Tag Archives: SMEalliance

Maxwellisation? Enough already.

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!

So 5000 SMEs supported the Tories but who will support 5M SMEs?

For some reason – and I can’t for the life of me understand what the reason is – in the recent election debates, none of the political parties have raised the issues of banks (you know the ones that caused mass austerity) bank misconduct (PPI, IRHP, EFG’s, Libor rigging, GRG, HBOS Reading, money laundering for drug cartels etc. etc) or the related issues of law and order and a two tier justice system. You know, the one whereby the majority of crimes committed by anyone in our financial sector results in no one going to jail and shareholders paying hefty fines for the “get out of jail free cards”.

Apparently none of this conduct and none of these issues are relevant to the election and we don’t need to know what the parties intend to do about them – if anything?

It’s been suggested (and probably rightly) that politicians feel such a minority of the population has been directly affected by such issues, it’s not worth making a big deal about them – not really a vote winner.

I just want explain why I think that is a total misconception. It affects millions.

On Monday the Telegraph ran an article about the 5000 SME owners who have signed Baroness Brady’s letter and pledged their support to the Conservative party. Personally I don’t think that was a very wise PR tactic because the obvious question is, who do the other 4,995,000 support? However the point I want to make is – according to the article 5000 SMEs represents 100,000 jobs.

According to the FCA, more than 60,000 SMEs were mis sold IRHP (Interest rate swaps): http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/10527353/FCA-chief-warns-Treasury-swaps-scandal-could-be-significantly-bigger.html

So by the logic of Baroness Brady’s letter, that would represent 1,200,000 jobs.

Recently, Clive May, a builder and founder member of SME Alliance, successfully got an admission from RBS that they had miss-sold EFG loans and were now investigating 1800 of them: http://www.thisismoney.co.uk/money/markets/article-2915335/Relief-fierce-critic-RBS-admission-mis-selling-loans.html

That’s another another 36,000 jobs and of course it’s the tip of the iceberg because a lot of banks were ‘mis-selling’ EFGs and, before that, SFLGs. According to Government statistics 1,740,736 EFG loans were drawn down between November 2008 and November 2013. Obviously, or should I say hopefully, not all of them were miss sold. But even working on the calculation only 10% were (and I think I’m being generous there) that’s still 174,073. Assuming (again hopefully) only 10% of that number resulted in SMEs being fatally damaged, that’s still 17,407 SMEs which, according to yesterdays statistics, equals approx. 348,000 jobs.

You see where this is going? Add to those figures the victims of asset stripping etc etc and you won’t get much change from the fact at least 100,000 SMEs who employed approximately 2,000,000 people, have been affected by bank misconduct. And that’s a conservative estimate. If you then add all the SMEs who were creditors of the failed businesses and who then had their own difficulties, the picture is very bleak. When I was investigating the HBOS Reading debacle, I started keeping a chart of the creditors affected and I gave up when I reached 20,000 – most of whom were SMEs.

All of the above wouldn’t be so devastating but for the other key issue being ignored in the election debate – justice and law and order. If SMEs could rely on the regulators, we may not feel so anxious to know what the political parties are planning to do about access to justice. But we can’t. I’m not going into detail here – but I can assure you that in the majority of cases, we can’t.

Neither can most of us afford civil litigation – and especially now when court fees have gone up to £10,000 while legal aid is all but non existent for SMEs. And, leaving aside court fees, in my view many SMEs are being seen as little more than cash cows by some legal firms who clearly think their remuneration should be on a par with bankers – regardless of whether or not they get results for their clients. And some, having milked the cow, drop the client the moment the udders run dry.

Where banks have committed criminal offences (and there have been many) we wouldn’t be so worried if we could report these crimes to the police and know justice would prevail. Again, in most cases that’s not an option and, on the odd occasion it does happen, you need to be prepared to wait years for any outcome. Generally speaking criminal prosecutions against bankers remain as rare as rocking horse sh*t and we’ve seen over and over again how banks deal with their crimes – they get shareholders to pay whacking great big fines and that’s the end of it.

Unbelievably our justice system and Governments (Labour and then the Coalition) seems to turn a blind eye to the fact so many crimes are going unpunished. Unbelievably, we, the public, have come to accept that status quo. There is now indisputable evidence bankers are not subject to the same laws as ordinary people. Additionally, SMEs know even when they can prove (and even in a Court) that a bank destroyed businesses, it doesn’t necessarily mean anything will be done about it: https://derekcarlylevrbs.wordpress.com/. Seems some banks are as cavalier in their view of a Judges power, as they are in politicians power.

