bank stop the absurd pretence that victims of Scourfield/Dobson teams did not suffer.

Some might say optimism is an ill advised trait in this day and age.  Nevertheless I still think Lloyds will ultimately do the right thing – the question is when? They didn’t meet their target of 30th June to compensate the victims and I wonder if we or the media should have asked Mr Horta Osorio whether he actually meant the deadline of 30th June was June 2017 or 2018? But they will have to do the right thing sooner or later because the alternative would cast serious doubt on whether the Bank’s Chairman and CEO are ‘fit and proper people’ to be running a Bank.

At the end of the day, the Bank’s lawyers can plot all they like to delay or decrease the compensation thus increasing their own remuneration. But the blame for prolonging the misery of people who have already suffered unnecessarily for so many years (it was unnecessary because both HBOS and LBG were fully aware of the criminality years ago) will not be laid at the door of the lawyers –  the blame will go to Lord Blackwell and Antonio Horta-Osorio.  I hope their lawyers are not trying to persuade them that won’t happen because that would be another false truth and potentially a very costly one.

24th July 2017

 

What a week!

As many people reading this will know, on Thursday 2nd February the Judge in the HBOS Reading trial sentenced the five delusional Defendants who pleaded not guilty and the one Defendant who did plead guilty, to a total of 47 years in jail. I was in Court for some of the proceedings and I know many people who couldn’t attend will want to know how it went.

Paul and I didn’t get to Court until about 11.45. Partly because we had the BBC at our house by 6.30am to do Breakfast TV, which was quite an odd experience because we generally get interviewed by people who know a lot about the HBOS Reading fraud. So I kind of felt we and Steff McGovern were talking about different stories and I hope we have a chance to go back and explain it to Steff in more detail so we’re on the same page!

By the time we got to Court it was packed. So packed all you could do was stand by the door at the back of the Court. A lot of press were there as well as a lot of the victims and they were doing the mitigation pleas when we arrived. I went in and listened for 20 minutes and then had to leave. I had to leave because one Defendant’s QC was talking about the hardship it would cause his Client’s family should he be incarcerated! Another pointed out his client was over 60 and in ill health!!!

I always think anger is a dish served silently and after reflection but I wasn’t sure how much longer I could stay silent or reflective in light of these comments. The families of scores of people including mine, have been devastated for years because of these people. Many of the victims have been serving a prison sentence for years and so have their children. We’ve had businesses trashed, no livelihood, no way forward because this has taken so long to reach a criminal conviction and we’ve been living on the breadline. On top of that our reputations, our credit ratings and our dignity has been smashed (yes Nigel, I pinched that from your excellent piece on BBC News at 10!).

Meanwhile, some of the people in the dock have been living like kings and indulging in every possible luxury (not always the luxuries that are to everyone’s taste) on the back of what they stole from SMEs. I say ‘some people’ because there were various degrees of ability or desire to indulge and these have been reflected in the Judge’s excellent summing up and sentencing.

On the subject of not being sent down because someone is 60 and in ill health – I am now 61, my husband is now 65 and we would consider our health to have been destroyed except for the fact other victims have fared far worse – at least five victims are dead!

I decided not to listen any more and I joined Paul in the corridor. I’ve done my best to keep Paul out of the Court room since September 2016. As many of the SME Alliance members will know, he has a photographic memory and I believe he would have been severely agitated to hear some of the evidence from both sides of the case.

We weren’t sure if the sentences would actually happen in the afternoon but fortunately they did. Again I could only squeeze into the back of the room because it was overcrowded. It was also incredibly hot and I began to wonder if people might start to feint from the heat and stuffiness – and the tension.

All through this trial it has been incredibly difficult to hear what is being said and Thursday last week was no different. People coughing, blowing their noses, turning pages of note pads (I was horribly guilty of that), people shuffling in their chairs and the Judge talking very quietly because of appalling acoustics – it’s been a nightmare. But everyone was doing their best to be quiet and hear what the Judge was saying. I don’t have to repeat what he said because it is documented, has been repeatedly reported on and is on the SME Alliance Public Interest page. But you had to be there or maybe you had to attend the entire trial, to get the impact of the Judge’s speech.

More than the sentences the Defendants’ got, I was grateful for that speech. He really got it – he really knew who these people were. The greedy ones, the stupid ones and the evil ones. Judge Beddoe knew exactly who was who in this trial and what their role was or what their importance was. This was so important. A Judge, any Judge, has to remain impartial throughout a trial and although all the way through the trial Judge Beddoe repeatedly picked up on things others in the Court missed, he was always impartial. But clearly he knew who he was dealing with and his speech before sentencing made that very clear. I and others have noted throughout the trial, Judge Beddoe is an exceptionally intelligent man and we were lucky he took this case. I am pretty sure he, like Paul, has a photographic memory – thank God.

Even in the middle of the chaos all around and with people cheering in the Court at the result, I genuinely felt for the first time that all the hard work Paul and I have put into this for 10 years, has been worth it. Not because these Defendants who, let’s face it, are either damaged, delusional or sad people, have been sent down for so long – in lots of ways I think losing their assets, their reputations and their livelihoods (like their victims) would have been almost as damaging as prison – but because I can now start to believe after all this time, perhaps our justice system can work.

I know all the victims of HBOS Reading will be grateful to the Judge, the Jury (they were brilliant), Brian O’Neil QC (Brilliant) with his team and Thames Valley Police (especially Mick Murphy) and, as you can imagine, it was a fairly emotional moment when the Judge read out 15 years for Mills, 11 years 3 months for Scourfield, 10 years for Bancroft, 4 years 6 months for Dobson and 3 years 6 months for Mrs Mills and Cartwright. I imagine it was even more emotional for them.

