The City's apologists for unlawful conduct come crawling out of the woodwork

 A truly unbelievable story in today's Daily Telegraph catches my eye. 

The CBI chief John Cridland has written to The Times defending City banks over Libor manipulation and PPI criminal selling tactics. He was today expected to call on the government to put in place legislation that would protect banks from lawsuits related to the sale of products linked to Libor.

His point, apparently, is expected to say that businesses which sold products linked to Libor should be prevented from bringing legal cases against banks despite widespread allegations that lenders manipulated global borrowing rates.

Writing in The Times this morning, Mr Cridland said banks should be protected from lawsuits connected to Libor-rigging that could cost them billions of pounds.

"Banks must be held accountable for the manipulation of Libor and the Wheatley Review has set out a comprehensive and compelling case for reform," he wrote. 

The two things are however not connected. Making banks accountable has nothing to do with the proposed reforms identified by Martin Wheatley, another friend of city fraudsters, as rowans-blog passim readers will be well aware!

"But hindsight is a wonderful thing", says Cridland. It would be a dangerous precedent if banks were to be held responsible for products sold that related to Libor."

So, let me see if I have got this right. This rather strange man believes that it is perfectly ok for banks to criminally manipulate the LIBOR rate, thus generating criminal proceeds in the form of illicit profits, which they then launder through their own institutions, but anyone else who has thereby suffered financially, as a result of this manipulated rise in costs, should not be able to sue for damages arising out of others' criminal actions.

Hmmmmm, seems fair,  but only if you inhabit the La-La land from which Mr Cridland hails. 

Mr Cridland also called for new laws to curb compensation payouts from banks for mis-selling PPI and other financial products. He is urging the Government to introduce a legal time limit on claims for payment protection insurance compensation.

How does this work, I wonder? You have been criminally defrauded by a bank who lied to you and forced you to buy a financial product which was not of the slightest use to you, and they trousered a significant amount of money as a result. Now you have realised that you were screwed, not unreasonably you want to get your money back.

But Mr Cridland doesn't want you to have the right to do that after a period of time, and he wants the Government to pass legislation to prevent such actions being brought.

It does seem rather unreasonable that this man wants to deny you any sensible rights to recover any losses you may have incurred at the hands of the banking mafia. Is he someone with a significant degree of experience in industry or commerce? has he undertaken some years of work in the main floors of a major business enterprise, has he handled complex worker relationships and won business for his firm and the country by his work in foreign countries. Who is he to make these startling demands, and what is his experience of criminal fraud, so that at least we may be assured that he knows whereof he speaks? 

John Cridland, now aged 50 , has been with the CBI for nearly three decades and has been deputy director-general since 2000. He will be the business organisation’s 10th leader and the first to be appointed from inside.

So good so far! Born in 1962, he was educated at Boston Grammar School and studied Indian and African history at Christ’s College, Cambridge. He joined the CBI as a policy adviser in 1982, which would have made him only 20, but then he was probably very bright and very precocious, because he became its youngest ever director in 1991, at 29, when he took over the environmental affairs brief.

He moved on to human resources policy in 1995, aged 33, where he helped negotiate the UK’s first national minimum wage and entry into the European Union’s “social chapter” on employment conditions.

Mr Cridland has been responsible for the management of the CBI’s policy and membership activities and is a frequent spokesman in the media and on public platforms. 

Outside the CBI, he served on the Low Pay Commission from its inception in 1997 until 2007 and also as a member of the council of Acas, the conciliation service. He was on the Commission on Environmental Markets and Economic Performance and the Women and Work Commission. He was vice-chairman of the Learning and Skills Council until this year, is a member of the Cranfield University council and a local school governor.

Mr Cridland was awarded a CBE for services to business in 2006.

In other words, he is a typical and traditional policy wonk, who has spent his time on Commissions and Committees and Councils, discussing, debating, organising, writing thought-provoking papers, polishing the seat of his arse, and generally being part of the magic circle. One isn't told if he has ever done a proper day's work in any of the industries he purports to represent in his entire life, but I am sure if he had, we would have been told!

And this is the man who elects himself to urge Government to institute legislation protecting banks from civil suit from those who have been defrauded over LIBOR or who have been cheated by the banking mafia out of their hard-earned money.

If it wasn't so quintessentially British, you would have a job making  this crap up! First, through institutionalised negligence and lack of attention to detail, we have a regulatory regime that doesn't want to prosecute those it regulates for fraud, thus encouraging them, by a complete absence of concern and attention to their criminal activities, to carry on defrauding their customers and the rest of the world at large; and then we have some City apologist who then urges Government to allow the same criminals to be allowed a complete immunity from civil suit and an end to pay-outs of compensation for the effects of their crimes!

This is what the City financial sector relies upon, When things get bad, when the chaps on the inside have virtually brought the Temple of Mammon down around their ears, almost throughout history, some paid lackey, fellow travelling lickspittle, some well-fed and watered Tory M.P with his nose firmly in the City trough, or other industry poltroon can be relied upon to step up and demand an end to the public outcry, for a cessation to the banker-bashing, for protection from righteous anger and concern, for fear of damaging the ability of the City of London to make money.

And time and again, the Government of the day takes heed. People like Martin Wheatley are invited to step forward to promote their new proposals for change, but nothing gets done to meet the immediate needs of the crisis. It has been like that since the days of the South Seas Bubble and it does not change.

Read this guff by Cridland, and learn from its content. These are the people who live in a permanent state of denial about the crisis which exists in the British banking sector. But his state of denial is a dangerous one because it obscures the reality of the criminal culture which the banking sector represents, and which will, if allowed to continue unchallenged, eventually corrupt the whole of the British body politic. We have a duty to continue to challenge these idiots!

The FSA must now focus its regulatory attention on HSBC, and bring relevant prosecutions, and if necessary, wind this rogue bank up in the public interest!

