Tag Archives: Clifford Chance

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

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.

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

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

SMEalliance v Parallel Universe.

I was think this morning (actually I was dreaming it as well) about this bizarre situation we have of parallel universes. It’s a situation now so blatantly obvious between SMEs on the one hand and banks, regulators, authorities on the other, that we seem to talk an entirely different language and have an entirely different thought process. A very good example of this is the Lawrence Tomlinson report into RBS/GRG vs the Clifford Chance report. Clearly the two camps are not on the same planet and not writing about the same problem. Or, worse still, Clifford Chance looked at the problem and then interpreted their findings according to the laws of Klingon or the Disc World. Question – which camp is run by aliens?

I would say it’s not us, the SMEs (well I would say that) but I have good grounds for that assumption. We, the many SME owners and employees, have no option than to deal with very real, down to earth problems and situations. Given the many and varied ways banks have tricked, manipulated, defrauded, deceived (call it what you will) the SME sector, many of us, and I can say this as a fact, have problems making budgets stretch to the next day. The concept of what tie to wear to the next Mansion House dinner or what colour Merc to order next year, is totally immaterial to our lives.  We are very ‘grounded’ and we are determined to bring about change, so we don’t end up ‘under-grounded’ before our time.  And of course that is not a scenario that applies just to SMEs – the majority of people in this Country have been affected by the extreme austerity the so called ‘credit crunch’ caused.

So it’s been interesting to see some of the top people from the parallel universe, running around like headless chickens for the last few weeks because they were suddenly forced to face the fact that ordinary people count. I’m talking about the Scottish referendum of course. Even although the ‘No’ vote won in the end, it was a sharp wake up call to “all in it together” Dave and Ed & co, when the Scottish people made it blatantly clear they were sick of a Westminster dictatorship. And although I personally think it would have been a mistake to split the United Kingdom, I do think Alex Salmond and his team may have done everyone a big favour. They’ve made a point – if you want to stay in Government you’ve got to do what it says on the tin – or we’ll walk.

For a very long time now, what we’ve had between Government and people is “a failure to communicate.” And it’s become so out of hand most politicians fail to understand even the most basic problem i.e  we vote them into power based on promises made which will benefit the majority and then, when they’re in power,  they break almost every bloody promise in order to benefit the tiny minority living in the parallel universe which encompasses that tiny dot of Britain in central London to include Westminster and the City.

I don’t want to get involved in the pro’s and con’s of Scottish devolution – I’m not Scottish – but I was quite fascinated by the lengths our political parties went to to keep Scotland. Of course the proof of the pudding is in the eating and, in my humble opinion, what will follow now is a battle, the likes of which we haven’t seen for quite a few years, while Scotland insists Dave keeps his promises and the rest of the UK wonders on what grounds Scotland gets preferential treatment – when half of them didn’t want to be part of Britain in the first place? It is going to be very interesting.

Anyway my point is – Scotland has 5M+ voters and the thought of losing them caused many people from la La Land to become quite apoplectic. Suddenly they listened and suddenly they agreed to the need for change. I can’t help feeling this was more about economics than people but, whatever, it brought our aloof elite back to earth for a while. How long they will stay – who knows. But there’s a good chance they’ll be here en mass for the next 9 months.

It took the SNP years to build that momentum and some may feel it is entirely presumptuous to compare SMEalliace to the SNP. But you’d be wrong – every organisation looking for change via our democratic process is similar to the SNP. Our problem so far has been – only money has been having political influence – not people. SMEalliance may be at totally grass root level and we are absolutely a fledgling initiative – but we want change every bit as much as Scotland does – and we want to be listened to every bit as much as Scotland does. And I hope we will grow very quickly as an organisation – because we could potentially reflect the views of millions of people – and some of them Scottish. And no, we can’t vote to get out of Britain (well I suppose we could form a convoy and head for the Costa Del somewhere) but we could vote for the party that listens to us the most – which was always the basic idea behind SMEalliance – we want to raise our voices before more SMEs are brutally trashed.

