It has just been reported that the Wall Street bank, Lehman Brothers, in its final days in September 2008 set up accounting ‘gimmicks’ which falsely gave the impression that its balance sheet was $50 billions stronger than it actually was. and that the auditors, the UK accountancy firm, Ernst and Young, when alerted to this by the Lehman vice-president, “took virtually no action to investigate”.
Everyone agrees that the MPs’ expenses saga is the worst poloitical scandal of modern times. But has it hit the right target? The worst offenders have actually got off scot free. First, flipping homes (i.e. changing the designation of one’ main home into a second home, and vice versa, in order to make lucrative home improvements at taxpayers’ expense and then maximize gain by selling free of capital gains tax) has perversely gone entirely unpunished. Maybe the fact that several members of the Cabinet and shadow cabinet profited handsomely from this wheeze might have something to do with it?
Second, those who bought large houses (and sometimes very large houses) as their second homes not only had the taxpayer pay well above average levels in mortgage interest, but then extraqcted equally disproportionately large capital gains on the sale of ahouse for which they had contributed nothing. This obvious loophole was never blocked.
Third, some of the excesses in the expenses extravaganze lovingly detailed by the Telegraph were huge in total, amounting to anything from £20,00 to £40,000 or more. Yet it is the foot-soldiers who have been taken to court and held up to public odium over sums that are far less.
Elliot Morley, David Chaytor and Jim Devine, if they are guilty (believe it or not, they haven’t even been brought to trial), should certainly be held to account. But why them? By any standards they are certainly not the worst or the biggest offenders. But one factor does unite them which might provide a clue. They are all back-benchers and all on the Left. Those on the loyalist Right who’ve committed far bigger sins have not been held up to public opprobrium, but allowed to slip away quietly. I wonder why?
The horrendous case of the father who raped and abused his daughters over 35 years almost defies belief, yet it follows a steady trickle of other horrific cases – Victoria Climbie, Baby P, the Edlington brothers to name but some. Every time there is desperate hand-wringing and a passionate pledge that this will never be allowed to happen again. Yet it does, again and again. Can it ever be prevented?
Not without a much more rigorous, and probably also more intrusive, framework of supervision. Essential elements are that:
* social work departments must be adequately resourced. That means enough social workers (so that caseloads can be managed properly, not skimped), enough training (to deal with difficult and threatening situations), and enough funding (that is, substantially more than at present),
* there must be clear and precise rules of conduct about how to deal with every type of contingency, even the worst cases. That could include visiting the most intimidating families in pairs, and where necessary access was denied, calling in the police straightaway,
* the most difficult and threatening cases should be dealt with by senior staff, or at least with constant reference to senior staff,
* it should be understood that where these principles have been breached or broken down and an appalling tragedy results as in this latest case, those responsible – not just junior staff, but the managers and the safeguarding children board - should lose their jobs, not primarily as a punishment but rather as a signal that society will not tolerate culpable failure where it leads to such crippling of innocent lives.
Only if the resources are provided, the rules are rigorous and clear enough, and the sanctions against failure are powerful enough can we expect that terrible tragedies like this will be pre-empted.
I was intrigued to hear Gordon Brown declare this morning that the Government would continue to take the tough decisions needed on finance and the economy since the waters were still choppy, even though the worst was now over. What tough decisions, I wondered, was he referring to? Yes, the Government did take the bold decision at the outset to preempt a total fiancial collapse by bolstering the banking system and bailing out the worst-hit banks.
But ever since then every hard decision has been dodged:
* the banks were propped up by the ruinously expensive Asset Protection Scheme (with taxpayer exposure to the tune of £570bn) in order at all costs to avoid (temporarily) nationalising the banks which was the far far cheaper and better option,
* the condition explicitly stated for bailing out the banks was that they should continue to lend to businesses and homeowners at 2007 levels, and when the banks did the exact opposite, they were allowed to get away with it with impunity and not forced to meet their obligations,
* none of the tough decisions to prevent a recurrence of the 2008 collapse have been taken: toxic derivatives have not been prohibited or regulated, casino investment banks have not been separated off from normal High Street commercial banking, and the City of London has not been shrunk to a level which fits the size of the British economy and allows a revival of the manufacturing sector on which the future of the economy depends,
* none of the gigantic bonuses which drove the recklessness in the trading rooms have been bridled in, nor has the unaccountable power and wealth of the City been tackled – meaning that nothing has been done to prevent another (and bigger, and perhaps fatal) collapse ten years down the line.
