Tag Archives: Lord Stevenson

“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.

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Justice delayed is justice denied #HBOS

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I wrote this blog on Tuesday 6th October 2015 but I didn’t post it because I didn’t want to tempt fate. Unfortunately fate is doing it’s own thing right now and my premonition was no more than logic. Dressed up in different clothes but all the same, on 9th October 2015 the HBOS Reading trials were put back to September 2016.

There is nothing in this blog that breaches sub judice. This isn’t about the merits of the case it is only about the conduct of the case and I make no mention of the content of the allegations. I would however point out that 9th October was a very very sad and even catastrophic day for a lot of people – but, as always, that seems fairly immaterial to the situation and, as far as I know, no one considered the victims when the case was moved.

Justice delayed is justice denied (written 6th October 2015).

Six years ago today Paul and I finished writing a report for the FSA on the subject of HBOS Reading. At that point we had already been investigating events originating at HBOS Reading (that’s the PC description) for over two years. Also at that time we were living on the bread line, our business had been trashed, HBOS/Lloyds had already tried to evict us about 17 times (22 times in total) and no one was really interested in our allegations of fraud.

In 2010 Thames Valley Police finally started an investigation and 12 people have been arrested. It took until January 2013 for anyone to be charged and the criminal trials were due to start in January 2015. But in October last year, the victims of HBOS Reading were suddenly told the trials had been delayed for a year. They are now due to start in January 2016 – or are they?

Call me a cynic but the articles in the press yesterday about the Chancellor, George Osborne’s intentions to off load £2BN worth of Lloyds shares with various discounts and incentive schemes thrown into the pot, rang some alarm bells. This bargain basement sale is due to have completed by Spring 2016 and I can’t help but wonder if a major criminal trial about events in Lloyds unruly pup HBOS is really going to persuade the public they want to get involved with Lloyds?

Of course Lloyds don’t need to rely on the antics at HBOS to tarnish their reputation. At SME Alliance we see examples of outrageous and potentially criminal bank conduct every day and while it would seem Lloyds can’t actually hold a candle to RBS, they don’t do so well in the popularity stakes. Lloyds have huge issues to address and plenty of group litigations to look forward to. Do they care? According to Rowan Bosworth-Davies, giving a powerful speech at an SME Alliance meeting yesterday, top bankers consider themselves to be a protected species. I have no doubt he’s right and that’s exactly what they believe.

However, what worries me more than the conduct of bankers is the conduct of politicians and the judiciary.

To be honest, if I was George Osborne I would be absolutely desperate to get rid of all and any shares in RBS or Lloyds – and he clearly is. Apparently RBS are now going to buy back their own shares to help the Government out: http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/11900014/RBS-could-buy-back-its-own-shares-to-aid-Government-sell-off.html

Meanwhile Lloyds are now going to become the best thing since SID. Fine, and I really wouldn’t care (because I can see why George is doing it, although the ethics of letting RBS buy their own shares with the money they borrowed from the State, does seem something that would have Mr Micawber turning in his grave) except that, in the case of Lloyds, I have a horrible feeling that all those skeletons Mr Horta Osorio wanted dragged out of the cupboard when he took over as boss, are about to be put back in and even bricked up.

HBOS is a delicate subject in anyone’s book and I suspect the forthcoming book ‘Crash Bank Wallop’ by Paul Moore, the HBOS Whistleblower and a good friend, will be considered by some as being as delicate as the trigger on a hand grenade! There’s nothing the authorities can do about that and I dare say Mr Horta Osorio will react in a similar way to David Cameron when Lord Ashcroft’s book about him came out. In the name of dignity he will just try and ignore it. But it will rankle and it will beg the question “why the hell did Lloyds get involved with a basket case bank?”

Then there’s the HBOS report which apparently some MPs are getting a bit tetchy about. As I blogged the other day, we have been warned about the likely redactions. But in my opinion, redactions won’t be enough. I think it’s likely to be delayed again and, if not, the redactions and re-write’s to protect the great and the good (not Hornby, Cummings, Stevenson or Crosby – I don’t think they are a protected species any more) will mean the report has limited value. We may get something in October as we’ve been promised but I’m guessing the full report, when all the Maxwellisation and Re-Maxwellisation has been completed and enough lawyers have made sufficient money to sail off to the Cayman Islands in a beautiful pea green boat, will appear late Spring and after the Lloyds shares have been sold. And on whose orders?

A lot of people will be eager to read Paul’s book and the HBOS report (believe me, the book will be the better read). However, the victims of HBOS Reading are not waiting to read a book. Not even my book which is about HBOS Reading. We are waiting to get our lives back and we’ve waited a very long time. Given the trials are about events that happened between 2002 and 2007, some of us will have been waiting 14 years by the time the trials are over. And the idea (and it is only a suspicion) that the trials will be moved again to fit in with the Lloyds share sale or for any other reason, makes me feel physically sick. Not only because I am tired, I’ve had enough and I want out of the nightmare this has become – but because I am literally terrified at the idea politicians can manipulate the criminal justice system to suit their ends and those of the 1%!

Surprisingly I have a lot of friends who are lawyers, barristers, QCs and even the odd Judge. They are good people and I know many of them care passionately about justice. They are also common sense people and I know many of them have campaigned against the cut in legal aid and the rise in court costs for people who can ill afford to take on gigantic corporate organisations.

SME Alliance relies on the good advice we get from good people in the legal world – some of our members haven’t always had good advice but we are gradually getting together a very good team. When I explain to my friends how often the Reading trials have hit delays and for how long, they are shocked. I’m not sure our new friend Rowan Bosworth-Davies will be shocked if, for what ever reason the HBOS Reading trials are moved to late Spring. I don’t think my good friend Brian Basham will be shocked nor will Paul Moore be shocked.

I won’t be shocked but I will be devastated. If it happens and I genuinely pray we won’t have another delay, it will cause untold pain, misery and unhappiness for a group of people who are already at the end of their wits. And personally, whatever reason is given for another delay, I will find it hard not to think it is to accommodate George Osborne’s sale of the Lloyds shares. And, were that to be the case (although of course that would never be the reason given) that would be a bad day for democracy and for truth and justice because, whatever politicians do and what ever power they have, they should never have the power to interfere with justice.