It would be wrong to focus on the downside after such a result but sadly there is one. We, the victims, won a battle last Thursday, definitely the biggest one we’ve fought so far – keeping that trial on track and getting the result (Paul and I have had to win 22 court battles over the last ten years to keep our house). But we haven’t won the war. HBOS have known about this fraud since 2006. Lloyds TSB have known about it since at least 2007 while Lloyds Banking Group (LBG) have known about it and certainly at a very high level, after the merger with HBOS in 2009. Peter Cummings, Andy Hornby, Lord Stevenson, Sir Victor Blank, Eric Daniels, Sir Win Bischoff and Antonio Horta Osorio. They have persecuted us and other victims for years in the knowledge every allegation we have made was correct. Why? How? How could this have happened? And even now when six people have been sent to jail for over 47 years, LBG are still putting out bland obfuscation as soundbites instead of doing the right thing. What will the latest Chairman of Lloyds Banking Group, Lord Blackwell, do now?

What will Andrew Bailey, the CEO of the FCA, do now?

HBOS could have resolved this years ago – so could LBG. It would have cost peanuts compared to what it will cost after the criminal trial. There must be a reason the Banks didn’t do the right thing? Is all this denial just hubris? Or is this because the management feel obliged to continue with their denials in order to stop an even bigger scandal coming out?

I’ve called this blog “Ill-founded and Misconceived” because that’s what the Deputy Chairman of Denton Wilde Sapte said about our irrefutable evidence back in 2008. He wrote this in a letter to us on behalf of the Board of HBOS and after HBOS had done various investigations establishing the facts as documented in the criminal proceedings. I think the ex Board members may well regret leaving the letter writing to Mr McAlpine.

One last thing – much as I think he was always fighting a losing battle and he lost, I was very impressed by Mills’ Barrister Kieran Vaughn QC. So that’s two names for the record – Brian O’Neill QC and Kieran Vaughn QC – just saying.

When justice is delayed too long the Devil is dancing.

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It’s very hard to write a rational, unemotional blog about the state of our financial system when I’ve just been to see a friend, who is a victim of bank fraud, who has been waiting for justice for over 10 years, and who is now dying of terminal cancer. But I’m going to try because too many people now are dying without ever seeing justice done. Perhaps just as bad, those they leave behind see little benefit to justice in the future because no amount of money or even bankers being jailed, can never bring back someone you love. There are some things money can’t buy.

I should add straight away that I’m not saying a bank caused my friend’s cancer – it didn’t. But years of stress, anguish, eviction hearings and trying to make ends meet will not have helped the situation. I’m not a doctor but it seems logical to me that the energy and willpower you need to try and fight of an evil disease like cancer and which should be your primary concern, is not aided when you have bailiffs at the door and a banks top lawyers trying to grind your chances of justice into the ground with legal technicalities and the ever promoted ‘costs’ threat.

That is a reality. When victims of bank misconduct are put with their backs against the wall, no one in authority says “hang on a minute, there’s a reason they can’t pay their Council tax or their bills”, they just go for the throat – which is why we have obscene programmes like ‘Can’t Pay We’ll Take It Away.” Bankers on the other hand, faced with serious allegations that may see them facing fines or, God forbid, criminal charges, can rely on their fail safe – money. Shareholders money (in some cases tax payers money) to bail them out of difficult situations.

It’s only a month since the wife of one of the SME Alliance members died of a heart attack – and in that case I suspect the conduct of a bank was the root cause. When that happened it reminded me of an article I found years ago which was written as a result of research by Cambridge University academics, entitled “Can a Bank Crisis Break Your Heart?”: http://www.cam.ac.uk/news/can-a-bank-crisis-break-your-heart

Obviously a bank crisis and I would add bank policy, can break your heart but business, economic climate and political policy doesn’t seem very interested in the human cost of unethical or even criminal bankers conduct. I say bankers because, as always, I would remind everyone that despite legal terminology, a ‘bank’ is the sum of the people who run it. So I’m feeling pretty heart broken even although I’m not the person dying. Neither am I going to be the person most affected by living without my friend. Her husband and children are and even her parents (who can bear the thought of burying their child?).

Anyway, all this has just hammered me. I’ve found it hard to function in the last few days thinking my friend has a couple of weeks to live and there is no way I can do anything about it or even guarantee justice will be served when she’s gone.

I know it’s very non PC of me to talk about human tragedy and banking in the same breath – but tough. It’s about time we stopped pussy footing around what is happening. Above all else, I believe that as a society we should not let the interests of economics or globalisation over take our ability or even our wish to be decent human beings. Sadly, some people, whether because they are genuinely socio-paths or whether their terms of employment push them into that position, are losing site of their responsibilities as human beings.

Maybe they just don’t realise the consequences of their actions? Certainly many bankers and regulators seem willing to turn a blind eye to the reality of bad banking conduct – and this cavalier attitude to individuals is, ironically, doing good banking a huge disservice. Whereas it seemed totally unreasonable up until 2008 to suggest bankers were anything other than professional people and an essential part of society, in general the opposite applies now and the collective name for bankers is often derogatory regardless of whether they are perfectly good people or one of the acknowledged egomaniacs who have hit the headlines in recent years. No one bats an eye to “yet another banking scandal.” We have even become immune to them – right up to the moment they affect us personally. Right up to the moment a bank deliberately targets our business or repossesses our house. Right up to the moment we realise there is no defence against this immoral conduct.

I have been fighting for justice since 2007. I thought it would be easy and that, having identified a massive bank fraud, I could write to senior management of the bank concerned and they would be keen to investigate the matter and make sure any victims of the fraud were compensated and the villains persecuted. I couldn’t have been more wrong. Since then successive senior managements have gone out of their way to bury the fraud I identified and even persecute the victims – presumably in the belief attack is the best defence. But why would you attack your own clients for things your own staff did? I don’t know why but I do know at Board level that has been the banks’ preferred choice.

