Yet again, the FCA ducks the issue of prosecuting banks for money laundering breaches.

The FSA has just published yet another Thematic Review entitled "...Anti-Money Laundering and Anti-Bribery and Corruption Systems and Controls..."

It is widely held that by preventing and forestalling money laundering, criminals will find it so much harder to enjoy the fruits of their crimes. This has become an article of faith and we have draconian laws to achieve these ends.

This is a highly laudable ambition, but as with any law, enacting such legislation is fruitless, if at the same time, sufficient provision is not made to ensure that the law is first obeyed, and secondly, enforced, and that persistent refusal to comply with the law is punished in an appropriate manner!

Despite the fact that the FSA has long been given the power to enforce the anti-money laundering rules and regulations, for so many years, the regulator studiously refused to have anything to do with them.

Later, when they were literally shamed into accepting their role in the regulatory process of these laws, they started to undertake some very limp-wristed 'thematic reviews', culminating in a major report in June 2011, in which a large number of institutions were reviewed, and the findings of a repeated series of failures to comply with the money laundering regulations were published.

The reason for this reiteration is to state, right at the start of this article, that the financial services industry knows full well that they are required to comply with the anti-money laundering laws; that they have to provide a full compliance regime; and that a failure to comply is punishable by law. They have been visited before, they have been reviewed, they have been inspected, they have been investigated, they have been coaxed, cajoled, and still they refuse to provide the level of compliance required by the law.

Lest anyone be in any doubt, and for these purposes I include the relevant members of the FCA, who clearly do not appear to know the law, the specific provisions of the criminal offences regarding non-compliance with the Money Laundering Regulations are contained in Section 45 of the Money Laundering Regulations 2007, which states;

 45.  (1)  A person who fails to comply with any requirement in (specific regulations) is guilty of an offence and liable—

(a) on summary conviction, to a fine not exceeding the statutory maximum;

(b) on conviction on indictment, to imprisonment for a term not exceeding two years, to a fine or to both.

It is perfectly clear that Parliament intended that penal sanctions should apply to those who are subject to the anti-money laundering laws, so why is it that the FCA steadfastly refuses to prosecute any financial practitioners for failing to comply with the law?

Their report starts with the predictable mission statement. I don't know why they bother because it is perfectly clear from their actions that they don't intend to practise what they preach, but it looks good in print!

"...Tackling financial crime is a key part of our remit, a responsibility we took over from the Financial Services Authority (FSA) in April 2013. Preventing financial crime is a vital element to achieving our objective of protecting and enhancing the integrity of the UK financial system..."

If prevention of financial crime is key, and is so vital, why are they so weak-kneed in the way they go about dealing with the very suppliers of professional services who are the greatest help to criminals laundering their criminal proceeds?  They continue;

"...There are some areas where the risk of money laundering and bribery and corruption is heightened in the asset management and platform sector. These include the selling of investment products, particularly where third-parties are employed to raise money; the dealings that firms have with clients, both at the point of take-on and on an on-going basis; and the search for information to obtain a competitive advantage..."

Ironically, the FCA demonstrates it knows the high-risk areas, but what does it do about them?  It continues to pontificate. It seems they have to publish this stuff more to justify their existence and to prove to others that they might know what they are talking about! They state;

"...The specific risks will vary depending on the nature, scale and complexity of firms’ operations. Factors that may increase the risk of money laundering and bribery and corruption include:

•           Non face-to-face business, which can be attractive for money launderers hiding behind stolen or fabricated identities.

•           Customers from, or with links to, countries that are considered high risk from a money laundering and/or corruption perspective.

•           Wealthy and powerful clients, particularly where they insist on a high degree of confidentiality.

•           The use of offshore trusts and shell companies to distance beneficial owners from their funds.

•           High value and/or unexpected transactions.

•           Payments or inducements, without a clear business rationale, to third parties..."

Their findings were quite explicit.

"...Given our strong regulatory focus and previous publications on AML and ABC we expected firms to have taken more action to ensure their controls reduced the risk of money laundering and bribery and corruption.

Our findings were of particular concern where the firms were part of major financial groups, which should have been aware of our expectations. In some cases, the firms we visited were from groups that had been subject to previous regulatory attention but we still found significant weaknesses..."