The Fantastically Supine Apologists have one last chance to assert their regulatory authority on the British financial sector by putting HSBC on notice that they are about to be subjected to the most intrusive root and branch review of their culture and their compliance practices, prior to the most stringent disciplinary action ever brought against a British bank, which will include criminal proceedings.

How much longer must the ordinary people of Britain be expected to put up with this shameless parade of organised criminality in their High Streets going completely unpunished, while decent and honest men and women are suffering so badly under the rigors of this recession. Does the FSA truly believe that the businesses which are being denied ordinary commercial loans, the savers watching their life savings being whittled away and earning nothing in interest, and the ordinary bank customers who are being gouged at every turn by fraudulent malpractice, do not notice that they, the primary regulators, are turning a deliberate blind eye to this level of blatant criminality, and doing nothing about it?

Only today, Sunday 11th, the Sunday Times, in article entitled 'The banks that still give customers a hard sell' reports that High Street Banks are even now, after all the recent scandals and fines, engaging in unlawful and criminal sales practices and forcing customers into the purchase of unsuitable financial products they don't need or want. And who are the biggest criminals of all, yes, you guessed right, HSBC, RBS and Santander. Don't these bastards ever learn, are they incapable of getting the message, that the days when they can just ritually gouge their customers with impunity, are over. Except, the FSA hasn't got that message across because they have never prosecuted anyone for this criminal activity, so they let down the investing public yet again.

The man and woman in the street knows that there is one law for the banksters and one for the rest of us, and as each scandal, each new criminal allegation and each new investigation is announced, while the FSA sits back and does nothing, means that the FSA is now held, generally, in deeper and deeper contempt. They could be doing something about this latest story of abuse. If their much vaunted intelligence facility was doing its job properly, they should be passing this information to its financial crime investigators on Monday and they should be undertaking an urgent review of product selling in these banks. They could be demanding access to the sales records of these banks, asking for the details of their objection training and interrogating their sales directors. Instead, they will do nothing, while we all wait for the next outcry of high street fraud.

The FSA has warned about these accounts before in 2010, but merely sending out an elevated news briefing is simply not enough because it does not get heard by the public. Now the FSA knows that the banks are wilfully ignoring their warnings, they must step in and do something positive, and prove that they have the will, the courage and the knowledge needed to take on these crooks. It's no good having a Financial Crime and Intelligence Division if they don't get out and start doing something positive. Just playing musical chairs with job titles is pointless

This week alone, two more major scandals involving HSBC have been publicly announced.

With HSBC already preparing to pay fines of around $1.5 billion in America for breaking money laundering rules, for deliberately laundering drug money for the Mexican cartels, the UK tax authorities have received details of every British client of HSBC in Jersey after a whistleblower secretly provided a detailed list of names, addresses and account balances earlier this week.

The list includes a British drug dealer, now on the run in Venezuela; an illicit arms dealer who was convicted of possessing more than 300 weapons at his house in Devon; three bankers facing major fraud allegations and a man once dubbed London’s “number two computer crook”, while a series of other accounts containing six-figure deposits are also registered to modest addresses in relatively poor parts of the country. These disclosures raise very serious questions about HSBC’s compliance procedures in Jersey, a jurisdiction with a less than savory reputation for handling other people's funny money. 

I am not going to listen to protestations from the Jersey authorities about the effectiveness of their much vaunted anti-money laundering regime. They have been whingeing about people like me pointing the finger at them for many years, but it's funny how, periodically, stories like this emerge. British residents put money offshore with the overriding aim of disguising the proceeds of their crimes or cheating on their taxes, and no-one with any experience or knowledge of this practice thinks or believes otherwise. I mean, It's not as if HSBC hasn't heard of due diligence IT products like WorldCheck which would have immediately thrown up the identities of these undesirable clients. But what the hell, why bother, a criminal bank likes to provide its criminal clients with the best services possible!

This does not even begin to address the question of the institutionalised level of tax evasion by British citizens which has been uncovered, and HM Revenue and Customs is now understood to be trawling through a list of the names and addresses of more than 4,000 people based in Britain who have had bank accounts at HSBC in Jersey. This work is expected to lead to the identification of many hundreds, if not thousands of people who are evading tax if the accounts have not been previously disclosed. A spokesman for HMRC said: “We can confirm we have received the data and we are studying it. We receive information from a very wide range of sources which we use to ensure the tax rules are being respected.

It is no longer acceptable for British banks to continue to adopt the insouciant approach that they cannot be expected to be responsible for UK citizens actions in cheating the British Revenue. In these straightened times, when ordinary people are being required to carry the financial can for years of banking irresponsibility and greed, and when they are being focused on by the Revenue authorities to pay every penny of tax that the authorities can levy against them, it is completely unacceptable that wealthy British citizens can open offshore bank accounts in British Banks, deposit significant sums of money, and the banks can just wash their hands and say '...it's nothing to do with us....'

If these complacent banks were fined the financial equivalent of every penny of tax evasion HMRC could calculate the UK Treasury had lost, as a result of these secret accounts, and they are, after all, providing safe refuge for this criminal financial activity (tax fraud is a crime let us not forget), then the bank should only be able to recover these fines from their clients, if the clients could not prove that they had disclosed their accounts to the Revenue. Why should HMRC, and by default, the tax-payer, have to foot the bill for this recovery process, let the banksters and their dirty clients pay for it!

The days of this offshore scam for wealthy British tax fiddlers should have ended long ago. A huge number of these so-called off-shore accounts are nothing more than electronic book entries, while the UK bank treasury function is still controlling the global book. It is nothing short of scandalous that H.M Government continues to allow these offshore boltholes to continue defrauding the British Treasury.

The HSBC Jersey client list is believed to include senior figures in the City. Dozens of bankers are understood to have deposited six-figure sums offshore, while some institutions are described as having “clusters” of employees taking advantage of the accounts. Doctors, mining and oil executives and oil workers are also heavily represented in the list. More unexpectedly, a greengrocer in the East End is understood to have more than £80,000 in his HSBC current account in Jersey. HMRC is comparing the new documents with existing tax records to identify anomalies. One investment manager has more than £6 million in his account, while the average amount held is £337,000. Of the greatest seriousness for HSBC, dozens of people with no obvious legal source of substantial income are identified to be holding large sums in Jersey.