 

 

 

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.

Maxwellisation? Enough already.

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So first we had the so called ‘credit crunch’. Bankers all over the world, all paid telephone number fees, ran banks into the ground and brought various economies to their knees. Then we had the bailouts – Governments all over the world and not least the UK, decided the best way out of the ‘credit crunch’ was to give the banks billions of pounds, dollars, Euro’s, you name it, they gave it, to the banks to replace what they lost in their bizarre spending frenzy. And that resulted in mass austerity across the UK, Europe and the US – probably elsewhere as well but I’m not an expert.

Then came the clean up – or the apparent clean up. What happened to cause the credit crunch and how regulators and Governments could ensure we wouldn’t get a repeat performance anywhere in the near future? And how was this clean up done? Well that’s the latest page in the most bizarre story of the 21st century history book – we clean up by burying as much truth as possible and where we can’t – because the public are demanding explanations – we introduce Maxwellisation.

I’ve read various explanations of Maxwellisation and they make as much or even less sense to me as the fateful and long drawn out love affair on the Maxwell House advert. I don’t know what happened in the agonising and tragic story of a love affair that was almost but never quite fulfilled. I certainly don’t know what it had to do with coffee! And similarly I don’t understand how the exploits of Robert Maxwell – who apparently ripped off not just his own company but also pension funds – could be introduced as a legitimate way to stop the rightful exposure of wrong doing?

I may be mad but surely we’ve got it the wrong way around? If our regulators and their third party experts do in depth investigations into situations and come up with explanations, in the form of reports, which finally expose the truth, how can it be right that the people named and blamed in those explanations, can challenge the reports before they are released? Are we saying our ‘experts’ and our regulators may have got things completely wrong? Is it in the nature of ‘experts’ who spend years doing these reports at vast expense to the public, to get it completely wrong? Is that an equation our regulators start with? I don’t think so.

This is like an appeal in the justice system happening before the trial. So the crooks, let’s say for the sake of argument bank robbers, receive the prosecution case and, before a Judge or a jury gets to hear it, half of it is removed because the accused don’t like it or they don’t agree with it. Better still, the accused’s lawyers may be able to come up with legal technicalities as to why the allegations can’t even be made in the first place. So what the Judge or the jury finally get to hear is an edited version of events as permitted by the defendants. Wow, I can see that going down very well with the criminal fraternity. Not a luxury extended to Tom Hayes but surely one the magic circle lawyers will be insisting on for more senior bank management in the future.

As someone who has spent years of my life investigating bank fraud albeit from the perspective of someone who is actually in the rock & roll business, the one thing I know is ‘the written word doesn’t lie.’ Even if people have been deliberately writing lies, the culmination of a proper investigation will just highlight those lies and you will be grateful someone bothered to put the lies in writing as an example of fraud or corruption or, at the very least misconduct or negligence. For example – how could any bank relying on untold amounts of emergency funding from the Bank of England and then needing several billion pounds from the public purse, possibly pretend to investors that it’s a safe bet to plough money into a Rights Issue? But read this absolute twaddle from Andy Hornby back in 2008 http://www.thisismoney.co.uk/money/news/article-1631967/HBOS-chief-Hornby-defends-rights-issue.html and you’ll see that’s exactly what some of them did! Now what part of Maxwellisation can alter those facts?

Better still, let’s remind ourselves of exactly how the great and the good from HBOS and RBS were still trying to pull the wool over everyone’s eyes even after they’d been so instrumental in bringing the Country to the edge of the abyss: http://www.publications.parliament.uk/pa/cm200809/cmselect/cmtreasy/uc144_vii/uc14402.htm

That’s a cracking read by the way.

I don’t know how anyone would do a comprehensive investigation into why we went into the Iraq war although logic would say the absence of the weapons of mass destruction, which were the reason for so many tragic deaths, raises some terrifying questions. But in the case or RBS or HBOS, it’s just not that complicated. If two music publishers can expose a massive fraud in HBOS and if certain members of SME Alliance are supplying the Times with evidence of massive issues in RBS, how can the FCA and their ‘experts’ be so endlessly challenged on their findings? The whole thing smacks of the dreaded ‘D’ word – deals. Deals to hide what really happened in our banking sector. Deals to protect the so called great and the good. Deals which, rather than give the public some sort of closure on what happened and show who was responsible, will just ensure the same or worse happens in the future.

There is no point in Maxwellisation – it’s apparently not a legal requirement and all it is doing is staving off the inevitable. If either of these banking reports ends up as another whitewash, there’s a whole army of people out there who will challenge them. Journalists, whistle blowers, small organisations like SME Alliance, Move Your Money and Bully Banks – not to mention various forthcoming trials (criminal & civil) which will shed more light on the reality. Clearly, if the FCA keep delaying their reports or if they allow the truth to be watered down, others will happily set the record straight.

I would say, from a public perception, Maxwellisation should really be called Orwellisation. We are continually walking backwards to Orwell’s views of 1984. The important difference is, there was no social media in Orwell’s world. No twitter or Facebook or Linked In. And unless the powers that be can wipe out the world wide web, Maxwellisation is actually and ultimately just like the coffee advert – long, drawn out and a fantasy. We’ve had enough fantasy when it comes to real people’s lives. Just like the cream always goes to the top of the coffee,  the truth, as Hillsborough has shown us, also has an amazing way of coming out on top and Maxwellisation won’t change it.

Surely the public have been on the receiving end of too much abuse from bankers without this latest trickery? Let’s just get on with it please, let’s publish these reports and stop all this nonsense. As a very good friend of mine would say – enough already!

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.

Ming the Merciless v Flash Gordon. What made Britain a ‘State of Anxiety’?

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I very rarely watch films in bed – mostly because the television in my bedroom is ancient and prone to turning itself off half way through a film. Or you get the picture but no sound – very frustrating. However last Monday (Bank Holiday), with both daughters and granddaughter away and as it was bucketing down with rain, I ended up staying in bed to watch Flash Gordon and the TV, in charitable mode, actually worked. I’ve never watched this film all the way through and every now and then, I enjoy watching something deliciously ridiculous. So a pleasant morning.

