Saturday, February 14, 2015

“...Every form of abuse, intrigue, deceit...”

“...History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by  controlling money and its issuance...” - James Madison

The recent scandalous discoveries from HSBC, showing how far they were prepared to go to conspire with tax-payers in many jurisdictions, to hide their wealth from their own tax authorities, raises a number of vitally important questions about the ways in which the State should seek to deter others from committing similar offences.

Questions were asked in a Parliamentary Committee hearing on Wednesday11th February as to whether HMRC were being too dilatory in their approach towards deterring others from engaging in tax evasive practices. Margaret Hodge, the chairwoman of the Public Accounts Committee, gave Lin Homer, the chief executive of HMRC a monster roasting, describing the HMRC approach as "pathetic" and not in the best interests of the British taxpayer.

One of the biggest bromides dumped down the throats of the British taxpayer is that our public servants are recruited from the very crème de la crème of their generation, and they work assiduously to protect our civil interests.

It is of course all a load of bollocks, and all too often we, the people, find that our interests, far from being protected, are being exposed to increased risk, because the people chosen by the corrupting, all-pervasive civil service culture of the ‘safe pair of hands’, ‘the jolly good chap syndrome’, the ‘don’t rock the boat personality’, all too often lets us down very badly when there is a need for focused urgency and an ‘action’ culture, to get things done quickly, or what Churchill once called an ‘action this day’ mentality. 

This is where we now need to be focusing our attention, on the pathetic nature and quality of the people we have leading our agencies of control, and we need to be asking ourselves very serious questions as to whether we are being best served by some of the weak-willed, genteel wusses who are given power to protect our most important assets.

It has been a matter of concern for years, that public servants of no particular focused skills or experience can be promoted to run important agencies dealing primarily with crime, criminals and criminal proceeds.

By their very nature, professional criminals have developed a singular state of mind. They know that they are operating outside the mainstream, that they are outside the margins of ordinary social intercourse, and they have developed their own immoral and un-ethical code, which bears no resemblance to that of ordinary law-abiding people. They will lie, cheat and dissemble because it is what gives them the extra edge in their dealings. If they are professional robbers or burglars, they deal in fear as well as violence and greed. 

These are the people, among whom James Madison included bankers, who ‘will use every form of abuse, intrigue, deceit, and violent means possible’ to achieve their ends’, and it takes a very special person to go up against them and take them down.

It takes a lot of moral and personal courage to go up against a violent robber and take him into custody, and it has to be done professionally, with skill and good knowledge because the police officer is only going to get one chance of doing this effectively. Afterwards, the criminal will lawyer-up and there will be no approaching him unless his brief is present.

My point is that persons of criminogenic personality need specially trained expert criminal investigators to bring them to justice, good ‘thief takers’ to use the old phrase, who know how to counter all the clever tricks that the criminals will use, and who are not afraid to talk back to their lawyers and put them in their place.

But will the mandarins who run the agencies of control recognise this need and appoint accordingly? You have to be joking!

In the UK, white collar criminals genuinely believe that they are immune from investigation or prosecution because for so long, successive governments have allowed them to remain secure in that belief. Gordon Brown consistently told the City spivs and wideboys what a wonderful job they were doing, all the time they were busily dismantling the financial infrastructure. The bankers persuaded him to believe that they were creating the new Jerusalem in EC3, and he, poor sod, believed them!

The message coming down from Brown and his side-kick Ed Balls, was ‘...hands off the City – light touch regulation all the way – leave the boys alone while they are making all this money...!’

Of course, it was all smoke and mirrors, there was no money, just bad debt, but no-one was going to prosecute any wrong-doing because it would have made the politicians look so dumb!

Now, with every crook, money launderer, Russian gangster, corrupt Pakistani politician, oligarch, dictator, drug trafficker and tax evader busily moving into London to squirrel away their ill-gotten gains, no-one in power wants to send any wrong messages to the black money movers, to prevent them from coming to the UK, so they think that nicking a high-rolling money launderer or foreign tax evader would not be exactly saying that ‘London is open for business’!

It takes enormous moral courage to go up against one of these criminals because their affairs are complex, they have almost limitless money, and they are surrounded by lawyers and accountants who do their every whim! The cop who reaches out and arrests one of these new anointed had better be absolutely certain he’s got his facts right and knows the law. 

I should know, I was sued twice as a detective by criminals who lacked a sense of humour when they were nicked and their criminal operations brought to a halt.

My case is that you need men and women of extraordinary knowledge, bravery, skill, experience and cunning to be able to go after these bottom-feeders and that is why I have never understood why the British civil service believes so passionately in its attachment to the cult of the all-round amateur being given the most powerful and sensitive posts of Government. When it comes to dealing with criminals, simply having an Oxford degree in medieval French poetry and having been the head of a small local government office doesn’t provide the requisite degree of knowledge and experience of the criminal type, and the way in which they operate. 