Apart from anything else, there would appear to be a complete absence of any proper anti-money laundering controls being applied to the maintenance of these accounts. This should not come as any surprise to us, or the FSA for that matter. Around the world, HSBC has faced repeated accusations that it was not maintaining sufficient controls over the source of money deposited in its accounts. Money laundering rules which demand that banks monitor the source of money and report any suspicions to the relevant authorities.are being routinely flouted.  

In July, the US Senate investigation found that money-laundering controls were largely absent in HSBC’s operations in Mexico, and that the bank was actively laundering money for the Mexican drug cartels. The bank has also faced serious criticism for hiding Iranian transactions.

One analyst has described HSBC’s compliance practices in this regard as “a wink/nod business model” that showed “a profound lack of controls”. Such a business model can only be allowed to work when the lead regulator repeatedly fails to take concerted action to enforce its rules on its regulated members. 

Other countries are now pointing out how HSBC is facilitating criminal activity in their countries.. 'India Against Corruption' on Friday released a list of 10 names, 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 these persons, 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.

In its most serious allegation yet, IAC charged HSBC Bank in India with involvement in ‘hawala’ transactions, as revealed by the depositions of three 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 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. 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.

It now looks extremely likely that the Indian Government is likely to conduct yet another thorough 

inquiry into allegations that HSBC was involved in money laundering which may have helped terror groups operating in India. The probe is likely to be conducted by investigators of various intelligence wings of home and finance ministries as the allegations, if proved true, would have serious security implications, senior sources in India have reported. The multinational bank had, however, on Friday denied the charges and said it takes compliance with the law very seriously. The probe agencies will look into reports that funds were being routed from Pakistan and a few Gulf countries to terror groups operating in India using banking networks.

All these multi-faceted allegations against HSBC, are a clear and loud message to the FSA that something is deeply rotten in the HSBC structure. Lord Turner goes to great lengths to point out that HSBC is structured on a Holding Company basis, but that he does not have authority over some of its overseas entities. In his typical Mandarin-like way, the head of the FSA tries to explain why he does not have authority over parts of the HSBC empire.

That, with the greatest of respect to his noble lordship, is complete and utter bollocks.

He is the boss of the lead financial regulator in the UK and HSBC is one of his entities. He has the power to drag HSBC and Stuart Gulliver its CEO into Canary Wharf and tell him that the days when HSBC can go round the world behaving like a mafia organised crime family are over, and he can put HSBC management on notice that they are being required to clean up their shoddy act, or face the ultimate consequence of a petition for their nationalisation being presented to Government.

It is often said that the fish rots from the head and in the case of HSBC, the failure to promote a willing acceptance of routine financial compliance in all its areas, is something that has emanated from the Head Office in London. Its culture is determined by the way the main Group Board dictates and if the message they send is that compliance is all too difficult and too costly and is frankly a waste of time, then that is the message the offices on the ground get!

I once attended an IMLPO quarterly workshop when a senior compliance man from HSBC Group made a presentation about compliance with the new laws on Bribery and Corruption. The message he was sending was as stated above, it was all too costly, too complicated, too difficult to achieve, and that it was frankly, a waste of time. He referred to a minor cultural practice in China of the giving of red envelopes containing a few small low denomination coins to business contacts at New Year. He explained how this age-old gesture, akin to our giving our friends Christmas cards, had needed to form a major legal investigation by HSBC, costing many thousands of pounds in legal fees to ascertain if they might be breaching the Bribery and Corruption laws by continuing with the practice.

What he was really doing was reinforcing the HSBC worldwide message, 'compliance is a waste of our time and money so don't get too involved with it'! Such a message is routinely reinforced when City apologists and fellow parallel universe dwellers such as the Centre for Economics and Business Research publish rubbish such as that reported in the Sunday Times Business Section today,where they reported that according to CEBR, London was losing its dominance as a financial centre and 'short-sighted over-regulation, penal taxation and banker-bashing' was accelerating the trend.

It's not over-regulation that causes financial crime, you dimwits, it's a failure to enforce the regulations that exist already. Its not penal taxation that is causing banks and obscenely wealthy people to defraud the Revenue, because all too few of them pay any realistic levels of tax, because they routinely cheat; and its not banker-bashing that is forcing London into a subordinate position in world terms, but the fact that the world is slowly getting the message that London is the leading financial cess pit of the world and if you don't want to be screwed over by the insiders, then don't bring your business here.

These are the problems that Lord Turner and his new Centurions face. Routine acceptance of the phenomenon of financial crime has meant that London has become a sink. He must now focus on exerting his authority over HSBC and make them understand that they are required to obey the law, that it applies to them as much as anyone else, and that a failure to comply, by permitting money laundering, facilitating tax evasion, engaging in Hawala banking thus facilitating terrorist financing, are all criminal offences, and a failure to implement a policy of 'best practice' of compliance with the Money Laundering Regulations is also a criminal matter, for which HSBC executives will and must be held to account.

Only in this way will the ordinary man and woman in the UK High Street start to begin the believe that the FSA really stands for anything, and is worth the money it costs and that it means what it says,  because right now, I am not sure they have any reason so to do!

The FSA proves that it has finally lost the plot altogether.

If you ever had any doubt that the movers and shakers at the FSA have difficulty in communicating with us ordinary mortals over their role and function, you should watch the following video, and cease being in any doubt.

- http://www.parliamentlive.tv/Main/Player.aspx?meetingId=11658&st=16:10:20

This vital piece of intelligence enables us to really observe how semi-detached the policy-makers at the FSA have become, and how far they have retreated from the reality of the financial world they are supposed to regulate.

The FSA is a regulatory authority and as such it has powers and responsibilities given to it by Parliament.