Nine years on I am still waiting for justice – and so is my friend. Except now justice will come too late. When she dies and she knows she will very soon, she will be the sixth victim to have died without seeing justice for this particular bank fraud.

Last summer one of my colleagues at SME Alliance and I went to a meeting with Head Counsel and Head of Litigation for a major bank. When our conversation turned to Private Criminal Prosecutions, the Head of Litigation became quite outraged and he said that we should realise that when we make criminal allegations we are ruining people’s lives. Even now I remain confused by this comment – does he seriously not realise how many lives his bank is ruining? Not just ruining lives but taking lives? Clearly the man was capable of having empathy towards others because he seemed genuinely concerned we would consider criminal proceedings against bankers. So how comes this same bank is notorious for its lack of empathy to its customers? Are they considered as a different species? Is this why the good old personal bank manager had to go – because he did empathise with his clients? Maybe he even liked them so the idea of selling them  ‘products of mass destruction’ would have have been distasteful to him?

In terms of banking reform I believe we are walking backwards. No one is properly regulating banks and no one is stopping the merry-go-round of greed and corruption which remains rife in our financial sector. On the other side of the fence, public anger is not dissipating and when one person dies one hundred people dig their heels in harder and want to see justice done. In the same way you can only beat a dog so many times before it will bite you, you can only break so many hearts before the consequences become equally dire.

I wish the senior management of banks would wake up to this fact. Justice has a way of being done despite all attempts to stop it and that includes the apparently well known judicial phrase “might over right.”

It is fortunate my friend is deeply religious and she has no doubt she will be going to a better place – neither do I doubt it, she is a good and kind person. The one sure thing we know about life is we we all leave it one day and the departure lounge for that journey doesn’t have a first class section or private jets – just a completely level playing field or “right over might.”

Dear Sirs, this is hardly flattering. Please redact. #HBOS

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IMG_3454I’m confused – for years now the FSA followed by the FCA have been looking into the conduct of HBOS. Whether or not he is considered good guy or bad guy, I know Hector Sants (who admittedly took some persuading) was eventually keen to get to the bottom of what had been going on in HBOS and he wasn’t in the mood for ‘cover up’ when he released the BoS Censure Report in March 2012. Not long after that he mysteriously went from being the golden boy tipped to take a top job at the Bank of England, to relative anonymity. Since then nothing has been heard about the Section 168 Report commenced in June 2010 specifically into HBOS Reading (probably because of the ever pending criminal trials due to start in January 2016) and the overall report into HBOS and its top management has been continually delayed.

Articles in the press yesterday seem to confirm that report will be out next month (October 2015). However, even now, after the endless delays and God knows how much spent in legal fees by the Bank (I imagine Lloyds has picked up the bill for Stevenson, Hornby, Cummings and Crosby – if he’s actually included) and the regulator, we have now been warned to expect redactions.

How does that work? The regulator does an in depth investigation into the catastrophic demise of HBOS and the people who were running the Bank don’t like the conclusions the FCA have reached – so they are able to have certain parts redacted. I’m not saying the report found anything criminal (although in my personal view I fail to see how it couldn’t have found some very shady conduct) but even in a civil court, could someone ask a Judge to redact the bits of evidence they don’t like? Imagine, “your honour, I don’t think the evidence before you puts me in a favourable light so I’d like that bit crossed out.” I would love to have any current photo taken of me photo shopped so I look thirty years younger but the truth is, I’m not. These possible redactions are similarly trying to change history – and it can’t be done. Neither should anyone countenance attempts to do so.

I have been told (repeatedly) that the FCA has quite extraordinary powers, should it care to use them. I know the powers of the FSA were split between the FCA and the PRA but all the same, how can top bankers or their legal teams, oblige the regulator to redact the findings of its own report? It makes no sense. Neither does the sharp ‘Harp’ exit of Mr Wheatley make sense. I find the whole thing very concerning. Rumour (or the media) has it, Mr Wheatley was too ‘consumer friendly’ and this did not fit in with Mr Osborne’s plans to make sure the City Of London retains pride of place in the financial world. Which is a bit odd because lately, even the BBC has been portraying the Square Mile as something akin to the Guild of Thieves from the Disk World.

Therefore, what worries me is this: if Mr Wheatley had to go because he wasn’t banker friendly enough, how can we expect Mr Osborne to allow a full, frank portrayal of what went on at HBOS?

Although various MPs and, I think, the TSC have demanded to see any redacted passages, how can other people, who have first hand experience of what was going on at HBOS, ever challenge what they will never see? I do know what some of the information and evidence the PRA received to contribute to this report was, as I sent some, as did Paul Moore. We didn’t send it randomly in the hope someone would read it, we were in direct contact with the PRA and the Bank of England via the Governor and we know they all received and read our evidence. Consequently we have our own views on what the FCA Report should include. It’s not a pretty picture and I have often wondered how the bankers concerned would refute this evidence? Well obviously, if the contentious or nasty bits of the report are redacted, they won’t have to!

Redaction has been a big issue with SME Alliance recently. Members sending Direct Access Requests (DSAR) to get their information from their own central files in banks (mostly RBS) have received such varied replies, we’ve asked both RBS and the Information Commissioners Office (ICO) to clarify exactly what members should expect to get. The answers so far have been as clear as mud but it is pretty clear no one should be getting entire pages redacted. Neither should anyone be getting information that has been manipulated or tampered with (that’s another story coming soon). We are struggling to get to the bottom of Section 7 of the Data Protection Act 1998 and a definitive interpretation. But I’m not sure Section 7 of the DPA was ever intended as a barrier to regulators publishing reports on banks or bankers! Neither was Maxwellisation and the remarkable Re-Maxwellisation meant to be used as a means of delay or ‘cover up.’ These are clearly new techniques invented by the very clever (and well paid) lawyers of La La Land – but that doesn’t mean we or the regulators should blithely accept them.

