Friday, October 12, 2012

Why we should have absolutely no sympathy for bankers whatsoever, and why they should be bashed regularly.

Conscious of my public stance towards bankers (I consider the vast number of them to be nothing short of unrepentant organised criminals), I nevertheless thought I should take another look at my views to see whether I was being entirely fair. I had assumed that although the top money men in the banks would be pure capitalists, red in tooth and claw, perhaps the Money Laundering Reporting Officers or the Compliance Officers might be more willing to take their legal and moral responsibilities seriously, and would be less inclined to treat the vast excesses evidenced by their colleagues with such a cavalier fashion.

My God, but was I about to be roundly disabused of that notion.

Recently, I addressed an audience of very senior Group Heads of Money Laundering and Fraud, at a private dinner, where I was invited to speak to the topic of '...Money Laundering laws are broken - How should they be fixed..?' The evening was held under Chatham House rules, so I am prevented from identifying the individuals or their institutions but I am free to report the event.

My aim was to assert that the money laundering laws were not broken, and that they were fit for purpose, but that they were being broken regularly by those required to adopt them, and that they were not being enforced by those with the authority to impose them.

That was my aim, but I wasn't even allowed to get into my stride.

No sooner had I begun to speak than there was an outcry from every side by the sleek, shiny, well-suited and booted Compliance personnel.

First of all, there was a complete and wholesale denial that the laws were being broken regularly. The laws, I was told, were not fit for purpose, that those who had helped to instigate them did not know what they were talking about, and that they were a needless and punitive expense for bankers.
Having been one of those who had given evidence originally to a committee of High Court Judges who were investigating the need for anti-money laundering legislation, I was not a tad miffed by the allegation that we did not know what we were doing. We detectives had laboured for years under the wholly mistaken apprehension that the banks really did want to talk to Police about evidence of criminality, but were prohibited from doing so by the rules dealing with banking confidentiality. I had lost count of the times I had been told; '...Well officer, I would love to be able to share all our information with you, but I need a Court Order first...'

Time without number I had dragged myself down to a local magistrates court to apply for a Bankers' Books Evidence Act Order in order to be allowed to get the evidence I needed. So in order to give the banks the unfettered right to share information freely with Police without the fear of being sued for breach of confidentiality, we recommended that the Judges introduce some new means by which they could be given that freedom.

The outcome was the Suspicious Transaction Disclosure, but here were the very practitioners who had told us how much they wanted to help Police, now bemoaning and bewailing the implications of such a simple requirement. It reinforced what I had come to realise years before, which was that banks don't want to talk to Police under any circumstances, and that hitherto, they had just been lying, as part of their policy of being seen to be observant and superficially supportive of law enforcement, while completely ignoring the laws in private.

So I asked them about the laws which were being regularly broken. How, I asked, did they justify blatant examples of money laundering such as that which had engaged HSBC in Mexico, or the issues arising from the LIBOR scandal. What about the Standard Chartered debacle or the Shah -v- HSBC case?

Whoops, another outburst of vituperation. LIBOR manipulation wasn't even a crime as far as these people were concerned. Everyone knew that even the new head of the FSA had agreed what had gone on was not criminal, which was why they were having a review for the future. When I suggested that it was clearly the criminal offence of conspiracy to defraud, and that the best outcome would be that the chief executive of each of the banks concerned should be prosecuted, one MLRO from a major bank which I refer to as among the top list of the most usual suspects when it came to skulduggery and downright criminality said in almost theatrical tones, '...I can't believe I am hearing you say these things...'

He clearly doesn't know me very well!

No-one was willing to go near either HSBC issue, it was as if they had never happened,  obviously no-one wanted to embarrass any colleague whether they were present or not!

I pressed, HSBC had admitted laundering vast amounts of dollars for Mexican drug bandits, surely that was breaking the money laundering law?


The Shah case had demonstrated how negligent HSBC had been in failing to adopt the money laundering regulations properly, and that the Judge had been, very charitable to the bank!

Anger! HSBC had won the case and that's all there was to it. It wasn't worth discussing.

By now, the battle lines had been drawn, and it was clear that the assembled Compliance Officers did not want to hear what I had to say. It wasn't just a question of polite disagreement, it was downright hostility. They were going to filibuster the evening to its close. It started by one MLRO stating that his institution were constantly telling police about fraud issues, but that the police did nothing to deal with them. So, from his perspective, it proved that disclosing stuff to police was a waste of time, and that he and his bank had effectively stopped making disclosures.