Firms should have taken more action, and should have been aware of the regulator's expectations. In some cases, this was not the first time they had been visited, and there were still significant weaknesses being found.

In other words, the firms concerned were not doing what they should have been doing to comply with an important law, despite the fact they knew they should have been doing the work. They were completely ignoring the law, sticking two fingers up to the regulator and thereby, almost certainly enjoying the benefits of significant value flows of dirty money.

And the outcomes?

"...We have provided feedback to those firms in our review, but we expect all firms to consider our findings and the examples of good and poor practice to improve their AML and ABC frameworks where necessary. We will be following up with some firms to discuss the actions they should take..."

Feedback, following up, well, no doubt that will teach them not to do it again!

Predictably, the FCA refuses to name the firms concerned, so there is no public opprobrium attached to these findings.

The report does contain some interesting and valuable findings, and there is no doubt that some firms do take the time and trouble to do more to provide a more robust compliance regime, but this does not answer the need for a sound and effective reason why, in the most egregious cases, they are refusing to prosecute those who are repeatedly failing to provide best practice compliance with the laws.

I rang the FCA and spoke to someone in their Press department. I asked him the question why they were still refusing to prosecute?

His answers made for interesting reading. He stated that they were 'looking at it'!

What was manifestly clear is that this person had no knowledge of any criminological findings or the research which has been undertaken into white collar criminality.

He was quite robust in his defence of the regime of imposing fines on firms for regulatory breaches, and believed that excluding practitioners from the industry was a deterrent.

He may be right in this, but until practitioners start to be excluded for failing to impose the relevant anti-money laundering regulations, we shall never know.

When I pointed out to him that there was a wealth of evidence that criminalising white-collar practitioners possessed the most exclusionary features, he was unaware of the existence of such information, and when I pointed out that fines, no matter how large, merely landed on the shoulders of the shareholders, he appeared unimpressed.

Money laundering is the Cinderella crime of the financial sector! Everyone knows she is there, but no-one wants to have anything to do with her.

So let me spell it out.

Financial companies know that a significant amount of big money that comes into London for investment, has a propensity to come from sources which are less than legitimate or legal.

It could be drug trafficking money, it could be capital flight. It could be the proceeds of state looting, it could be large-scale tax evasion. It could be purloined aid money given to help a third world state, but secretly stolen by the 'President for Life', it could be the proceeds of major corruption, it could be money routed from countries subject to UN sanctions, it could simply be the proceeds of fraud or other crime, until the right questions are asked and the correct answers satisfactorily identified, the money is always going to be a potential problem for the company handling it.

The vast majority of British financial services companies don't care a jot and some (HSBC, Standard Chartered, Barclays, et al) positively facilitate the transfer of the money, as we have so recently learned.

Just as single mothers who claim benefit can be sent to prison for fraud if they allow their boyfriends to stay overnight, but who fail to report the matter to the Benefits Agency; so bankers who are repeatedly found to be deliberately refusing to comply with the Money Laundering Regulations should also face criminal prosecution.

For the benefit of the Press Department person at the FCA who appeared to know so little about the white collar canon, there has been significant research undertaken by academics into the exclusionary power of criminal prosecution upon the white collar sector. (Professor Michael Levi at Cardiff University has been among the most prolific researchers in this genre.)

Any financial practitioner who is successfully prosecuted for a criminal offence faces a life-time's exclusion from the market and rejection by his former business colleagues. It is akin to being cast into outer darkness, and it possesses grave implications for any business whose executives are so dealt with.

That is why it is such a powerful sanction, and widely feared by the City and for that reason, City practitioners are so rarely subjected to its effects. That is why I am asking, yet again, no I am not asking, I am demanding to know why no one in this latest study has been reported for the question of prosecution to be considered?

If the FCA wants to avoid the mantle of its predecessor, the FSA, of being seen as a tame and shabby toothless tiger, at least as far as City crime is concerned, then they must begin to adopt the use of criminal prosecution in specific cases, as a means of penalising the 'protected species' within the Square Mile.

If this method were adopted, they would see an overnight conversion to the way of truth and righteousness. The entire sector would burst a collective blood vessel ensuring that their systems and controls were as clean and sound as they could be. It would be the most effective way of ensuring compliance with the relevant laws and regulations.