My other concern is that while this report may actually be more candid than others before it (I’m remembering the 1 page press release fiasco from Lord Turner about RBS http://www.publications.parliament.uk/pa/cm201213/cmselect/cmtreasy/640/640.pdf ), it will be written in such a way as to minimise any potential legal actions against Lloyds Banking Group who merged with HBOS. Contagion is a huge issue for the banks and I’m sure the emphasis of this report will be on “this is what HBOS did but Lloyds were totally unaware of any of this.” Which begs the question (again) – why would Lloyds go ahead with such a critical merger without knowing chapter and verse of what they were getting involved with? Money laundering rules being what they are these days (or profess to be), banks need so much information to open an account, I’m waiting for “what colour knickers are you wearing” to be added to the list of KYC questions. So it is inconceivable Lloyds had inadequate detail about their new partner. And, in my opinion, Lloyds didn’t just merge with HBOS, they’ve done a pretty good job at morphing into the same sort of unethical and unattractive organisation.

Last thing – I know many victims of HBOS have waited years now for some sort of closure. The criminal trials regarding HBOS Reading have taken years to happen (if they ever do) and the various reports on HBOS have been endlessly delayed and now (probably) redacted. While I don’t suppose the ex management of HBOS have been quite as cavalier about the FCA report as they were about running the bank, I very much doubt if any of them have suffered anything like the hardship the banks’ victims have. Some of us have had our businesses ruined and our lives on hold for many years. Not to mention the many people who lost their savings and their retirement plans via the disastrous way HBOS was run. So I really hope, regardless of the HMT’s desire to hang on to its golden goose (that many of us feel is actually a dead duck), that when the HBOS Report does finally come out, it is as honest as harsh and as damning as it should be. Hector left us with the BoS Censure Report – before Mr Wheatley left, let’s hope he finished the job and, for once, let the blame fall where it’s due.

If you don’t identify the crimes or the criminals, you don’t have to support the victims.

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There was an interesting article in the Guardian today on the subject of Lady Newlove’s report into the lack of support for victims of crime. http://www.theguardian.com/uk-news/2015/jan/27/victims-crime-let-down-criminal-justice-newlove I agree with her entirely – there is very little support. Equally interesting was the comments below the article.

For example, someone posted we are all more likely to be victims of financial crime than being mugged in the street. I would agree because PPI, IRHP, LIBOR rigging, asset theft (GRG) and various other fraudulent schemes, all have their victims – not that I am in anyway decrying the horrific consequences of violent crime.

However, there is a huge problem when it comes to financial crime. First and foremost, it is rarely classified as crime. It has various bogus titles and the most common is mis-selling. Also, financial crime is a political animal and as such, it seems to feel it is reasonable it should fall outside of the boundaries of common law. It shouldn’t do but it does. This is probably because any major case exposing the horrendous corruption in our financial system would have far reaching political and economic consequences. Not only would it risk serious ‘Brand protection’ to financial institutions, it would also damage UKPLC. Therefore even if you report serious and fully substantiated financial fraud to the police, you are unlikely to get an investigation – so you are unlikely to get a result.

Anyone challenging this view should consider why, when Banks are found guilty of money laundering for drug cartels, or of rigging LIBOR (which affects everyone), or of selling fraudulent products to consumers and SMEs, the answer is invariably a huge fine paid by the Bank shareholders? But no one goes to jail.

Occasionally and if you are incredibly persistent, the police will open an investigation into specific crimes by bankers or their associates in the financial system and, I can say from experience, that despite the initial euphoria victims may feel when this happens, what follows is a long drawn out process which gives little or no consideration to victims or to the consequences of those crimes. And while I adhere to the theory of “every man is innocent until proven guilty,” a justice system which takes years and years to bring cases to trial means that some victims, suffering badly from the effects of a crime, will have their lives on hold for an indefinite period. Some die before they ever see justice and that is a fact. “Justice delayed is justice denied.”(See below)

Take for example the case (which I won’t name for reasons of sub judice) where some 80 SMEs were first defrauded and then destroyed by employees and associates of a High Street bank. This was first exposed by the victims in 2007 but the police refused to investigate because the bank concerned assured them there was nothing to investigate. However, in 2010 and under the radar, a different police force did start an investigation. By the end of 2010 several people had been arrested but no one was charged until 2013. The trials for those people charged with assorted serious crimes were due to start in January this year but have now been put back to September and will finish in 2016 – if they happen at all. 2007 to 2016 is a long time to wait for justice. Three people have died while waiting.

The victims have lost their businesses, therefore their livelihoods and in many cases their family homes. They are all due compensation – but that won’t happen until after the trials as the management of the bank concerned are adamant no crime was committed (even although the Bank was the biggest loser of all) and the police have spent a fortune of public money on a witch hunt.

In the meantime there is little communication between the police and the victims except for the odd brief e-mail. The victims are dissuaded and even threatened not to attend any case management hearings – so they don’t know how the case is progressing (or not in this case) and if ‘victim support’ are aware of this crime, they haven’t acknowledged it. I know most of the victims – I don’t know any who have had any support.

The defendants on the other hand, are kept fully briefed by their legal teams (some of whom are paid for by legal aid), they continue to work or trade their businesses (which haven’t been destroyed) and some have requested and been given their passports back as and when they want to go on holiday abroad. Fair enough, they have not been found guilty as yet.