The word 'regulate' according to the Oxford English Dictionary means to control something,               ( especially a business activity) by means of rules and regulations: Its origin is from late Middle English (in the sense 'control by rules'): from late Latin regulat- 'directed, regulated', from the verb regulare, from Latin regula 'rule'.

This definition places the role of the regulator firmly in the forefront of the debate. They are there to control or rule, by means of rules or regulations. Their job is to impose rules and ensure they are obeyed. How they do that is debatable, but they must have a series of gradated sanctions which they can impose, because how else do they assert their devolved authority. And this is where I continue to assert that the FSA lost the plot a long time ago, and the passage of time has made their work product worse, they have lost the ability to enforce their will.

As a result, the industry they sit above generally despises them, and ignores them most of the time. How else can you interpret the level of financial criminality that goes repeatedly unpunished, the level of organised criminality which is endemic within the British banking sector, and the criminogenic culture which permeates the sector. On criminals such as these, fines have no effect whatsoever, because they are not even paid for by the Executives running the institutions being penalised. It is the shareholders who are forced to pick up the tab!

The discussion in the video revolves around the House of Commons Home Affairs Committee enquiring into the proceeds of narcotics dealing, and the question to Lord Adair and Tracy McDermott was whether there was an increase or a decrease in the amount of money laundering being carried on by those who use UK financial institutions to move the proceeds of drug trafficking.

The importance of this question is that it goes right to the heart of the whole responsibility of the FSA for regulating one major element of the UK financial market, the element of money laundering. Yet the answers appear to be frankly unsatisfactory, complacent, almost evasive, although the first answer from Lord Turner, boss of the UK's financial regulatory agency, was right on the money when he said;

"...I would have to say that I do not know the answer to that..."

The rest of the first element of the conversation that then flows for the next few minutes is not helpful to us. However, what it does demonstrate is through focusing on minutiae, how far away from one of the major issues of our time, Lord Turner has managed to distance himself. Let us review the facts.

The question of money laundering within the major banks in the UK has become among the most serious issues facing the regulators. As Keith Vaz, the chairman of the committee says at one stage, there have been cases such as those in Coutts, Lloyds Bank, HSBC in Mexico, Barclays Private Bank, etc, but there have been no prosecutions of anyone involved.

And this is where the real issue resides, there have been no prosecutions of anyone for what has amounted to billions of pounds worth of financial criminality in the form of money laundering.

Chairman Keith Vaz refers to the US Senate report which castigated HSBC and which detailed what it called a "...pervasively polluted' culture at HSBC which allowed the bank to act as financier to clients seeking to route shadowy funds from the world's most dangerous and secretive corners..."

Chairman Vaz asks Lord Turner whether this report had rung an alarm bell in the FSA, but all Turner can tell him is that it is '...something we are alarmed about...' he says it is '...prima facie, very concerning...' and then '...whether this contains implications for other UK-based banks, we don't know...' and that it will be a '...spur for us to look in more detail in the area of what we are doing in anti-money laundering...'

He then goes rambling off into a long apologia about the legal status of HSBC, and the role of the FSA with regard to a foreign-registered entity. Chairman Vaz tries to bring him back to the area of concern about the amount of money being laundered from drug profits through US and EU banks, but Turner reverts to Mandarin mode again and starts rambling on about the need to maintain strict controls within banks, and admits that what has happened inside HSBC means they will have to focus more on it. 

It is all smoke and mirrors of course, and at no stage does Turner evince the slightest admission that in reality, this level of banking criminality is something that he or his people intend to get excited about. It is as much as he can do to elevate his level of admitted concern to anything higher than a need to '...focus more intently...'  He admits he will be attending a debate where they will focus on whether the FSA needs to raise its concern. This is a classic re-statement of the FSA, civil service model of side-stepping responsibility and concern for what has become by any standards, a level of organised banking criminality on a grand scale, and reverting to the mode I have referred to in previous blogs where there has been a long-standing tradition within the agency of not prosecuting anyone for money laundering issues.

Turner talks in rotund tones about the way in which the FSA has in the last couple of years, been 'ramping up' their focus of concern about money laundering, but when Chairman Vaz, clearly rapidly reaching the limit of his patience at all the bullshit which Turner is spouting about thematic reports and the key issues regarding PEPs, wire transfers etc, and their inability to find an exact equivalent to Mexican activities, all of which he is using to try and filibuster his way through the question, asks him if after all the meetings he has attended and all the regulation he has done, that he is not concerned about the amount of money laundering being identified. Turner then utters a phrase which to me is the root cause of his problem, his utter lack of urgency to be doing something about financial crime more generally and money laundering in particular, and demonstrates that not only does he not apparently know the law, but that he wants to avoid the possible consequences of the law.

It is hard to say, and I do not intend to, that Lord Turner deliberately tried to mislead the Select Committee, or that he deliberately stated an untruth, but he clearly made a statement which is simply not correct either in fact or in law.

He said in response to Chairman Vaz's goading that '...we are not a law enforcement agency directly in this respect...' and then wanders off into burble-speak again.

I think this is the most important key point in the whole issue, and it is repeated later in the video when Tracy McDermott states that the FSA are '...not the prosecuting authority...' in this regard.

What we are witnessing in this video, most of which is taken up with a huge diatribe of regulator-doublespeak and fairly meaningless wabble-babble, is the core recognition of the fear that lies at the heart of the FSA (and presumably will continue with the FCA), that they might have to take on board the responsibilities which Parliament gave them in 2001, the responsibility for enforcing the Money Laundering Regulatory regime.

This, more than anything else, I think, colours their thinking and their approach to their responsibilities. They talk grandly and broadly about getting their views across to the industry through the production of their thematic reviews, and their consultation papers, and their periodic reviews and all the other detritus of a bureaucratic approach which seeks to focus on policy issues (beloved of all Mandarins and civil servants), while adamantly refusing to get their hands dirty by getting down and doing the job they were tasked to do which is to regulate the fucking sector, to control or rule it, and in default, by imposing their will on those who do not want to get into line.

Let us look at what the FSA's role is supposed to be.

