Thursday, February 19, 2015

Open letter to David Cameron about Banking Crime

Dear Prime Minister,
It is reported in the Guardian of 16th February 2015 that you have rejected calls for an inquiry into the handling of 3,000 suspected tax evaders with accounts at HSBC’s Swiss private bank, which has only yet led to one prosecution..

Your spokesman said officials had done what they could to make sure people paid up and argued it was “right that HMRC prioritised collecting revenues” before bringing cases where they could work with prosecuting authorities. 

It is reported that the Treasury is coming under increasing pressure to explain why HM Revenue & Customs did not pursue those suspected of criminal evasion more vigorously. 

The arguments that HMRC and Treasury ministers claim that France put restrictions on the use of the leaked HSBC files, which have only just been eased, are frankly specious. This claim was countered last week by the French finance minister who suggested the UK could have found ways to pursue criminal cases, if they had really wanted to!

When you were asked whether you were happy with the UK tax authorities’ handling of the leaks, your spokesman said: “...HMRC, as I see it, took the information that they had, they went through the 6,000 or so cases, they whittled that down to 3,000 specific ones to look at, went after those who were non-compliant to recoup them and launched prosecutions where they could. So they did look at and take forward action on prosecutions when they went through this HSBC data...’”

 ...“HMRC went after those that were not compliant and focused on making sure that those people who had not paid the taxes that were owed did so … The people who should have paid tax have had to pay tax. And then they did what they could with the restrictions that were imposed on them by the French on the information which has led to one prosecution so far. Clearly those restrictions have now been eased and, as HMRC said last week, they will therefore continue to have discussions with prosecuting authorities about any further action that should be taken...”

In this answer, all you have done is to parrot and replicate the words provided by HMRC, you have not said what you really feel at all, and that is what causes me and hundreds of thousands of people like me to wonder about your commitment to dealing with financial crime at all.

This is a very serious electoral issue for me and those who share my views. We believe that you and your Cabinet are not serious about dealing with financial crime, and particularly when it takes place in the Banking and Financial sphere.

You give few impressions of concern any time another scandal breaks in the banking sector. You never make any comment about the amount of criminal money that is flooding into London and being invested in high value properties; you rarely comment when banks are exposed committing very serious criminal offences, whether it be in the provision of worthless insurance policies to hapless bank clients, or the criminal manipulation of important global benchmarks such as Libor, or even the wholesale criminal dealings in foreign exchange accounts.

Oh you may make the odd off-the cuff remark to News at Ten saying how you expect cases to be investigated by the relevant authorities, but in areas of financial and white collar crime, particularly in the banking sphere, where any law-abiding citizen ought to be able to expect the Prime Minister to raise important issues of grave concern, you either remain resolutely silent, or you talk rubbish.

If anyone doubts that things cannot really be that bad, have a read of Ian Frasers excoriating blog at

Entitled ‘On banking, David Cameron is clueless’, one short paragraph will suffice to give a taste of Ian’s concerns about your lack of expertise.

“...These are just some of the reasons why my jaw hit the floor when I heard Cameron’s remarks about the banking sector on Tuesday morning. He came over as so glib, so blandly complacent, and so ill-informed it bordered on the terrifying...”

George Osborne, it is true, in a speech to the Mansion House in 2014 said; “...The integrity of the City matters to the economy of Britain. Markets here set the interest rates for people’s mortgages, the exchange rates for our exports and holidays, and the commodity prices for the goods we buy. I am going to deal with abuses, tackle the unacceptable behaviour of the few and ensure that markets are fair for the many who depend on them...”

All very impressive, except that it doesn’t mean anything, it is just rhetoric and hot air!
Yes, after the Libor scandal, in a huge brouhaha, the Government brought in a new criminal offence of reckless misconduct for senior managers whose actions lead to bank failure, with a maximum penalty of seven years jail and/or an unlimited fine.