I know I’ve waited 8 years for justice and it’s still not on the horizon. I know many members of SME Alliance are in the same boat. And those bankers who are deliberately perverting the course of justice by denying or burying criminality they are fully cognisant of, are still being given telephone number bonuses to continue this charade. Yes, Dave, Ed, Nick, we know all of that.

What we don’t know is: WHICH POLITICAL PARTY WILL ADDRESS THESE MATTERS AND SUPPORT SMES? #Justasking

But it’s never too late for someone to tell us. Who knows, maybe at the 11th hour one of the political parties will pull the cat out of the bag and show some support for the thousands of SMEs that have been ravaged by banks and who are really struggling to get justice.

And that could be a big vote winner.

BTW Before some annoying troll posts on twitter that neither I nor SME Alliance speak for or represent the views of all SMEs – I totally agree. That’s hardly the issue – this blog is about which politicians will speak out for SMEs – and will they do it before the election?

SME Alliance meetings at EMM Law and Metro Bank. A really brilliant day!

IMG_8976Yesterday was a double whammy for SME Alliance – we had a morning meeting sponsored by EMM law http://www.emmlegal.com/meet-the-lawyers/kate-mcmahon/ on the subject of Private Criminal prosecutions and an afternoon meeting sponsored by the Metro Bank. I didn’t attend the morning meeting (no room at the inn) so I can’t say a lot except we’ve had some really good feedback and we’d like to thank Kate McMahon and her team at Edmonds Marshall McMahon for their hospitality and for explaining how the process of Private Criminal Prosecutions works. Hopefully Andy Keats, who set the meeting up for us, will blog about it in the very near future.

The afternoon meeting at the Metro bank also went brilliantly. Derek Granville, our host, was our first speaker and he explained both the ethos of the Metro bank and the way they work. Two things in particular were music to the ears of our members. First – they don’t want to sell you financial products. So no PPI, no swaps and no other dodgy, so called, insurance. Secondly the Metro Bank is completely deposit funded and there is no wholesale funding. So they are not reliant on the ‘money market.’ Sophie took loads of notes of the whole meeting and we will post all the main points Derek made as soon as she has typed her notes up. But I can say a lot of us were very impressed with what Metro bank has to offer and it does seem like they are bringing back old fashioned banking where you know who you’re dealing with and what you’re dealing with.

IMG_9015Our second speaker was Andrew Hilderbrand http://gunnercooke.com/team/andrew-hildebrand/ who is a mediator. And whereas the word ‘mediation’ means an alternative form of bank bullying to some of our members, Andrew very eloquently put the case for positive mediation. As many members pointed out, it’s not always the case you can get a bank to consider positive mediation as they’re used to having everything on their terms. However, tying this in with our report to Andrea Leadsom where we suggested ‘FOS Plus’ would require banks and clients to ‘mediate’ early on in the process of dispute resolution, Andrew’s brand of very successful mediation would work very well. Will blog in more detail soon – or better still I’ll ask Andrew to blog.

Our last speaker was Lindsay Whitelaw from Urica. This company offers a very different type of factoring. I have never thought much about factoring except when people call to talk about Bibby (which they often do) but what Urica is offering sounds very different and very positive. The difference with ordinary factoring is Urica requires no personal guarantees and only checks the credit worthiness of the creditor. Anyone who uses factoring services should check Urica out: https://urica.com/ As their website says – “It’s not invoice discounting because that’s just debt by another name.” So it’s an interesting concept and a very new business model.

IMG_8990

Overall it was a great meeting with many new faces including people I’ve been talking to for years about HBOS, Lloyds, bank fraud, SME issues, but I’ve never met. And both Jon and Nick invited some interesting guests. But as always it was really great to see all of our founder members there. I know some people came from Scotland, Wales, the West Country and the North of England. Thank you all for making the effort to travel so far to join us. And thanks also to the two new members who felt it was so positive they have offered to sponsor us.

I will blog again over Easter in more detail but, if I don’t get another blog out before Easter Friday, Happy Easter to all and many thanks for your support. Who would have thought we could achieve so much in such a short time???

p.s I don’t know what time everyone left the Shakespeare’s Head where networking was still going strong when the Turner crew left about 7.00pm but I’m guessing Weatherspoons like SME Alliance!