Again, for the benefit of the FCA Press officer, mere fines do not work against the financial sector, no matter how much you may believe they do! They don't pay them anyway, they fall on the shoulders of the shareholders, and they get written off to tax at the end of the year!

Most importantly, the FCA has to start to rebuild public confidence in the equality of justice as it is employed against the City. They must deconstruct the generally-held opinion that the banksters and their molls, can get away with anything as long as they wear a suit and work in EC3!

By failing to prosecute anyone for this latest round of failings to comply with the Money Laundering Regulations, they have missed yet another opportunity, to set out a policy of compliance requirement, and it is an opportunity which will not go unnoticed by the organised criminals in the financial sector.

They will read this report (if they can be bothered), and they will be re-assured that yet again, the regulator has given them another free pass! They will continue to ignore the important provisions of the Money Laundering Regulations and continue to trouser the illicit profits!

And the FCA?

They will continue to look at the issue! This is official, the Press Officer from the FCA told me!

The secret plans for London - Why the financial crisis has in reality been a financial revolution

The financial crisis through which we have all suffered (by 'we' I mean the ordinary man and woman), will turn out to have been less of a crisis and more of a revolution.

Ironically, if you have been in a well-paying job, in banking, consulting, IT, head hunting, recruitment, or any of the adjunct functions which serve the City and the financial sector; or you have been in the professional classes, the law, auditing and accounting; or the tame and timid regulatory agencies, the financial crisis has not really caused much damage to you in the longer term.

Oh sure, you may not have drawn down quite such high bonuses as you were used to enjoying, but you have still been able to continue to live very comfortably. Interest rates have been the lowest they have been in any living memory, and they have remained at neo-negative rates for a long period of time. You have been enabled to trade up in your property purchases, borrowing significant sums of money, leveraged on your existing properties, and in so doing, you have enabled the property market to resist the ordinary impact of the crisis.

To a very large number of people however, the 'squeezed middle', those who are coming to the end of their immediate working lives, but who are still supporting elderly parents, as well as children who cannot find jobs; those who are still able to work and at the top of their skills ladder in terms of knowledge and experience, but who are deemed 'too old' to be employed by an ageist jobs market because they are over 55; those who have been made redundant at the wrong age and thus forcibly retired and who have been living on income from insufficient pensions, and who have watched while the government has squeezed the life out of community spending in the name of 'austerity'; those who work in teaching, nursing, policing, the fire service or any of the other vital municipal service provisions on which our communities rely so heavily, there is no end to the damage that the impact of the financial crisis is causing.

The important distinction here is that the very sector whose criminogenic behaviour caused the financial crisis in the first place, the shady banksters with their shoddy banking practices and their concomitant criminal banking activities; the legal services which were used to protect their interests when the criminal banks were confronted by angry clients who demanded redress; the complicit accountants who signed off on every-increasingly dubious audits, and who conspired to make the books balance and the figures look good; and the complicit regulators who looked the other way and became apologists for the wrong-doing of their sector, all these services continue to prosper and thrive.

We have observed the actions of a Parliamentary Commission on Banking Standards which has sat in judgement on the actions of those who wrought so much damage to the body financial, but what has really happened as a result of their deliberations?

Frankly, very little!

The real outcome of the financial crisis has been to cement in post those whose activities and actions did so much to damage the interests of a very large sector of the British people, and has, by so doing, enabled the whole rotten edifice to remain unreformed.

Take, as an example, the HBOS affair.

Back in April this year, the Parliamentary Commission on Banking Standards published its Fourth Report - ‘An accident waiting to happen’: The failure of HBOS.

Commenting on the publication of its Fourth Report, the Chairman of the Parliamentary Commission on Banking Standards, Andrew Tyrie MP, said:

"The HBOS story is one of catastrophic failures of management, governance and regulatory oversight.

The sums would never have added up: the Commission has estimated that, taken together, the losses incurred by the Corporate, International and Treasury divisions would have led to insolvency, regardless of funding and liquidity problems, had HBOS not been bailed out by both Lloyds and the taxpayer.

The Commission concluded that primary responsibility for these failures should lie with the former Chairman of HBOS, Lord Stevenson, and its former Chief Executives, Sir James Crosby and Andy Hornby.