But my mind always strays whatever film I’m watching and something Ming the Merciless said to Flash, made it stray again. Ming suggested he would like to have Flash on his side and he would give him an entire planet of his own where Flash could rule over everyone, in exchange for his loyalty. The planet was Earth and Ming confirmed he would do such terrible things to the planet prior to handing it over, Flash would not recognise the people on Earth. “You’ll make them slaves” Flash suggests? “Let’s just say they’ll be satisfied with less” Ming replies (that’s from memory, so don’t quote me but you get the gist).

It made me think of the relationship we earthlings have with our so called ‘Masters of the Universe’ in the financial sector. There was a time when we, as the customer, expected and even assumed the people running banks were decent, professional, ethical and even helpful people. Just like the people on the adverts and a bank manager was such a pillar of the establishment, he could even sign your passport. As for the CEO or Chairman of a bank? They were, quite naturally, beyond reproach.

Times have changed radically and, while I don’t suggest the majority of employee’s in the financial sector are intentionally bad people, most of us don’t bat an eyelid now even when we hear how banks (bankers) are laundering money for Mexican drug cartels, manipulating LIBOR or screwing their customers every which way. Worse than that, we seem to have accepted the ridiculous myth no-one is personally to blame for any criminal conduct in the banking world and senior bankers should still get bonuses for running what are, in some cases, organised crime syndicates. How did that happen? When did we accept becoming a banana republic?

One of the things we are possibly all agreed on – and even bankers – is how over extended credit was a major contributory factor to the credit crunch. People with low incomes were encouraged to take on mortgages they couldn’t afford; banks were issuing credit cards like they were ‘Smarties’; businesses were getting massive loans and; even students with no incomes were offered big overdrafts. Of course no one had to accept any of these loans but, in a consumer society where “credit is good for the economy” was the motto of the day and, as the rise in house prices became totally out of sync with what people earned, many people did. And while some of the public pushed themselves to the absolute maximum in the borrowing stakes, the banks, who based their bonus structures on loans, went even further.

Then the crunch came and suddenly the huge and fundamental difference between the people (who the banks had willingly lent money to) and the banks, became horribly transparent. The banks got all or most of the money they lost back from the taxpayer (the people) on the grounds they would re-float the economy – which they didn’t do. Meanwhile the people had no one to bail them out and, almost overnight, this situation was exacerbated when the banks started aggressively demanding back the money they’d lent consumers. It was a double whammy – the credit crunch caused mass austerity on the one hand (cuts in every aspect of public funding except MPs and bankers’ wages) and, on the other hand, not only did future credit dry up, the terms for existing credit were harshly altered – although the terms and conditions which enabled this were always in the small print, tucked away discreetly for a rainy day.

I’m not talking about PPI or LIBOR or IRSA or even major bank frauds here – just how the basic principles of the bank / consumer relationship, changed. The banks, who were so eager to extend credit one day, were demanding it back with menaces the next. And the methods they’ve used over the last 6 years are often akin to those used by the playground bully. Here’s a couple of examples:

Bank of Scotland has been ordered to compensate a customer for harassment after it made an astonishing 547 calls to recover a debt. http://www.moneysavingexpert.com/news/banking/2013/07/bullying-bank-ordered-to-pay-up-for-harassing-customer-know-your-rights

‘You have 24 hours’: Devastating tape reveals how RBS accused of bullying warned struggling chain of chemists it could call in the administrators http://www.thisismoney.co.uk/money/news/article-2516063/Tape-reveals-RBS-warned-chain-chemists-administrators.html#ixzz3BaDHrbWr 

(Sorry – the above link, is temporarily not working)

Every bad thing about banks got horribly worse after the historic events of October 2008 when Gordon (Brown that is, not Flash) and his chums created a completely different pecking order in the country he was supposedly running as a democracy. And sadly, I have to conclude the end result has caused Britain to be a ‘State of Anxiety.’

Fear has always been an efficient if immoral tool to control large numbers of people. People who are frightened tend not to ‘rock the boat.’ Most of us don’t have grandiose ambitions and it’s the idea of losing the simple basics in life we’ve worked hard for, that cause the greatest fear. Therefore, regardless of how bad the game has become, we keep playing it. We don’t worry about getting run over by a bus because we don’t think it will ever happen. We don’t worry a meteorite will smash into earth and we’ll be obliterated because we know there’s nothing we could do about it. But the idea of losing your family home for instance, is a situation that cripples people with fear. I know because I’ve been through 22 eviction hearings. My particular case, or cases, were complicated and I can’t go into detail because of Operation Hornet and sub judice. But whatever the reason anyone is staring eviction in the face, the sickening fear of it becoming a reality, is always the same. It’s debilitating and crushing.

So paying your mortgage to keep your house is a number one priority which means, at all costs, you must keep your job (even if you hate your job because the new corporate order means you are asked to do things you feel are morally unacceptable). Paying that mortgage to the bank is definitely going to keep you playing the game.

But what happens if you lose your job because your employer was one of the thousands of SME owners who have been sent to the wall (administration or liquidation) by the banks who have unethically demanded long term loans be paid back overnight? Or if you worked for an SME that was a creditor of a company forced into administration which has, as a consequence, then hit the wall itself? What happens if, through no fault of your own, there is no job to pay the mortgage?

In those instances it’s an amazingly short scenario to the really basic problem of things like food. Benefits are few and far between these days (cutting those on benefits also cuts the numbers of unemployed). Who would have believed hundreds of thousands of people in Britain would have to rely on food banks? How frightening is it when you have to rely on charity to feed your family? And it happened so quickly – austerity, job losses, benefit cuts and food banks.

I could go on – electricity, travel costs, school fees, health care, old age with inadequate pensions…. what it all adds up to is anxiety and fear for a lot of people. And when people live with fear, just keeping your head above water is a priority. Questioning why you are in that situation becomes a secondary consideration – first you have to survive.

