Re-tooling up the Police

In April 1981, the Metropolitan Police Special Patrol Group were ordered into Brixton with instructions to carry out a dynamic 'stop and search' campaign among the youth of the community. A large number of arrests were made for various street offences by well-drilled officers, and the immediate effect among the Brixton residents was to cause enormous resentment. Police in surrounding districts watched in mounting disbelief as the SPG roared through Brixton like a hot knife through butter, and discussed among themselves who could possibly have ordered this campaign, which was guaranteed to cause social unrest of unrecognisable proportions.

Following the urban riots which inevitably resulted, Margaret Thatcher visited The Metropolitan Police Commissioner at the Yard, and discussed the additional training and the list of new riot equipment they needed, including a '...greater variety of riot shields, more vehicles, longer truncheons ...' (Margaret Thatcher 'The Downing Street Years, p.145.), equipment, they would very quickly receive. The riots, and the immense public fear they engendered, provided the political impetus for the Conservative Government to spend a significant sum of money changing the face of Police public order containment tactics. They knew they would not be opposed in providing the Police with the new, aggressive riot equipment, which up to that point had consisted of a rather cumbersome plastic shield, an acutely uncomfortable hardened helmet, and a cricket box!

It is of some interest to recall that in 1974, while the Tory Party were in Opposition, in the aftermath of the Heath government being brought down by the 1974 coal strike, the Ridley Plan (also known as the Ridley Report), reported on the state of the nationalised industries in the UK. The report was produced and drawn up by the right-wing Conservative MP Nicholas Ridley. In the report he proposed how the next Conservative government could fight, and defeat, a major strike in a nationalised industry. Among his many recommendations were the need to train and equip a large, mobile squad of police, ready to employ aggressive riot tactics in order to uphold the law against violent picketing.

These tactics, including the provision of more dynamic riot equipment (subsequently described as the 'tooling up of the police' by Sir John Alderson, Chief Constable of Devon and Cornwall police), would later be successfully employed during the miners strike of 1984-1985, when the National Union of Mineworkers was defeated by the Conservative Government of Margaret Thatcher.

After the Miners' strike had been crushed, William Whitelaw was quoted as saying; '...Without Brixton, I doubt if we could have defeated Arthur Scargill...'

The riots of Brixton, and later Toxteth on Merseyside, fortuitously provided the requisite degree of public anxiety which would enable the government of the day to engage in a wholesale re-arming of the police, without attracting too much criticism from the Liberal Left who would see it as an anti-libertarian gesture. Police agencies which aspire to 'police by consent' are very sensitive to suggestions that their tactics could be making too great an inroad into possible areas of civil liberties, and how we arm our police in this country has always been a very contentious topic. If we are going to see our police being equipped with new and more aggressive weapons of constraint and coercion, we need to be provided with very good reasons for that change, and rioting, burning and looting can prove to be very persuasive.

In August this year, a black 'gangsta', Mark Duggan, was shot dead by police in Tottenham. He was found to have a converted pistol which the Independent Police Complaints Commission subsequently confirmed was a BBM ‘Bruni’ pistol containing live rounds and it was being carried by Duggan hidden in a spare sock, not one he was wearing.

He was shot dead by a police marksman in Tottenham, North London. He had been stopped by undercover officers as he travelled in a minicab and confronted because they believed he was on his way to ‘use the weapon’ he was carrying. Rumours that he had been ‘executed’ fuelled the riots in the North London community, which spawned copycat violence and looting across the country.

So, it was with no great surprise to hear immediate calls for the police to be issued with rubber bullets and water cannons, for use on the British mainland. The immediate calls for these items to be deployed followed hard on the heels of the inner city riots, when gangs of marauding youths ran amok in commercial centres, smashing windows and looting and burning shops. In the post-disturbances discussion, innumerable commentators have sought to find reasons for the riots and how they could have been better controlled, and among the many calls for action was to issue rubber bullets to the Police.