Only Peter Cummings has faced regulatory sanction for HBOS’ failures. The Commission was surprised by this.

The Commission stated openly that It was unsatisfactory that the FSA appears to have taken no steps to establish whether the former leaders of HBOS are fit and proper persons to hold the Approved Persons status elsewhere in the UK financial sector. The Commission has therefore asked the regulator to consider whether these individuals should be barred from undertaking any future role in the sector.

For the future, far more needs to be done. Those responsible for bank failures should be held more directly accountable for their actions and face sanction accordingly. The Commission will return to this issue in its Final Report.

The regulators also have a lot of explaining to do when it comes to their role earlier in the HBOS debacle. From 2004 up until the latter part of 2007, the FSA was ‘not so much the dog that didn’t bark as the dog barking up the wrong tree’.

The FSA responded favourably to a Treasury Committee request for a comprehensive report, similar to that prepared on RBS, not just into the failure of HBOS but also into the FSA’s own conduct. The Treasury Committee has appointed specialist advisers whose job will be to ensure that this work is done thoroughly..."

So, taken in the round, this means that a major bank collapsed because those with the responsibility to ensure that they should have done their job properly, failed to exercise their responsibilities properly, with the result that others had to be appointed to oversee their actions.

And the outcome has been to sweep the whole fucking mess under the carpet in a traditional British way of reconciling these scandals.Essentially, it has been decided that those responsible for the biggest banking crash in living memory, to say nothing of the resultant scams, frauds and other examples of financial skulduggery will not face any kind of scrutiny by regulators or government. The revolving door at the top will go round and former regulators will become bankers, accountants will become regulators, the most egregious will be allowed to slink away with their pensions and their pay-off's, while you and I will be ritually and righteously screwed!

Why?

Because I am slowly beginning to realise it is becoming clearer that the aftermath of the financial crash and its attendant outcomes was not just an accident waiting to happen. It was carefully thought-through by a group of powerful elites who realised that they could use the implications of the mess left behind by Gordon Brown and Ed Balls.

They could begin to dismantle the benefit culture ethos which had undeniably been allowed to spread like a virus under Brown. Brown believed that the City was bringing in the money because he wanted to believe the bullshit the City told him. He, in turn, extolled their actions in after-dinner speeches at the Mansion House, while spending public money like a man with no arms, until even he was forced to realise there was nothing left in the pot, as Liam Byrne so eloquently reminded his successor in post!

By driving out the poor, the indigent and the work-shy and relocating them to other useless towns and cities in the Midlands and the North, they would free-up a workforce in London who would be willing to work for limited or minimum wages and zero-hours contracts, made up very much of European immigrants driven to the UK by the awful financial conditions at home, ready and willing to service the new post-crisis economy planned for the new London.

In addition, their ambitions have begun a root and branch restructuring of London and the South East, turning the whole sector into an elite commercial and financial 'business' centre, coupled with a highly desirable residential venue of choice for the fantastically wealthy, who will want to use all the banking and financial services offered by the 'new City elites', provided by a new breed of 'ask no questions' lawyers and accountants, and protected by Boris Johnson's incessant promotion of the constantly parroted demand for foreign capital, of whatever nature and provenance, to find its home in London.

The London of the future is intended to become the leading global financial centre, which will become an offshore-haven in its own right for those with money (and there are plenty of them in other countries) to invest.

I have just returned from a business trip, which I shared with an architectural engineer. He was telling me of the vast number of new high-rise residential buildings (over 60 at the last count) that are being constructed in the centre of London. He talked about the number which, once completed, will stand completely empty, having been already purchased 'off plan' by wealthy foreign investors in China, Malaysia, the Middle East and India, who own them but will never live in them. They will stand permanently empty and idle, their windows bare, like huge stationary ghost-structures, a monument to greed and funny-money.

Should you be tempted to believe that I am exaggerating, I am going to quote extensively from an amazing article written by Michael Goldfarb, a writer whose most recent book is;

 '...Emancipation: How Liberating Europe's Jews From the Ghetto Led to Revolution and Renaissance...'

I hope he will forgive me for re-quoting from his piece here, but it is a superb illustration of what I have been trying to say.

