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

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

Original blog of 26/09/2011

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Can anyone save Greece and, while we’re at it, can we also save Mozzarella from EU lunacy?

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Having lived in Italy both pre and post the European Union, I’m surprised this EU marriage of assorted incompatible countries, which was definitely not a marriage made in heaven, has lasted this long. Historically, European Governments (and certainly in Mediterranean countries) have had enormous difficulty in efficiently running their own economies – so the idea that a central Government, run by bureaucrats from innocuous offices in Brussels could manage them all, was always a Panglossian scenario doomed to end up with one country or another or several ending up in the stew.

I don’t doubt there was some good intention behind forming the European Union. Open borders, one currency, easy trading – but it was always tenuous. We live on an Island and our only neighbours are Scotland (and that’s going well!!) Wales and Ireland and even those relationships are littered with dissent and the demand for independence. All the same, we just about manage to stay together under the heading of Great Britain and we have done for many years. But the relationship between the Italians, French, Germans and the Spanish (to name but a few European neighbours) prior to the EU, was frequently as collaborative and friendly as rival Pitbulls. The idea that Europe would unite and merge cultural and economic identities under one banner and one rule was always quite extraordinary.

Neither was it properly considered. Due diligence would have told anyone we are so culturally diverse in Europe, any collective rule book would have been as useful as a manual on aerospace technology for three year olds. The idea that Greece or Italy (for example) would conform to the same rules as Germany or France was just daft. I lived on the Italian French border for many years and the difference between Ventimiglia and Menton (about 5 miles distance) was so enormous it was just like entering a different country – because it was! What part of signing membership to the EU changed that scenario?

In my opinion the EU was never about what was best for people and always about what was best for the financial sector. And sooner or later it was always going to become impossible for voters in any country to have confidence in a system designed solely to feed the banks to the detriment of all else.

If the IMF decide in their wisdom to lay the blame entirely with the Greek people for this crisis, then I suggest they will find find they have a similar crisis with Spain and Italy (for starters) in the very near future. Even if (as the media would have us believe) Greeks really are the laziest and least trustworthy people in Europe – by whose standards are we judging them? By German standards? Are we saying Greeks are different to the Germans or the French and therefore they must change? Do the Greeks want to be like the Germans or the French? Or do they just want to be Greeks? Was the Greek economy on a sure footing before they joined the EU?

Ah but, I can hear people saying, in that case, they shouldn’t have joined Europe and borrowed so much money which they can’t pay back. And who engineered that situation? And who monitored it? Surely the top economists rounding up European countries for membership had some inkling that Greece was not economically stable – so how exactly did they qualify? As anyone in business (and especially the banking sector) knows, numbers on a page can be rearranged to tell a hundred different stories to a hundred different readers and someone obviously did some exceptional fantasy accounting for Greece. And who ever was regulating these figures somehow failed to notice two and two was never adding up to four.

Some might say it’s rather like the mess RBS or HBOS/Lloyds got themselves into which went (apparently) completely under the radar of the UK regulators. While the bank bosses were telling the world and his wife they were absolutely solvent, the truth of the matter was always bound to come out – they were completely broke and deeply in debt. Of course what happened there was the UK tax payer bailed the banks out even although it caused mass austerity. To add insult to injury, in the UK we continued to plough our banks and our top bankers with money and we refused (unlike Iceland) to hold anyone responsible for the catastrophe the banks caused. We even kept the obscene bonus system going.

Banks across the world were falling like nine pins during the so called ‘credit crunch’ and in the majority of cases the big banks were bailed out because they were “too big to fail.” Countries, it seems, are not. Fair enough – so Greece first and who is next?

The Greeks got themselves into this mess and now they can get themselves out of it is the attitude of the EU leaders. Although I can’t help feeling that the biggest offence Greece has committed against the EU has been to suggest it won’t be dictated to. How dare they tell EU leaders they won’t meekly submit their people to years and years of austerity and misery while they concentrate on pouring every possible Euro they can into paying off a debt that, realistically, is beyond repayment without some write offs? There has been a definite issue of ‘face saving’ here and the EUs big bosses have not taken kindly to the idea that the Greek people could have a say in economic affairs they clearly know nothing about! How many times do the ‘people’ have to be told “leave politics to the grown ups!” Hmmn – I think what they really mean is “leave politics to the bankers” who, as we all know, must continue to be paid millions of pounds for a job well done!