Talking about tough decisions isn’t enough; they actually have to be delivered.
The Guardian story about the 42 million green bulbs sent http://www.guardian.co.uk/business/2010/mar/07/energy-lightbulbs-wasted-lax-regulation to British homes under the CERT (carbon emission reduction scheme) in the last quarter of last year, though few customers had asked for them, illustrates how devious and manipulative comopanies are when left to their own devices in an open market. They were exploiting loopholes to meet their obligations in the cheapest way possible, even though they knew perfectly well that alternatives like cavity wall insulation would save far more energy.
Several other recent evens illustrate the same theme:
* Research by ICIS Heren has shown that the forward price of wholesale gas fell last year by two-thirds from over £1 a unit to around 36p, but energy firms have reduced their prices by less than a quarter of this reduction, using their market power as middle-men to pocket the difference in exorbitant profits.
* EU regulators have noted that Big Pharma patent-holders frequently pay a maker of generic drugs to delay their launch of a cheap copy – a delay that they calculate causes generic drugs to arrive 6 months or more after the relevant patent expires, costing the consumer over £3bn a year.
* Trafigura, the British oil trader that bought contaminated oil on the cheap and then dumped the waste in West Africa, which led to 15 deaths and thousands hospitalised, is an icon of corporate capitalism – keeping the profits and dumping the costs on someone else. Price risks are dumped on farmers, health and safety risks are dumped on sub-contractors, insolvency risks are dumped on creditors, social and economic risks are dumped on the State (notably by the banks), toxic waste is dumped on the poor, and greenhouse gas pollution is dumped on everyone.
It is almost unbelievable that all three political parties are still obsessed with savage cuts/slash and burn as the panacea for the country’s ills when all the evidence shows that it is counter-productive and dangerous. When are the political leaders going to learn sense?
* As Richard Murphy of the Tax Justice Network has shown, sacking a £25,000 public sector employee saves just £2,000 when the income tax, national insurance and VAT contributed by an employee is lost and social benefits are paid out in full (rightly) – and that’s without the depression, illness and possible loss of home that can result,
* As the 60 economists who recently wrote to the Times spelt out so eloquently, it runs the very real and dangerous risk of provoking a double-dip recession and postponing a recovery for many further years,
* As Roosevelt’s US discovered in 1937 and Japan in the 1990s, tightening monetary and fiscal policy prematurely can easily unravel the whole of the previous fiscal stimulus and open up the economy again to the recession abyss.
Pursuing this course should be political suicide. How can the voices of reason make themselves heard?
The outrage over Venables having re-offended with allegedly a serious sexual offence has very unhelpfully distracted from the need for fundamental prison reform and a much more determined drive for rehabilitation as the underlying goal of the prison system. This requires a systematic change in direction away from current policy: (more…)
This is a funny old election. Both the main political parties are focusing on one central issue (how far and how fast the budget deficit should be cut) when that is the wrong policy and the right policy is being rejected out of hand. At the same time what should clearly be the central focus of this election doesn’t even get a serious mention.