Meanwhile, the masters of the universe most responsible for where we are – what’s happened to them? In the majority of cases they have just continued to receive mega fees, bonuses and pension pots for failing with vigour. Should we feel sorry for the likes of James Crosby, who lost his knighthood and even had to forego a third of his six figure pension pot? I think most people don’t even care. Their own personal angst totally and reasonably excludes the bigger picture. Which is very convenient for those who do their best to make us forget how we got to where we are.

The comments from Ming the Merciless made me think – has the aftermath of the credit crunch brow beaten us all to the point we ‘except less’ and ‘accept the unacceptable’? Is this why we don’t shout and scream when shareholders (including the taxpayer), who’ve already lost a fortune in banks like HBOS, RBS and Lloyds, see millions of pounds being paid in fines for criminal conduct in banks as opposed to holding CEOs and Chairmen to account for what happens on their watch? Is this why we unbelievably seem to accept one law for the masses and one for the elite? Much as I hate the very idea, I think that may well be the case and I even wrote to David Cameron asking for him for some clarification on this point:

Dear Mr Cameron,

I and many other people were stunned by the quotes from the chief executive-designate of the Prudential Regulation Authority, which were reported in the Daily Telegraph yesterday (December 14th, 2012).

Mr Bailey seems to have confirmed that, irrespective of their criminal actions, banks are not only “too big to fail”; they are also “too big to prosecute”. In an interview with the Telegraph, Mr Bailey said that prosecuting banks and by implication their executive and non-executive directors,

“would be a very destabilising issue. It’s another version of too important to fail. Because of the confidence issue with banks, a major criminal indictment, which we haven’t seen and I’m not saying we are going to see… this is not an ordinary criminal indictment.”

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 ……..

……..If justice is indeed now a ‘private members’ club’, then it is to up to you, Mr Cameron, to explain this to the British public. And, as I am sure you are aware, there is a real danger that the country will descend into lawlessness if the law is unevenly applied and enforced. If you really intend proceeding down the path seemingly advocated by Mr Bailey, then you risk going down in history as the Prime Minister who did more than any other to undermine the legitimacy of the British state……

http://www.ianfraser.org/dear-mr-cameron-if-bankers-are-above-the-law-we-need-an-urgent-explanation/

I have never had a reply to my letter and the lack of reply speaks volumes.

My point: Has the so called ‘credit crunch’ worked out badly for everyone? Or has it enabled some very sinister aspects of society to come to the forefront and control us all via economic fear? I think that is exactly what’s happened. “He who pays the piper calls the tune.” Here’s the definition of that saying from the Cambridge Dictionaries on line: “said to emphasize that the person who is paying someone to do something can decide how it should be done”

There is no doubt the banks can afford to pay the piper – and how crazy is it our elected representatives gave the banks that money from the public purse? They gave the banks so much money, it seems even Governments can no longer call up a good tune these days.

Of course, in the film (and the comics), Flash Gordon never gives in to the likes of Ming. He risks everything to save the world. I can’t help feeling our modern day equivalents, who endlessly profess to be fighting for the greater good (especially running up to elections), have gone completely off track – and they only ever seem to save the inhabitants of La La land – which is a very small island somewhere between the Cayman Islands and Monte Carlo. Don’t get me wrong – I’m all for capitalism – who doesn’t want to be rich? I lived in a Communist Country for two years and it was like – well actually it was similar to what we have in Britain now – some very wealthy and very arrogant people suppressing the rights of ordinary people. We have the same kind of lunacy now masquerading as democracy. If it was just happening in a cartoon or a film, I would maybe call it deliciously ridiculous. In real life, it’s not the least bit entertaining and it’s very disturbing. And not least because the authorities we all thought we could rely on (after all we vote for them), are the very people who are allowing this absurd situation to continue. Where will it end?

BTW, you may remember, at the end of the Flash Gordon film, a random hand reaches out and takes the ‘all powerful’ ring Ming wore. Clearly Ming wasn’t really dead and was just biding his time before having another go at world domination (there’s always one). I am reliably informed Ming the Merciless is currently residing in La La Land rent free, in exchange for doing a bit of consultancy work for the great and good.

Bank reform or tokenism? Rule No 1. “Don’t ever side with anybody against the family”.

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I don’t particularly like August. It doesn’t mean holiday time for my family – it just means a month when Paul and I can make little progress towards ever having a holiday because everyone to do with the HBOS scam we’re determined to see exposed, is on holiday. Still, this year August has at least given me some quiet time to continue with my book, which is going well. I can even say I’m enjoying writing it now even although it is taking me back over some very dark times including 22 eviction hearings because, for HBOS/LBG, screwing my business wasn’t enough and they wanted my home as well.

I’ve put as much humour as possible into the book because, as in the ‘Wolf of Wall Street’ story, I can see that what people really enjoy knowing about, is the excesses and madness of the banking world. They want to be entertained and disgusted at the same time – which is maybe why the ‘Wolf of Wall Street’ is a rather one sided story or ‘romp’ that focused entirely on events in ‘La La Land’ but totally ignored the effects banking or bankers have had on the rest of the world. All the same, the film was entertaining and, let’s face it, some of us might give bankers a bit more latitude if they looked like Leonardo de Caprio. But it also made me worry and contrary to what I have previously considered possible, I’m beginning to think maybe bankers are indeed starting to achieve Mafia status? We can’t control what they do but we can make great films about them. Well, if that’s the way we’re going, let’s do it – I have just the script. Although casting could be a bit of an issue with our Britbank villains.

However, there is one overwhelmingly depressing thing that really pains me while I’m writing the book about my own experience with banks and bankers – over the last 7 years and despite bucket loads of rhetoric from Governments, regulators and the endless committees who have, apparently, investigated the causes of the ‘credit crunch’, nothing has changed. Nothing at all. And that’s bad.

