Sunday, January 06, 2013

Why Cameron and Osborne are tax hypocrites

6 days ago, while other fat-cat bankers were still sleeping off their excesses of food and wine, the Icelandic judiciary acted.

Without a great deal of fuss and bother,  two of Iceland's most senior former bankers were jailed for making reckless business loans, following investigations stemming from the collapse of the country's banks in 2008.

Larus Welding, the former chief executive officer of failed Icelandic bank Glitnir, and Gudmundur Hjaltason, a former director at the bank, have each been sentenced to nine months in jail for fraud, a court ruled.

They were sentenced by the Reykjavik District Court after the two men were indicted a year ago on charges that they had "misused their position and grossly endangered the bank's funds" by lending €102m to a company called Milestone, without guarantees or collateral, the prosecutor said. At the time Milestone was a shareholder in the bank.

Larus Welding was formerly a senior executive at Landsbanki, the former owners of Ireland's Merrion Capital. The nine-month sentence handed down by an Icelandic court makes Welding the first head of a major bank anywhere in the world to be jailed for a crime linked to the global financial collapse.

Mr Welding helped to negotiate Landsbanki's €90m takeover of the Irish stockbroker back in 2005, when he was Landsbanki's most senior London-based executive, according to sources in Dublin.

Landsbanki's former joint chief executives, Halldor Kristjansson and Sigurjon Arnason, were both directors of Merrion Capital from December 2005 to October 2008, according to Companies Office filings.

Both men have been quizzed by Icelandic prosecutors as part of investigations into the collapse of Landsbanki.

The Larus Welding case has attracted headlines around the world over the past week and more Icelandic prosecutions are expected to follow over the coming months.

What is the most exciting thing about this story is that it proves, without hesitation, that it is possible to prosecute senior bankers in a mature economy and convict them and send them to prison.

Now, my detractors will say "Iceland, where is that place?" or "Not the biggest world economy", but that doesn't matter. Everything is relative, and in a small country which suffered badly under the speculative maelstrom unleashed by the global banking criminals, they too were damaged severely by the actions of bankers who felt that they could do what they wanted without recrimination.

 And the Icelanders have debunked that theory by sending these two banksters to jail.

And that message will be heeded by other Icelandic bankers, because when these two scumbags finish their sentences, they will never again be able to find work inside the financial sector. The very work skills they have spent years learning will be forced to lie idle because society has demonstrated that they don't ever want to have anything to do with criminals who have been marginalised by having been convicted of crimes.

That is because the convicted person has just been instantly 'labelled' as a 'criminal' and that very word alone possesses a great deal of emotive baggage.

So why is it that here in the UK, we cannot get the regulators and the other Government agencies to prosecute bankers like they have just done in Iceland?

Why have the senior executives of HSBC not been prosecuted for money laundering, and why was Barclays fined for LIBOR rigging, but no-one was charged with any criminal offences.

I mean it's not as if the present Government is anti-prison for criminals. On the contrary, they want to see prison working even harder and more cost-effectively. Chris Grayling, the Justice Secretary has been quoted as saying:

 ''Prison is not meant to be a place that people enjoy being in. I don't (want to) see prisoners in this country sitting in cells watching the Sunday afternoon match on Sky Sports.

''Am I planning to reduce the number of prison places? No I'm not. I do not want to set a target to reduce the prison population. 'What I do want to do is bring down the cost of prison. The whole philosophy I will bring to the department is getting more for less.''

But Grayling never once mentions banksters, or other financial criminals.

And this is part of the problem with the British attitude towards dealing with financial crime. We are quite happy to watch zigga-gillions worth of foreign dirty money flood into the City of London, because of the weird view that it somehow contributes to our GDP. I have never understood how that happens, and no-one has ever satisfactorily explained it to me, but we keep on being told this huge lie.

British banks routinely facilitate foreign tax evasion, particularly from the sub-continent of India and Pakistan.

Lifting the veil that has for years shrouded the names of those who allegedly stashed money away in Swiss banks, "...India Against Corruption..." recently released a list of 10, including a politician and heads of corporate houses, and charged HSBC Bank with running ‘hawala’ (money laundering) transactions.