Cutting public spending, whether drastically or sensitively and straightaway or a bit later, is not the right policy when the ‘recovery’ is so precarious and particularly when the deep recession is mainly due, not to the bank bail-outs, but to the collapse in private investment. That investment, especially in housing and private transport equipment (buses, trains, cars, etc.), had already fallen spectacularly by 15% between the first quarter of 2007 and the second quarter of 2008, before the financial crash of September 2008. The banking failures, which then exacerbated the collapse in lending to businesses and homeowners from a healthy 20% a year growth at the start of 2007 to nil or negative two years later, compounded an already dramatic fall in private investment. (more…)
Today’s decision by the Electoral Commission that everything was hunky-dory with Ashcroft’s donations of £5.1 millions to the Tory Party via his company Bearwood Corporate Services (BCS) looks like a whitewash, contradicted by – or at least unsupported by – their own evidence, made all the more suspect by their admission that Tory officials refused to be interviewed by them and that Ashcroft had shredded some of the key documents. I have therefore sent an FOI request to Jenny Watson, the Electoral Commission chair, requesting disclosure of:
1 all the evidence and documents on which you relied to reach your conclusion that BSC was operating as a propoer company when the donations were made to the Conservative Party and was not a proxy for Lord Ashcroft to make these donations,
2 the grounds on which you relied for your conclusion that the absence of documented evidence of a deal for BCS to donate on behalf of Lord Ashcroft means that BCS could not be a proxy,
3 all the evidence and documents which led you to conclude that on balance there was certainty withing the Conservatice Party about the identity of the donor,
4 what invitations, and on what dates, were sent to Conservative Party officials to attend meetings with the Commission which were refused or ignores, and what was the information which would have been sought at these meetings,
5 A list of all the documents which were sought from Lord Ashcroft which he failed, or was unable, to produce,
6 all the documentary evidence of attempts made to discover whether Lord Ashcroft was registered as a UK voter on the electoral register,
7 all the internal party emails and sections of Lord Ashcroft’s book Dirty Politics, Dirty Times which indicate that the donations were from him rather than BCS.
Answers to these within the statutorily allotted 20 days should be interesting.
After years of numbing defeats in the Commons, progressive forces have finally today secured some striking victories in a series of votes which could radically change the effectiveness of the House in future struggles with the Executive, and in particular with No.10. The votes today for the first time give the House ownership of its Select Committees by requiring chairmen and members to be elected, not appointed by the Whips, and reclaims for the House control over its own business by allowing the House, not the Government, to determine through an elected Back-Bench House Business Committee the agenda on the floor of the House in respect of all non-Ministerial business.
In today’s debate I spelt out in a short speech the long-term profound implication of this.
Accountability is a strong theme on this website, and after the 4 current examples I cited yesterday, the Ashcroft scandal immediately presents a 5th today. The key question is how Ashcroft was allowed to get away for 9 years with giving a ‘clear and unequivocal assurance’ that he would be permanently resident in the UK before the end of 2000 and on that basis was given a peerage in the Lords, yet never paid UK tax on his world wide income because he was actually a non-dom for tax purposes. Why didn’t the authorities at any time in 9 years not insist he paid full UK tax for which he was liable (a total of probably £127 millions over the period) or, when he broke his assurance, make him forfeit his peerage?
I have today put down several PQs to the Treasury (HMRC):
1 Who were the senior civil servant and the Tory whip who did a deal in March 2000 that Ashcroft need only be a ‘long-term resident’ in the UK which allowed Ashcroft to remain non-domiciled for tax purposes, thus avoiding tens of millions of pounds in UK income tax, and what Minister (if any) sanctioned this deal?
2 What is the precise legal authority for ‘long-term resident’ which indicates that the taxpayer may well leave after an extended period, and how many days per year have to be spent in the UK per year to claim this status?
3 Was Bearwood Corporate Services, the UK company owned by Ashcroft, operating as a fully-fledged company when Ashcroft’s donations of £5 millions were made to the Tory Party, or was it simply and exclusively a vehicle to enable him to donate?
4 Will the Chancellor in his upcoming Budget end the anomaly of non-domiciliary tax status?
‘A Future Fair to All’ is apparently New Labour’s slogan for the coming election. Does that include, on behalf of the victims, holding to account the perpetrators of public scandals? The last week alone has had quite a slew of them:
1 Will the managers of Stafford Hospital be brought to book (sacked? and prohibited from any senior role in social care in future?) for the deaths of 1,200 patients in their care whom the Francis Report found would not have died if they had received proper care?
2 Will News of the World, including its owner Rupert Murdoch and his editors including Andy Coulson, be held to account (fined? and warned that any future repetition could lead to editors being sacked or even divestment of the paper from its current owners?) for illegal hacking into telephones on an industrial scale?