Talking about the new property boom being driven by foreign investors, he says;

"...This is what happens when property in your city becomes a global reserve currency. For that is what property in London has become, first and foremost. The property market is no longer about people making a long-term investment in owning their shelter, but a place for the world's richest people to park their money at an annualised rate of return of around 10%. It has made my adopted hometown a no-go area for increasing numbers of the middle class.

According to Britain's Office for National Statistics, London house prices rose by 9.7% between July 2012 and July 2013. In the surrounding suburbs they rose by a mere 2.6%. The gap between London prices and those of the rest of the country is now at a historic high and there is only one way to explain it.

London houses and apartments are a form of money.

The reasons are simple to understand. In 2011, at the height of the eurozone crisis, citizens of the two countries at the epicentre of the cataclysm – Greece and Italy – bought £400m of London bricks and mortar. The Italian and Greek rich, fearing the single currency would collapse, got their money out of euros and parked it some place where government was relatively stable and the tax regime was gentle – very, very gentle. Considering that tax evasion in Italy and Greece was a significant contributory factor to their debt problems, it just seems grotesquely cynical to encourage this kind of behaviour.

But that's what Britain in general, and London in particular, does. The city is essentially a tax haven with great theatre, free museums and formidable dining. If you can demonstrate that you have a residence in another country, you are taxed only on your British earnings.

And the savings on property taxes are phenomenal. The property taxes on New York mayor Michael R. Bloomberg's $20m London home come to £2,143.30 a year. That's $3,430. Clearly, the mayor bought in at the right time. The Google executive chairman, Eric Schmidt, is reported to be house-hunting here – he's looking in the £30m (about $48m) price range. Yet he will pay a similar amount in property tax as Bloomberg does.

There are other facets of London real estate as a medium of exchange. British gross domestic product has yet to return to pre-crash levels, but the financial services industry has roared back. Banks are paying out big bonuses again, and anyone looking for a safe investment is getting into London property.

From the top of Parliament Hill, on Hampstead Heath, look eastward. Out around the Olympic Park and beyond you see clumps of high-rise apartment buildings sprouting like toadstools in a meadow after heavy rain. These aren't being built to meet the calamitous shortage of affordable family housing in the city; they are studio and one- or two-bedroom apartments.

The developments are financed by "off plan" buying. Bonus babies look at the blueprints and put their money down with no intention of living in what they've bought – just collecting decades of rent. And it's not just those who work in London's financial district, the City, who buy in. Hot money from China, Singapore, India and other countries with fast-growing economies and short traditions of good governance is pouring into London.

When I say property is money I mean it. An astonishing £83bn of properties were purchased in 2012 with no financing – all cash purchases. That's around $133bn.

The ripple effect of this frankly demented situation is felt all over town. The foreign rich and the City rich (there is some overlap) have made most of the centre of London unaffordable to any but their own kind.

The overall economy of Britain certainly doesn't justify these prices. Bank lending for businesses is flat, but mortgage lending? It's as if the whole British economy is based on housing speculation in the capital.

David Cameron's government seems to think that is the case. Cameron may be pursuing austerity policies elsewhere in the economy, doing virtually nothing to help subsidise employment or industry, but his government has just started a "help to buy" scheme. The government will guarantee up to 15% of the purchase price of a house up to £600,000 ($960,000), if you have a 5% down payment.

Now it is beginning to feel that the next phase of London's history will be one of transience, with no allegiance to the city. I wonder whether those just parking their money here by buying real estate will ever be able to provide the communal sensibility to help the city survive the inevitable shocks it will experience in years to come.

How this story will end doesn't bear thinking about. It seems a very reasonable bet, though, that those who use London property as just another form of money aren't thinking about it at all..."

I have just discovered yet another reason for why I dislike George Osborne so much!

I really dislike the whole concept of George Osborne. I don't dislike him as a man, I don't know him, but I loathe his entire context, and what he represents.

His latest outburst when discussing his trip to China that 'Britain has lost its sense of ambition' and his calling on the country to 'up its game', is precisely the kind of insultingly elitist bullshit that really alienates vast numbers of people, and which really irritates me!

He probably wouldn't like me very much, if he knew me, but he doesn't.