And here’s a thought running up to the election – if the 4.9M SMEs in this Country were able to function efficiently and grow as the entrepreneurs who started them intended, instead of being continually crippled – and not just by banks – the impact we would have on the economy would be phenomenal. We would be a huge asset to the Country and we would shift the balance of power back from the parallel universe to the real world.

Now I know a lot of people won’t like that idea. But it’s called democracy and if we could identify the political party who would give it a shot – we could be a handy vote.

 

 

 

 

Interesting day – Ian Fraser, Tom Harper, Richard Brooks all aware of FRC conduct.

Interesting day of research (always for the book) and many thanks to Ian Fraser, Tom Harper and Richard Brooks, for pointing me in some interesting directions, especially with reference to my recent blogs.

I started my new blog site with some details about the HBOS rights issue and the Lloyds/HBOS Merger, which, after reading the BoE report on the ELA given to HBOS and RBS in 2008 does, regrettably, seem to have been a rather unfortunate ‘con’ (I just can’t find a more PC word for it) on the shareholders of Lloyds and HBOS and also on the tax payer. I can say that, in the circumstances, I fully appreciate the Tripartite Authorities were definitely ‘over a barrel’ at the time but, all the same, the losers, as always, were the little people. All of us little people who now live with such austere conditions, that hundreds of thousands of people in Britain now rely on food banks:

A food bank charity says it has handed out 913,000 food parcels in the last year, up from 347,000 the year before. The Trussell Trust said a third were given to repeat visitors but that there was a “shocking” 51% rise in clients to established food banks. It said benefit payment delays were the main cause. In a letter to ministers, more than 500 clergy say the increase is “terrible”. The government said there was no evidence of a link between welfare reforms and the use of food banks. http://www.bbc.co.uk/news/business-27032642

Paul has been out all day helping someone with a long running case against HBOS. When he came home, he asked if there were any interesting e-mail or tweets. I said Tom Harper tweeted me an article by Mark Kleinman about: The Chancellor has ruled out a sale of Lloyds shares to the public ahead of the next general election, Sky News can reveal.

I said to Paul (and I said on twitter) I didn’t think this was wise. If I was the Chancellor, I would off load those shares asap. As always, Paul pointed out the folly of my logic. I have just posted a document suggesting the lack of transparency over the HBOS/RBS ELA and the HBOS-Lloyds issue was, potentially, out of order and maybe even fraudulent. Imagine – the Government sell the shares in Lloyds now and then, down the road (and before the election) a scandal – any scandal – breaks about criminal conduct by the senior management of Lloyds Bank or its sick puppy HBOS, that causes the share price of Lloyds Banking Group to drop just after thousands of people have bought shares? Add that to what has already happened. Catastrophe. It’s not impossible in my view.

I think Tom, like Paul, has considered this possibility but me? Well I was so deeply immersed in other research, I didn’t add 1 + 1 up. So well done Mr Osborne, you clearly are wiser than I thought.

Actually, what I was concentrating on was the FRC. Following on from my blog yesterday about the appointment, as Chairman, of Sir Win Bischoff, first to the FRC and then to JP Morgan Europe, ME and Asia, I received two interesting articles from Ian Fraser on the topic. One article was about the extraordinary way in which the FRC had dropped its investigation into BAE Systems (another favourite of mine – and Tom’s http://www.independent.co.uk/news/uk/politics/exclusive-the-cameron-crony-the-private-jet-company-and-a-crash-landing-that-cost-taxpayers-100m-9350090.html ) and the article also said:

The FRC has form when it comes to letting ‘Big Four’ accountancy firms — Deloitte, Ernst & Young, KPMG and PWC — off the hook. On April 11th, The Times’s Alex Spence revealed that the Financial Reporting Council had decided against probing ‘Big Four’ firms’ pre-crash audits of UK banks, simply because it wanted an easy life.

There was a lack of will,” one well-placed insider told The Times. “There was a general reluctance to get into it. It would just be too disruptive, too damaging.