Their own website page entitled 'Fighting Financial Crime' states;

"...One of our statutory objectives is to reduce the extent to which it is possible for a financial business to be used for a purpose connected with financial crime..."

Subsequently, the message reads; '...Financial crime includes any offence involving money laundering, fraud or dishonesty  or market abuse...'

At the foot of the page, it quotes a former FSA Chairman, Sir Callum McCarthy who stated;

"...We must not lose sight of the fact that the purpose of our financial crime objective is to help in the fight against crime; crime that creates real and social harm like drug-dealing, people trafficking, fraud, market abuse - and terrorism..."

I have quoted these statements in full, because I believe that they give the alternative interpretation to the statements made by both Turner and McDermott in their evidence to the Committee. 

It is manifestly clear that the FSA is a law enforcement authority, with a mandate to enforce the law with regard to money laundering, including drugs, and for Lord Turner to be unable to determine the scope of the role in dealing with drug money laundering is shameful. For him to evidence the paucity of his knowledge in this field is risible, and is merely more evidence of the de minimis level of concern he and others evince towards money laundering offences.

As to whether the FSA has the authority to prosecute money laundering offences, a fact denied by Tracy McDermott, well the principle is well established.

The Court of Appeal has stated quite clearly in the case of Rollins, R. v [2009] EWCA CRIM 1941, that the FSA has full powers to prosecute offences of money laundering, and that the FSA '...should be able to act as the single prosecutor instead of having to bring another prosecuting authority...'

So why these two experienced regulators should seek to dissemble before the Select Committee in this way is beyond me, but the facts are there in front of you and you can watch and hear them on this video. It is up to Lord Turner and Ms McDermott to persuade Chairman Keith Vaz that they had no intention to deliberately mislead the Committee, and I am certain that, gentleman that he is, he will eventually allow himself to be so persuaded. 

So, watch the video and then ask yourself if having seen its contents, that you feel that there is any greater degree of likelihood that serial organised criminal entities such as HSBC et al, are likely to be prosecuted for money laundering. Even the news this morning of the new allegations against HSBC Jersey will, I suspect, be allowed to slip between the fingers of Lord Turner and his new centurions, led by Ms McDermott.

There is one delightful moment in the video which is worth waiting for, which comes just at a time when you are beginning to wonder what kind of relationship exists at the top table inside the FSA.  Ms McDermott and Lord Turner are referring to each other on first name terms, which makes it all very chummy chummy, and inclusive, but does not give the sense of absolute professionalism which one might have thought should apply in a meeting before a Parliamentary Committee. After calling Lord Turner 'Adair' for the second time, Chairman Vaz purposefully reminds Ms McDermott that his title is 'Lord Turner', which Ms McDermott is forced to acknowledge with an apology, which she does courteously, but the point has been made.

In this one single, clever intervention, Chairman Vaz pointed up the lack of seriousness that clearly permeates this debate inside the FSA, such that these two public servants can appear in front of the Home Affairs Select Committee, and talk together as if they were merely sharing a coffee back at FSA HQ.

Priceless stuff, but deeply worrying all the same. Can we expect prosecutions now to be brought against HSBC as a result of the Jersey revelations today, which are clearly so blatant and so scandalous as to be nothing more than a direct challenge to the authority of the law. Might be ok if we had a prosecuting authority willing to take responsibility to bring a case, but I wouldn't hold your breath!

The silence of the hyenas!

I think we are rapidly approaching the time when we will soon be inhabiting a parallel universe from the major high street banks. They are clearly living in another paradigm from the rest of us, where they have been encouraged to take leave of all sense of reality, a concerted retreat from sanity which allows them to pretend that their criminal actions in money laundering, PPI fraud, or LIBOR manipulations are really perfectly normal and in the normal course of doing business, and the real fault lies with the regulators and the politicians who insist on passing laws which as far as the banks are concerned, merely get in the way of their doing as much criminal business as they wish.

They have been behaving in this organised criminal fashion for so long, and in the process, making so much money, that they now believe that they are truly above the law which applies to mere mortals. They honestly have come to believe that they are the Masters of the Universe, the financial Jedi, and that ordinary laws passed by democratic processes do not impact upon them. How else can you explain the rash of shoddy articles suddenly appearing in all good Tory and City apologist papers, bemoaning and bewailing the unreasonable way in which the poor British banks are being treated.

Suddenly, the fact that they are openly and cynically breaking international laws, implemented through the exercise of the democratic function, is of no account. Engaging in a level of organised criminality which would have made Lucky Luciano proud, is what has come to be expected of them, it's what they do; an exercise in wholesale law breaking for which they express no sense of remorse, they refuse to be drawn on the admission of any sign that they regret their excesses, and instead, they call to their aid the PR men, the word-weasels, the petty scribblers and the traditional lickspittles and poltroons who champion their cause, to downplay their wrong-doings. When we might expect them to speak out and express contrition, all we get is corporate silence, the silence of the hyenas!

Recent stories in the Daily Telegraph point to the support of my thesis. Take the title from the edition of 6th November, "...America's self-aggrandising regulators are biggest risk to HSBC..."

Of course, silly me, why didn't I realise that it was not HSBC's criminality or greed that had dumped them in the shit, but some jumped-up, puffed-up American regulator, keen to put another notch on his gun!

I should have seen through the Americans' little game. These fines were not being levied against HSBC because they were operating like a rogue operation, moving ziga-gillions of dollars of drug money for the Mexican cartels, in complete disregard for every fucking anti-money laundering law and regulation in the world. No, they were imposed because in the words of one writer on the Daily Torygraph, "...myriad US regulators have now found a wonderfully self-aggrandising business model - namely targeting foreign banks and using the fines levied to launch fresh enquiries, ad infinitum..."