Osborne is one of the old Anglo-Irish aristocracy, known in Ireland as the Ascendancy. He is the heir apparent to the Osborne baronetcy. He was educated at St Paul's School, London and Magdalen College, Oxford, where he was a member of the elite Bullingdon Club, before working for the Conservative Party as a researcher, special adviser, speechwriter and strategist. In 2005, he ran David Cameron's 's successful party-leadership campaign and was made Shadow Chancellor.

His father is Sir Peter Osborne, 17th Baronet,  who co-founded the firm of fabric and wallpapers designers Osborne & Little. His mother is Felicity Alexandra Loxton-Peacock, the daughter of artist Clarisse Loxton Peacock. His mother was a Labour voter, who worked for Amnesty International.

What I particularly dislike about Osborne's context is the fact that he represents a type and a class which we might have not unreasonably thought had died out of British politics.

In many ways, his whole 'raison' is a pastiche, a sort of cliché, a characterisation from a Bertie Wooster novel, a throwback to another era, a bit part in 'Brideshead Revisited'!

He has just got back from China, where he has been busily toadying up to the Chinese 'nomenclatura'!

Britain, as usual, has left it until the last minute to 'discover' the new China,  - the Germans and other nations have been building strong ties with China for some years -, and we must now parade our rather tattered credentials to make ourselves their new 'best friend'!

Osborne has come back with all the Sino-zeal of the newly evangelised missionary. He says;

"... “You cannot fail to be staggered by the scale of the economic progress and the building that’s happening all around you. It’s astonishing,” he said. 

“I feel both energised by a trip like this because there’s so much more Britain can be doing; I also feel a bit like, my God, we’ve really got to up our game as a country, and the whole of the West has to understand what is happening here in Asia.”

Benedict Brogan's piece in the Daily Telegraph today amplifies the new Osborne enthusiasms.

He describes a man who has observed the industrial and economic milestones that China has created in recent years, and who enthuses about them, using both the language and the idioms of the public school toff.

Suddenly, China is "...a country that left him “staggered” by its success, as he contemplates how Britain should rediscover its capacity for entrepreneurial dynamism..."

Note the emphasis on 'entrepeneurial dynamism'!

Brogan observes that "...His visit — which marked a thaw in relations after David Cameron’s meeting with the Dalai Lama — produced a wealth of useful advances for trade, notably landmark deals for making Britain a global centre for investment in China’s renminbi currency..."

Predictably, the City of London will offer its dubious financial services facilities to provide an offshore centre for untold numbers of currency speculators to trade the renminbi, a currency that will in the future prove to be an increasingly important payment mechanism. Quite how the Chinese will respond after they have been repeatedly fleeced by the City's army of currency spivs and wideboys is not reported.

What this facility will provide however, is an additional offshore market outside Hong Kong for China's criminal money launderers to utilise to move their criminal profits derived from the proceeds of drug trafficking, product counterfeiting, people smuggling, software piracy, and of course, vast swathes of political corruption.

The City of London will predictably not turn a hair, and indeed, it looks as if this new deal has already been given a kind of official seal of approval, arising out of Osborne's visit. What he has done of course is to open the London market up to yet another source of vast swathes of criminal and black money, but then he and his fellow toady, Bo-Jo (Boris Johnson), seem less concerned about that as long as the money continues to flood in to EC3!

No, Osborne was "...evidently galvanised by what he had seen and learnt, and itching to take on those who caution against engaging with the world’s largest dictatorship. Throughout, it seemed, China’s success stood as a reproach to Britain’s loss of ambition..."

And this is what I truly resent about Osborne and his class!

There is, it seems, this received political wisdom that we in the UK have suddenly lost all our ambition, we have become anaesthetised against wanting to be commercially and financially successful.

Nothing could be further from the truth. There are countless good, well-educated, young men and women in this country who are aching to get jobs, trying desperately to find work, any work, which will get them off the benefits treadmill. Just trying to get through the week is a big enough hurdle, never mind starting up a new business, or building an entrepreneurial ideal.

The problem with politicians, and particularly the posh toffs like Osborne, who have never missed a meal in their lives; who have never wondered how next week's rent would be paid; who have never had to decide whether to eat or get their shoes mended; is that they simply cannot understand what it is like to be so potless, that you would do anything rather than live in the way you are forced to.