The FRC has yet to make clear whether it is going to bother to launch a specific probe of KPMG’s role as auditor of the disastrous UK bank HBOS in 2001-08. It is apparently sitting on its hands while it waits to see the outcome of the FSA’s whitewash report into the Edinburgh-based bank’s failure. http://www.ianfraser.org/britain-is-fast-turning-into-a-banana-republic-wilfully-blind-to-corruption/

The other article ian alerted me to was one he wrote for The Sunday Times. I can’t read it all because I can’t afford to subscribe (thanks HBOS/LBG) but I trust Ian enough to know it is entirely relevant to my issues about Sir Win and the FRC:

Sir Steve Robson, one of seven RBS non-executive directors to be purged last month, is facing calls to resign as non- executive director of the Financial Reporting Council (FRC).

If Robson remains in his post, critics suggest the FRC could lose credibility. At RBS he was partly responsible for one of the largest bank collapses in UK history.

“The whole civil service ethos is that Caesar’s wife is above reproach,” said Robert Bertram, a corporate lawyer with experience as a non-executive director of listed companies, who served as a member of the Competition Commission.

“Whether or not Robson, a very distinguished public servant, has made his own position untenable, it seems the FRC itself has made it untenable …..http://www.thesundaytimes.co.uk/sto/business/article156107.ece

All serious food for thought from my point of view and the icing on the cake was an article Richard Brooks sent me from Private Eye:

(C) Private Eye

(C) Private Eye

So, an interesting and worrying day. I keep thinking I have discovered important and interesting information. But of course the real ‘investigative journalists’ – and ian, Tom and Richard are three of the best – already know a lot of what I’ve discovered, they’ve published it and, the powers that be have ignored it – so I’m in good company.

Last bit of interesting news I got from my research today, was from the website of 33 Chancery Lane, the Chambers of  John Black QC who is representing the Crown in the Operation Hornet case. Interestingly, while the CPS have not updated their version of events on their website, which refers to 8 defendants and losses of £35M in the Reading fraud, John Black QC has a more updated version:

Operation Hornet (2013-2014) – advising Attorney General, CPS and Thames Valley Police on prosecution of bankers at leading financial institution and other businessmen for corruption, money laundering and fraudulent trading. The forthcoming trials concern an alleged £245m fraud.

As I said, an interesting day.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sir Win Bischoff – Chairman of the FRC and also a Chairman of JP Morgan. The Revolving door to La La Land is spinning off its hinges.

I note it has been announced in the press today (12th August) that JP Morgan has appointed Sir Win Bischoff as chairman of its main legal entity in Europe, the Middle East, and Africa. And here was me thinking Sir Win was out of Banking (he retired from Lloyds Banking Group Plc, Bank of Scotland Plc, HBOS Plc and Lloyds Bank Plc, on 3rd April 2014) and into regulation (he became chairman of the Financial Reporting Council (FRC) on 1st May 2014). Then I realised I don’t really know what the FRC does – maybe it’s not a regulator in which case, being a chair at JP Morgan and also at the FRC, might not be the “fox in the chicken coup” scenario it seems.

I know what the FCA (formerly FSA) and the PRA do or purport to do but I’ve never really looked at the FRC. So I did and this is what it says about its role:

The Financial Reporting Council is the UK’s independent regulator responsible for promoting high quality corporate governance and reporting to foster investment. We promote high standards of corporate governance through the UK Corporate Governance Code. We set standards for corporate reporting, audit and actuarial practice and monitor and enforce accounting and auditing standards. We also oversee the regulatory activities of the actuarial profession and the professional accountancy bodies and operate independent disciplinary arrangements for public interest cases involving accountants and actuaries.

So, not necessarily a banking regulator but certainly a ‘bankers mates’ regulator. I looked up who exactly is subject to the FRC rules and regulations and who pays for this organisation?:

The Preparers Levy

By agreement with the Department of Business Innovation and Skills and HM Treasury, the Financial Reporting Council is funded partly through a preparers levy on organisations that are subject to, or have regard to, FRC regulatory requirements in preparing their accounts. Companies and other organisations subject to the Preparers Levy are:

All companies listed on the London Stock Exchange with a Premium or Standard listing. (So it is a banking regulator as well) All UK AIM and ISDX (previously known as PLUS) Market group companies. All large private entities with a turnover of £500m or more Large private subsidiaries of listed companies are invoiced on the same invoice as their parent company. Global Depository Receipt companies. Government Departments and other public sector organisations