I wonder how this man manages to keep his lunch down sometimes! But wait on, there's more about these perfidious Americans. When talking about the criminal investigations which HSBC has been subject to, he complains;

"...But the chances of something amiss turning up tends to increase when you have four US federal agencies – the Department of Justice, the Federal Reserve, the Office of the Comptroller of the Currency and the Department of Treasury Financial Crimes Enforcement Network – all poking their noses in and ruminating on how big a fine they should levy. And that’s before a similar clutch of regulators at New York state level get involved assessing separate penalties for HSBC’s alleged failure to screen a Saudi Arabian bank, possibly linked to terrorists..."

I mean, what could be more unreasonable than an American law enforcement agency should bother to do the job they are created to do? That's what's so wrong with this world, you see, instead of behaving like decent British regulators and sticking their heads in the sand and ignoring the facts and pretending that nothing criminal has happened, because it has been carried out by the suits, and anyway you can always tell the public that there are no criminal offences which apply, no, the Americans actually have the temerity to do their job properly! I mean, is this unsporting of them, or what?

And it's not just HSBC the writer seems to have a crush on either. He wants to apologise for Standard Chartered, another bank which after years of wrangling about how many crimes it was going to admit to, finally wound up with a nasty reminder of the Americans' powers when it comes to hitting rogue banks where it hurts. 

"...But, as rival Standard Chartered has also shown, the biggest risks do not come with banking in far-flung places – but in dealing with US regulators alert to any consequent money-flows through banks’ American subsidiaries..."

You see, those damned regulators again, sticking their noses in where Standard Chartered would have preferred them not to go! Let us remind ourselves that Standard Chartered were not investigated for banking in far-flung places. They were investigated and fined for routinely ignoring and flouting US rules on sanctions and in particular with Iran, and thus laundering vast sums of money through the US banking system. 

I keep on telling banks, laundering money through the New York Bank Clearing system will get you in deep shit with the US authorities. If you don't want to run this risk, don't do business in dollars and don't flout US sanctions! It's their jurisdiction, it's their currency, it's their rules, it's their game, so don't fuck about with them! 

When discussing how apparently easy it is to fine banks in America, the writer says of HSBC's new business line in Mexico of 26 million new potential clients, described by HSBC as a 'demographic bonus', he says;


"...That should go down well with the American authorities. HSBC has just made another $800m (£500m) of provisions on top of the $700m in the previous quarter – largely for the bank's failure to spot how many of its exciting sombrero-clad clients had links to Tijuana’s money-laundering fraternity. For the regulators, it looks like easy pickings..."



Spot the satirical irony here. Oh poor HSBC, regardless of the global legal requirement to 'Know Your Customer' and apply enhanced due diligence in High Risk countries, their '...exciting sombrero-clad clients...' insisted on bamboozling them into dealing for money launderers. Here's a world leading bank with experience in over 70 countries, but they want us to believe that they could get turned over by a bunch of peons in big hats! You couldn't make this crap up! Does anyone in HSBC work in the risk management practice?

Actually, that's what always makes me laugh about banks like HSBC, Barclays, Lloyds, Standard Chartered, et al, how they make such a big issue about their ability to 'manage risk'. 

When I used to work at a major IT provider in the late 1990s, we were always being told how efficient the big banks were at managing risk, and how they spent serious sums of money on hiring those people who could bring new designs of risk management tools and solutions to their stable. Well, they obviously weren't that good!

Another writer for the Telegraph in a piece entitled "...We're a British Bank, get us out of here..."  points out a very interesting side-light on the scandals around bank crimes. Apparently the British regulators have been upset by the scale of the financial penalties imposed on major UK banks and have privately expressed their fury at the way the US authorities seem to have singled out this country's lenders for punishment.

It's not as if they were concerned about the fact that British banks were breaking US laws, or flouting international standards, or riding roughshod over global conventions to which the UK is a signatory. They too apparently subscribed to the view that this was some kind of commercial attack on UK interests as opposed to the reality that the size of these fines and the way in which the investigations were moving at pace just made the UK regulators look silly and amateurish in the way they deal with the problems, and in comparison to their US counterparts?

However, even the anger at their US counterparts, it appears is tempered by a sense of disbelief at the way several major high street banks naively wandered into the American market and operated their businesses in such a way as to leave them facing such large fines. As managers in other industries have learnt to their cost, you ignore the highly politicised nature of American corporate justice at your peril.

Excuse me, Mr British banker, why on earth go to New York and take such chances, when you could have stayed here in Britain and got away with murder. You've been getting away with it here for years so why try and change the model now? Were you so naive, so arrogant, that you thought the Americans would let you get away with the kind of criminality you have traditionally been excused in the UK?

This is fascinating stuff. Let me make sure I understand this. The British regulators, the FSA (and presumably at this time the Bank of England) have been exercised by the way British banks have sought to commit the sort of crimes in America for which they have been disciplined and hugely fined, but which had they been committed in the UK, would have probably been called by some benignly misleading name such as 'mis-selling', or even better, probably ignored for as long as possible. The commentator continues;

"...For executives at British banks the post-millennial scramble into the US market has been replaced by a headlong charge for the exit. HSBC has rapidly pared back its operations in the country and is on course to completely exit the US retail business. RBS is facing increasing pressure to sell up, too, though its managers are reluctant to crystallise the loss any sale is likely to require..." 

Not surprising really, can't be much fun trying to run your bank on the British High Street model where the customers are led as lambs to the ritual slaughter for every new wheeze, scam, fiddle, and fraud the banks can dream up as new products, when you have a regulatory atmosphere that wants to throw the book at you every time they find you on the take?

The Daily Telegraph continues its anti-US rhetoric; "...It will be understandable if the current attack on British banks by the US authorities continue their rapid retrenchment..." 

For the life of me I cannot understand why simply because they want to do the jobs they are paid to do, the Americans should be subject to this kind of pillorying by a national newspaper which should know it is giving tacit support to every organised criminal act of which the British Banking sector is capable. Perhaps they don't care anymore, perhaps they never really cared, perhaps they were always prepared to turn a blind eye as long as their monied friends in the suits were making money of whatever kind or colour?