Ironically, the issuance of rubber bullets to confront the inner city rioters would have been a largely pointless exercise. Baton rounds are designed to disperse dangerous crowds, in static situations, where it is perceived that the threat of potential violence and danger to law enforcement is reaching an unacceptable limit. Then baton rounds are effectively used to break up large numbers of protesters gathered together to confront police. They are not prescribed for use against mobile, small running groups of people such as were seen during the looting sprees. Rubber bullets are a crowd dispersal agent, not a missile to be fired at running groups of youths, because they are ineffective against the mobile rioters, and dangerous to potentially innocent persons who might be inadvertently caught up in the fleeing melee.

So why were there so many dark predictions of the use of rubber bullets during the student fees demonstration on 9th November in London? Why were we subjected to the lugubrious face of Commander Pountain as he pontificated on the theoretical use of rubber bullets to protect his heavily armed and armoured officers. I say theoretical because nobody in the wildest extremes of their imaginations really believes that police are going to fire rubber bullets against students. It isn't going to happen.

This what the police spokesman really said about potential violence at the demonstration.

'... 'However, it would be negligent if we did not plan a response to the small minority who may be intent on disruption and may not intend to be peaceful...'

Regarding the potential use of baton rounds, a police spokesman said: '...There are a range of tactics available if there is criminality and violence associated with the event. One of these is the authority to deploy baton rounds in extreme circumstances. These are carried by a small number of trained officers and are not held and used by those officers policing the route on Wednesday...'

So, there you are, no-one policing the demo would carry rubber bullets. So why raise the issue at all?

Now, in the aftermath of the Tottenham and Manchester riots, the time is ripe for a new paradigm in public order management. It is simply all part of a campaign to 'soften up' the British people to get them used to the potential likelihood of the use of these weapons in the near future, so when they are used, no-one can say they were not warned! And when will that be...?

Well, it won't be very long. The impact of the economic austerity measures has not yet really begun to bite, and will not be truly felt until the first part of 2012. Then, when people begin to feel the true impact of the cuts to their living standards; when they see the inevitable upward spiral of fuel costs; the increases in the cost of food; the erosion of their savings, caused in a big part by the outright criminality of the banks and the savings' institutions as they reduce hard-earned savings by hidden costs and charges; the refusal of the big banks to cut their obscene payments to themselves while engaging in wholesale mis-selling practices, and the host of other issues they will have to face, including the increase in the costs of their children's educations, then we will see the emergence of the anger of the hitherto silent class, the group which up to now has sat silent and carried the financial burden through their taxes, while the government has laid billions of pounds of tax-payer's money on the banks, only to see it disappear again in more balance-sheet reconfiguring and bonus awards.

Then the ordinary people of this country will start to find ways of expressing their anger at the failure of the politicians to manage things equitably and fairly, and when they finally realise the growing disparity between those who are reaping millions in banking bonuses or other dividend windfalls and their increasingly straightened circumstances, then even they will move onto the streets. Oh it will all start peaceably enough, with orderly demonstrations, along the lines of the 'Not In My Name' marches prior to Tony Blair's taking us to war in Iraq, but it will not be long before these marches are hi-jacked by the agit-prop groups, the anarchists, the SWP and all the other groups of the political extremes, who long for physical confrontation with the agencies of control. They will gladly catch a free ride on the coat-tails of the respectable Middle Class, until it comes time to take over.

Remember the Poll Tax riots, which in effect proved to be the Rubicon which Margaret Thatcher could not cross, well these manifestations will be a great deal worse and they will involve very extreme violence. The rioters a few weeks ago learned a lot of lessons about successfully confronting the police, and those lessons learned will be re-enacted, as mobile squads of rioters group and re-group, not staying long enough to be 'kettled', moving from flash-point to flash-point, directed by messages promoted on social media messaging systems (are the police really going to shut down the whole mobile phone network, with all the commensurate costs involved to legitimate users?)