Basis for the Preparers: Levy Section 17 of the Companies (Audit, Investigations and Community Enterprise) Act 2004, as amended by Part 44 of the Companies Act 2006, confers a power on the Secretary of Stateto make regulations enabling the FRC to recover its costs through a levy. Thus far, thispower has not been exercised. The FRC’s responsibilities are funded through non statutory arrangements on the basis of an understanding with the groups subject to the levy. However, should a voluntary approach prove unsustainable, the FRC will formally request that the statutory power be invoked.

I’m not too sure exactly what that means. Do any companies pay a ‘levy’ on a voluntary basis?And what are they paying for? To be regulated? To be protected? To be part of the club? Sounds a bit like a Mafia organisation getting in collection money to me. You don’t know exactly what you’re paying for – but they do. It continues:

The 2014/15 levy is made up of a minimum levy of £992 and further amounts payable by companies above a certain threshold, with the rate per £m declining in five levy size bands……

Anyway, whatever it means, what concerns me is the phrase “independent regulator responsible for promoting high quality corporate governance and reporting to foster investment.” In my opinion, the quality of corporate governance at Lloyds Banking Group or any of its affiliate companies, was anything but high quality. And that is fairly self explanatory by the the many and varied accusations levied at LBG. For example, the customer complaints as reported in the Telegraph:

The ombudsman said Lloyds Banking Group was the most complained-about business group in 2013.” http://www.telegraph.co.uk/finance/personalfinance/money-saving-tips/10674042/Financial-Ombudsman-reports-record-complaints.html

And the latest massive fines levied on LBG for rigging LIBOR:

The Bank of England (BoE) governor has warned Lloyds Banking Group that “clearly unlawful” conduct over fee manipulation may amount to criminal behaviour as it was fined more than £200m”http://news.sky.com/story/1308901/lloyds-risks-criminal-action-in-rigging-case

Or the way it continues to mistreat its staff and persuade them to mistreat its customers:

Lloyds is continuing to pressurise staff to mis-sell credit cards, loans and insurance, a leaked email has revealed – just months after the bank was fined £28million for promoting a ruthless sales culture.” http://www.dailymail.co.uk/news/article-2721448/Secret-email-shows-Lloyds-pressures-threatens-staff-sales-just-months-fined-28m-mis-selling.html

And all of that is over and above the number of shareholders and investors waiting to sue Lloyds Banking Group over the merger with HBOS, the rights issue or just ripping them off in general.

I fail to see the logic of making the man who was chair of a clearly dysfunctional bank right up to March 2014, the new chair of an ‘independent’ body responsible for overseeing good ‘corporate governance’ in May 2014. And to top it off, he’s now the chair of a division of JP Morgan whose ‘high standards’ in corporate governance, beggar belief:

US bank JP Morgan Chase has agreed to a record $13bn (£8bn) settlement with US authorities for misleading investors during the housing crisis. It is the largest settlement ever between the US government and a corporation.

The bank acknowledged it made “serious misrepresentations to the public”, but said it did not violate US laws.” http://www.bbc.co.uk/news/business-25009683

To me, these latest appointments for Sir Win are not just the normal ‘revolving door’ scenario, this time the door has spun off its hinges and is now endlessly spinning at the gateway of La La Land. And, as if this could not get any more illogical, I checked out the other Board members of the FRC and found former members of KPMG and PwC, a managing partner at Clifford Chance, a former MD at JP Morgan, a retired head of E&Y, the Chief Executive of Standard Life and the former Deputy Chair of Barclays, who is now Chair of Legal and General. I kid you not, these are the people who will keep our major companies, corporations and their auditors in check.

Are we ever going to see this madness stop?

And of course I have my own personal reasons for doubting Sir Win’s ability to preserve ethical or high standards. Something to do with the 3 D’s – delay, deny, dilute for 3 years, then a criminal investigation for the next 4 years and a false bank account paying a £1000+ per hour lawyer to ensure (amongst other unethical things) my family were homeless. But that will all come out in the wash.