As I said, this was all about the management of risk, for which the British banking sector has always believed it has a genius (to paraphrase Professor Jim Gower!) The debate on risk management used to be loud and long, but no-one ever thought to incorporate regulatory risk into the model!

I used to try and make a contribution to this debate by seeking to devise a software product and procedures which would help these banks identify specific US-centric risks which could be of real danger to them. As a lawyer, I was only too well aware of the issues of US extraterritoriality, and how the US justice authorities conducted their investigations and prosecuted the crimes they discovered.

I was aware also of the plea-bargaining mechanisms they adopted to encourage recalcitrant criminals to agree to plead guilty. I tried, vainly to encourage the big banks to see US market regulatory standards and procedures as a primary risk issue which needed to be managed, and I tried to get them to understand how to implement systems and controls to minimise those risks. All they did was laugh at me and say it wasn't an issue for them! 

So, now I sit back and watch all these cases and think how much they could have saved themselves if they hadn't been so arrogant. Pay up boys and look good about it and stop whingeing, 'cos you had your opportunity and you blew it!

Denis MacShane can and must be prosecuted!

The revelations over MP Denis MacShane's resignation from the House of Commons drives yet another nail into the coffin of public shame which is being built while awaiting the final denouement of the screaming death dive of public morality which is the leitmotif of our times!

This shameful tale identifies so much which is wrong with the way that the criminal law is administered in the UK today, with Government immediately imprisoning the poor, the socially marginalised and the underclass arrested for rioting, while allowing the rich, the powerful, the banksters and Parliamentarians every degree of legal leeway to avoid the possible consequences of their gross criminality. 

We are living in disgusting times, and anyone who wishes to claim any degree of association with the principles of open and transparent justice, must feel wholly betrayed and sickened by this constant parade of perfidy and double standards; while the rich commit the crimes of the powerful, like the £18 billion of PPI fraud, for which there is, apparently no means of obtaining redress (or so we are told by the financial regulator), or MP's commit bare-faced fraud and deceit by claiming public money for disbursements through the use of invoices described as adopted 'plainly to deceive', right down to a Chancellor of the Exchequer who tries to ride first class on the train when he only has a second-class rail ticket. 

A Parliamentary committee found that MacShane had submitted 19 false invoices which were 'plainly intended to deceive'. The Chairman said it was the gravest case to come before MPs. Letters between MacShane and the House of Commons in which MacShane admitted his wrongdoing were described as not being admissible against him in a Police investigation.

Apparently the letters are covered by Parliamentary privilege which it is claimed, is necessary for Parliament to function. Hence the Metropolitan Police had dropped their original investigation into MacShane's activities.

In a damning report, the standards committee said the former Europe minister's actions were "so far from what would be acceptable in any walk of life." 

MacShane breached rules by claiming thousands of pounds of taxpayers' cash for travel across Europe and entertaining European contacts, according to MPs. The findings come after a complaint made in June 2009 about a raft of expense claims he made for "research and translation services". Between January 27, 2005, and January 11, 2008, he submitted 19 claims forms backed by false invoices from the European Policy Institute (EPI).

The organisation's letterhead indicated there was a general manager and four associate directors but Mr MacShane admitted the titles were "simply on the letterhead to make it look more official", according to the report. But the EPI had no office or permanent staff and names on the letterhead were friends of Mr MacShane dating back to the time he spent in Geneva in the early 1990s, it added. Mr MacShane was "by far the main organiser" and also controlled the bank account, the report found.

The Labour MP told the Parliamentary Commissioner for Standards that he used the EPI to recoup expenses he paid out for research as part of his parliamentary work on European issues. He argued that he submitted the EPI bills for "ease of administration" for amounts he considered covered "what I had disbursed in the period concerned". MacShane submitted a list of foreign travel to back up his defence, which included visits to France, Germany, Poland, Kosovo and Switzerland.

But the commissioner found much of the travel was against the rules. That included a trip to Paris for meetings around the European Book of the Year, which was "clearly not a parliamentary duty". He also criticised MacShane for travelling to the French capital to interview candidates for a job as his personal assistant and for the apparent use of parliamentary funds to entertain European contacts.

The committee said the "real mischief" of MacShane's conduct was that the "method he adopted of submitting false invoices" allowed him to bypass rules to spend public money as he saw fit. It said it was "impossible to escape the conclusion" that he claimed in that way to ensure he was not challenged over using taxpayers' cash to fund travel for his work in Europe.

MPs said it was this misuse of cash that was "most serious" and suggested that of the £12,900 of claims he made it was likely around £7,500 was "outside the rules". MacShane has repaid the entire £12,900, the report said. 

These strong findings raise the prospect of a second police investigation into MacShane's expenses. The police decided to take no action against MacShane in July after a lengthy investigation. But a Metropolitan Police spokesman said Scotland Yard would now examine the committee's report. The spokesman said: "We are aware of the report and will be assessing its content in due course."

So, for the benefit of those who like reading this blog, let me spell out how Denis MacShane should be investigated and what evidence the police should be able to acquire in order to convict this thoroughly dishonest man.

Just as I did with the offence we discussed in the LIBOR case, I want to look again at Section 17 Theft Act 1968, the offence of False Accounting, to demonstrate how to bring MacShane before a court. 

Section 17 states:

1. Where a person dishonestly, with a view to gain for himself or another or with intent to cause loss to another:-

a) destroys, defaces, conceals or falsifies any account or any record or document made or required for an accounting purpose: or

b) in furnishing information for any purpose produces or makes use of any account, or any such record or document as aforesaid, which to his knowledge is or may be misleading, false or deceptive in a material particular;

he shall on conviction on indictment, be liable to imprisonment for a term not exceeding seven years.

2) For the purposes of this section a person who makes or concurs in making in an account or other document an entry which is or may be misleading, false or deceptive in a material particular, or who omits or concurs in omitting a material particular from an account or other document, is to be treated as falsifying the account or document.

Legitimate Parliamentary expenses are defined in a document issued by Parliament. The way in which they are to be accounted for and claimed for is also defined. Denis MacShane would have known this.