The riots will be coordinated and will involve the escalation of extreme violence on both sides, and as the violence increases, so will the calls for the use of the baton rounds, and the police will be hard-pressed to keep them in check. The Right-wing Press, eager to see these weapons used on the mainland for the first time will shout for their use, and they will be brought into the action. Their inexperienced use will lead to serious injuries, indeed, even possible fatalities, as in Northern Ireland, and this will, in turn, aggravate the whole situation. It will be inevitable as the less experienced and the legitimate protestors begin to witness the kind of violence which has marred so many police actions hitherto, they themselves will start to protest at the kind of behaviour being manifested by uniformed officers, as well as the new groups of plain-clothes snatch squads being increasingly used to take down individuals. In protesting at this kind of conduct, they are more likely to find themselves being 'kettled', manhandled, screamed at, violently pushed backwards, hit on the body and legs with long truncheons and even arrested and subjected to the use of 'reasonable police force', which will tend to have a radicalising effect on even the most moderate protestor!

It is only when the middle classes find themselves on the receiving end of police action that they begin to understand what others have experienced in the past, and usually, they don't like it, and they make their feelings felt at the ballot box. That is why the use of this 'Situationist' style methodology can be so effective and could so easily lead to the radicalising of a whole new group of hitherto unaligned groups of people, which will result in turn, in a fracturing of civil society unimagined in our time.

When politicians resort to tooling up the police, they do so for a very good purpose, and they intend the weapons to be used. We are fast approaching that time.

Banking culture saps energy and enthusiasm!

A fascinating story in today's Daily Telegraph. Told by a former insider at Lloyds Banking Group, he unloads a broadside at his former employers.

'...If some mad professor wanted to conduct a cruel experiment in the psychology of stress, he couldn't do better than to replicate the corporate culture of Lloyds Banking Group...'

He then proceeds to describe what can only be defined as a completely dysfunctional environment, where very senior people are expected to put in punishing hours of work '...to micro-manage the smallest details of everyday business...'

Probably no bad thing if some mega M&A deal is about to be signed off, but to receive an text at 1.00am demanding details of a seating plan or a briefing on a customer recently met, demands an urgent review of the mental balance of the sender!

He talks about an '...endless cycle of reorganisation...' a seemingly permanently repeated activity since the merger with HBOS in 2009, during which, each member of staff has to re-apply for their jobs, and which demands many months of management time. During this time, all effective decision-making had to be put on hold, leading to a state of inaction '...close to paralysis...'

Managers' decision-making authority was eroded to the point that in order to get approval for two additional junior staff required to help undertake a vital compliance task (probably something like a major KYC remedial exercise), it required a study by external consultants, costing far more than the modest salaries of the staff needed, and adding months of delay!

Deferring decision-making became the order of the day, and instead of exercising authority, managers chose to get 'sign off' from as many other people as possible. This, we are told, led to an atmosphere of distrust and suspicion, which the write finally ended by resigning!

As an ordinary man in the street, I used to find myself caught in a quandary when I was forced to determine what sort of service the public are entitled to look for from the major High Street banks. We have been constantly told that the banks have to be free to pay salaries and bonuses which make their ordinary client's eyes water, because the banking process is so complex and they need to be able to hire the best brains, to remain competitive.

I no longer believe this bullshit, indeed, I haven't believed it for many years. When I was in the Fraud Squad, I often had to go to banks to elicit information, get evidence we needed to convict some scam artist, and I never once ceased to be amazed at their apparent lack of common sense, their constant obstruction of every move we needed to make, until they were in possession of a piece of meaningless paper called a 'Bankers Books Evidence Act Order'. Even then they would only eke out the information like it was their own blood.

Later, I watched while financial practices which would shame some three-card trickster became the sine qua non of day to day business practice, while young people, frightened for their jobs, aggressively pushed the sale of new credit cards, new accounts, personal pensions, personal protection insurance policies, whatever was flavour of the month being promoted by their greedy sales managers. No wonder they were allowed to get away with it, there was no-one left with any vestige of business morality left to put the brakes on, and all the time, the level of operational dysfunctionality was getting worse and worse.