But Greece isn’t the only country in financial turmoil. And obviously the biggest issue with letting the Greek people have a say in their future is (God forbid) other economically badly behaved Europeans may follow suit. Worse still, when the European elite have finished blaming all the people of Europe, they may have to wake up to the fact the people of Europe are getting restless and some of them no longer care what a bunch of bureaucrats in Brussels think. If the EU was run so well and regulated so well, why isn’t it an overwhelming success? Could it be the so called credit crunch was the fly in the ointment? Could it be the financial sector has had a big hand in this problem? Could it be that the big banks like Goldman Sachs (busy doing God’s work) just saw Europe and its populations as a delicious example of cannon fodder? And especially countries like Greece. Sun, sea, chaos, corruption, no taxes – did the EU not know that was the deal with Greece? Did they think people joining the EU and the Euro would automatically abandon their Mediterranean heritage get into straight lines?

Culture with all its good points and its failings is still the very thing that make Europe unique. A host of countries with a completely different way of life dating back hundreds of years. If you wanted to go to somewhere very well organised with fantastic motorways and possibly an over fondness for pork, you went to Germany. If you wanted to go somewhere where life is very laid back, prone to siestas and fiesta’s and with very good fresh fish, you went to Greece or Italy or Spain. You changed your money and deliberately set off to visit somewhere completely different to your own country with different shops, food, habits, architecture and lifestyle. What was wrong with that?

Clearly something was because we now have a system where EU countries must now conform to a bland similarity based on nonsense rules that are totally open to abuse. And apparently some abuse the rules more than others – well there’s a surprise. But I wonder who are the greatest abusers in a decade where corruption is so wide spread? You can get it anywhere these days but some nations hide it better than others and some are better at managing it. Take the UK? Some would call it the money laundering centre of the world – but in EU negotiation terms, butter wouldn’t melt. In my opinion, turning Europe into a franchise of one big corporation like MacDonald’s was never going to work. You were always going to end up with hamburgers containing snails, garlic, anchovies, sardines, sauerkraut and “don’t worry, I make lamb.” Bankers may have thought all European countries would perform unilaterally if they all had the same currency – they couldn’t have been more wrong.

Europeans are ultimately all Nationalists – even the Brits, look at the somersaults the UK Government did to keep Scotland British. You can’t tell Greek or Italian or, heaven help us, the French or German people how to live. You can try and bribe their Governments with grants and loans and swaps, and it all goes swimmingly while there’s plenty of money to dole out. But when the coffers in one country run dry and other richer countries start imposing such harsh austerity people risk losing their shirts, is it surprising we all start remembering we’re individual nations again?

We don’t have the Euro in the UK and that is our saving grace. Love him or hate him David Cameron does put the British point across in his negotiations with Europe and they have to listen. Despite our internal conflicts (Scotland, the power the banks have, austerity blocking justice) we do at least have our own currency and therefore a bigger hand in running our own economy – and even if it’s a mess, neither the Germans nor the French can dictate what’s best for us. Maybe the Greek leaders have realised (before the rest of Europe does) that the views of the people they rule are more important than the corporations who just think they’re so important. Maybe the Greek people just want their country, their dignity and their identity back. And whatever it costs them now, might be less than it costs them (or other EU nations) in the future. Bankers, in the name of the EU, have run riot over Europe in a bulletless war for too long now. Maybe the Greeks are right to fight back?

One final example of why I believe the European Union is ultimately doomed. It’s a small example but it clearly shows the dangerous level of interference the EU wields over national heritage. Last Wednesday I was talking to a very good friend who lives in Ventimiglia. I used to live there and I remember the border coming down. So I was asking my friend how Ventimiglia was coping with the thousands of migrants stranded there because the French have now very definitely put the border back up so the immigrants can’t just wander over to Monte Carlo or St Tropez.

However my friend, who is a great foodie, was intent on telling me about the latest crack pot EU regulation. Check out this headline: http://www.telegraph.co.uk/news/worldnews/europe/italy/11704323/Italy-EU-request-for-powdered-milk-in-mozzarella-is-attack-on-cultural-heritage.html

What meddling jobsworth came up with that idea? Is this really the kind of rule the EU was set up to introduce? Does anyone really want to be associated with such idiocy? Oh for the days of bent cucumbers, irregularly shaped tomatoes and interesting foreign currency.

I will keep praying for a miracle solution for the ordinary Greek people caught in the middle of these power struggles. Obviously, at this stage, only a miracle will suffice.