Friday, March 21, 2014

The Bar scene from Star Wars, or the Last Chance Saloon? A review of the 57th Session of the U.N. Commission on Narcotic Drugs!

For the second year running, I have been a delegate at the UN CND held in Vienna. I have a feeling it will be my last!

The whole event possess a surreal quality, starting with the “out-of-worldly” buildings which comprise the UN complex based in the Vienna International Centre, a few stops on the U-Bahn from the centre of this most beautiful of old Eastern European cities.

The UN complex, which includes the building in which the CND is held, resembles nothing so much as some demented architect’s futuristic vision of what a global-administrative agency should look like, but situated in a galaxy many light years away from here, hence the Star Wars connection! It is ugly beyond belief and rears up over the individual, dwarfing him by its sheer grotesque size, but to soften this overbearing image, there are no hard edges or sharp corners. 

Everything is rounded off, windows, in disciplined ranks are oval ended, the whole edifice is a study in curves and elipses, and painted in sickly pinks, oranges and beiges. It looks like a model made by a child from sticky Plasticene.

One is already having one’s mind programmed before gaining admission to the event – this is the UN, and you are being reminded of their almost unlimited power, but in ever such a user-friendly and politically-correct manner.

The delegates to the event represent a major cross section of just about every agency, NGO, lobby group, think tank and fellow traveller whose interests coincide with the issue of the legal or illegal status of narcotic drugs, their cultivation, possession, usage and dissemination.

There are some very exotic delegates, tattoos and body piercings abound, people will introduce themselves proudly with such words as, ‘Hi, I am a medicinal Cannabis user and a Ketamine injector” or whatever narcotic is their choice of achieving personal gratification. One gentleman, it turns out, is a registered user of Heroin and receives it on prescription, so I am advised. He is a highly intellectual debater and a powerful argument for demonstrating that under proper supervision, even the hardest drugs can maintain the user in a balanced equilibrium. The man who says he uses Ketamine ( I had always thought of it as a horse anaesthetic), is a well-balanced and gentle exponent of drug counselling and has spent many years as a drug mentor and guide, advising and supporting young people in managing their drug issues.

One woman talked quietly to me about her lifestyle choices involving Cannabis and Ecstasy, as well as occasional forays into other drugs, and she counselled me seriously on the many dangers inherent in my own personal choice of red wine which even taken in moderate quantities ‘...can do very bad things to you...’ 

Virtually every country in the world which grows, produces, exports, imports or uses these narcotics is represented, and every point of view is capable of being heard.

The UN and its mind-boggling bureaucracy is represented everywhere, from the gun-toting guards who stand around at every doorway and corridor, to its wholly unfriendly, surly coffee-bar staff, who run their posts with machine-like order.

They do not open for service before 9.00, despite the fact that a vast queue of thirsty coffee addicts is lined up at the counter. (Ironic how no-one at a drug conference appears to equate caffeine addiction with any of the other habit forming commodities being discussed)! Requests for service to the staff behind the counter are met with a mumbled refusal, and only when the clock passes the appointed hour do the staff then busy themselves cashing up the tills, bustling about, and eventually serving, but in a most inefficient manner. Don’t ask for change for the free-standing machines which dispense drinks at half the counter price, it will be refused. 

One should never overlook the message being sent by these time serving ladies, who are exactly the same ones whom I experienced last year! This is how the UN works, it has rules, it has a bureaucracy, it has apparatchiks, and nothing will or must be done to change anything that is written into the status quo. It is as if when you come to work in this building your brain is automatically taken over by a UN control mechanism which puts you on an auto-pilot mode which fits their design.

Having negotiated the almost incomprehensible agenda, and decided which of the many main events and side programmes are of greater or lesser interest, it is always worth reviewing the stalls and exhibitions. Until I attended last year, I had no idea just how much of the world’s rain forests are destroyed to meet the insatiable demand for paper on which to publish the outpourings of the groups who inhabit this strange world of drug discussion. A few examples will serve to explain my wonder!

“Sentencing policies for drug offences: Best practices in the UK”. Organised by a group calling itself the Academic Council on the UN System. Considering that some of our worst drug addictions are to be found inside our prison system, and the chances of leaving prison addicted to hard drugs, even if a prisoner was not so addicted upon entry, is so high, I hoped to hear a paper which talked of alternative means of sentencing drug-offenders which avoided custodial sentences. I may have missed it, but I am not sure if the issue was raised at all.