It is all very well pontificating about the way "...China teach(es) us that we have lost our capacity for hard work? He points out the obvious cultural and political differences. “I’m not sure anyone in Britain would want to have imposed on them the Chinese work ethic,” he sneers. “But I do think there’s an ambition in the country and a sense of optimism and 'can do’ which our country had in the Victorian age and had at other points in our history.”

Yes, he finally makes the point. China has now reached the same stage as that of Britain in the Victorian era, with everything that entails.

Osborne still, it seems, wants to live in a twilight world where Britannia rules the waves, where the humble but deserving poor doff their caps to him and his ilk as they trundle by in their sumptuous carriages, and the plebs know their place!

He is reaching back to an age when Britain was the sweatshop of the Empire, where there was no universal right to education; where women did not have a vote; where there was no National Health Service; no Industrial safety requirements; no efforts to make the workplace a more humane environment; where miners died in their hundreds in huge pit accidents because their owners were too mean to put in the necessary means of providing pit safety; where the ordinary working man and woman had no political voice; where the State could not be challenged; and the most usual means of penal sanction for any crime worth more than a shilling was death by hanging. An age when political corruption was rife, and the political class was bought and sold at the hustings.

This is an age which he and his Cabinet friends can yearn for, and clearly still do, and bear in mind, every single one of these conditions is relevant to modern day life in China.

China is still among the most corrupt nations on the planet, and its people are kept in their place in a straightjacket of political repression. China does not recognise human rights, and it is not a democracy within the real meaning of the word.

Watchdog groups believe that actual judicial execution numbers greatly exceed officially recorded executions; in 2009, the Dui Ha Foundation estimated that 5,000 people were executed in China – far more than all other nations combined. The precise number of executions is regarded as a state secret.

The level of corruption in public life is breathtaking. A report from  the Carneigie Endowment for Peace reports that;

"...Though the Chinese government has more than 1,200 laws, rules, and directives against corruption, implementation is spotty and ineffective.  The odds of a corrupt official going to jail are less than three percent, making corruption a high-return, low-risk activity.  Even low-level officials have the opportunity to amass an illicit fortune of tens of millions of yuan.

The amount of money stolen through corruption scandals has risen exponentially since the 1980s.  Corruption in China is concentrated in sectors with extensive state involvement, such as infrastructure projects, real estate, government procurement, and financial services.  The absence of competitive political process and free press make these high-risk sectors susceptible to fraud, theft, kickbacks, and bribery.  The direct costs of corruption could be as much as $86 billion each year.

The indirect costs of corruption (efficiency losses; waste; and damage to the environment, public health, education, credibility and morale) are incalculable.  Corruption both undermines social stability (sparking tens of thousands of protests each year), and contributes to China’s environmental degradation, deterioration of social services, and the rising cost of health care, housing, and education.

China’s corruption also harms Western economic interests, particularly foreign investors who risk environmental, human rights, and financial liabilities, and must compete against rivals who engage in illegal practices to win business in China..." 

Osborne seeks to deflect any reference to this phenomenon. Brogan quotes him saying;

"...What does he say to those who fear China’s dark side? “We’ve got to start by understanding that China is an ancient civilisation with a long and proud history. If you start by understanding that and treating that with respect that’s a good place to begin.” China’s growth has lifted hundreds of millions out of poverty, he points out. It is sometimes easy to forget that within our lifetime it was a country of famine. “China is what it is. And we have to either be here or be nowhere.”

That may be true, that may be what we have to do, but let us not pretend that there is any virtue entailed by reverting to Victorian standards of business conduct.

In Victoria's era, we may have run an entrepreneurial Empire, but it was not difficult because it was based on a complete disregard for human rights in exactly the same way that China's social model works today. We should not lose sight of the fact that in doing business with China, the Chinese Government benefits enormously as well, because by being seen to be happily linked to the UK, it gives China international credibility which she might otherwise not enjoy.

We cannot ignore China's shortfallings, no matter how much money she dangles in our faces. The bankers can hardly wait to start providing trading services for the Chinese currency, but it was ever thus. We started out by turning the Chinese on to Opium, now we are going to provide them with even more efficient money laundering facilities. Commercial imperatives may predicate that we have to sit down at the same table with the Chinese, but we would do well to use a long spoon!