If you are one of those who is so fed up with the level of non-service you get from your bank, the lack of management empowerment, the inability to take even the most simple decision, then read this article on page B4 of the Daily Telegraph. I doubt whether Lloyds is alone in this condition, banks are so used to benchmarking themselves and their business methods by what their competitors are doing, that my guess is they are all in the same condition of paralysed inertia, as the author of the article puts it;

'...Middle managers' inability or reluctance to make decisions puts a further burden on senior executives, who are already prone to meddle too much in detail...'

God help us if they had to do something complicated.........

David Cameron's Acid Test of enforcement

A new report gives the lie to the Prime Minister's bromide that '...we're all in this together...'

Nearly all of Britain's biggest companies legally avoid tax in the UK, including the state-backed Royal Bank of Scotland and Lloyds Banking Group, according to new research.

The charity, 'Action Aid' found that 98 out of the 100 companies on the FTSE 100 base their operations in territories where there is low or no tax.

The heaviest users were based in the financial sector despite the industry's role in the economic crisis.

Britain's four biggest banks - HSBC, Barclays, Lloyds and RBS - have 1,649 tax haven companies between them.

Action Aid's tax justice expert Chris Jordan said: "Tax havens have a damaging impact on the UK exchequer, the stability of the international financial system, and vitally on the ability of developing countries to raise tax revenues which would lift them out of poverty and make them less dependent on aid.

"When multinationals use tax havens to avoid paying their fair share, ordinary people in both poor and rich countries are left to pick up the bill. Spending on doctors, nurses and other essential services gets cut for those who need it most.

"Tax havens might provide the lure of financial secrecy and low tax rates for big companies, but at a time when all countries are desperate for revenues, the UK government can't afford to turn a blind eye."

If this news wasn't nauseous enough, consider the bonus payments that bankers are now demanding.

In a recent survey by recruitment website eFinancialCareers, nine out of ten City bankers said they expect a bonus this year. Of these, nearly half anticipate more than last year; while one in ten expects their year-end payment to rise by 70% or more.

TUC general secretary Brendan Barber was reported as saying: "Banks have played a key part in bringing the economy back to the brink of recession so it's astounding that bankers expect any bonuses, let alone bigger pay-outs..."

"If the government refuses to challenge these multi-billion pound rewards for failure, the least taxpayers deserve is a bonus tax to help pay for the mess they are creating."

Despite several major banks warning that the eurozone debt crisis will hit profits this year, think tank, The Centre for Economics and Social Research, predicts that City firms will hand out bonuses totalling £7.2billion, up from £6.7billion last year.

Mr Barber said: "It makes you wonder what level of financial Armageddon is needed for bankers to not get a bonus."

What we all have to understand is that these grotesquely-paid parasites, who caused the international debt crisis in the first place, are getting their bonuses from money on which little or no British tax has been paid. So, where is their employers' justification for paying such high salaries and bonuses now?

We are always being told that without these payments, these incredibly intelligent people would go elsewhere. Well, now we can see there is no reason to keep them here, because their employing institutions aren't even paying any realistic tax anyway, so these threats are as hollow as are the morals of those who parrot this rubbish. Let the bastards fuck off to another jurisdiction, but make their hitherto automatic right to re-enter this country dependent upon a one-time windfall payment, cleared through H.M.Treasury, before presenting themselves again at Immigration!

David Cameron cannot sit back and contemplate this scenario without feeling very uncomfortable indeed. He has already had cause to observe what damage can be caused by a criminal under-class who had no reason to riot. If these disparities in social wealth become any more egregious, ordinary, decent working people who pay their taxes, seek to educate their children honestly, and who do not live in debt, but who find their jobs shrinking, their costs of living spiralling and their savings dwindling, will start to reconsider their position, and when that happens, their wrath will be terrible to behold.

We are now governed and ruled by faceless men and women in suits who sit in banks and boardrooms and bureaucrats' offices, and have no interest in us or our interests or our way of life. Banking decisions which govern us are made largely by people who have no interest in Britain, yet our Governments, of both colours, meekly acquiesce, and sign up to the bullshit they are fed.