I have this horrible gut feeling that, while everyone, including bankers, insist that what we all want is a better banking system devoid of excessive risk, dodgy derivatives and dubious standards, actually, what the banking world really want is to carry on with “business as usual.” In reality, what’s happening now is an even bigger whitewash than all those we’ve already had. While the headlines insist bankers are about to get their comeuppance and even the SFO are threatening to investigate bank malpractice, behind the scenes and very casually, the right people are being put into the right places to make sure the cracks in the walls get a new round of sticky plaster. The ‘revolving door’ is quietly turning again. But moving the chairs around on the Titanic, didn’t do any good after the last credit crunch and moving the same chairs again, won’t stop another crash. Yet again, we have senior bankers acting as regulators – it doesn’t work.

For example, looking back many people, including me, would say HBOS, in the years running up to the credit crunch, became an absolute basket case of a bank. With hindsight even PCoBS, the TSC and the Regulator, would have to agree. Point 137 (page 44) from the PCoBS report into HBOS (HBOS – An Accident Waiting To Happen. April 2013) concludes under the heading of “Conclusion – a manual for bad banking”:

The downfall of HBOS provides a cautionary tale. In many ways, the history of HBOS provides a manual of bad banking which should be read alongside accounts of previous bank failures for the future leaders of banks, and their future regulators, who think they know better or that next time it will be different. We will ourselves seek to draw further lessons from the case of HBOS as we frame recommendations for the future in our final Report. http://www.publications.parliament.uk/pa/jt201213/jtselect/jtpcbs/144/144.pdf

You can take your pick of damning extracts from the FSA Bank of Scotland Public Censure Report (March 2012) but I think point 4.14 explains a lot about the seemingly star struck Exec’s of BoS and their ‘risky’ management:

In relation to large leveraged transactions, these deals involved lending over £75 million or a substantial equity investment which meant they had to be sanctioned by the Executive Credit Committee. There was a significant increase in the volume and complexity of deals that this committee approved during 2006 and 2007. There were 199 approvals of lending in excess of £75 million in 2006 (which represented total

lending of £56 billion), which increased to 361 such approvals in 2007 (which represented total lending of £96.2 billion). There were 56 approvals of lending over £250 million in 2006 (which represented total lending of £36.2 billion), which increased to 110 such approvals in 2007 (which represented total lending of £64 billion. The size of these transactions meant that any default would have a high impact on the book http://www.fsa.gov.uk/static/pubs/final/bankofscotlandplc.pdf

I’m interested in that extract because it confirms how the excessive loans to companies like Corporate Jet Services Ltd 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 had to have been authorised by very senior people in the Bank and not, as LBG would have us believe, by a regional bank manager. But in truth, it wasn’t just BoS that was running amok – it was the whole of HBOS. But the FSA didn’t censor HBOS and maybe because the CEO of HBOS held a senior position in the FSA ?

I remember having a conversation with Bill Sillett (the named respondent for any queries about the Censure Report) who visited Paul and I in April 2012. I asked him back then why the Report only covered the period from 2006 to 2008 when I know for a fact HBOS was acting like a fruit loop from at least 2002. Here’s his reply, taken from my notes of the meeting 11th April 2012:

BS spoke briefly about the time scales of the FSA report and why they chose the period 2006 to 2008. He said Crosby was effectively out of the bank in that period. He said they chose that narrow remit because going back further could have involved another year of work.

I think “Crosby was effectively out of the Bank in that period” is highly significant. Obviously, had the report highlighted poor management of BoS when Crosby was the CEO of HBOS (parent of BoS), it would have caused a few red faces for the FSA. But what I still find amazing is – Mr Crosby may have come out of the Bank in 2006 but, from November 2007, he went from being a Director of the FSA to Deputy Chairman – and that was in the same period when HBOS was already under heavy scrutiny by the Bank of England. And even when the proverbial hit the fan in October 2008 and HBOS got the secret £25.4BN, apparently no one in the Tripartite Authority felt it was inappropriate for Sir James, as he was then, to continue on as the Deputy Chair of the Authority most responsible for regulating banks!

I make the point in my book:

Aside from the fact the people advising the Bank of England on how to cope with various banks losing hundreds of billions of pounds were predominantly bankers (from commercial banks), I’m very confused by the fact Gordon’s chum, Sir James Crosby (now plain old Mr Crosby), the former CEO of HBOS until mid 2006, managed to retain his position of Deputy Chairman of the FSA right through the credit crunch, the bailouts and beyond? Did Gordon Brown realise the FSA were supposed to monitor the Banks so that such disasters couldn’t happen? Had he even heard of the FSA I wonder? (NEXT PASSAGE REDACTED)……..

……..So why did JC keep his position with the regulator? Possibly it was so his friends in high places, like Gordon Brown and Alistair Darling, who appointed him to oversee Government projects, wouldn’t get egg on their faces. In 2006 Gordon appointed JC to lead a ‘Public, Private Forum’ on Identity theft and in April 2008 Alistair Darling appointed him to advise the Government on how to “improve the functioning of the mortgage markets.” And then, of course, there was his knighthood in July 2006 for services to the financial industry.

Oh well, water under the bridge now and Sir James did eventually resign from the FSA in February 2009 when the allegations made by Paul Moore in 2004, could no longer be ignored. Although according to both the FSA and James Crosby, his departure was nothing to do with Paul Moore. Here’s a statement from La La land, as reported by the BBC 11th February 2009:

Sir James said in his statement that HBOS had “extensively investigated” Mr Moore’s allegations, concluding that they “had no merit”. Mr Moore was the former head of risk at HBOS.

“I nonetheless feel that the right course of action for the FSA is for me to resign from the FSA board, which I do with immediate effect,” Sir James added.

The FSA said: “[The] specific allegations made by Paul Moore in December 2004 regarding the regulatory risk function at HBOS were fully investigated by KPMG and the FSA, which concluded that the changes made by HBOS were appropriate.”

“It should also be noted that the FSA’s concerns about HBOS’ risk management framework considerably pre-dated the allegations by Mr Moore,” the FSA said in a statement.

Excuse me? The FSA’s concerns about HBOS pre-dated Paul Moore’s allegations and – what did they do about it? They made the CEO of HBOS a Director of the FSA in January 2004 and then promoted him to Deputy Chair. Confused – you should be.

