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Why I object to Eric Daniels walking away from chaos with £5M – it’s not banker bashing, it’s logic.

I wrote the blog below in September 2011. Today’s news that Eric Daniels now feels he can sue Lloyds Banking Group for lost bonuses has not improved my view of him. Mr Daniels was a spectacularly unsuccessful bank CEO. A friend of mine said the HBOS /Lloyds bankers were paid a fortune to “fail with vigour.” My friend was right and Mr Daniels was a classic example. The fact he believes he is entitled to even more money is offensive to the Bank’s shareholders, it;s customers, to the thousands of staff who lost their jobs, to the victims of #HBOS Reading who Eric not only ignored but in some cases persecuted, and to the whole Country. Shame on you Mr Daniels. 22/08/17

Original blog of 26/09/2011

Some may say my various tweets on Saturday (24th September) about Eric Daniels were a bit harsh or that I have been indulging in what has reportedly become a common pastime in the UK, banker bashing. But I have good reason to feel Mr Daniels should not be allowed to cock this last snoop at the British taxpayer or at me.

I do remember 2009, when Eric Daniels became head of HBOS as well as Lloyds. I remember thinking that finally, the victims of HBOS Reading would get a fair hearing and a resolution because obviously, the management of Lloyds would want to clear up such an unwholesome mess. Not so.

I wrote to Mr Daniels on several occasions and those people who replied on his behalf (he never replied personally), simply said that, as far as Mr Daniels was concerned, the issue of HBOS Reading had been dealt with, there was no fraud and the Bank did not intend to correspond further. They are still corresponding now, over two years later and our last letter came from Harry Baines, General Counsel for HBOS and now Lloyds Banking Group, in July 2011. His variation on a theme was the matter has been well ‘ventilated’ and that’s the end of it.

The serious question this behaviour poses is not just as to why Mr Daniels, or anyone else for that matter, would be happy to see business banking clients left in such a sorry state having been defrauded by bank employees but rather; why would the CEO of a bank ignore evidence of criminality and allow the situation to progress to a full scale police investigation which could only be detrimental to the bank and its shareholders?

I’m fully aware that banks get hundreds if not thousands of complaints on a daily basis and they  very often deal with them using the ‘delay, deny, dilute’ tactic. But, I truly believe in this instance it was absolute madness and totally negligent to repeatedly ignore complaints about HBOS Reading and even when:

  1. Several MPs were asking for a resolution on behalf of Constituents.
  2. The HBOS Reading scandal was the subject of a File on 4 broadcast.
  3. MPs had a Debate at Westminster on 2nd June 2009 and James Paice MP even used Parliamentary Privilege to expose some of the unwholesome details (documented on Hansard).
  4. The FSA did a Section 166 Review which progressed to a Section 168 Investigation.

What part of the list above would allow the CEO of any business to think this was a matter that could simply be swept under the carpet and denied? At what point did Mr Daniels think the best way forward was to ignore the victims or, in our case, to proceed with trying to evict us from our home 22 times so that we could not continue our investigation into the fraud? Leaving aside integrity or even decency, has Mr Daniels never heard of damage limitation?

And the end result of pretending the HBOS Reading fraud never happened is Thames Valley Police and SOCA are now into their second year of ‘Operation Hornet’, the full scale investigation into what really happened at HBOS Reading. 8 people including 2 bankers have been arrested so far – which suggests that while Mr Daniels has not taken this matter seriously, the police have.

That cannot be good for the reputation of HBOS, Lloyds Banking Group or any of the senior executives, past or present, of HBOS or Lloyds who have refused to deal with the matter. Surely it is the responsibility of these people, who are paid vast amounts of money, to make make sure that a) major frauds do not happen in the Bank and b) when something does go horribly wrong, it is dealt with quickly, fairly and efficiently. But that has not happened – not under Andy Hornby nor Peter Cummings nor Eric Daniels. More importantly, anything detrimental to the Bank’s reputation, is not good for the shareholders which, in this case, means the Country. We have all seen Lloyds share price drop from pounds to pennies – while pay and bonuses for the top bankers have gone from thousands to millions. For what? For running the banks into the ground?

To make matters worse and even more confusing, Mr Daniels was in charge when the false bank account in the name of Zenith Cafe Ltd was being debited. I have already blogged about this but I forgot to add a vital point. While the Bank are busy convincing the FSA this is an ‘internal’ account which our company was never going to be asked to repay, we have the letters demanding repayment and telling us we must stick to the overdraft limit – which is of course zero as you can’t negotiate an overdraft for an account you don’t know about.