David Cameron needs to go away and read G.K.Chesterton if he wants any assistance on what might lie in wait!

From the poem '...We are the people of England...'

They have given us into the hand of new unhappy lords,
Lords without anger or honour, who dare not carry their swords.
They fight by shuffling papers; they have bright dead alien eyes;
They look at our labour and laughter as a tired man looks at flies.
And the load of their loveless pity is worse than the ancient wrongs,
Their doors are shut in the evening; and they know no songs.

We hear men speaking for us of new laws strong and sweet,
Yet is there no man speaketh as we speak in the street.
It may be we shall rise the last as Frenchmen rose the first,
Our wrath come after Russia’s wrath and our wrath be the worst.
It may be we are meant to mark with our riot and our rest
God’s scorn for all men governing. It may be beer is best.
But we are the people of England; and we have not spoken yet.
Smile at us, pay us, pass us. But do not quite forget.

The World-Check Global Compliance Leadership Forum 6 - 7 October 2011

To Brocket Hall, Hertfordshire as an invited guest and speaker, to attend the annual Global Compliance Leadership Forum organised and produced by World-Check.

I have known the company since they started over a decade ago when they launched the world's first database for KYC compliance. Today they are rightly considered to be the leading global authority on resolving risk through targeted intelligence.

Now an integral component of the new Thomson Reuters Accelus Screening product, World-Check has been joined by the Northland Solutions Transwatch transaction monitoring software, to create a suite of end-to-end solutions that provide a comprehensive view of regulatory and legal risk, helping organizations manage Governance, Risk and Compliance globally, encouraging growth and innovation instead of bogging them down.

In the distinguished company of Rear Admiral Chris Parry, a specialist in Geo-Strategic Forecasting and Risk Assessment; Professor Alain Bauer, Professor of Criminology; Neville Tiffin, Global Head of Compliance of Rio Tinto; B.C.Tan, Head of Organised Crime Research for World-Check and Keith Packer, a former Commercial General Manager of British Airways, we spent two delightful and instructive days evaluating and analysing high-level issues of compliance with international regulatory demands.

My paper, which examined the issues surrounding narcotics and terrorist money laundering in Pakistan and Afghanistan, sought to evaluate the implications of the lack of meaningful aml systems and controls which still pertain in Pakistan, and how her failure to comply fully with FATF requirements has made her a real risk to international banks who could easily be induced to provide services to Pakistani high net worth individuals, or exchange-quoted companies.

When discussing money laundering typologies in Pakistan, it is an enormous mistake to start by thinking in conventional, money laundering terms.

In Pakistan, cash is routinely used, every day, as the traditional means of value transfer, and a very large number of even sophisticated, educated people will routinely withdraw the entire contents of their monthly pay cheque from the bank, once the cheque has cleared into their account, and hold it in cash.

It is not unusual to observe significant amounts of cash being used to pay for very large bills. When one checks into a hotel, even one of a very high standard, the clerk routinely asks whether the bill will be settled in cash or by the use of a credit card.

Pakistanis keep large sums of cash in their homes, and no-one thinks anything remotely untoward of such significant possession.

Therefore, when conventional money laundering methodologies are reviewed, but in Pakistani terms, the traditionally accepted truisms do not so easily apply.

For this reason, a major number of Western-style anti money laundering methodologies simply have no resonance in Pakistan because the criminals routinely keep the cash, and no-one is in the least bit concerned or suspicious if such sums are used to maintain their lifestyle.

This is not to say that money laundering techniques are not used in Pakistan, indeed, the more important requirement for illegally-acquired money in Pakistan is to have an acceptable way to explain its existence in cash form, as opposed to seeking to use conventional ways of laundering it. This does mean, however, that in many cases, the laundering methods adopt a form of 'reverse money laundering' where the activities of the person conducting the laundering activity are aimed at providing a putative legitimate provenance for the money, to give the cash a legitimate 'legend'.