Here’s the point – as at today’s date, the Chairman of the FCA, which took over from the FSA, is now John Griffith-Jones, who held the position of Chairman of KPMG at the time Mr Moore made his allegations and who must have sanctioned the report refuting those allegations. And, because, some would say that in the corporate world at least, “incest is best”, KPMG were also the auditors of HBOS at the time they prepared the report. I share the concerns of Ian Fraser – none of us should be reassured when the financial industry is so keen to ‘Keep it in the family.’ In June 2012, Ian wrote:

I was surprised and exasperated to learn last week that chancellor George Osborne has rubber-stamped the appointment of John Griffith-Jones, the senior partner of KPMG, as chairman-designate of the Financial Conduct Authority, one of the two financial regulators that will take over from the soon-to-be-disbanded FSA. As the news of this “revolving door”,“poacher-turned-gamekeeper” appointment sank in, my disappointment bordered on outrage.

http://www.ianfraser.org/financial-regulation-with-griffith-jones-appointment-britain-keeps-it-in-the-family/

I was equally outraged Ian – and I begin to wonder what kind of ‘family’ the big banks and their auditors belong to? The Corleone family?

Meanwhile, over at the FRC, Sir Win Bischoff, former Chairman of Lloyds Banking Group (the parent of HBOS), has taken the post of Chairman while simultaneously becoming the Chair of a division of JP Morgan. You could not make it up!

I put up some details the other day about the history of the great and good on the Board of the PRA. https://spandaviablog.wordpress.com/2014/08/12/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/

Question: in the same way I sincerely doubt Sir James Crosby (as he was) was ever seriously going to let the FSA rumble the many and varied dodgy scenarios going on in HBOS while he was Deputy Chair, does anyone really believe John Griffith-Jones or Sir Win Bischoff are the right people to head up our regulators? Is Win Bischoff ever going to expose anything really bad that happened in Lloyds under his watch? Is Griffiths-Jones going to take action against KPMG or the HBOS audits under his watch. Is the forthcoming report into the failure of HBOS really going to highlight anything that would compromise those members of the ‘family’ who are still active?

Are we really on the road to reform in our banking sector – or have the powers that be, just made moved the chairs on the Titanic yet again and put the same established and reliable old foxes in place to guard the chicken coups? In my opinion, all this talk of reform is just tokenism.

I am fully aware the PRA are in the process of preparing the report on the failure of HBOS. I am also aware – as is Paul Moore – they fully intend to exclude issues that were fundamental to the Banks’ failure. Apparently, some of the really catastrophic or even criminal conduct in HBOS, is not considered relevant and consequently, is not part of the PRA remit. Yet again, they are not going against ‘the family.’

Do the crime – the shareholders pay the fine. Painless. But does crime pay for Lloyds Bank?

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Talking to my twitter friends in the last few days, some of whom are in the process of taking legal action against various banks, I begin to wonder how much money banks are paying in legal fees these days? And I’m also wondering how much it would cost them to simply compensate people making serious allegations against them as opposed to going to Court? Would it be cheaper? Who knows but in cases where the evidence is indisputable, it would certainly help a bank’s reputation.

But no – in so many cases, they just insist black is white or rather, they get their very costly lawyers to say it for them. And even a simple letter can cost them a fortune, depending who writes it.

For example, over the past 7 years, I’ve lost count of how many letters Paul and I have had from the various legal firms in HBOS/Lloyds employ and quite a lot of them have come from Denton Wilde Sapte (now called SR Dentons), on behalf of Peter Cummings, Lord Stevenson, the Boards of HBOS and then LBG. And, because Paul and I have apparently upset the Bank so much with our allegations, those letters came from the then Deputy Chairman of DWS, Rory McAlpine (he’s left Dentons, so we haven’t heard from him for quite a while). Not only that, he also trooped up to the Cambridge County Court 6 times at enormous cost to the Bank, or rather it’s shareholders, in an attempt to secure our eviction – which fortunately, didn’t happen and in which he was not instructed.

Mr McAlpine is no lightweight in the legal world and, as top lawyers and certainly Partners in the big law firms, demand and get top dollar, those letters will not have come cheap: Britain’s biggest law firms are shamelessly exploiting the maxim that “you get what you pay for”, with hourly fees at record levels of £850 an hour, according to new research. Independent 26 November 2013 http://www.independent.co.uk/news/uk/home-news/justice-costs-fury-as-lawyers-fees-top-850an-hour-8965339.html

Admittedly most of the legal letters we’ve had from HBOS or Lloyds Banking Group, have been quite short (it takes a limited amount of words to say bugger off) but, as the letters they were replying to were generally rather long (we were trying our hardest to give them the full picture of what was going on in their HBOS Reading branch), it’s fair to assume that, between receiving instruction to write on behalf of the Bank’s Board, then reading our letters and writing the reply, Rory would have spent a couple of hours per letter. That’s at least £1700.00 per letter. Okay, so letters from someone like Mr McAlpine (who now advises Mr Abramovich) were always likely to be fairly costly but, even junior lawyers in the magic circle law firms get charged out at £450 – £500 an hour these days. Lets say £900 per letter. Then multiply that by 1000? 10,000?

Here’s some stats from Moneywise: In the last six months of 2013, Lloyds bank were the most complained about bank with 40,500 complaints going to the Financial Ombudsman; 2nd came Bank of Scotland, with 39,134 complaints to the FoS. http://www.moneywise.co.uk/news/2014-03-04/lloyds-tops-list-most-complained-about-banks

Erring on the side of caution, it would be fair to say about 150,000 people complained about Lloyds TSB or BoS in 2013. Many of those will have got the bog standard, in-house letters to say get lost but, assuming 20% merited at least one letter from the likes of Dentons or Herbert Smith or who ever is currently flavour of the month, at £900+ per letter, that works out at £27M – from one Bank.