My point – most people in this Country are asking (quite reasonably) why bankers, who have already been found guilty of various crimes for which their shareholders have been penalised, have not been charged or gone to jail? I would say it is because the majority of the really serious crimes had to have happened with at least the knowledge and possibly the authorisation of those at the top of the Banks – not to mention key figures in associated ‘professional’ firms. But if Governments (via the justice system) start admitting our banks have been and are being run by criminals, it would destabilise our much loved financial system. So, even where a case does slip through the radar and bankers are charged with crimes, the main consideration seems to be how the authorities can limit contagion and, if possible, stop these trials actually going to Court. A valiant attempt was made to stop Operation Cotton and therefore other big financial fraud and VHCC (very high cost cases) from proceeding, via the legal aid débâcle. Fortunately it wasn’t successful.

And the victims? Well, better a few victims fall by the wayside than we tarnish the City of London. But actually it’s not a ‘few victims’ because we are all victims of financial crime and we are all paying the price (national austerity) while the charade goes on. And what a charade it is – after all that has happened and after banks brought world economies to their knees, top bankers demand and still get millions of pounds a year. And once a year they head off to Davos with the great and the good, to decide our economic future for the following 12 months. It’s not just illogical and unethical – it’s bonkers.

Great to see Lady Newlove has written a report and identified the lack of support for victims but, in the case of financial crime, which has reached epidemic proportions in the UK, the biggest hurdle to our justice system is a refusal to identify the criminals. Cost effective and sneaky but not democratic.

  • On the subject of “justice delayed is justice denied” and while I was looking for the origins of that quote, I randomly came across an extraordinary dark example of how this statement is sometimes abused by the very authorities we rely on for justice. The case is nothing to do with financial crime and the victim in the case is the accused. And this highlights yet again how important it is to democracy that justice is seen to be done and in a timely manner. I would say in too many cases, it isn’t. http://www.innocent.org.uk/cases/Karl%20Watson%20-%20Woffinden%20art.pdf

Christmas 2014 round up of financial crimes with no one going to jail.

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My husband made a very valid point a few days ago and I have been thinking about it every day since. He pointed out that when we (Paul and I) started looking at misconduct in the financial industry and specifically HBOS, we couldn’t get anyone to take our allegations seriously because no one believed us. That was in 2007 and it took until late 2009 to actually get the FSA involved and 2010 before the police got involved – even although we made allegations to the police in November 2007. We’re not a lot further forward now in December 2014 because the criminal trials for that alleged crime won’t start until September 2015 – and even then, I’m not holding my breath.

It was disappointing no one believed us in 2007 but not surprising because the idea banks, or rather bankers, might be crooks, was out of the question back then. Bankers were seen as respectable professionals and your bank manager was so trustworthy, he or she could even sign your passport. The same doesn’t apply now and no one bats an eyelid at the concept of crooked bankers – in fact bad conduct is what we expect from them, to the point even the good guys (yes I do acknowledge there are still many good bankers our there) are tarred with the same brush.

Paul’s point was simple: It was tough back in 2007 because no one believed us, so nothing was done. Now, everyone knows the financial sector is rife with fraud and corruption and still nothing has been done! Not just in the case we reported – right across the board and in thousands of cases. Even more alarming is the fact that, in many instances I know of, where people have tried to report financial crime, the police will not investigate it! In all probability this is because they don’t have the budgets to investigate such a glut of criminality in austerity Britain – but that is of no help to the victims who are frequently told – “it’s a civil matter.” No it’s not – crime is never a ‘civil matter’ and even victims of PPI have a right to report it as a crime, get a crime number and, if applicable, also have it investigated. Of course that might damage crime statistics.

But no. Most financial crime is just swept under the carpet as “mis-selling” or “restructuring” and resolved by bank shareholders’ paying huge fines to the FCA. Think about that for a moment – we all believe bankers have committed criminal acts but nothing has happened. It just beggars belief and is really as scary as hell because, what it actually means is, we can no longer rely on the Law and really do have a two tier criminal justice system. There isn’t another, plausible explanation.

This terrifying thought was brought home again when I read the latest excellent Matt Taibbi article in Rolling Stone magazine: http://www.rollingstone.com/politics/news/the-police-in-america-are-becoming-illegitimate-20141205 where he is talking about the disparities in the US legal system and it reminded me that I still haven’t had a reply to my letter to Mr Cameron of December 2012 when I asked for some clarification about the apparent immunity bankers have from prosecution. In that letter, which I wrote after reading some worrying comments from Andrew Bailey (now head of the PRA), I said:

“Mr Cameron, unless I am completely mistaken, Mr Bailey seems to be telling us that banks, and therefore bankers, are now officially considered to be above the law in this country and that, in the interests of confidence in the banking industry (which is already at rock bottom among the British public, and therefore can hardly sink any lower), they cannot be prosecuted.

I am writing to ask you, as Prime Minister, for some clarification.

Does your government endorse the notion that banks and bankers should be given a licence to commit criminal acts without any fear of prosecution? Is this now official government policy? Are the British public now being asked to accept that, despite incontrovertible evidence of multiple criminal acts by banks, including money-laundering, drug-money-laundering, Libor rigging, multiple frauds and assorted Ponzi schemes, bankers are considered to be immune from prosecution? And if so, can I ask on what grounds your government, or indeed the government of any democratic country, can justify such a policy?” Full letter here: http://www.ianfraser.org/dear-mr-cameron-if-bankers-are-above-the-law-we-need-an-urgent-explanation/

I didn’t write the letter to be confrontational – although I must admit I am incredibly disappointed the PM’s strong words in the run up to the last election about what should happen to criminal bankers, turned out to be hot air and no more. This is what he said to Jeff Randall in January 2009:

“I think that we need to look at the behaviour of banks and bankers and, where people have behaved inappropriately, that needs to be identified and if anyone has behaved criminally, in my view, there is a role for the criminal law and I don’t understand why is this country the regulatory authorities seem to be doing so little to investigate it, whereas in America they’re doing quite a lot.”