There seemed to be almost wholesale agreement to this man's assertions. The police were worse than useless when it came to dealing with fraud against the banks, so what was the point in telling them anything?

I gently probed the open wound! What was it that our angry friend was disclosing to police? He indicated that his institution had a big problem with what is referred to as 'cardholder not present' fraud. This occurs where a fraudster represents himself on the phone as someone else, but whose credit card details are known to the conman. He orders goods and quotes the card numbers. Later it turns out that the fraud is discovered when the legitimate card holder denies the purchase. This practice is costing card providers many millions of pounds.

He got a lot of sympathy, in fact by now, fraud against the banks was all the assembled company wanted to discuss!

I then asked him; '...Why should the tax-payer have to subsidise the cost of your unwillingness to make your card services more secure...?' I pointed out that there were other protective measure that could be taken to make the on-line purchase more secure, but our banker then pointed out that this would a) increase the cost of the service, and b) more security demands at the point of purchasing gateway make it less likely that customers would want to use the card.
His concern was that his service was being made less profitable because he refused to implement more security elements, and he wanted the tax-payer to pick up the cost of chasing down the villains who were committing the frauds.
When I, not unreasonably, pointed out to him that the policy was increasingly to leave these elements in the hands of the business, it was part of their moral responsibility to protect their profitability, and to disrupt criminal activity, and not to burden the public purse to shore up their already obscene profits, and he became quite agitated.

He was about to utter the traditional shibboleth about combating Organised Crime, but I cut him off.  This was a classic excuse adopted by bankers too lazy to protect themselves and their business and I said that I was not surprised that the police ignored their reports. I then invited him to comment upon my assertion that the real organised criminals were the banks themselves!

More outrage.

I wanted to get the topic back on track, but there was no way this bunch of criminogenic apologists was going to allow me to do so. They demanded that I justify my comments.

I did so by stating that any organisation that had been forced both by the regulator and the Court to set aside in excess of £12 billion to recompense the victims of misselling, would in any other legal sphere have been branded as an organised crime enterprise. I stated that misselling was nothing more than a convenient way of defining institutionalised fraud, and again, that the proceeds were capable of being laundered, so that every criminal penny they took in dodgy PPI insurance or fraudulent interest rate derivatives, was laundered by them.

Even more outrage and now palpable anger!

How dare I make these unfair assertions? How dare I challenge their sense of self-appointed smugness, their institutionalised denials of wrongdoing? What was termed misselling was nothing more than a legitimate episode of clever marketing and selling of products that might have worked. It was up to the customer to determine the suitability of the product to meet their needs, they didn't have to accept the offer. There was nothing criminal about the products, they were well written and underwritten, and they could have been a useful adjunct to the loan protection.

I asked if this were the case when clients had been deceived when told that they had to take out PPI in order to receive the loan they were requesting? Or where the product terms and conditions had not been properly explained or indeed, ever explained at all?

Ah well, this was just clever selling, and good market practice came the reply, you cannot always tell the whole truth or give all the facts because no-one would buy the product! But it wasn't a crime, and indeed the new head of the FCA didn't think it was a crime either and had said so! They seemed to take a lot of comfort from this recent statement and it brought home to me my own recent observations on how Martin Wheatley had just given the bank criminals a get-out-of-jail card for free!

If that was the case, I asked, why were they paying up and trying to look good about it? It was merely a cost of doing business, I was informed. This level of insouciance rather bemused me until it occurred to me that the shareholders had already received their dividends out of this exercise in gross financial criminality. Any future refunding would be set against future potential profits and just minimise their future tax liabilities, so it wasn't really costing them anything at all. If they could continue to convince themselves that what they had done wasn't really criminal at all, and was just a case of the beleaguered banks having to respond to unjustified public criticism, then they would suffer no ill-effects, and no lessons would be learned. They didn't even feel ashamed of the activity, so there was no public shame being applied. It was a classic example of criminologist David Matza's theory of techniques of neutralisation at work!

The Standard Chartered case raised the greatest anger of all. This was an entirely uncalled-for intervention by a rogue regulator who had punished SCB for his own political ends. There was some denial that SCB had done anything wrong at all and that what was complained of was in the process of being explained away as activity which had once been legitimate but had changed over time.