Presumably Mr Daniels would say he didn’t know about the account. He would be oblivious to the fact Zenith Cafe appears to owe the Bank approx. £630,000 – £200,000 of which was to pay the Bank’s lawyers to be involved with 5 of our eviction hearings when they weren’t instructed in that matter.

But even the FSA are now saying they are taking this matter very seriously because it simply isn’t possible to add approximately £250,000 worth of interest and charges (going up at £11,000+ per month) to a £372,000 debt for their legal fees and come out with a £600,000+ credit which is explained away as an ‘internal’ matter. So maybe, as CEO, Mr Daniels should have known about it so he could have asked the question – who authorised it? And how many other fake accounts were/are manipulating the Bank’s loan book? What impact is this or other ‘internal’ accounts having on the P&L? Or did this well paid now ex CEO have no idea what was happening on  his watch?

This morning I was reading an old letter from a Mr Godfrey at the Bank on behalf of Mr Daniels. It says – over and above the usual, “we’ve dealt with this so go away” – that the Bank is fully aware of our level of indebtedness. Maybe they were – but I certainly wasn’t as I knew nothing about the account for the first 18 months after the Bank created it! And I’m wondering now if my other company, Zenith Publishing Ltd, also has a false account attributed to it and how much does that one show as owing to the Bank?

Many people would say the ‘fantastic’ deal Mr Daniels and friends did when they merged a good or at least functioning bank, Lloyds, with a basket case, HBOS, caused thousands of people to lose a fortune. Not the kind of fortune top bankers or Corporate CEOs make in bonuses but the few thousand pounds a lot of people thought they were going to get annually as a pension when they retired – or the reasonable wage they made before thousands were made redundant when the Bank had to off load staff to increase profits – or the comfortable nest egg they had which meant they could afford a reasonable lifestyle. So many people’s lives changed thanks to the Lloyds/HBOS merger and even more lives have changed thanks to the overall bank bailouts.

I think we are all entitled to question why so many of the people who caused economic catastrophe have been so handsomely rewarded?

We are entitled to ask why people who have possibly broken the law, are not being prosecuted?

We are entitled to ask why people who have breached FSMA 2000, who have acted with little or no integrity and who have caused damage to our banking system via their negligence, have not been struck off as directors?

Personally I would ask why the ex CEO of Lloyds Banking Group was able to; totally ignore the evidence he was sent of a major fraud which has resulted in a major police investigation that is detrimental to the bank ; allow and even authorise the malicious persecution of the victims of the fraud; allow a false account to be operated in the name of a victim’s company (when false accounting is a criminal offence); and why should he walk away with £5 million pounds?

It doesn’t make any sense to me and I’m deeply disappointed UKFI, our Government and our regulators seem unable to understand how offensive this pay off is to the majority of the British people. This is not about banker bashing – it’s just logic and I imagine the 43,000 people who have lost or are losing their jobs at Lloyds, will also be wondering about  the logic of them all ending up with nothing when the man in charge of the disastrous merger, can get so much?

Maybe, on a personal level, Mr Daniels is a good man – I wouldn’t know. But in my view, he isn’t a good business man and I cannot understand why a bank that is 41% owned by the state, is paying him £5M? Or why he has been getting £3,333 a day since last March for doing nothing?  Or is the  implication, it was costing us much more than that when Mr Daniels was doing ‘something’?

I’m inclined to think it was. He has cost this Nation a fortune – and now his pension from the part state owned bank he was instrumental in ruining, will keep paying him a fortune every year for the rest of his life.

Eric Daniels, Fred Goodwin, Peter Cummings – some might consider them to be three of the most successful bank robbers in British history. No horses, no getaway cars, no balaclava’s, no dynamite. How did they do it?

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When justice is delayed too long the Devil is dancing.

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.”

How much more contempt must society swallow from banks?

Interesting few weeks – the election of course with the Conservatives winning a majority – who saw that one coming? And, in the process, the Tories appear to have demolished most of the other parties, not to mention some key names in politics. Of course the SNP helped the Tories enormously – the idea of Labour with the SNP running Westminster had a devastating effect. It’s almost as if we collectively had visions of bearded, kilted Scotsmen rampaging all over England intent on rape and pillage, when we still haven’t recovered from the suited and booted Scotsmen who ran the Government and some of the big banks – so that didn’t help poor Ed. And this just goes to show that while we pat ourselves on the back for being a liberal, accommodating, multi cultural society, the truth is we’re every bit as Nationalistic as Germany, France or Italy. And why not? What’s wrong with being fiercely protective of your Country? And while, in this instance, we conveniently forgot Scotland is part of Britain, I think many of us did reasonably feel that is a tenuous situation which a second referendum could change.