It is alleged that he made 19 separate claims for expenses, which were supported by invoices which purported to be signed by another person, and were written on the letter-head of an organisation which did not exist in the form claimed. In addition, many of the claims were for travel which did not fall within the rules of the permitted allowances of the House of Commons.

So the claims were false and fraudulent in 3 ways.  

First they were signed with misleading signatures. So the documents could have been genuine, but the signatures were dishonest.

Secondly, the letter-heads were not honest, they were misleading as they purported to represent an organisation that did not exist.

Thirdly, the claims were in some cases for non-qualifying travel.

So MacShane is caught by both sub-sections of S.17. He submitted a false account and a false record, and a false document made or required for an accounting purpose.

Further, in furnishing information for the purpose of his claims, he produced and made use of an account, a record and a document, which to his knowledge was or may have been misleading, false or deceptive in a material particular;

The false documents he submitted were an integral requirement for the Parliamentary accounting purpose, and he used this method to bypass a Parliamentary prohibition of using public money to fund his own work in Europe.

So the evidence is very clear that there is a strong prima facie case against MacShane of the offence of at least 19 separate charges of false accounting. I also believe he could be charged with theft of the lap-tops which were made available to him for parliamentary purposes, and which he later gave to interns when they left his employ.

The facts of the case have been found by the Parliamentary Commission, and that evidence should be capable of being acquired by the Police. What MacShane may have said in a letter by way of admission of the offences to the Commission might not be admissible under a strict interpretation of the law, because they were not made under caution, and were made for proceedings of the House of Commons, but that is irrelevant. Police don't need his individual letters and any admissions made in them because the external evidence against MacShane is so strong.

The physical documents demonstrating the false claims are discoverable; his own bank documents are discoverable by way of Court production order, to prove he received the money; the details of his foreign travel are discoverable; an officer from the House of Commons is subpoenable to prove the breach of the House of Commons rules of claiming expenses, and in the absence of such a person, the rules themselves can be placed before the Court. The fact that the invoices were paid out can be discovered.

MacShane should be arrested (he can come to the police station by appointment with his solicitor) and he should be formally cautioned and then interviewed on tape. In this way the police can put all the allegations to him. He can then either say nothing or make a full confession. He might try to bullshit his way out of the allegations, most con-men and MPs talk too much, but I hope his lawyer advises him to remain silent. In that way the police can put the whole matter to him, including all the details of the individuals named on the false letterheads. They may not be able to use the report as evidence against him but they sure as hell can use it as a 'map' to guide further enquiries of their own which they can then submit in the file to the CPS.

If the CPS then refuse to bring charges, then we will know that they have been leant on by 'higher authority', as I expect happened in the earlier referral. The British prosecution authorities have always been notoriously susceptible to political interference.

This is exactly the kind of case that needs to go before a Jury and I have no doubt whatsoever what its outcome will be if it is so presented. One only has to read the comment pages of any website carrying this shameful story, to see that ordinary people across the country are asking why he has not been prosecuted, and demanding that he should so be!

Parliament should not be permitted to stand in the way of any man's prosecution for serious crimes committed against the public purse, and to claim such a privilege makes them a laughing stock. If this case had been against anyone other than an MP, the police would have had an opportunity to seize the correspondence and use it in evidence against the alleged wrongdoer. If he was not an MP, and thereby protected by the arcane rules of the House of Commons Privileges, there would be none of this as an issue. As a servant of his constituents, remunerated from the public purse, should we the voters, not be entitled to expect that his conduct in high privileged office should be of a far higher standard, and subject to even greater scrutiny? To seek to protect a man under these circumstances, when his reputation has been trashed by his own conduct in front of his peers, is risible.

This is exactly the kind of nonsense that makes a mockery of our system of criminal justice, when a man's letters in which he admits facts which could prove to found a criminal case against him, are deemed to be inadmissible, and he is allowed to walk away from his actions, It is even more galling when earlier MPs who were also prosecuted for false accounting for expenses fraud, had their claims of Parliamentary privilege denied them. Eric Illsley who received a 12 month prison sentence for false accounting under S.17 Theft Act, has accused the police and the CPS of double standards for failing to prosecute MacShane.

Ironically, when Margaret Thatcher was in her first term of office, she wanted to take strong action against benefit cheats and persons who made false claims for welfare benefits. She was adamant that this would be a major plank of her platform of social reform. She was reminded by Cecil Parkinson that they would have difficulty being seen to go after underclass cheats, when a major City financial fraud case, the Guinness share manipulation affair, was about to become public, and a lot of City suits were embroiled in the scandal. Parkinson wanted to know how Margaret Thatcher intended to square that circle. Her answer was illuminating;

"...Well get the handcuffs on, Cecil..."

That very afternoon, Ernest Saunders was arrested coming out of his lawyers' offices!

The point here is that in the not too distant future, the Government is going to have to face up to the prospect of massive inner-city riots and public disorder when their cuts policy begins to bite down even harder on the poor, the unemployed and the socially marginalised. There will be widespread rioting and more looting as we witnessed last year.

The politicians will seek to respond as they did before by encouraging the courts to engage in knee-jerk responses, locking up hundreds of offenders and making a huge song and dance about public misconduct.

They will not like being reminded then that they themselves have been persistently guilty of sending the wrong messages to the country at large, by allowing the banksters, the financiers and the other members of the privileged classes, including MPs, to walk away scot-free from crimes whose absurd values dwarf the relatively small sums involved in public rioting.

The real problem about the MacShane case is that the public standing of our politicians has fallen so low that they daren't spend too much time keeping this case in the public eye for fear of another backlash in public derision and opprobrium. They want the MacShane case to go away, and for MacShane himself to be dispatched to the dustbin of history. It is up to those of us who care enough to keep these issues alive so that people are not allowed to forget that the crimes of the powerful must not go unpunished, because this shameful episode of public double standards and legal dissembling is yet again, another example of how there is one law for the powerful and another for the poor.