In trying to explain the true facts of the SCB case and the role that Ben Lawsky had played, in conducting investigations of SCB over a period of 4 years when they had had plenty of time to come clean, I found that the bankers were simply not listening any more but were just talking amongst themselves. They had simply run out of interest in the topic and were satisfied that being among friends, they could continue to manifest the deniability of their conduct and continue to convince themselves that they were cleaner than clean!

It had been both an exhilarating event, fighting my corner in the presence of a number of very highly-placed policy makers, but at the same time, deeply dispiriting. I felt truly deflated because I had hoped that there might just be the smallest light amid the gloom which is the British banking community, and that at least the compliance people would be keeping the flame of truth and decency alight. But it is not to be. These people are not assisting in ensuring compliance with the law, they are ensuring that everyone maintains compliance with the business aims of the bank.

These people know on which side their bread is buttered. They know what they have to do to keep their salaries coming in and being critical of their principals is not an agenda item. The policy is to deny everything that even looks like it might be critical of the bank, and lend support to every bit of rottenness and wrong-doing.

The evening proved to me that this country needs a root and branch revisiting of the banking process. Organised criminality seeps from every pore, the only way of doing business is to cheat and lie, to defraud your customers at every level, screw their pension arrangements, overcharge them for their savings needs, demand ridiculous sums of deposit in order to grant them a mortgage, foreclose on property developments before they are completed and then sell the sites thus obtained at a profit while forcing decent people into penury and bankruptcy. Force clients to buy unnecessary financial products to guarantee loans, flog them worthless interest rate swaps, secure in the knowledge that the market is about to turn, lie to them about their indebtedness, mislead and dissemble to the Banking Ombudsman when complaints are made, and then when the shit finally hits the fan, demand that the tax-payer bails them out, or borrow the money to underpin the balance sheet from a bunch of dodgy Arabs who require vast bribes to agree to do the deals, while all the time paying themselves salaries and bonuses far beyond the dreams of avarice.
I have reached the stage where I truly believe that unless we insist that banking crime is made an electoral issue, it will continue to be swept under the carpet and these evil men (and I do not cavil  at these words, harsh though they may be) are finally brought to heel, and the most egregious locked away so they cannot steal any more.

 I want to finish by quoting the words of a song, "...Arrogance, Ignorance and Greed..." by Steve Knightley and Phil Beer. It sums up what I feel about the banking sector and why those of us who care must continue to bash the bastards at every possible opportunity, invade their events, award them satirical gee-gaws (these fuckers love these events and these putty medals and pieces of Perspex) so let's give our crusading young team of Intruders some more opportunities. Only in this way by satirising them and making fun of their pomposities will the message be heard.

All I wanted was a home and a roof over our heads
Somewhere we could call our own, feel safer in our beds                                           There was a storm of money raining down it only touched the ground
With a loan I took I can’t repay and the crock of gold you found
At every trough you stopped to feed with your Arrogance, your Ignorance and Greed.
I never was a cautious man I spend more than I’m paid
But those with something put aside are the ones that you betrayed                            With your bonuses and expenses you shovelled down your throat
Now you bit the hand that fed you, dear God I hope you choke
At every trough you stopped to feed with your Arrogance, your Ignorance and Greed.                                                                                                                                     You're on your yacht, we’re on our knees through your Arrogance, your Ignorance and Greed.                                                                                                          Toxic springs you tapped and sold, poisoned every watering hole
Your probity, you exchanged for gold
The working man stands in line the market sets his price
No feather bed, no golden egg no one pays him twice                                              So where's your thrift, your caution, your honest sound advice
You know you dealt yourself a winning hand and loaded every dice
At every trough you stopped to feed with your Arrogance, your Ignorance and Greed.                                                                                                                                                I pray one day we’ll soon be free from your absolute indifference
Your avarice, incompetence, your Arrogance, your Ignorance and your Greed.


Jason said...

Classic stuff. This is what happens when you bring a pneumatic drill to a wallpapering-over-the-cracks party.

Next time, why not bring one of these?

Or am I being a bit too cheeky?

The thing is you are hearing the real views of these people. If you got audio and it went out on Newsnight or Dispatches or whatever, I think it might be complete dynamite...

Jason said...

BTW I realise the rules don't permit identification of speakers but there can be workarounds for that including disguising voices and so on.