Anyway the Conservatives won and that was certainly a relief to big business who were apparently sure Ed Miliband was anti business. But I wonder if anyone in politics could make a difference to the whims and pleasures of major corporations now – and especially our financial sector?

One thing that has been made abundantly clear (again) in the last week with a US Judge handing out multi billion pounds fines to our big banks, is how much more powerful banks are than Governments. If I was trying to explain to an alien what’s been going on over the last twenty years in the ‘Incredible saga between banks and society’ I would say:

“From the late 90’s, bankers decided they could make more money and bigger bonuses by forgoing traditional banking and behaving recklessly, unethically and with gay, greedy abandon until this conduct nearly brought even the wealthiest of nations to their knees by 2008. So Governments bailed the banks out with the monies they collect in taxes to pay for essential services, even although this caused mass austerity for millions of ordinary people. But we never really got to the bottom of the reckless behaviour and we certainly didn’t blame anyone. So bankers realised very quickly they could carry on with that kind of behaviour and nothing much would happen.

Pardon? Yes we do have laws on this planet and yes bankers did break them but the leaders running the various countries on behalf of the people, decided it wouldn’t be a good idea to apply the laws to the bankers? Why – well apparently it’s complicated (or so we’re told) and, aside from anything else, we, the public, would have felt loath to trust a financial sector where some of the bosses turned out to be convicted felons.

Yes I know some of them may well be ‘criminals in pinstripe’ but that’s not the point. You can’t just go around calling people crooks if our justice system hasn’t confirmed it – so the trick is, don’t prosecute people and then no one can say they’ve done anything criminal.

What happened next? Well obviously, realising they had immunity from the law and could therefore do what the f*ck they liked with no personal consequence, the bankers dreamt up even more blatantly criminal scams to make money because – what did they have to lose? And when they (banks – not bankers) were found guilty of crimes, either their share holders or the tax payer (again) paid massive fines on behalf of the banks to the organisations set up to make sure banks did behave well and didn’t break any laws in the first place.

No I don’t know why these organisations didn’t police the banks properly. But I suppose if they had, they wouldn’t have been able to demand billions of pounds in fines at a later date.

What happened to the bosses running the banks? Well obviously they got huge bonuses even although they were overseeing criminal operations. And let’s be logical – the banks may have been fined billions of pounds but that’s a fraction of the profit they made while acting illegally. So you could say these bosses were doing a good job in terms of making money – which is all banks care about.

Yes, you’ve summed that up beautifully – the people bailed the banks out when they lost everyone’s money; then the banks carried on robbing the countries blind while paying their executives millions of pounds and finally; the public paid the fines for their criminal conduct. It’s a total Catch 22 as far as society is concerned.

I realise it makes no sense to you – it makes no sense to most people on the planet. Don’t we have a say in all this you ask? Well yes we do. We vote for the kind of leadership we think will be best for society and who will stop this kind of thing. So why doesn’t it stop? I don’t know. And yes, I’d say society is deeply offended our elected representatives have given bankers immunity from the laws of the land. Many of us are trying to do something about it. I have written many a letter to various leaders asking for a logical explanation to what’s going on http://www.ianfraser.org/dear-mr-cameron-if-bankers-are-above-the-law-we-need-an-urgent-explanation/

I haven’t had any replies – no doubt our leaders are very busy trying to work out how to balance the scales of a disappointed and furious populace on the one hand and the all powerful and Government empowered banks on the other hand. It can’t be easy forecasting which camp will do the most damage if not appeased. Especially if there’s not much you can do about the situation.

And no, I don’t know how much more contempt society can swallow before it all turns very nasty.

What, you’re off to find a more logical, ethical planet for your holiday? I don’t blame you. At least you managed to catch the Eurovision Song Contest while you were here. Do you know, that used to be considered one of the most bizarre, hilarious and illogical things on the planet? Now it seems like a welcome break in an even more bizarre reality.”

Guest Blog – A Letter to Shareholders in Lloyds Banking Group plc

25th March 2015

Dear Fellow Shareholder

Corporate Jet Services Limited/Corporate Jet Realisations Limited (in Liquidation) (“CJR”)

Sycamore Limited is a small shareholder, previously in Halifax Bank of Scotland plc (“HBOS”), and now in Lloyds Banking Group plc (“Lloyds”). We urge you to join us in demanding an agenda item at the next available General Meeting to give an account of the CJR affair and to explain what the current board will now do to make good the damage to shareholders’ interests past and present which it has caused.