But no, it has always been a matter of faith with the civil service caste that persons with no special experience or knowledge of such behaviour can be appointed to the most senior roles, trampling over the possible appointment of others who may possess real skills and have years of valuable experience to offer to the role.

It seems to be the British way – the way the British mandarin class works.

Take Jane Earl, who was appointed  -  over the heads of at least two very experienced men who had widespread knowledge of taking terrorist financing from the IRA, -  to the post of Director of the Assets Recovery Agency on 5 November 2002, and took up her post on 3 February 2003. Prior to this appointment she had been chief executive of Wokingham Unitary Council from November 1999.

Her previous service in local government did not appear to provide her with any especial skills and insights with which to combat some of the most serious professional criminals in the UK, and take away their criminally-acquired assets. As a result, in a short time her agency was commonly held to be a total failure 
In a report entitled “Underperformance of the Assets Recovery Agency” on 12 June 2006 the conclusions were;

“...It is clear that ARA is not being as effective as it could be. As the figures in this report demonstrate – the agency has failed to meet several of its key targets and is
nowhere near to meeting its target to recover assets equivalent to 100 per cent
of its budget. It is currently recovering less than 25% of its own running costs...”

Commenting on the report, Grant Shapps said “What we have is an Assets
Recovery Agency announced with a fanfare of publicity by the Prime Minister,
yet the reality is that it’s costing us nearly £20m to run, whilst it’s only recovering little over £4m each year. A combination of human rights legislation and the failure of the government to give the Assets Recovery Agency teeth means that the Agency is costing us four times as much to run than it recovers.”

The ARA was subsequently wound up as a signal failure and incorporated into the NCA.

We have also watched while the FCA continues to operate without any meaningful skilled former criminal law enforcement input, leaving the important decisions to operatives who have had no prior criminal justice hands-on experience. The view seems to be that civil solicitors can provide the necessary skills and insights that a former senior skilled detective might otherwise bring!

One of their former officers who became head of financial crime and intelligence for 2years and a few months, had previously worked in a number of admin roles at the FCA having joined from a Financial Services company. I have nothing against this individual, except to say that in my judgement they had insufficient criminal justice experience for such an important role. This person has now decamped to provide similar services to a major bank..

Now, we observe the hapless flounderings at HMRC.

Anyone who watched the hearings of the Public Accounts Committee on Wednesday 11th will have seen the pathetic performance of Lin Homer, boss of HMRC as she was grilled over what she knew and when she knew it about HSBC and what her department was doing with the information supplied by the French whistle blower over the tax evasion facilities provided by HSBC to its high-net worth clients.

Well, we have learned very little, except that HMRC have managed to prosecute only one person in 6 years, on the basis of this information.

This is staggering news, with all this information at their finger-tips HMRC have succeeded in prosecuting only one person.

Listening to the meanderings of Ms Homer, I began to lose the will to live as she sought to defend her department’s feeble activities.

She talked about the need for ‘corroboration’ before the Crown Prosecution Service would mount a prosecution. Corroboration of the content of the evidence!!

She admitted that it could take 44 months on average from the submission of a case to the CPS before they would bring a prosecution.

This sounds like the really bad old days back with a vengeance, when the CPS was staffed with a lot of men and women whose only function seemed to be a prosecution preventative agency against any charges being brought against anyone, and who demanded that every single issue was topped, tailed, and doubly underlined before they would sign off on it.

I am not going to identify every single feeble moment while Ms Homer struggled, squirmed and tried to talk over her inquisitors in a vain attempt to persuade them she and her team were doing a good job, you can watch the whole cautionary tale at

At no point did I get any sense that she or her people understood the need for direct dynamic action in the HSBC case. There was no sense that she understood the public concern that is inevitably being shown at the shenanigins of the crooks at HSBC who have been helping tax cheats from denying the UK the relevant contribution to the tax take the country so badly needs, and what is more, she gave every appearance of being disdainful of the comments and observations being made to her.

Of course, this is always the civil service way, any weakness demonstrated in showing an understanding of public concern is immediately denounced as ‘consumerist’, and is to be rigidly excluded from the debate.

Even more worrying is the track record of Ms Homer. Her history was recently identified in a major British newspaper website, ‘The Mail Online’.

Before coming to HMRC, Ms Homer was in charge of the UK Border Agency which performed so badly under her tenure, she was accused by MPs of a 'catastrophic failure of leadership' on securing Britain's borders, leading to a huge backlog of hundreds of thousands of immigration cases.

But astonishingly she emerged unscathed and was rewarded with promotion through the civil service and is now in charge of HM Revenue and Customs.

In March 2013, the powerful Home Affairs Committee said they were ‘astounded’ she was considered suitable for the job of collecting the nation’s taxes.

Chairman Keith Vaz hit out at 'incompetent' Mrs Homer receiving £20,000 in bonuses despite leaving the UKBA in a 'worst position' than when she started. 