Then add the fines – including the fines for handling customer complaints badly. In 2013, the FSA fined Lloyds Banking Group and BoS a total of £32,343,800.00. And that money was paid for (of course) by the shareholders. Did it do any good? Apparently not, because on 28th July this year Lloyds bank Plc and BoS were fined £105M for “serious misconduct relating to the Special Liquidity Scheme (SLS), the Repo Rate benchmark and the London Interbank Offered Rate (LIBOR). http://www.fca.org.uk/firms/being-regulated/enforcement/fines

As part of the ‘agreement’ reached, Lloyds also had to pay £62M to the Commodity Futures Trading Commission and £51M to the Department of Justice in the USA. And to top it all off, the bill for PPI payments from Lloyds has almost reached £10BN: The cost of the payment protection mis-selling scandal has hit more than £22bn after Lloyds Banking Group said it was setting aside an extra £1.8bn to compensate customers. It takes the cost for Lloyds alone to just short of £10bn after the bank, which is one-third owned by the taxpayer, revealed the extra costs in a surprise trading update less than two weeks before its annual results announcement.
http://www.theguardian.com/business/2014/feb/03/lloyds-ppi-compensation-bill-10-billion-pounds

Then there’s the various shareholder groups waiting to sue the Bank with group actions (one group is apparently suing for £4BN) and, of course, the many SME owners who are due compensation for the many and various ways their businesses have been destroyed by the Bank.

My point is: surely we have reached the stage where banks and bankers should start realising ‘crime does not pay.’ Yes it may have worked for years for the Mafia and Organised crime syndicates but they don’t have to worry about their reputations. If anything, their crimes have been glamorised by the media and the public and, whatever atrocious crimes they commit, end up, sooner or later, as blockbuster movies or spectacular TV series. But what works for Tony Soprano (RIP) just doesn’t work for bankers. Villains or professional criminals work with the motto “if you can’t do the time, don’t do the crime.” Bankers, on the other hand, seem to have a motto of “we commit the crimes, the shareholders pay the fines but we always get our bonuses.” People are getting sick of it. Bankers make lousy bank robbers, they get caught all the time and worse than that, our regulators make lousy sheriffs, they do eventually catch the robbers but only penalise the victims (shareholders).

I read an article today by Mark Kleinman, Sky News, where he quoted Antonio Horta-Osorio saying:

“Enforcement and fines have an important role as a credible deterrent against future misconduct.
“But the new rules will potentially reverse the burden of proof where individuals are guilty until they prove themselves innocent in the eyes of the regulator.
“I worry that this could incentivise people to do nothing, as they could waste their time trying to create a paper trail rather than doing what they should be doing, focusing on customers.
“Secondly everyone makes mistakes. If you do a major thing wrong like causing the failure of a bank you should be held accountable for the decisions that you made. But we need to separate the major mistakes from the small ones which will always happen.”

I totally agree Mr H-O, everyone makes mistakes – but that’s where we part company. The mistakes Lloyds Bank sees as “small ones”, are actually the mistakes that ruin people’s lives. And, in the case of the many SMEs that have been totally trashed by HBOS/Lloyds, was that a mistake or was it, as it seems with GRG, a deliberate policy?

I get it that many of the mistakes Lloyds are dealing with now, were in relation to BoS, HBOS or the former management of Lloyds Banking Group but, unfortunately, it’s your watch now Mr H-O. In my opinion, it would be much better for Lloyds Bank to really deal with the skeletons of the past and then go back to traditional banking. The way things are going, a few more major fines, a couple of big group actions by unhappy shareholders, a lot more SME owners suing the bank and a few thousand more of those £900 legal letters – there won’t even be enough money left to buy hay for the black horse. As things stand, the only winners are the lawyers, who must be thoroughly satisfied with ‘bank conduct’, because its making them a fortune. And don’t get me started on auditors and administrators, who seem to be doing as well if not better than the ‘consigliere.’

p.s I wrote this blog last night (Friday 15th) and the first thing I’ve seen on twitter this morning is another article in the Daily Mail about the horrendous sales culture in Lloyds Bank. What’s wrong with this Bank? Is it trying to lose customers? And, considering the ongoing sales culture, how did the Bank manage to include the following in last year’s annual accounts (page 43 of Lloyds Banking Group 2013 results):
Conduct Risk:
Principal risks

As a major financial services provider we face significant conduct risk, including selling products to customers which do not meet their needs; failing to deal with customers’ complaints effectively; not meeting customer expectations; and exhibiting behaviours which do not meet market or regulatory standards.

Mitigating actions

Customer focused conduct strategy implemented to ensure customers are at the heart of everything we do.

Product approval, review process and outcome testing supported by conduct management information.

Clearer customer accountabilities for colleagues, including rewards with customer-centric metrics.

Really?

My new blog starting with the HBOS/Lloyds Merger and the HBOS Rights Issue

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After a very long break I have finally got around to making a new blog site – or at least I’ve got around to asking my daughter to make one for me. I haven’t been too lucky with the last couple of sites about HBOS. I had to take one site down when Thames Valley Police started their investigation into HBOS Reading – because all the blogs were about HBOS Reading and contravened sub judice. So I started a new site with slightly less specific blogs but it was still mainly about the misdemeanour’s of HBOS. And one particular blog I wrote resulted in a rather menacing phone call from an ex HBOS banker and an even nastier virus being attached to the site which contaminated any reader’s computer. So it had to go.

Anyway, third time lucky and I won’t waste time explaining what I’ve been doing since I took that blog down, I’ll move straight on to a subject that is becoming more and more prominent in the news (not that it ever went away) – the merger between Lloyds and HBOS and the legality (or not) of the HBOS Rights issue. I will just add however that I have been busy writing a book about HBOS and while I can’t publish it until next year when the criminal trials re HBOS Reading should be over, I can publish some non-specific extracts from the book as well as some of the research for it – which I have done below.

Recently someone very kindly pointed me in the direction of a document published on the Bank of England website about the Emergency Liquidity Assistance (ELA) HBOS and RBS received in October 2008. It’s a fascinating document and it clarifies some of the myths about how and why the HBOS-Lloyds merger happened. I wanted to share it with Paul Moore as I know he’s also writing a book about HBOS called ‘Crash Bank Wallop.’ To save him having to read the entire document, I extracted some of the key points in relation to the merger and the HBOS Rights Issue. I hope these points will be of interest and of use to others. All the writing in italics is from the BoE document and all the comments I’ve added are entirely my own views:

Some key points from the Bank of England report on ELA to HBOS & RBS. Oct 2012.