But when you drill down into the granularity of what that really amounts to, anyone with any legal knowledge at all can see immediately that that offence is so unlikely to be ever charged, that it is merely an illusion of doing something, and not a reality at all. It is frankly deceitful, and makes me and other like me really wonder where your true motives lie?

I have written a number of times before that the conditions precedent that surround that new law are so onerous and will be so difficult to achieve as to make the law frankly unusable. It is a bad law and all lawyers know that bad law is worse than no law at all.

What makes it worse is that we already had perfectly good laws that could, and should have been brought to bear immediately. In the Libor cases, selected charges of false accounting under section 17 of the Theft Act 1968 could have been brought within weeks against a number of practitioners. 

It is speed of action from detection to charge and trial that provides one of the really big disincentives to white collar criminals. There was nothing to stop the Police or the SFO from getting in and acting swiftly and decisively because huge volumes of personal admissions by traders were all captured on the in-house compliance tapes which recorded telephone calls coming into and leaving the building in which the traders were housed.

One of my students was employed in a temporary job to listen to these tapes, and she found them truly shocking in the way the individual traders boasted to each other of the ways in which they had cheated the system and made money. These were primary evidence, which when played back to the accused would have proved devastating in interview, so why was the matter allowed to drag out and drift for ages before the SFO were brought in?

Surely it wasn’t the old tactic of allowing a lot of time to lapse so that the public would begin to forget the issue and it would fall out of people’s consciousness?

Of course, all your friends in the City would love that to be the case. Your dinner mates down at the Mansion House would be happier if cases like this never came to public attention at all, while those who are busily making shed-loads of money like the hedge fund managers, who may well prove to be implicated later, would be pleased if the heat was allowed to evaporate from the events.

After all, it’s a bit difficult to be a donor to the Tory party all the while one’s affairs might be under the spotlight.

As far as the latest HSBC scandal is concerned, well this is just another same old, same old, from the Bank that likes to say ‘Yes’  to every money launderer, drug trafficker or arms dealer. I don’t recall you making any public statement of concern or expressing your unhappiness when HSBC agreed to pay a record $1.92 billion in fines to U.S. authorities in 2012 for allowing itself to be used to launder a river of drug money flowing out of Mexico together with other banking lapses.

Mexico's Sinaloa cartel and Colombia's Norte del Valle cartel between them laundered $881 million through HSBC and a Mexican unit, the U.S. Justice Department said on Tuesday.
In a deferred prosecution agreement with the Justice Department, the bank acknowledged it failed to maintain an effective program against money laundering and failed to conduct basic due diligence on some of its account holders.

I believe that if you had come out firmly and ensured, through your influence in the Cabinet Office that senior officials in HSBC were prosecuted or at the least stringently regulated for these offences, I, and the general public would have more faith in your ethical position over this level of organised banking crime.

Did you at any time ask Lord ‘ICannotRecallWhatTimeItIs’ Green of Stay Shtum about his money laundering policies when he was head of HSBC.  Did you not think to find out what investigations HSBC was subject to when you made him a Peer in 2010? Pretty neglectful of you, if you don’t mind my saying so! I mean, don’t you people do any due diligence at all? It’s not like he would have been in the dark about what his bank was doing!

As for the latest scams that occurred on Lord ‘IHave’ntAClueWhatYouMean’ of Money Laundering’s watch, I agree that the provision of bank accounts to high net worth tax payers to enable them to evade the payment of tax is a very serious charge to lay at any bank’s door, but you give every impression of being completely sanguine about the whole affair.

Not once, as far as I can ascertain, have you raised one word of concern about the fact that one of the biggest and most prestigious UK banks is alleged to have conspired with its clients to facilitate tax evasion, a major criminal offence.

You appear to be unconcerned that in so doing, HSBC were engaged in wholesale criminal money laundering. It may be that you did not fully appreciate the whole criminality involved in the process, but that does not excuse you from taking advice from the Lord Chancellor and the other lawyers, who would have been able to fill in the gaps in your ignorance.