Apathy International. Does anyone really expect HSBC or wealthy tax evaders to be prosecuted?

I had an interesting conversation on twitter last night with someone I don’t know from Canada – although I think he is British. The very topical subject was “why are wealthy people guilty of tax evasion not prosecuted?” And right from the start of the conversation my twitter friend, let’s call him Bill, made the point that in his view it would cost so much money and take so much time to prosecute them all, it would be counter productive. The cost would be more than the gain.

Bill is probably right. Tracking down the thousands of people identified by the Swiss Whistle blower (and let’s face it, as he says, his list is the tip of the iceberg) would cost a fortune and would probably result in very lengthy criminal trials where the only beneficiaries would be the lawyers. And Bill compared the situation to the gun amnesty used in the US. Hand in your unlicensed gun and we’ll say no more about it. Here the equivalent would be throw the tax man a few thousand pounds voluntarily and we’ll call it a day. I say a few thousand because, in the same way it wouldn’t be cost effective to prosecute these people, I can’t imagine HMRC have the manpower or even the will to do full on investigations into how much is actually owed?

My point was (and is) even considering the logistics of this situation, how can a democratic country ditch the law in the case of one section of society because it’s not cost effective to enforce law? Tax evasion is against the law and nowhere does it say “unless you are part of a rich minority who has been advised by your bank to shunt your money offshore.”

I also made the point HMRC will go through hell and high water to prosecute so called benefit cheats or even people on low incomes who may have been overpaid and then can’t pay it back. Similarly SMEs will be hounded for perceived VAT or tax issues and, if the man in the street doesn’t get all his tax returns in precisely on time and to their satisfaction, HMRC will be very efficient in sending out demands for what they calculate is owed or hefty fines. They also have no compunction about prosecuting for a few hundred pounds if they feel it is due. And that happens to thousands of people.

Bill made the point it doesn’t make any difference whether you cheat the tax man of £50.00 or £5M – it’s still against the law. I agree. So why do I have this horrible feeling you are less likely to be penalised for the £5M than the £50? And the same seems to be true of money laundering or other economic crimes. Big banks money laundering for drug cartels just get hefty fines paid by their shareholders but no one goes to jail. Here’s an extract from my book about HBOS (to be published in the dim and distant future) on these criminal but curiously acceptable transactions:

And by the way, how does that happen? It’s common knowledge now that certain banks have done these totally illegal deals and, yet again, no one in any bank is to blame and instead, the shareholders have paid massive fines as a penalty for bankers conduct. But if no one’s to blame, how do the deals get done? Do the bosses of the drug cartels phone a special ‘money laundering’ call centre and listen to an anonymous voice giving various options: “Please dial 1 for drug deals, 2 for arms deals or 3 for off shore tax evasion. To hear these options again, please dial 4.” Or do the Banks have departments which deal specifically with these ‘dodgy transactions’ and where the staff work in the secure knowledge no one will ever go to jail for criminal deals because bankers are above the law?”

Then there’s other proven fraudulent products like IRHP – another fine. Out and out asset theft from SMEs – another fine. PPI, EFG, SFLG, it’s becoming like a game show – think of an acronym and the contestants get to guess the appropriate meaning and the applicable fine. Winner gets two weeks in the Caymen Islands all expenses (and of course taxes) paid by the FCA. But if you or I were to commit any deliberately fraudulent act to turn a quick profit, you could expect and get the full force of the law to come into force.

However, taxes and financial crime aside, what really disturbed me about my twitter conversation which, by the way, I thoroughly enjoyed because I love a good debate, was the apathy involved. While Bill agreed with me we shouldn’t have a two tier justice system, his very logical approach was, as Tony Soprano would say, wattayagonnado? We are where we are and there’s little we can do about it – apparently.

I am pretty sure the members of SME Alliance would not agree. Most of them (me included) have been victims of the many and varied banking scams which have devastated SMEs. Most of us have been fighting for justice for what seems like a lifetime and sometimes pretty much is and we are, putting it politely, extremely angry at the way banks, who have caused us so much damage, are never penalised except with shareholders fines. Neither are they obliged by the regulators to repair the damage done. So when we hear about people with very healthy off shore bank accounts, organised by their bank, becoming immune from prosecution, we are anything but apathetic, we’re furious. It’s another slap in the face of the British justice system and another reason we are losing faith in it.