21. …..The judgement as to whether or not to activate ELA in 2008 needed to address three core criteria—that the potential failure of the banks in need of support should be judged to be a threat to systemic stability; that the banks receiving support should in a broad sense be solvent; and that there should be a feasible exit strategy from the ELA— …….

22.The second criterion of solvency is never easy to assess because difficulties in funding can quickly transmute into impairment of solvency. But for both banks in 2008 there was a concrete path to future solvency on which the Bank could base its decision to extend ELA. In the case of HBOS, the path to future solvency at the point ELA was extended appeared to be the merger with Lloyds TSB that had been announced on 18 September 2008.

So HBOS was insolvent in the run up to the merger and, as such, wasn’t eligible for the £25.4BN it got in ELA. And the only way around this problem was to merge HBOS with a more solvent bank. I guess Lloyds TSB pulled the short straw and I imagine even the “not given to superlatives” Eric Daniels, would no longer say the merger had a happy ending for Lloyds, its shareholders or even for him. In my book I’ve described what happened as follows:

“Consider this scenario – a previously successful business man who, due to bad judgement and excess, becomes a drunken vagrant, goes into a bank and asks for a huge loan to tide him over a bad period. He tells the bank manager he has no assets, loads of debts and is currently destitute. However, he wants the loan on the grounds he will soon be moving in with his mate down the road and that will solve his problems. His mate is minted and will pay off all his debts even although this means they will both end up strapped for cash. Would he get the loan?”

98. As noted above, the run on Northern Rock marked a step-change in the level of the Bank’s engagement with individual banks and it is clear that the Bank, and indeed the other members of the Tripartite, were fully aware of the vulnerabilities of HBOS prior to its need for ELA in October 2008. By September 2007 the Bank was receiving what it felt were more appropriate data from the FSA, at any rate on banks identified as more vulnerable, including daily liquidity reports from the FSA on HBOS (as well as on Alliance & Leicester and Bradford & Bingley).

The Bank of England were monitoring HBOS on a daily basis by Sept 07 – such was its vulnerability. But, in their trading statement December 13th 2007, Andy Hornby commented:

“HBOS is set to deliver a good full year outcome despite the dislocation in global financial markets. We continue to build on the strengths of our UK franchise and are seeing real benefits from our investment in targeted International expansion.”

And on the subject of capital and funding, Mr. Hornby said:

“Our capital strength, the quality of our retail deposit franchise and the diversity of our earnings continue to underpin confidence and support for HBOS in the wholesale funding markets. Our move to lengthen the maturity profile and diversity of our funding in recent years, and our policy of not over-paying during this time of intense competition for funds and capital, is consequently being rewarded.”

http://www.lloydsbankinggroup.com/globalassets/documents/investors/2007/2007dec13_hbos_trading_smt.pdf

101. From late-2007, the Tripartite authorities began contingency planning to map out possible options for resolving HBOS should the key risks facing it crystallise. There was heightened monitoring of HBOS from March 2008 after the emergency sale of Bear Stearns on 16 March and after an unfounded market rumour that HBOS was receiving emergency assistance from the Bank caused a sharp fall in HBOS’s share price on 19 March. At this stage the Bank was considering in detail the consequences of HBOS, like Northern Rock the previous September, being unable to fund itself in the markets.

In other words, by March 2008 the BoE & the FSA absolutely knew HBOS was broke and yet they still let them proceed with a misleading Rights Issue!

102. By mid-April 2008, although still work in progress, a comprehensive contingency plan had been prepared by the FSA, in conjunction with HMT and the Bank. This contingency planning explicitly recognised the possibility of the Bank needing to undertake some form of ELA in the event of wholesale markets beginning to close to HBOS. Although by May the immediate threat to HBOS appeared to have receded somewhat, in part because it was able to utilise the SLS launched in April, the Bank continued through the summer closely to monitor HBOS’s liquidity strains on a daily basis as HBOS endeavoured to scale back assets and increase deposits in order to reduce its reliance on wholesale funding. In the event, wholesale funding became increasingly difficult as the maturity of funding available to HBOS shortened, progressively increasing the ‘snowball’ of funding that had to be rolled at shorter maturities. With the failure of Lehman Brothers on 15 September, HBOS’s position rapidly became untenable. When it finally needed to seek ELA from the Bank on 1 October, the approach did not come as a surprise and the Bank was able to respond rapidly.

That paragraph completely omits the author’s own statement in paragraph 9: “HBOS announced a £4 billion rights issue on 29 April, but only 8% of the HBOS rights issue was taken up by private investors in July, with the remainder being left with the underwriters. ”

Here’s an extract from an article written by Ian Fraser in January 09 re the rights issue:

“At the meeting at which shareholders were persuaded to vote in favour of the rights issue, in Edinburgh on June 26, the HBOS chairman said: “The rights issue is absolutely right and will put us in a competitive position.”

He added: “We are saying performance will be satisfactory and resilient. Armageddon may happen and we should be prepared for it and we are.”

And he said: “We are telling the truth; we are truthful people. But if we weren’t, there’s an army of regulators, auditors et cetera to make sure we are.”

My conclusion

The Directors of HBOS, the BoE, FSA and the Treasury, were fully aware when the Rights issue was announced that; the Bank was insolvent but for the fact it was receiving substantial funding from the SLS (Special Liquidity Scheme) as of 21st April 2008 – 8 days before the Rights Issue. By 1st October HBOS was forced to go to the BoE to get Emergency Liquidity Assistance (ELA) which they got and which peaked at £25.4BN on 13th November 2008. This funding was kept secret until 24th November 2009, by which time HBOS was part of Lloyds Banking Group and investors in both HBOS and Lloyds TSB, had lost their money.

Here’s the link to the whole document: http://www.bankofengland.co.uk/publications/Documents/news/2012/cr1plenderleith.pdf