I wrote the letter because I genuinely wanted some reassurance from the Prime Minister that bankers are not above the law; we don’t have a two tier legal system and; something would be done to redress this inequitable situation.

So what has happened to clarify or allay my concerns since December 2012? Well a few things have happened but not what I was expecting. For example:

  1. I’ve never had a reply.

  2. Several banks have been found guilty of money laundering and even money laundering for drug cartels. And the only penalty has been a huge tax on the bank’s shareholders who have paid massive fines for the conduct of bankers. But no one has gone to jail.

*given that banks (buildings or legal entities) don’t have any physical ability to pick up the phone and negotiate with drug cartels – such deals had to be done by bankers. So why have no bankers been held responsible?

  1. Many banks have been found guilty of making billions of pounds with the PPI scam. They’ve had to pay the money back in many cases but, I assure you, not all cases. So again, the shareholders have lost a fortune. But no one has gone to jail.

* I often wonder who invented PPI? Did senior bankers sit down and plan how best to get thousands of their customers to take out insurance policies which cost them a fortune but could never be used? Or did someone in a bank find a recipe for creating and implementing PPI in a fortune cookie?

  1. As a founder member of SME Alliance, I talk every day to people whose businesses have been totally destroyed with various, ridiculously (and I would suggest deliberately) complicated financial products under the collective name of swaps. I’m not a victim of a swap and I know little about them (I’m learning fast) but even their titles smack of more contempt for businesses e.g. vanilla swaps. Can you have chocolate or strawberry? Probably. The FCA have said many of these products should never have been sold to ‘unsophisticated’ clients and in some cases banks have had to give the money back. However, the years it has taken for this to happen and the devastation these products have caused, apparently do not necessitate banks having to pay out billions in compensation. The redress scheme the FCA has come up with has conveniently been limited to peanuts – and no one has gone to jail.

* A journalist was telling me the other day of a case where someone challenged the FCA decision multiple times and was eventually awarded £500k – but of course the bank interest and charges on his account over the time it took to challenge the bank’s conduct meant the victim got nothing and the bank paid themselves £500k. You couldn’t make it up.

  1. The now infamous business recovery units like RBS/GRG have been merrily acquiring, appropriating, stealing their clients’ assets left right and centre and sadly RBS have not been working in isolation. It has caused outrage – it’s been all over the news, MPs have held debates on the subject, Committees have interviewed senior bankers and regulators and even the ever cautious BBC have suggested some bankers are crooks. http://www.bbc.co.uk/programmes/b04t6jy1 But no one has gone to jail.

* As a victim of HBOS Reading (similar model) I have so much to say on this – but am having to keep quiet for now but not forever.

  1. And while the likes of GRG and HBOS Reading have caused many businesses to fail, a separate scandal has specifically targeted farms across the Country for over 20 years. Repeated allegations have been made against a man called Des Phillips and various of the 59 companies he has been or is a director of including UK Farm Finance, UKCC and UK Acorn Finance. And some of our major banks have been heavily implicated in these allegations as have other ‘professionals’. It’s a sickening story which has resulted in many family farms being repossessed and, sadly, farmers committing suicide. You can hear about it here: http://www.bbc.co.uk/programmes/b040hzz5 or read about here: http://www.publications.parliament.uk/pa/cm201415/cmhansrd/cm141111/halltext/141111h0001.htm No one has been prosecuted so no one has gone to jail.

  2. Bankers or traders have been found guilty of rigging LIBOR. Again, massive fines have been levied – another penalty on shareholders. However, in this instance it looks possible some bankers will go to jail and one banker has even pleaded guilty. But let’s not get too excited that justice might be done. Read this: http://www.theguardian.com/business/2014/oct/07/banker-pleads-guilty-libor-rigging-rate-fixing

As you can see the banker concerned could get up to 10 years in jail but we don’t know who he is or what bank he worked for and reporting on this case is heavily restricted. Presumably, after the other three people charged have had their trials, we might know more. But I wouldn’t bet money on it – especially if the banker in question worked for one of the State subsidised banks. But it’s a start.

I could make the list much longer but, to date and looking at the 6 instances above, money laundering, PPI, Swaps, asset theft including farms and LIBOR rigging, it’s certain 1 person in the UK will go to jail and 4 people might. And when you look at the trail of poverty, misery, desperation and devastation these crimes have caused, it is unbelievably disappointing – not to mention scandalous, that our regulators, justice system and worse still, our Government, have let this happen. In fact it is morally and ethically reprehensible.

Of course individual bankers do go to jail quite regularly – they’re usually quite low down in the pecking order and their offences (with a few noticeable exceptions) just about make it into their local newspapers. But the top dogs – the ones who make policy – the ones who instigate and oversee the kind of conduct which allowed all of the above to happen, seem to remain above the law. Which begs the question – why do we have laws?

Meanwhile, the Government have issued the following figures regarding crimes to businesses:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/284818/crime-against-businesses-headlines-2013-pdf.pdf

I haven’t read it in any great detail but I’m pretty sure it doesn’t mention the wholesale destruction of SMEs by banks. I sometimes think we should move the Houses of Parliament to Canary Wharf and have done with it before La La Land spreads across the whole of London.

Here in the real world we are in the run up to what will be another very austere festive season for many people in Britain – and I’m not just talking about people or SMEs who have been defrauded by banks. I’m talking about those families who’ve lost jobs and/or benefits and most of all, those people relying on food banks or who have lost their homes and now live on the street. A lot of people would say – me included – our major banks and therefore our most senior bankers, were very instrumental in causing our national austerity. And, post the so called Credit Crunch, those same banks (especially the part State owned ones) have done little to help the economy and much to damage it further. Unbelievably, the people at the top of those banks continue to be heavily rewarded.