But, being honest, I think back to my life before the consequences of fraudulent bankers and their associates kicked in – was I even aware of our two tier justice system? Admittedly inequality has got worse since the so called credit crunch but, if my business hadn’t been sabotaged and had instead fulfilled its full potential and made millions of pounds, would I be seriously concerned about the conduct of the likes of HSBC and its tax dodging clients? Would I be calling for prosecutions? Or would I be taking the rather detached and very logical approach Bill takes?

We have a saying in our house, “you can’t not know what you do know.” And that’s a shame because the things I now know after 7 years of investigating bank fraud and social injustice, very often stop me sleeping at night. I didn’t sleep much last night thinking it’s possible a massive segment of society may be so oblivious to what is happening to democracy or, more likely, just trying to get on with their own reduced circumstances in austerity Britain, they don’t even care about off shore accounts in Switzerland or Monaco. But I think (or should I say I hope) I would have been aware, albeit to a lesser degree, of the increasing dangers our democracy faces even if I hadn’t experienced the consequences personally. I’m a lyricist and a poet and I grew up listening to Bob Dylan and Joan Baez – so the spirit of protest has always been there. But who knows? As long as the comfortable remain comfortable, will they rock the boat? Hmmn. While apathy is, on the one hand a powerful tool for the State, it’s also a powerful tool for the individual conscience.

“If there is nothing I can do about injustice, no one can blame me for doing nothing.” It’s a scary concept but one that has helped permit every shameful human catastrophe.

Anyway, I don’t know what the resolution is to the HSBC tax evaders or the many other tax evaders who were no doubt advised by other banks. Quite frankly, I think those banks must be bricking it in case their own whistle blowers come forward. I agree with Bill, it is impractical to think HMRC can or will prosecute all of these people. But, and remembering this year sees the 800th birthday of the Magna Carta, if we are truly a democratic society, I cannot see how Government, or the appropriate authority, cannot prosecuted them? After all, one person has been prosecuted and surely that has set the precedent? And what was so special about that case? Seems a bit harsh – thousands do it but only one pays the price.

I wouldn’t like to be running this Country. Whatever good intentions any of our politicians have, there seems to be an endless barrage of obstacles in the way of good governance and most of those involve the necessity to compromise and close their eyes to the kind of corruption that is swamping the Country. Hard, I imagine, not to just go with the flow for the 5 years they are in power. And hardest for those in power as opposed to those in opposition where it’s easy to shout foul (especially if you have a short memory)!

If anyone thinks they have the answer to the current problem – is it possible to prosecute every criminal act in the financial system and the associated activities like tax evasion, I’d be happy to hear it and I’m sure many politicians would as well. If we did take this route, we’d have to build a lot more prisons because financial crime, without doubt, is more epidemic or contagious than the flu and we have no jab for it. We seem to have no cure for corruption.

I leave you with a poem I wrote in 2003. I rarely inflict poetry on my blog readers but this one seems entirely appropriate.

Apathy International

I am a member of

Apathy International.

I am working my way up in the company

and should shortly become

a bored member.

Membership was free

and just slipped onto my shoulders

during a raging storm,

like a comfortable old raincoat.

The effects are almost unnoticeable

as is everything else now.

And, as in all such large organisations,

only non members receive active attention,

so I fully expect to disappear completely and painlessly any day now.

(Which I really can’t worry about).

But late at night I wake up

terrified

as a distant but unfiltered image of raw gaping wounds stabs me

and I can hear the hideous cackle of the devil’s favourite shareholders

and I recognise the voice of our beloved CEO crooning

and I think I will implode with panic.

But in the grey reasoned morning light

I think –

what could I do? Nothing.

So I don’t –

except to gently fondle my membership badge.

© Nikki Turner 2003

Bad Saturday – Twenty people with teacups can’t stop the flames of the next credit crunch.

Not a good start to a Saturday. First the post arrived and it was one letter with a barely legible hand written envelope to Mr P Turner – well done to our postman for deciphering the address. All the same we could see immediately who it came from because of the Royal Courts of Justice stamp on it. We were surprised because we don’t have a pending case in the Courts. What we do have is an indefinitely stayed case regarding our never ending eviction hearings. It’s stayed pending the outcome of the HBOS Reading trials which were due to start in January 2015, were moved to September 2015 and, a couple of weeks ago, were moved again to 2016.