3 Will MI5 be subject to account (sacking of senior managers or director where found to be responsible?) for knowingly allowing torture to be applied to British citizens, not only Binyam Mohammed but several others?
4 Will those allegedly responsible for violence, mistreatment and racist abuse at the Bedfordshire detention centre at Yarl’s Wood be made liable (sacked?) if the charges are proved?
Vacuous slogans need to be brought to life with real action in cases of the worst abuses.
The Sunday Times YouGov poll today giving the Tories a mere 2% sliver of a lead over Labour shouldn’t be taken at face value, for 3 reasons:
1 Until, or if, it is corroborated by at least two or three other polls, it may simply be a rogue poll outlier. Clearly there continues to be an edging back towards Labour (or rather away from the Tories), but a swingback from a 10% Tory lead in January to 6% a mere week ago and then to just 2% now is difficult to credit objectively.
2 There are marked differences between nationwide polls and those in marginal seats where the final result will largely be decided. Labour could still win on the national figures, and yet lose the election in the marginals.
3 The millions that Lord Ashcroft has been piling into the most vulnerable Labour marginals could still have a decisive impact. It is remarkable that Labour, despite Gordon Prentice MP’s constant chivvying over this scandal of a peer/businessman who is apparently not tax-registered in the UK being allowed to get away with trying to pervert the election though his foreign wealth, has still done next to nothing to stop him. Presumably New Labour too is more dependent on non-doms than they care to admit.
Perhaps the most curious thing about this latest poll, if there is any truth in it, is why this remarkable collapse in the Tory lead (from 26% less than 2 years ago to 2% now) should have happened. As so often in politics, the side that benefits may claim the credit for the shift, but big swings in political sentiment nearly always reflect own goals by the losers – and the Tories really have been doing badly recently – constant opportunistic changes of stance and no stability in what they really stand for, if indeed they know.
The three concurrent inquiries at present – into the Iraq war, the corruption alleged to be behind the £43bn al-Yamamah arms deal, and democratic reform of the House of Commons – don’t seeem to have much connection. In fact they are all probing one single fundamental issue: how can the wielding of unbridled power be held to account by checks and balances which preserve the democratic rights of the majority over fundamental decision-making? Blair could only take Britain into an illegal war of aggression because he had crushed or manipulated the countervailing forces in the Cabinet, Parliament and in society at large. BAE was only able to carry through what is now widely seen as one of the biggest and most corrupt arms deals in history because it colluded with the Government, and Downing Street in particular, in evading all the normal mechanisms of transparency and accountability. The Wright select committee which recently reported on reforming parliamentary procedures was primarily concerned with limiting the overweening power of the Executive to get its way on everything irrespective of Parliament and the electorate.
The stench of corruption in the long-running BAE saga over the al-Yamamah and other massive arms deals is almost suffocating, and now to cap it all BAE (for the moment at least) has escaped criminal prosecution. Just about everything in this episode stinks:
* Kickbacks for securing these gigantic deals (£43bn revenue to BAE for the Saudi deal) were channelled through offshore shell entities to disguise where these payments came from and who to, as MOD defence sales must have been aware,
* The SFO corruption inquiry launched in 2004 revealed huge sums paid into Swiss bank accounts associated with middlemen like the Syrian billionaire Wafic Said, a close friend of the Thatcher family, but as the Swiss prepared to disclose bank records to the SFO which might implicate the Saudi royal family, Blair ordered Lord Goldsmith, the attorney general, in a secret and personal letter to stop the investigation,
* The inquiry was then only resurrected when the US Justice Department discovered that BAE had been paying Prince Bandar, son of the Saudi Defence Minister, over £1bn through the previous decade in £30m quarterly payments, apparently through an MOD account, yet the British government refused to hand over documents about these Bandar payments, no doubt because Ministers had been insisting for 20 years that there had been no secret commission payments,
* Other BAE deals now being uncovered include the sale of hugely expensive radar to poverty-stricken Tanzania, with a third of the £28m contract price now revealed to have been diverted into secret offshore bank accounts, yet the deal was forced through by Blair who, in the words of Clare Short, “absolutely, adamantly, favoured all proposals for arms deals”.
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