For example, yesterday (13th December) I was reading an article about the top paid European Bank CEO’s. http://www.cityam.com/1415705309/which-ceos-european-bank-have-biggest-pay-checks-two-uk-banks-take-second-and-third-place

Hmmm – £7.4M. Even when you deduct 50% tax, that still leaves approximately £71k a week. I think you could have one hell of a Christmas with that remuneration package!

Mind you, every silver lining has its own cloud and I suddenly thought – I bet it’s really tough finding the perfect Christmas gift for these top bankers because, what do you buy for the man or woman who has everything? So maybe La La Land has its own problems at Christmas.

Shame you can’t gift wrap integrity – if we could give some of them that, the whole Country might feel more festive. Still, there’s always the good old standby gift – Monopoly. After all, banks have bought, sold, packaged and mortgaged every property on the board many, many times over – but, to date, they have been very adept at steering clear of the “Go to Jail” square. But then I’m guessing Al Capone thought he would never lose ‘games’ either.

Did the Bank Wreck My Business? Yes – so what happens now?

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Did the Bank Wreck My Business? Yes – so what happens now?

I’m pretty sure the ratings for the excellent Panorama programme, ‘Did The Bank Wreck My Business’, were very high last Monday. Certainly most people I know watched it – but then many of them have direct experience of banking abuse at the hands of RBS or Lloyds – so they would. In fact most of them were interviewed by Andy Verity and Jon Coffey although their stories weren’t used in the programme. Some would say (and I would agree) there are many more horrific stories out there that the production team could have used – but it’s not a competition. Every business annihilated by bank misconduct (known to many as fraud), is a tragedy. And, given the Beeb’s generally conservative, establishment stance, I think it’s nothing short of a miracle this programme was as frank and exposing as it was.

As always, when programmes like this are on, I took some notes. I do it mostly to collect quotes for my book (nothing quite like “from the horses mouth”quotes to make points) but I also do it because I’m so staggered at what some people in the banking world say, it has to be captured in black and white for posterity. One day future generations will surely look back and ask “how the hell (being polite there) did a democratic country let that happen?”

I know the transcript of the programme will be available soon (or I hope it will) but here’s some of my favourite quotes from last night:

Jon Pain (RBS) “The whole purpose of GRG is to help customers return to financial health…..”

Vince Cable (BIS) “Well of course I’m very alarmed because good companies appear to have been put at risk or in some cases destroyed by banks behaviour…..”

Stephen Pegge (Lloyds) “our goal is to support businesses (you know) small and medium sized businesses are really important to us….”

Jon Pain (RBS) “(But) I would in no shape or form condone any inappropriate behaviour by anybody acting on behalf of RBS – that’s not part of our agenda in supporting customers.”

Christ Sullivan (RBS) to Andrew Tyrie re GRG “It is absolutely not a profit centre!”

Ross Finch (Lloyds victims) re his meeting with an exec of Cerberus who Lloyds sold his loan to “When I expressed disbelief about their behaviour, um, he said, “what you’ve got to understand is I am a prick” – which I couldn’t believe he would say such a thing!”

I’ve just pulled out those quotes because they are either so absurd or so shocking– and they’ve been broadcast on the BBC, the bastion of British correctness. If even the Beeb is exposing RBS and Lloyds as a bunch of crooks, what can we say? Nine years on from the so called Credit Crunch and where are we? I would say, if anything, we’re walking backwards. As one of the founder members of SME Alliance and a member of Whistleblowers UK ( Paul and I blew the whistle on HBOS Reading – the HBOS equivalent of GRG), I hear horror stories about banks v SMEs every single day. But the exposure of banking atrocities is no longer limited to what banks like to portray as ‘the niche market of poorly performing SMEs’. Everyone knows how bad some of our banks are and Andy Verity’s programme should be one of the final nails in the coffin of bad banking.

But will it be? Big question:

Vince Cable, Andrew Tyrie, the Treasury Select Committee, the FCA, the PRA, Mark Carney, David Cameron, Ed Miliband, Nick Clegg – did you watch “Did The Bank Wreck My Business’? And if you did – what are you going to do about it? They certainly didn’t wreck your businesses so I understand that maybe you don’t understand the consequences of what banks do. However, I do and so do thousands of SME owners, employee’s, shareholders and creditors. We live with the consequences.

I also know Andy Verity and Jon Coffey have done extensive research to make this programme and could have used any number of totally outrageous cases because they interviewed loads of SME owners (or ex SME owners) – and I know some of those stories may have been a step too far for the Beeb. In my own case sub judice was a big problem. But I know they made the programme in the spirit of stopping banks abusing SMEs. So has it worked? Has it helped? Will anything change?

Well the Panorama team have done their bit. David, Ed, Nick, Andrew, Mark – over to you. You are the people who can make the banks behave – or at least you should be. If the reality is you’re not – then wow, we have a serious problem in our democracy.

Best quote of the programme, without doubt, has to be Austin Mitchell MP, talking in Parliament about the Keith Ross case and saying it how it really is:

“What I want to do today is tell the story of the theft of a profitable Yorkshire company and I don’t mean the criminal Mafia we often speak of I mean Britain’s dark suited Mafia which in this case is represented by Lloyd Bank and Price Waterhouse Cooper both acting in collusion….”