A senior Whitehall source said: ‘There are increasing concerns from ministers as to why there are no penalties for poor performance in the civil service. Instead what we have is a “promotions-all-round” culture. 

‘There needs to be penalties for the worst performers and better career paths for those who are doing well. If someone has a terrible track record of delivery, should they really be being promoted? 

 ‘The civil service does not do talent management properly.’ The select committee accused Mrs Homer of repeatedly misleading MPs and called for Parliament to be given greater say over appointing of top civil servants.

The MPs said: ‘It is shocking that after five years under Lin Homer’s leadership an organisation that was described at the beginning of the period as being not fit for purpose should have improved its performance so little.

‘Given this background, we are astounded Mrs Homer has been promoted to become chief executive and permanent secretary at Her Majesty’s Revenue and Customs.’

Ms Homer has been in charge of and promoted out of a number of posts in the past..

Having worked at Reading Council for two years then Hertfordshire Council, where over a period of 15 years, she rose to the position of Director of Corporate Services.

This proved the springboard for her first major town hall job, in 1998, as chief executive of Suffolk Council.

Just four years later, she was parachuted into the same post at Birmingham City Council, on £174,000-year.

In 2005 she was accused of throwing ‘the rule book out of the window’ in a major postal votes scandal in Birmingham that ended up before the courts.

Election judge Richard Mawrey said fraud in the city ‘would have disgraced a banana republic’. He described Mrs Homer’s decision to allow postal ballot papers to be transported to the count in shopping bags as ‘the direst folly’.

But later that year she was chosen by the Home Office to run what was then called the Immigration and Nationality Directorate – this time on £200,000, plus bonuses.

Already in chaos, it was on her watch in 2006 that the country learned of the mistaken release of 1,000 foreign criminals.

It later emerged some 450,000 asylum cases had not been dealt with but left in boxes at the Home Office.

The new UKBA was meant to clear up the mess, and Mrs Homer became its first chief executive, on an astonishing £208,000 a year. 

But among a fresh run of scandals was the revelation that nearly 400 of the 1,000 foreign prisoners were told they could stay in Britain and dozens remained untraced.

Promotion came again in 2011 when she was handed the post of Permanent Secretary at the Transport Department where she stayed for barely a year before winning her biggest job to date – running HMRC.

Since then she has been criticised for failing to tackle tax avoidance, admitting in November last year that over half of Britain’s biggest 770 firms funnel profits overseas.

Now she is under the spotlight again for her handling of the HSBC scandal.

None of this woman’s postings indicate any skills or abilities to go up against criminals and others with criminogenic personalities.

The British people deserve a whole lot better than this. At a time when dishonest British tax payers were deliberately evading the scrutiny of the HMRC by moving assets into Swiss secrecy facilities, and ordinary men and women were being taxed to the limit and punished for any failure to submit their tax returns on time, it is unconscionable that HMRC should behave as if there was no sense of urgency or concern over the HSBC revelations.

Now, since the Panorama programme that first broke the story this last week of the whole rotten edifice structured by HSBC, it appears that HMRC had opened discussions with the Serious Fraud Office and the Police to establish other ways of moving forward against HSBC.

A case however of too little, too late!

All this perhaps explains why institutions like HSBC believe they can get away with the kind of criminal activities they have just been exposed for. These people do not need to have it spelt out to them, the first time they sail close to the wind and the Government agency in charge of their activities does not come down on them like a ton of bricks for behaving in this way, they immediately take the message that they can do what they like because the Government doesn’t have the bottle to go after them.

The more this kind of thing happens, the more secure the wrong-doers feel, until such time that they are confident that no matter how criminal their actions, the agencies of control will do nothing about them..

Once this state of affairs has arisen, then the banks can (and do) carry on pretty much as they choose, and that is the state of affairs we find ourselves in, in the UK today.

The moral of this story is ‘If you want the banks to toe the line and not to behave like organised criminals, then put people in charge of their regulatory conduct who will step in and treat them like the criminals they are at the least opportunity. Once we have locked up two or three bankers for cause, the rest will burst a blood vessel to get into line.


anrigaut said...

Meanwhile, Iceland continues to lead the way. This week, the Supreme Court confirmed - and in two cases increased - the 3-5 year jail sentences on 4 ex bosses of Kaupthing for fraud in the so-called 'Al Thani case'. In his summing up the judge is reported to have stated that the defendants were guilty of “thoroughly organized violations, committed out of determined intention and unprecedented impudence and disregard.” The verdict concluded: “The defendants’ conduct … involves a serious breach of trust against a large public limited company, leading to massive loss in funds”.

The Special Prosecutor said this ruling was a signal to countries slow to pursue similar cases that no individual was too big to be prosecuted.

"This case...sends a strong message that will wake up discussion," special prosecutor Olafur Hauksson told Reuters. "It shows that these financial cases may be hard, but they can also produce results."

But not, it seems, in the UK.

Anthony Ward said...

A crackerjack piece. Well done sir.

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