Following Osborne’s triumphant releasing of pensioners to unlock their annuity contracts to spend how they will, there were many siren voices raised that that risked exposing many vulnerable elderly people to crooks and scammers selling dud investment projects as the road to riches. The results have turned out even worse than feared. City of London police are now having to wage a huge campaign against the use of some of the Square Mile’s most prestigious addresses as a cover for scams purporting to sell overseas land for investment as well as wine, diamonds, etc. Police say such scams cost mostly elderly and vulnerable people at least £1.7bn last year, with fraudsters typically returning to their victims a second timein the guise of ‘asset recovery specialists’ who pursue lost money for a fee. Read more “Osborne’s giveaways come back to haunt him” »
Money laundering by a HSBC bank in Mexico is bad enough – though no-one been sent to prison for it yet, don’t hold your breath. But it’s now happening here in Britain on a huge scale. The Director General of the UK National Crime Agency (NCA) has said that “many hundreds of billions of pounds of criminal money is almost certainly laundered through UK banks and their subsidiaries each year”. He even called the scale of the money-laundering “a strategic threat” to the UK’s economy and reputation. According to the NCA’s latest report on suspicious transactions, no less than 354,186 such reports were filed by banks and other regulated entities last year. Just over 14,000 of these were consent orders, of which 94 were passed on to the Proceeds of Corruption Unit. These were then analysed by the international corruption watchdog Transparency International (TI) which found that only 7 such transactions were deemed so suspicious that they were not allowed to go ahead. TI declared that the current method of seizing corrupt assets was “not fit for purpose”. Read more “Cleaning up Britain’s corrupt financial system should be another big issue in Leadership contest” »
Behind the scenes Britain’s Big 4 banks have now launched a sustained campaign to get the this Tory government to go easy on regulation and review (a euphemism for wind down) the bank levy. Considering the colossal damage that the bankers’ arrogance, mismanagement and corruption inflicted on the British economy which is still on-going and may be for another decade, that takes some chutzpah. They see it as payback time for the half of Tory party funding which the banks, hedge funds and private equity dish out every year for their benefactors. A more balanced view is that the bank levy is a charge on bank balance sheets to offset the cost of the financial crisis for taxpayers. The truth is that the banking crisis more than doubled the UK national debt which is now £1.4 trillions and still rising. An objective view would be that the current bank levy is nowhere near enough to meet its stated objective.
The bank levy paid by HSBC last year was £667m and by Barclays £462m. The other big banks paid only half of that or less: Lloyds paid £254m, RBS £250m, and Standard Chartered £222m – a total of just £1.85bn, some 2.6% of the doubling of the national debt they brought about. But that still leaves aside the web of corruption that all these banks, as well as several big foreign banks, indulged in by systematically rigging the Libor and ForEx markets to increase their profits criminally at the expense of global markets which depended on the trustworthiness of these benchmarks. Even that still excludes the vast scams that these banks perpetrated over product protection insurance and interest rate swaps which again were motivated by banks’ profit maximization without any real external benefit. It’s true that the banks have been subject to large fines for this misfeasance, but at much lower rates than those imposed by the US Department of Justice for the same offences, and without a single top executive having been sent to prison.
The real issue over financial regulation is whether it is sufficient to stave off another massive financial crash. Despite the banks’ whinging, it’s perfectly clear that by a long shot it isn’t. The proposed ring-fencing between the retail and investment arms of the banks is itself a climbdown from what is obviously needed, the reintroduction of the Glass-Steagall Act which for 63 years between 1933-1996 prevented any major banking crash, and within 11 years of its repeal led directly to the 2007-9 global financial/economic crisis. The Vickers proposed ring-fence will easily be circumvented by City arbitrage, yet the banks are still whingeing about its impact on their balance sheets, totally heedless of the effect that further weakening of an already enfeebled regulation might have on the likelihood of another global catastrophe. And to cap it all, none of these regulations are due to come into effect till 2019!
We are even now being told by insiders at the Financial Conduct Authority that they have been steered by the government to take a softer approach to regulation. That tells you all you need to know about the power structure of Britain and and the blatant discrimination shown between the treatment of the banks and hedge funds on the one hand and, just to take an example, the trade unions on the other.
Six global banks, two them British, have just been fined £5.6bn in what the FBI has called ‘massive scale’ criminality, yet no individual executive has been prosecuted and no bank has been deprived of its licence to practise which would have happened in any other sector given such monumental wrongdoing. Indeed State regulators have gone out of their way to protect them from any such consequences. None of the charges in respect of any of the banks has been brought to trial so that the full scale and nature of these criminal activities will never be publicly disclosed. Two of the banks did not admit to any crimes related to this abuse, though they still paid up, but the other 4 who did were then given waivers shielding them from the consequences that would normally follow – the loss of the all-important banking licence. The banks have an armlock around the neck of the State.
How did this arise? Under the current financialised capitalism, the most extreme form of market fundamentalism, the UK State is effectively run by a political-financial nexus between No.10/Treasury and the Big 4 banks which implicitly guarantees protection for these banks against all eventualities. This pattern was first apparent in the banks being ‘too big to fail (or jail)’ after the enormous financial 2008-9 crash which they largely caused, then in the leniency and no prosecutions after the Libor rigging scandal, and now again after the equally colossal Forex market rigging scandal. It is also astonishing how listless has been the political response to all this monumental criminality.