We are dealing with a State which is very resistant to implementing meaningful aml systems and deliberately engineers a legally-instituted system of cross-border financial transfers, designed to allow the free-flow of all kinds of international currencies into and out of Pakistan, but without any meaningful questions being asked as to the source, provenance or ultimate destination of that money, a system which flouts international law and makes a mockery of any internal anti-money laundering proposals or initiatives, and which deliberately facilitates the financing of international drug trafficking and terrorist financing.

Addressing an audience largely composed of senior risk and compliance professionals is no sinecure, and a sharp debate ensued, identifying and recognising the problems associated with States like Pakistan and Afghanistan, and asking how they can safeguard their institutions from the risks of doing business with major Pakistani criminal elements or Afghan terrorist paymasters.

When discussing the difficulties associated with the narcotics connection which Pakistani money poses, it became easier to appreciate the dichotomy which financial sector practitioners have to face. Nevertheless, the debate did point up some potential solutions, which I have no doubt the World-Check and Thomson Reuters professionals present would have noted and will be working on.

This is the real value behind these fora, the chance to meet and discuss real-life problems with those who have most to lose from getting them wrong. This is where Thomson Reuters is really defining a new agenda of risk management, and opening up a whole new series of prevention mechanisms and tools. Working at this depth of intellectual challenge and with this degree of granularity defines a whole new scenario of sophisticated supports for the regulated sector.

As these kind of new products come on stream, they will quickly spotlight those 'so-called ' solutions which seem to promise much but deliver very little, and in time, they will be excluded from the market, as the new Thomson Reuters solution suites become recognised as providing significant added value.

Thank you World-Check for the invitation, thank you to the new friends and contacts I made, it was one of those events that was worth every minute!

New City Trader Scandal

Well, why are we so surprised? It was only a question of time before another city gambler stepped forward to claim the title of greater fool! I use the word ‘gambler’ deliberately, because that is what these people are. I mean the people who throng the city desks engaging in financial trading, whether client-focused or proprietary. Theirs is a gambling mentality, and their liabilities are magnified exponentially by the very instruments they adopt.

Derivatives instruments are fundamentally risk-limiters, used to manage and mitigate risks. When you reverse their polarity, and put them in the hands of people who are remunerated by the amount of money they can make for their institutions, speculating on the world’s markets and using instruments to leverage their exposure to potential gain, and you have a recipe for disaster.

But we have known this for a long time. Nick Leeson, 1995, Yasuo Hamanaka 1996, John Rusnak, 2002, Jerome Kerviel, 2008, all of them lessons in how and where the regulators and the Compliance departments got it so fatally wrong.

Regulatory agencies have demanded greater and tougher surveillance systems and controls to manage these risks. Daily reporting of exposed positions to the regulators is mandated, but nothing seems able to identify these traders effectively, until the problems burst open, with the concomitant losses matched only by the red faces at all levels of control.

Yet, these problems do not need to take management by surprise.

Northland Solutions Ltd, now owned by Thompson Reuters have long been able to offer a transaction monitoring tool which runs a daily surveillance function of every trader in any trading department. The tool will monitor their build-up of open positions, at what time, in which market and at what price; it will monitor when specific positions are closed, and at what price; it will closely track position limits being reached, where margin limits are being potentially crossed, and it will provide a fully holistic picture of the trading activity being undertaken by every trader in the team.

Where positions are growing dangerously large, or where they might indicate that some other, possibly illegal activity is being planned, (insider dealing, market manipulation, etc) the system will send a warning to the compliance team to alert them of the risks being adopted by the trader, and give them an opportunity to act accordingly!

There is absolutely no excuse for any institution not to implement such systems and put them in place immediately. No CEO should be able to say in future that he or she was not aware of the risks of unmonitored trading.

This time, some very senior heads at UBS need to roll. It will not be enough simply to lay all the blame on the trader, there are others who need to share this responsibility.

My private expectation is that this trader has been making some exceptional profits in the past, and that he has been allowed to carry on all the time he was making money. This time it seems he may have read it wrong, or more likely, something in the market has intervened to alter the shape of his playing field. Whatever the explanation, he should never have been allowed to get into this position in the first place.