Tag Archives: PwC

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

25th March 2015

Dear Fellow Shareholder

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

  1. I’ve never had a reply.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

But will it be? Big question:

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

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

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

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

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

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

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

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

#SME Alliance – giving SMEs a voice. #nooneisabovethelaw

Following on from yesterday’s Indy article about the HBOS Rights Issue, can we at least stop subsidising fraudulent conduct in banks?

Tom Harper’s excellent article questioning whether or not investors were given key financial facts regarding the HBOS Rights Issue in 2008, provoked some serious outrage on the ‘Twittersphere’ yesterday – and quite rightly so. http://www.independent.co.uk/news/business/news/hbos-accused-of-misleading-the-public-over-4bn-rescue-9701791.html

I don’t suppose the Government, Lloyds, the Regulator or the BoE will be happy with that line of investigation. Not least because it opens the door to a whole torrent of questions about how many other transactions, involving state subsidised banks, have been less than transparent?

And perhaps the biggest question will be – was the information in the Lloyds/HBOS Merger proposal, as accurate and transparent as it should have been?

I am sure Lloyds bank will say the HBOS Rights Issue was nothing to do with them as it pre-dated the merger. But in order for the Merger Proposal to be correct, it should have contained watertight data about the financial state of HBOS – which, reading Tom’s article, I’m not sure it could have? I’ve looked at the Proposal and it relies on financial accounts for HBOS and Lloyds TSB dating back to 2005 – although conveniently, it only relies on unaudited accounts for HBOS in 2008. Not that it makes much difference because, sadly and to add weight to yesterdays article, the Big 4 auditors appear to have been equally confused as to the solvency of the banks despite the audited accounts, as shown in another excellent article by Ian Fraser, November 2010: http://www.ianfraser.org/connolly-i-do-believe-that-auditors-performed-well/

What I find really upsetting about all this was brought home this morning by an article from the Positive Money site (following up on an article by Jill Treanor in the Guardian). The article dates back to December 2013 and explains, in very clear and simple terms, how banks continue to be subsidised and why. https://www.positivemoney.org/2013/12/uk-banks-benefited-38bn-big-fail-state-subsidy/ And of course, if we are still subsidising the part state owned banks – we are also subsidising bankers’ bonuses – which, considering neither Lloyds nor HBOS have managed to comply with the terms and conditions of the 2008 bailouts, seems entirely unjust not to mention bonkers. In a letter I received from the Treasury dated 15/05/09, Lloyds and HBOS agreed to meet the following terms:

A range of conditions are attached to the recapitalisation package. Lloyds TSB and HBOS have agreed that over the next three years they will maintain the availability and active marketing of competitively priced lending to homeowners and to small businesses at 2007 levels. They will also provide support for schemes to help people struggling with mortgage payments to stay in their homes and the expansion of financial capability initiatives. The remuneration of senior executives will follow strict guidelines – both for 2008 (when the Government expects no cash bonuses to be paid to board members) and for remuneration policy going forward (where incentives schemes will be reviewed and linked to long-term value creation, taking account of risk, and restricting the potential for “rewards for failure”). The Government will also be consulted on the appointment of new independent non-executive directors…”

Joining up all the dots, I begin to get a very clear picture of La La Land and it’s not pretty. As I am definitely a layman in these matters (albeit a fairly well informed one), I thought I’d take this opportunity to share my view of what’s happened over the last few years.

Round up of events in La La Land.

In 2008 and after exceptional spending sprees by both the banks and the public, the proverbial finally hit the fan and many banks ran out of money. The Government, terrified they’d have a repeat of the Northern Rock débâcle, gave the banks billions from the taxpayers’ coffers. As this resulted in mass austerity, the Government were loath to let anyone know exactly how bad a shape some of the banks were in (some were insolvent) and they certainly didn’t want the public to know the exact details of the billions being handed over, so they did their best to keep it all quiet. They (and the banks) even kept it quiet from the people being asked to invest in the banks via rights issues and/or sanction the HBOS-Lloyds merger, although they didn’t have to keep it quiet from institutional investors, because they were ‘in the know’ and had no intention of investing in insolvent banks.

The banks took the money but totally ignored the social responsibility that went with it (terms and conditions) in the same way they ignore little things like money laundering laws or Principle 1 of the FSA Principles of Business: A Firm must conduct its business with integrity. Actually I struggle to see how most banks comply with any of the FCA Principles: http://www.fca.org.uk/static/documents/handbook-releases/high-level-standards136.pdf Section 2.1

However, after the credit crunch the banks could no longer be seen to lend with reckless abandon (which was a bit annoying, as they rather liked basing bonuses on inflated loan books), so they invented other reckless and ingenious ways of making money – e.g crippling the SME sector and stealing assets. Best of all, having totally screwed up and taken everyone’s money, they came up with their most ingenious plan to date – they sold us all the simple concept that – if we didn’t allow bankers to keep taking bonuses, they’d walk away – and then we’d all be screwed. To make sure that dreadful day never comes, we continue to subsidise banks so they all live happily ever after.

That sounds like a pretty dark fairy story and the darkest bit is – it’s not a fairy story. So I hope somewhere, someone in authority (not mentioning any names Mr Tyrie) will have read Tom Harper’s articles, Ian Fraser’s articles and I’m hoping Max Keiser will invite Paul Moore back on the Keiser show to talk about the appalling behaviour of HBOS, Lloyds and other banks. Because, crazy as is it and despite all the rules, laws and regulators we have, I think our best chance of getting banking reform is to report bank misconduct to the media and then spread the word via Twitter? Of course, that could ultimately do enormous damage to some banks but I can see little alternative to this course of action. It’s a huge problem that while we definitely do have regulators, it seems La La land is out of their jurisdiction – which is the obvious reason they cannot do anything to penalise errant bankers.

*Here’s a thought – if we’re going to rely on journalists to clean up the banking world – maybe we should be paying our financial journalists (and their research teams) more and getting rid of regulators? We’d save a fortune and get some results.

Anyway, what upsets me most about all this is how we continue to let ourselves be mugged and my point is: If banks are intent on continuing to cheat their customers, destroy SMEs and refusing to compensate the people they defraud while insisting they still get huge bonuses – fine. It seems there’s little we can do about it. But can we please, please stop subsidising this conduct?

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

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

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

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

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

The Preparers Levy

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Are we ever going to see this madness stop?

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