For those reading this who don’t know anything about Paul and I, we have spent years investigating and exposing a major bank scandal. It took us from mid 2007 to September 2009 to get the regulator involved and then another year to get the police involved even although we reported it in December 2007. For our troubles, HBOS and then Lloyds Banking Group tried to evict us 20 times and on their last attempt a Circuit Judge allowed it and refused us permission to appeal. So our last hearing was the second of 2 in the High Court where we were asking for and then granted permission to appeal. That was in August 2010. However, by this time the police were involved and the first arrests in the case were in September 2010. So in December 2010 the Bank asked us to agree to an indefinite suspension of any eviction hearing on the grounds both we and they were witnesses in criminal proceedings – it wouldn’t do for witnesses to be fighting each other. That’s where we are – on hold until the criminal trials are over and God only knows when that will happen – although thinking about it, God probably doesn’t know either.

Anyway, the letter, or rather the form from the Courts this morning, informed us that our case is now closed and we have 14 days to retrieve our paper work or it will be destroyed.

This could mean one of two things: First, a clerk in the court, tasked with filing, has seen the date on our case and assumed it must be over, or sorted, or in any event not going ahead because it’s dated 2010. I might make that assumption myself in the same way I would have assumed the HBOS Reading trials would have been over 4+ years after people were arrested. And if this is the case, which I hope it is, we simply have to inform the Court our case is not over and is still active.

The second and darker scenario is that this is some form of legal trickery by the Bank to get the case out of the High Court and maybe back to a friendly Circuit Judge. I can’t see why the Bank would do this or how it would be advantageous to them when they could simply carry on waiting for the criminal case to start which could be never? But, while I repeatedly say (these days and as a founder of SME Alliance) that I firmly believe there are good banks and good bankers, sadly I don’t include Lloyds Banking Group or team Horta-Osorio in that bracket. And I am always waiting for their next malicious move.

You don’t hear much about HBOS these days although there was a small flurry of news when it was reported the FCA review into HBOS (like the HBOS Reading trials) has been delayed yet again – until after the election. Well there’s a surprise. But I don’t think this is because anyone in Government or in the FCA/PRA has forgotten about HBOS – we are constantly reminding them it remains unresolved. I think it’s still a priority – or at least burying what happened at HBOS is still a priority.

Which leads me on to the second disturbing thing about this Saturday morning. Included in our e-mails this morning were a couple from our friends at WBUK (whistle blowers) who wanted to share a video on Youtube. The video is of ‘The Spaniard’ interviewing a former employee of the FSA/FCA turned whistle blower. https://www.youtube.com/watch?v=bS5c1FmVL8M

The whistle blower, who almost certainly isn’t called ‘Joanne’, says she worked in the financial sector for 15, 16 years and her last job was to help the FCA write mortgage policy so a financial crisis couldn’t happen again (so she was looking at what happened with sub prime) – I have no reason to doubt what she’s saying. She also says or confirms what a lot of us have felt for a very long time – the regulator is paid for and controlled by the banks.

This is not a revelation and I do remember a senior enforcement officer of the FSA telling Paul and I the FSA BoS Censure Report of March 2012 could have been published two years before it was but for Lloyds stopping it – which was a clear case of the tail wagging the dog.

Ridiculously maybe, even people like me who have battled long and hard with the FSA for 7+ years, still hope there is an element of good intention in the Regulator’s office and that ultimately, it will do what it says on the tin – i.e. regulate, control and, where necessary penalise the banks and bankers to stop them doing more damage to the economy and to society as a whole.

Some would say that is a very naïve view and one I have no excuse for holding but actually, it is essential we hold on to this hope because the alternative is too dark to consider. Which is why I found ‘Joanne’s’ words so depressing this morning. I am a member of WBUK and I know there is no glory to blowing the whistle. Whether you blow the whistle on the MoD, NHS or the financial sector, all you will get for your efforts is aggravation, alienation and sadly, in many cases, persecution leading to serious depression. So I think Joanne would have thought long and hard before she did this interview.