Negotiated settlements are no substitute for criminal proceedings. Worse, it is clear that this velvet glove system of penalties has not led to any change of behaviour among the offending banks. Global banks have now been made to pay more than $10bn in relation to the Forex scandal despite previously being charged $9bn over the Libor rigging revelations. Many have responded, not by altering their culture, but by hiring former prosecutors and regulators. Two banks, Barclays and UBS, have explicitly been penalised for breaching existing deals with US prosecutors not to break any more criminal laws after settling Libor-rigging charges in 2012. And, so far from being chastened, Wall Street and the City of London are now looking to revive the niche single-name credit default swaps (derivative contracts that track the risk of default by a company that sells bonds) which were widely blamed for helping to inflate the credit bubble prior to the 2008-9 crisis.
Nevertheless, in the face of all evidence to the contrary, the UK Financial Conduct Authority has been claiming that the fines are working. That has probably more to do with Martin Wheatley, head of the FCA, seeking to salvage his reputation after his serious mishandling of the investigation into the insurance industry a year ago. Pace Wheatley, it is patently clear that only individual prosecutions and deterrent custodial sentences, Read more “Banks have taken over the State and got away with it” »
The size of the penalties imposed on the UK’s Big 4 banks for illegal misconduct since the crash in 2008-9 is stunning. It amounts to £42bn already levied up to 2014, plus a further £19bn for conduct and litigation charges this year and next. That £61bn total is a staggering figure, equal by one measure to 4% of Britain’s entire GDP and by another well in excess of levies imposed for BP’s oil rig disaster in the Gulf of Mexico. KPMG have also estimated that these 4 banks have paid 60% of their profits since 2011 in fines and repayments to customers. Huge though these figures are, they still conceal three important points that indicate the need for radical reform. Read more “UK Big 4 banks charged £61bn for misconduct in 6 years since 2009: can private banks ever be trusted?” »
No-one had heard of Navinder Singh Sarao until on 6 May 2010 he ‘spoofed’ the international stock markets while sitting in his room in his parents’ semi in Hounslow and made $879,000 on that day alone and, it is alleged, $40 millions fraudulently over 5 years. He is now awaiting extradition to the US to face charges. But the crucial points are that one lone individual (though his connections with several big names in finance have been noted) could generate a ‘flash crash’ causing a loss of £1 trillion of stock market value albeit very temporary) and what damage might be done by market operators with bigger financial resources.
What lies behind Sarao’s scam is the phenomenon of high-frequency trading (HFT), made possible in today’s financial markets by immense computing power created. There is what might be called an arms race among HFT firms to execute trades faster and faster. Andrew Haldane, the Bank of England’s chief economist, said in 2011 (and it will be faster today) that the lower limit for trade execution was around 10 micro-seconds, i.e. in principle it would be possible to execute around 40,000 back-to-back trades in the blink of an eye. To put that in domestic terms, if supermarkets ran HFT programmes, the average household could complete its shopping for a lifetime in under a second. Ponder that. Read more “Hound of Hounslow shows non-regulation of banks remains extremely dangerous” »
The horror of the story now emerging about Bradford City’s Valley Parade ground conflagration that killed 56 football fans shocks even those hardened by the constant drip-feed of scandals that have numbed the national consciousness as accountability is dumbed down by an over-powerful self-interested and self-protective Establishment. The book just published 30 years later by Martin Fletcher, who escaped the fire aged 12, casts a lurid light on the way that the disaster, if not hushed up, was certainly not properly investigated. The inquiry before High Court judge Popplewell was held only 3 weeks after the disaster and only lasted 5 days before deciding it was caused by a match or cigarette.
It failed to uncover, what Fletcher has painstakingly discovered, that the owner of the football ground at that time, Stafford Heginbotham, had had fires at no less than 9 buildings he owned or controlled over a period of 18 years. He received insurance payouts of £27m at today’s money value, including £2.74m from his Bradford firms. Moreover, at the time of the Bradford City ground blaze, he had been in desperate financial trouble, and had been told just 2 days earlier that it would cost £2m to bring the ground up to required safety standards. Was the fire then just an accident, and why was it dealt with so superficially? Read more “Only a radical government will overturn the Establishment scandals of the last decades” »
It was originally assumed that blacklisting was a secret tool used by construction companies – Balfour Beatty, Costain, McAlpine, Skanska, Carillion, Kier and over 30 others – to keep out people they didn’t want. To achieve this the euphemistically named Consulting Association over 16 years (1993-2009) complied a database on thousands of construction workers who were denied a job if it was reported that they were trade union activists or had expressed concern about health and safety standards or had simply been the victims of derogatory gossip, thus destroying their livelihood for sometimes 30 or more years for reasons kept secret for the worker himself. This scandal may finally be exposed in the High Court this year, though nearly half of the 3,213 persons with Consulting Association files on them have still not yet been traced. But the latest evidence now emerging indicates two other sinister trends: the extensive involvement of the police and security services and the inclusion on the blacklists of several persons in public life who have had no connection whatever with the construction industry. Read more “How far did blacklisting extend outside construction?” »
It is incredible how the reports of corruption in Britain are now going from bad to worse almost every single day. HSBC’s original lame excuse for the massive tax evasion engineered by its Swiss bank in Geneva was that it was previously run on a ‘federated’ basis so that central controls were much looser. Yet we now find that the HSBC chief executive, Stuart Gulliver, was himself engaging in exactly this tax dodging for his own personal benefit from his own bank, holding £5m in a Swiss account and having his huge bonuses paid through an anonymous company registered in Panama. What adds insult to injury is that instead of being forced to stand down for deliberately profiting from the financial malpractice he was supposed to be regulating and closing down, he is now getting a total remuneration package of some £7.5m as HSBC announces £13bn profits for 2014. Read more “This election should be about ridding Britain of the stench of corruption” »