Here’s the link from Hansard to Keith Elliot’s case: http://www.theyworkforyou.com/whall/?id=2013-11-12a.212.0

Of course, living in Italy for nearly 20 years, Austin’s comments would strike a chord with me. Well said Austin – there’s not many MP’s who would draw Parliament’s attention to the similarities between the banks and the Mafia but I would just put you straight on one thing – our dark suited Mafiosi are, in many cases, criminal.

I’m posting this on my own blog site because this is my own view – but I believe many people in SME Alliance will appreciate this view and I have to give us a plug because the conduct exposed in the programme is one of the reasons SME Alliance was formed.

#SME Alliance – giving SMEs a voice. #nooneisabovethelaw

Mark Carney says #nooneisabovethelaw now we need to work on #whocanaffordthelaw?

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On 24th September 30 people travelled from all over the Country to attend the first meeting of SMEalliance in the Old Council Chamber at the Law Society. It could have been double that number but, having asked our hosts, Rustem Guardian, for a room for 12 people, then 25 people, then 30 people, I felt it would have been rather rude to continually increase the numbers!  All the same we ended up with about 35 people. Rustem Guardian did us proud and we are enormously grateful to them for giving us such a fitting venue for our first meeting.

I say fitting because one of the key phrases that came out of the meeting was this:

“no one is above the law.”

Of course most people at the meeting were brought together because, as SME owners are very well aware, some people do seem to be above the law – which is, in part, the reason why so many SMEs are struggling and continue to be abused and especially (but by no means exclusively) by the financial sector. But the reality is  – and we need to remember it – in a working democracy, no one is above the law.

I raised this subject at the meeting because of a letter Paul and I received, dated 1st September 2014,  (1 day before SMEalliance was born) on behalf of Mark Carney, Governor of the Bank of England. We wrote to Mr Carney on 31st July 2014 and that is our first letter to him although we were in regular contact with Lord King from 2010 and he always replied, usually in person and with his private seal. Mervyn King (as he was in 2010) had asked to be kept fully informed of the progress of investigations into HBOS (ongoing) and I don’t make the point to infer we are buddies of Lord King’s,  I make it because by writing to him and getting replies, we were sure the BoE had critical information about malpractice in HBOS. So we were keen to make sure Mark Carney was similarly well informed. I can’t publish most of our letter or the reply for reasons of sub judice but I can publish this point we raised with the Governor:

Mr Carney, even as music publishers (there’s been little music publishing and lots of fraud investigation over the last 7 years), we understand the need to maintain international confidence in the City of London and our financial sector. But it would seem the attempts to indemnify bankers from crime in order to maintain that confidence, has resulted in the City becoming the ‘Wild West’ of the financial world. By not holding bankers to account individually when they break the law, we now have a situation whereby the banks feel their immunity to prosecution is a licence to further break the law. And they do so in the knowledge that, worst case scenario, their shareholders will pay huge fines while those bankers responsible for the good management and reputation of the banks, continue to get huge pay packets, bonuses and pension pots. Under such a scheme, where is the incentive for bankers to behave lawfully, morally and ethically?

The reply to this on behalf of the Governor was (I’ve redacted specific’s):

Your letter also notes a concern that regulators have not acted to penalise relevant individuals in relation to XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX and that bankers are somehow above the law and able to avoid prosecution. This is a view very much not shared by the Bank of England. As the Governors recent letter to Lord Blackwell made clear there is absolutely no doubt that bankers who are guilty of misconduct should face the regulatory and / or criminal consequences of their actions. No one is above the law.

I haven’t published that to annoy the Governor of the Bank of England by sharing private correspondence. On the contrary I’ve published it to make the point that in the “them v us” scenario many SME owners feel exists between businesses and the establishment,  we have a lot of shared views. And I may be very naive but I was actually delighted to read the headline in the Huff Post today:  Mark Carney Tears Into Bad Bankers For ‘Getting Away With It’

http://www.huffingtonpost.co.uk/2014/10/13/mark-carney-bankers-banking_n_5975494.html

I am not saying our letter to the Governor made an impact but, on the other hand, maybe he is aware of the bad conduct of banks towards SMEs – maybe we can get our message across to people like Mark Carney and maybe now if the time to resolve a “failure to communicate” situation that has existed for far too long. I really hope we can remedy that with SMEalliance. We can open a real dialogue with people who can help us get change – and this time, the message won’t be from people paid to represent us – it will be SMEs representing SMEs.

I feel hugely encouraged by the immediate response and support for SMEalliance – it really feels as if a fuse has been lit and an immediate network of like minded people have joined forces. We need to build and build our numbers so our voice gets louder. And then we can collectively make sure influential people like Mark Carney  or politicians know exactly how we feel, what our problems are and what changes we want to see – straight from the horses mouth. Starting maybe with the statement from the Governor’s office:

No one is above the law.

If even the Governor of the Bank of England is agreed on this principle. maybe we could start dealing with the one thing that hinders it:

But most people can’t afford the law.

That’s a huge problem but let’s not run before we can walk. If we can be sure the authorities will support  “no one is above the law” that would already go a long way to helping SMEs. So that when we report misconduct, fraud, misrepresentation, sharp practice or other issues that damage SMEs to the regulators, the police, MPs – we could do so with the confidence the law will protect us.

Last thing – you don’t have to have a problem to join SMEalliance. Aside from trying to raise important issues at a political level and have a huge voice, it is a huge opportunity to network, share information or idea’s and cross reference facts that will also alert others to potential pitfalls. And for those who do have a problem, it will also hopefully provide a support network.  I saw all of this go into action straight away when everyone at the meeting adjourned to the pub and it was evident the knowledge and experience people were willing to share was phenomenal.

Please visit our website http://www.smealliance.org and if like us you think SMEs, which are the absolute backbone of the economy, should have a better deal and a bigger voice, please join us. Our next meeting is 6th November at the Winford Manor Hotel in Bristol.