It’s quite hard to hear what she’s saying because it was a telephone interview so I’ve transcribed a couple of extracts:

“….it was all about making sure you work with the banks to protect the banks, not to protect the people. It’s definitely not independent – everything had to go back through the banks, even the wall to wall control by banks – it was absolutely astonishing. I was amazed at the amount of politics that was there and the fact that everything had to be referred back to – did it reflect well on the Government, did it reflect well on the banks – and that was the aim of everything.”

…. and in my opinion there were rules already in place that could have been used to prosecute banks and could have been used to hold somebody to account for what happened in the massive mortgage mis-selling scandals. But they weren’t because nobody had the will to. Because that’s not what we were there to do – we were there to give the impression that’s what we were doing but you weren’t actually supposed to do it.”

I would have transcribed more but it’s too depressing – maybe I will tomorrow. In short, what Joanne is saying is, all the harsh words from politicians, from the Treasury, from the regulators about how bad our banks are and what is being done to reform them, are no more than lip service put regularly in the public arena to deceive us. In reality the banks have been and are still holding all the cards and pulling all the strings. When you go to the regulator with a serious complaint, you are really sharing information with the banks and they will decide how it is dealt with. If Joanne is right in her allegations then Paul and I have furnished the Bank with 35,000 pieces of evidence about HBOS Reading. Not very clever of us.

Back to this morning’s post and Mr HO. I have no faith or trust that the HBOS Reading trials will ever go ahead – I hope I’m wrong but considering Joanne’s words, it seems unlikely the establishment would allow such a controversial story to come out. Similarly the FCA report into HBOS. If regulation is all about protecting banks and not the people, HBOS is a hot potato that at all costs must be mashed to a pulp and then smothered in a gluttonous gravy that makes it impossible to recognise let alone swallow.

While Ian Fraser’s brilliant book ‘Shredded’ (which I would advise everyone to read) exposed the horrendous goings on at RBS, there has been no major criminal case involving RBS bankers which would put Ian’s research in the spotlight and directly in full view of the Court of Public Opinion. Not so HBOS – we’re waiting for a major criminal trial to proceed and a major FCA review to be published. Additionally, there is at least one book taking a very candid look at HBOS waiting to come out and that is over and above the fact no one can doubt, after his years of blogging and articles, Ian Fraser is a font of knowledge about HBOS as well as RBS. Of course all concerned will abide by the rules of sub judice until the criminal trials are over but none of this will fit the criteria of “ did it reflect well on the Government, did it reflect well on the banks” Clearly not. So will the authorities ever allow HBOS to be fully exposed? Probably not.

And if that is the case, the only other place where much of the truth about the staggering misconduct in HBOS would come out, is in a High Court case when and if the Bank decide to re open our eviction hearings – although actually the stayed appeal is our case and we could also reopen it. Our defence in the eviction hearing is entirely based on what happened at HBOS Reading and the conduct of the management of HBOS and Lloyds after Reading was exposed.

So maybe the logic of the Bank and its high powered lawyers is to get our case out of the High Court where it could be as damaging as the criminal trials themselves? Or maybe our post this morning really was a case of a clerk having a tidy up? Who knows? Either way, Paul and I have learned a lot over the last 8 years and we will not be ignoring the Court letter.

I really, really hope that one day soon, someone, somewhere in authority, will decide enough is enough and bring about even a minor change of policy that starts reflecting the interests of the Country and its people over the interests of the Banks. I don’t think that someone will be David Cameron or George Osborne or Ed Miliband. All of this “first and foremost protect the banks” policy, started under New Labour and has progressed under the Conservatives. Sure, there are some really good cross party MPs or even Conservative or Labour MPs – but one swallow doesn’t make a summer and even a really good MP – my friend Clive May’s MP, David Hanson, is a very good example as is Brian Little’s MP, Jim Shannon – can’t change policy on his own.

Maybe Mark Carney who has said “no one is above the law”is the man for the job? And someone told me a while back that John Griffith-Jones is actually one of the good guys and I should talk to him – I would certainly like to and I would like to ask him for his comments on what Joanne has said. I would be so happy to see concrete evidence that actually the FCA considers “consumer protection” and “the reduction of financial crime” of equal importance to “market confidence.” But Joanne’s words make that hard to believe. Especially her comment when she was asked – if Wembley Stadium going up in flames equalled the credit crunch, how many fire engines would she say the FSA used to put the fire out? Her answer was:

….“there was probably a line of twenty people with teacups.”