That damage was firstly the loss of some £150 million of shareholders’ money by what it is extremely difficult to see as other than a fraud which has never been explained; followed by a toxic culture of denial and cover up which has persisted ever since. Lloyds knows the facts but it is not telling. You may have read something about Corporate Jet Services in the press or on the internet but Lloyds has maintained a lofty silence. We have written to our Chairman, Lord Blackwell several times but he does not reply and he brushed aside a shareholder’s question at the last AGM.

If we want our bank to be soundly profitable, to deal fairly with its customers, to promote honest business practice and to pay maintainable dividends – in short to make a clean break with the past some truth and reconciliation is required. The bank must also pursue those responsible for CJR and who have benefitted from it within and beyond the Bank, for restitution of the millions they have misappropriated.

The history of CJR was short but disastrous for shareholders. In 2003 HBOS set up what was effectively a secret subsidiary company, lent it £12.8 million secured on executive jets worth about £8 million and equity capital of £2,500; and proceeded to pump money through it until it was shut down in September 2007 by PricewaterhouseCoopers as Administrative Receivers at a cost to the Bank’s shareholders of about £150million. That company was CJR and it banked with the High Risk Unit in Reading. Tellingly, the Bank paid off all third party creditors and sold the good bits of CJR to the management team for a song, presumably as a thank you for their skillful services rendered. After 2004 by which time it owed the bank
£28 million CJR produced no statutory financial statements, in blatant breach of Company Law, so there is no public record at all of where most of the money went. Lloyds will not even tell the Liquidator of CJR and has threatened us with legal action if we support him in his requirement for that information. Certainly it appears that much of the money went to the Isle of Man and some was used to fund the purchase of two luxury motor yachts. The Bank’s official line, in so far as it has one, maintained by Lloyds to this day, was that CJR was the result of some overenthusiastic lending by a manager in the High Risk Unit in Reading
and that none of the lost money is recoverable. Admittedly, HBOS probably did regard £150 million of shareholders’ money as peanuts. It raised £4billion in a rights issue shortly afterwards in 2008 and secretly borrowed £25 billion from the taxpayer to keep itself afloat. Nobody felt that needed mentioning to the shareholders of Lloyds when they voted on the merger in 2009, so why would they mention a mere £150 million?

We believe that the CJR affair goes to the heart of the HBOS and now Lloyds banking culture. You may think that you deserve an explanation. Lloyds does not. Nor does the public shareholder, UK Financial Investments, which still holds nearly 25% of Lloyds and could singlehandedly get CJR on the agenda, but has told us that the matter has nothing to do with them. Neither it seems do the authorities think that you deserve an explanation. In fact it appears that everybody involved with Lloyds has long known about CJR except the ordinary shareholders. We believe that shareholders are entitled to a full explanation, a heartfelt
apology, action to recover the money, and real cultural change.

The key questions are;
1 Where has the money gone?;
2 Who approved the CJR “lending”?;
3 Who else knew about it?;
4 Who has benefitted from that money?;
5 Will Lloyds now take disciplinary action against those directors and employees responsible for CJR and the cover up?;
6 Will Lloyds now pursue for compensation the individuals responsible, whether inside or outside the Bank, without fear or favour?

Please send an email and/or write as follows in your registered name and address as a shareholder to:
Malcolm.Wood@lloydsbanking.com
Malcolm Wood, Group Company Secretary,
Lloyds Banking Group plc
25 Gresham Street
London EC2V 7HN

I/we as a shareholder in Lloyds Banking Group plc (“LBG”) request that the following be
included as an agenda item at the next available General Meeting of the Company, being a
matter which ought to be explained in the interests of the shareholders:

“An explanation of the Company’s involvement in the affairs of Corporate Jet Realisations
Limited (in Liquidation) Company number 04521080”
I/we hold (number of shares registered in your name) shares [this is optional but preferable – see note (i) below]
Registered Name of shareholder:………………………………………..

PLEASE NOTE that according to the Company Secretary:
(i) To be accepted, the request must be submitted by members holding at least 5% of the issued share capital of Lloyds Banking Group plc or by at least 100 members holding at least 1,000 shares each (£100 worth of 10p nominal value shares).
(ii) the request must be received at least six weeks before the AGM or, if later, by the time the notice of the AGM is given.

As of 22nd March the notice of the 2015 AGM has not yet been issued. Given that the 2015 AGM is to be held on 14th May to ensure that your request is accepted for the AGM it should be submitted before 2nd April 2015.

Make your voice count. You may also like to ask your MP to raise this matter with the government and with UKFI.

So that we may check that the threshold for acceptance has been reached please email a copy of your request to:
mpage@sycamore.aero
Yours sincerely
Sycamore Limited
Michael Page
mpage@sycamore.aero