In a daring expose, IAC members alleged that Mukesh and Anil Ambani and Congress MP Anu Tandon, among others, had crores of rupees sitting in Swiss banks. This information, they said, was based on a list of 10 account-holders in HSBC banks in Switzerland that was passed on to them by a senior Congress leader and cross-checked by them independently. Those named were part of the list of 700 people who had accounts with HSBC banks in Switzerland. The list was shared by the French government with India, which, however, did not reveal any name, and the matter is pending in the Supreme Court.

This was the tip of the ice-berg, the IAC members said. Charging the Manmohan Singh government with protecting the guilty, they said: “It is the biggest threat to the economic sovereignty of the country.”

In its most serious allegation yet, IAC charged HSBC Bank in India with involvement in ‘hawala’ transactions, as revealed by the depositions of three “small fish” account-holders whose premises were raided last year.

“You don’t even have to go to Dubai or Geneva [Switzerland] to open a Swiss bank to deposit your unaccounted money. HSBC Bank is openly and brazenly running a hawala racket in India, making the country vulnerable to terrorist money, drug money and ransom money. Someone from the bank comes and collects rupees from your house, and its equivalent in euros or dollars is deposited in a Swiss account opened for you. It can work in the reverse order, too, if someone wants to spread terror in the country,” IAC members Arvind Kejriwal and Prashant Bhushan said at a press conference here.

Demanding action against the bank and its top officials, they urged the 30,000-odd employees of HSBC to quit the bank “in the national interest.” They also demanded the “immediate arrest” of those who indulged in money- laundering transactions.

In the UK, we openly stand back and welcome foreign criminal money entering our country, even though much of it is merely passing through as part of a money laundering process, and we welcome foreign tax evasion for the same reason,. but David Cameron bleats like a stuck pig when foreign companies like Amazon or Starbucks ruthlessly exploit our elastic tax computation laws. This is hypocrisy of a truly breath-taking variety.

Cameron and Osborne are caught in a cleft stick. On the one hand they want to keep on making Britain attractive to wealthy foreigners who wish to evade tax in their own countries, to come here to shelter their capital (however acquired).  So they can't really prosecute anyone caught swindling and cheating the UK market, because too much draconian regulation of the London market might prove to be a disincentive for all those Pakistani and Indian and Russian billionaires who might want to hide their money here.

The problem is however that their failure to regulate the London market in an effective manner has meant that the British Government has sent a very clear message to every crook, con-man and money launderer that London is wide open for business.

At the same time, they are trying to talk tough on other kinds of crime, and bragging about how effective prison is for working class criminals, while refusing to prosecute white collar criminals for fear of putting off other crooks from coming here.

There is a strange dichotomy of moral conflicts inherent in this position. The ordinary man and women in this country is now very clear that this Government stands to protect the interests of their own class, while not giving a flying fuck for the interests of ordinary working people who are suffering so acutely at the hands of the bankers and the financial institutions. Cameron and Osborne are demonstrating that their truly is one law for the rich, etc.

Four out of five people want individuals to be prosecuted when banks break the law, according to a new survey.

Research by consumer watchdog, 'Which', has amply demonstrated that two-thirds of people believe the Government will not act in their best interests when implementing banking reform.
And only one in five think the Financial Services Authority is effective in regulating UK banks.
The watchdog is calling on the Government to ensure criminal prosecutions can be brought against individuals - up to boardroom level - who have presided over corrupt and dishonest practices.

These are findings which should be sounding a real warning bell in the Cabinet Room, because it means that a significant number of people are withdrawing their legitimacy from this Government, because they are failing to act in a manner which the great majority of the people want to see being adopted.

Cameron has shown that he will spend money like a man with no arms in certain cases, the amount of police time and money being spent on the investigation into the Plebgate affair has surmounted all realistic needs or expectations, while he will not sanction any meaningful prosecutions of bankers who have stolen billions of pounds.

So, that is why I am happy to see the Icelandic courts handing down prison sentences to senior bank executives for fraud, and that is why such outcomes are long overdue in the UK as well.


AbogadoNZ said...

Another good one Rowan.

Like you I see no prospect of The Axis of Evil that Nos 10 & 11 Downing Street have become, ever getting off their arses to have a go at the banksters. All the rest of us can do is broadcast the fact that UK is now officially a government sponsored tax haven where dirty money is welcomed. If only the 4th estate had the balls to keep asking the hard questions..

Keep going Rowan. Another brick in the wall...

anrigaut said...

Thanks Rowan for another great blog.

From your report on the Which survey it seems the message is getting out to a wider public. Don't give up!

AJD said...

Thank you for your help.

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