That is very scary and we should all be aware the only outcome of this situation continuing is the next fire won’t be contained to a stadium.

Many thanks to both the Spaniard at White Rabbit Education and ‘Joanne’, for bringing this insight (or is it incite?) to our attention.

First the Banks – are EU Regs, MOSS VAT & HMRC also trying to kill off UK SMEs?

This is an unscheduled blog because this afternoon I read an article in the Telegraph about a proposed VAT reform which will literally kill off tens of thousands of SMEs. Here’s a link to the article: http://www.telegraph.co.uk/technology/internet/11295953/How-the-EU-is-throttling-online-business-with-idiotic-VAT-reform.html In short, what it says is every SME will have to pay VAT on every digital transaction to EU Countries as of January next year and this will expand to physical transactions in 2016. Therefore, even an aspiring author or musician or photographer selling their ebooks, digital images or mp3s – and maybe with a turnover of £5-£10,000 per annum will have to register for VAT, charge it to their EU customers and submit a mountain of paperwork to HMRC. They will also have to register for UK VAT even although they are exempt and under the threshold.

This begs the question of why we are part of the EU when the adverse consequences seem to outweigh the benefits? And what benefits? Surely one of the biggest benefits was we are free to trade with all our EU partners? Here’s a blog from Andrus Ansip at the EU Commission: https://ec.europa.eu/commission/2014-2019/ansip/blog/euvat_en

The first thing I noticed in the blog was this comment “The change in VAT rules was decided democratically, and after years of discussion, by EU Member States in 2008.” Democratically by who? Given it will affect SMEs so dramatically, I wonder how many SMEs were asked how they felt about it? And assuming it was a democratic process in EU terms, i.e the MEPs sat down over a nice lunch and agreed on this, how democratic were individual Governments and specifically ours, in asking if SMEs agreed? Personally I had no idea this was due to happen – maybe I just missed it? Admittedly I was very tied up exposing bank fraud in 2008 (another crippling tool to destroy SMEs) so I may have over looked it because I couldn’t trade my SME back then (or now). And, trailing through Goggle today, I have found plenty of news about this – although no front page news, so I have been asleep at the wheel but that doesn’t excuse the lunacy of it.

Why have the EU done this? Well according to Andrus, “ As I understand it, one of the aims was to establish a level-playing field for smaller companies. No more picking of low VAT countries by larger companies to gain a competitive advantage over SMEs.” Riggghht! This is to stop companies like Amazon exploiting tax loop holes by basing their digital content sales in Luxembourg. Fair enough, Amazon et.al will now have to pay millions in extra VAT payments. But does anyone really think they will absorb this cost? No. They will simply pass the cost on to the consumer. Not just the cost of the VAT but also the huge accountancy costs involved.

Andrus goes on to say “Now, some small and micro companies are worried about what the VAT changes coming on January 1 mean for them.” You bet they are. “Given that this change was adopted six years ago, Member States should have helped businesses to prepare.” Even if they had – what would that change?

Consider this: Joe Bloggs writes a book, turns it into an e-book and promotes and sells it via his own website. The e-book costs the buyer £2.00 + VAT for EU buyers. He sells 50 books in the UK – that’s OK he doesn’t have to charge VAT although he still has to be registered for VAT if he wants to sell in the EU. He sells 10 books in France, 15 in Germany, 5 in Italy and and 20 in Spain because his Aunty Mavis who lives in Benidorm persuades her friends to buy it. So that’s 100 books and 4 different VAT rates. There is apparently a “one stop shop” which will help with these varying VAT rates but I’m not sure how this works or, if I was Joe (and to an extent I am) whether I would want to take that route or just not sell to EU Countries.

Joe will have to do quarterly UK VAT returns even if he doesn’t charge VAT in the UK (he can just fill in 0 in all the boxes – so that’s not a waste of any one’s time!) and do separate VAT returns for his EU sales (no idea what happens with the rest of the world – is that still zero rated?). But because he does charge VAT for the EU he can deduct any expense relating to his EU sales from his overall VAT. And all this will be broken down and documented in the records of sales Joe must keep for years.

Now Joe, who is an excellent writer but not much of an accountant, could possibly struggle with the various rules and regulations he has to comply with – starting with, does he have to register at all or is what he does exempt? For example, these new rules don’t apply to: “supplies of goods, where the ordering and processing are electronic.”

