Today’s revelations that senior MOD officers have taken up no less than 3,500 jobs in arms companies over the last 16 years go a long way to explaining why there is next to no regulation in the UK of the massive corruption involved in UK arms deals over the last 40 years. The defence companies use their money to fund political parties and find lucrative jobs not only for the top MOD military brass but also for former and potential ministers, all with the object of stymying regulation. For the banks and the corporate elites the ‘feather duster’ regulation of the neoliberal era paved the way for the ‘London loophole’. All this remained secret behind tightly closed doors till the financial crash of 2008-9, notably the al Yamamah mega-arms deal with Saudi in 1985 totaling over £40bn, the details of which still remain hidden after Blair’s intervention in 2005 to block a SFO inquiry. Even now nearly all the expose’s derive from the US, not the UK.
The Bank of Credit and Commerce International (BCCI), the biggest banking fraud in the last century, was closed down in July 1991, leaving 1.4m depositors with a £7bn loss of savings. It was a Senate committee report in the US (significantly not a UK inquiry) which concluded that the Bank of England and the BCCI auditors Price Waterhouse were engaged in a cover-up. It also released 99% of a report, censored by the Bank of England, codenamed the Sandstorm Report which described the frauds and their perpetrators. Only several years of FOI battling finally revealed that the wrongdoers included members of the Abu Dhabi royal family, key Middle East businessmen, the head of Saudi intelligence, and even the biggest funder for al Qaeda.
Again the extensive revelations of UK bank malfeasance throughout 2012 have all originated in the US, not in the UK. It was the US Senate Permanent sub-committee which found HSBC, Britain’s biggest bank, had facilitate financial laundering for drug cartels, terrorists and pariah states by failing to monitor some $60 trillion of transactions. It was the New York State Department of Financial Services which charged the UK’s Standar Chartered Bank with colluding with Iran to hide from regulators some 60,000 transactions involving the laundering of at least $250bn. It was US regulators who exposed the LIBOR scandal in London, involving primarily but not only Barclays.
All this raises questions as to why Britain’s financial regulators are so often found asleep at the wheel. A prime reason for this is that the UK culture of secrecy is so regularly greased by the merry-go-round of money that links the MOD and the banks to the British Establishment.