I mean, doesn’t it worry you that the UK’s leading banks are now considered by the regulators of the world’s financial services operators as being on a par with the world’s leading organised crime gangs. London is considered a safe haven for every kind of dirty money and the City is nothing more than a sink which washes every criminal’s dirty dosh down into the offshore sewer. Don’t rely on my word for the truth of this, ask Alexander Lebdev, owner of the ‘Independent’ newspaper and the ‘Evening Standard’!

How can you remain so silent when the very nerve centre of our banking and financial system is the plaything of every international crook, oligarch, money launderer, tax evader, drug dealer, arms smuggler and state-looting criminal?

Don’t you know these things are going on every day, and our banking system and our bankers are on the watch list of every major law enforcement agency in the free world.
Take a look at these facts reported in Business Insider magazine and then tell me you aren’t concerned enough to stand up and say something.

 “...Swiss authorities shocked the markets Wednesday morning when police raided HSBC’s Geneva office. In an emailed statement, the Swiss prosecutor's office confirmed it was investigating "HSBC Private Bank (Suisse) SA and persons unknown for suspected aggravated money laundering."

Herve Falciani worked in HSBC's IT department between 2006 and 2008, when he became a whistle blower to French authorities.

100,000, the number of  HSBC client accounts under scrutiny related to tax evasion and money-laundering investigations, involving £78 billion — the accounts' asset total between 2005 to 2007 — the years in which the account data stems from, involving 203 countries
The other countries launching investigations into HSBC over client tax evasion and money-laundering allegations are Belgium, France, Argentina, the US, and Switzerland.

Are you worried now, Mr Cameron?

I believe that your silence in the face of this tsunami of financial crime and organised criminality taints you and your colleagues. It indicates a total lack of willingness to do anything to help prevent this level of mafia banking, and it leaves those of us who care about these things asking whether you care enough about the reputation of this country to do something effective about it, or whether your friends in the City are really pulling your strings.

You would be fast enough to act if this level of financial corruption was being alleged within a major Trades Union, and you would ensure that all the right stories appeared in the press saying what you were doing to undermine it!

It would only take a couple of phone calls from your office to the head of the FCA, the SFO and the Commissioner of Police for the City to get actions started. You don’t have to make it public, but we do need to see real action being taken against these rotten bankers and their criminal satraps.

By real action I mean a dynamic prosecution policy, the formation of a specialist task-force of properly qualified and experienced detectives, customs officers and revenue men and women who could work in multi-agency teams to get the evidence and then conduct the dawn raids on the homes of senior bank officials, before preferring selected charges against them.

It needs concerted action if you are going to win back the reputation for having the guts to do something about the criminal City, because otherwise, the belief will continue to be spread abroad that you are their creature, and that you and yours do not care about financial crime enough to do anything about it.

Worse, it will reinforce the belief that you and yours are complicit in the wrongdoing and profiting from it. 

Is that what you want?

There are more than enough people know who watch and see what is happening and can provide no explanation for the lack of action by you and your government other than that you are protecting the money men; and the only charitable explanation for that protection is that in some twisted perverse way, you think that by allowing this slew of dirty money to find a safe haven in London, you are somehow benefiting the UK plc.

You are not. As fast as that funny money arrives here, it can exit again, when another safe haven offers better protections to this vast ball of dirty money which rolls around the globe, looking for a temporary home.

It is way past time when you, as this country’s leader, should stand up and say ‘enough is enough’, and task the relevant authorities to put a stop to this level of sleaze and criminality once and for all.

You have to put the real reputation of this country and its banking sector ahead of the short-term profits that your spiv City friends are busily making, managing the dirty money that is flowing into this country because its criminal managers know that we are too scared to see it go elsewhere.

This country and its decent, law-abiding people who pay their taxes and whose money has already been used to shore up this organised criminal banking enterprise, deserve no less, and we would like you to know it!



Roger Lewis said...

Well Said Rowan!

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