But they do apply to: “images or text, such as photos, screensavers, e-books and other digitised documents e.g. pdf files, music, films and games…..”

I find that a bit confusing because ordering or processing an e-book is all done electronically isn’t it? So I looked at the section of the HMRC document entitled, “What is meant by electronically supplied?” and it explains: “This covers e-services which are automatically delivered over the internet, or an electronic network, where there is minimal or no human intervention. In practice, this means: Where the sale of the digital content is entirely automatic – for eg a customer clicks the ‘buy now’ button on a website and the: content downloads onto their device – customer receives an automated e-mail containing the content.”

So what part of a customer clicking “Buy Now” on your website and then receiving your e-book to download, isn’t covered in the above? Equally confusing is the section entitled “Examples of Electronic Supplies and Whether They Are Digital Services.” According to the chart, if Joe e-mails a pdf (his book) to someone, that is an E Service but it’s not covered by the new rules. However, if his pdf document is automatically e-mailed by the sellers (his) system or automatically downloaded from his site, then it is an E-Service and he does have to pay EU VAT to sell it in Europe. Hang on – didn’t it also say the new rules don’t apply to “supplies of goods, where the ordering and processing are electronic” or where the customer clicks the “buy now” and automatically downloads?

I won’t go through the rest of the document because I’m confused enough but here it is: https://www.gov.uk/government/publications/revenue-and-customs-brief-46-2014-vat-rule-change-and-the-vat-mini-one-stop-shop-additional-guidance/revenue-and-customs-brief-46-2014-vat-rule-change-and-the-vat-mini-one-stop-shop-additional-guidance

I have a horrible feeling this EU VAT reform will be an absolute disaster for SMEs and it will either cause a lot to just stop trading or, it will cause them to stop bothering to be independent. What will be the point of Joe doing all this hard work (over and above writing his books) when the easiest option will be to sell it on Amazon in the first place and let them do the accountancy exercise? Yes Joe will get less money so Amazon can have a cut and his book will cost more because Amazon will pass on the EU VAT costs to the customers – but at least Joe won’t have a nervous breakdown doing a mountain of paperwork (which will no doubt result in massive fines if he gets it wrong) in order to sell 50 e-books to Europe. And there are 1000’s of Joe Bloggs in this Country who will do the same. I would even advise them to do so. So Amazon et.al could come out of this quite nicely.

Don’t get me wrong, I have two books on Amazon Kindle and it’s a very convenient site for writers. And ironically, I’ve had an e-mail this evening explaining the new charges anyone in Europe will have to pay for my books. But I am very aware small publishers will really struggle with this new system – the same as I would as a music publisher – which I was and would be but for HBOS.

End result? Whereas the internet gave millions of people and SMEs the opportunity to promote and sell their individual downloads all over the world – MOSS VAT + HMRC will now take that ability away. We will end up with half a dozen global platforms to sell digital or physical products across the Europe – and no doubt the world will follow. Sure they will have lots of subsidiaries but ultimately there will be a few Corporates running sales across the internet or to Europe.

The obvious solution was (and you don’t need to be a rocket scientist to work this out) – those digital traders or physical traders in the UK who sell in excess of the UK VAT exemption figure, should charge and, if applicable, pay VAT to the EU in the same way they do in the UK but at a flat rate agreed by the EU community to avoid unnecessary bureaucracy.

I would say to Mr Ansip, Mr Osborne and Mr Darling (who must have agreed this in the first place) that while MOSS VAT may bring in some cash from the big players avoiding tax, it will do them little harm and they’ll simply put prices up. But your new rules will be a disaster for SMEs, for the economy and for the morale of the Country.

For example, I know a young photographer who sells her images digitally and who has already considered the sad fact she will have to put a sign on her site saying – “Apologies, no sales to EU Countries.”

One might almost think our Government’s (present and past) are quite keen to see SMEs throw in the towel. First the banks and now this. What next?

And one last thought, why does Andrus Ansip say “As I understand it….” Surely this is an EU directive drafted in Brussels or Strasbourg wasn’t it? So he should know. Unless it was drafted elsewhere.

p.s If any accountant reading this can clarify what MOSS VAT really means to SMEs, please do post a reply or e-mail smealliance2014@gmail.com . I sincerely hope I have got this all wrong.

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.