Or how about “Drug Trafficking and Consumption in West Africa” Organised by Cape Verde, Benin, et al.

Other papers dealt with ‘Violence against women who use drugs’,’ Protecting youth with drug policy’, ‘ Evidence-based tools and resources’, I could go on and on.

One extremely valuable presentation was made by the Portuguese during which they talked openly of the successes they had made in reducing narcotics harm through the use of a focused decriminalised drug use policy. But for every sensible and well-balanced presentation, there were others like the Drug Policy Futures Group who have set their hearts and minds against the entire campaign for decriminalisation and are determined to work against the well-intentioned agendas of those disparate groups who see decriminalisation as representing, ultimately, the only real policy which will have any meaningful effect against the influence of organised crime in the global drug markets.

Perhaps unsurprisingly, I could not discover any willingness to discuss the issue of the criminal laundering of the enormous proceeds of criminal drug trafficking, and as far as I could ascertain, there were no banks or financial institutions present, and willing, to discuss their attempts and methods to limit the amount of drug money entering their systems.

It is the major issue of the criminal money which is generated by the international drug trade which is the real elephant in the room at conferences such as these, but no-one it seems wants to discuss it. I tried to engineer a discussion with a delegate from Mexico, a representative of the Mexican drug control agency, but he just laughed in my face.

"...My deluded friend" he said, "...Everybody in this business knows that all the drug money from the narco- trafficantes finds its way to the City of London. Look at the HSBC bank, how they moved all those millions of dollars for the cartels in my country. Why your country did not prosecute them is clear to us, Great Britain does not care where the money comes from, as long as it comes to Great Britain, and no British Bank will be punished for bringing in the drug money. You people did it to China in the 19th century, and now you do it with the rest of the world. .."

What is clear to this overworked law enforcement agent from a country which is truly suffering from the corrupting effects of Cartel Heroin is that the UK has absolutely no agenda to promote or support any agenda for legalisation, because it would mean a strangling of the supply of illegally-generated drug profits, but then, the UK is not alone in having no intention of lifting the yoke of prohibition!

Regardless of the fact that the UNDOC, in the form of their President Raymond Yans, will discuss UN prohibitionist policies in terms of health, welfare and national benefits, he continues to talk down the likelihood and possibilities of legalisation in other countries of certain initial drug issues. This is in the face of the evidence now before the Conference from Uruguay, Washington State, and Colorado, where a degree of legalisation has now been achieved.
Listening to Mr Yans, I get the overwhelming impression that he is nothing so like the small Dutch boy, sticking his fingers in the dyke to prevent the leaks from leading to the entire edifice crumbling.

And this, or so it seems to me, is the essential conundrum behind this major annual jamboree. It seems to exist for the benefit of a very large number of people who belong to exotic-sounding organisations, and whose ambition is to continue pouring out learned papers and discussion documents on such issues as harm reduction, health management, youth protection, and who enjoy travelling to attractive venues to discuss their vested interests.

These people are dependent, for their cushy lifestyles, their expenses, and maybe their jobs, on the likelihood of drugs remaining prohibited for the foreseeable future. They have a vested interest in ensuring that the drug laws are not amended, or at least not too much, so as to threaten their functions. If these drugs were decriminalised and prohibition ended, bureaucrats and apparatchiks like Raymond Yans  would be out of a job.

The organisation I represent, "Law Enforcement Against Prohibition", a global body of former law enforcers who have long since seen and realised the inherent dishonesty and futility of the so-called ‘war on drugs’ had put forward a discussion document for consideration and wider dissemination on a proposal to amend the United Nations Drug Treaties, essentially eliminating the criminalisation-oriented drug policy paradigm, replacing it with a health-harm reduction and human rights oriented policy.

You might think it odd that thousands of ex-police officers in a number of countries might see eye to eye on the logic and pure sense of such a policy, but it was there in black and white, on the table in the Meetings.

The effect of such a policy if accepted and enacted would begin to curtail the activities of many of the exotic delegates all clustering around the bar of wider discussion (hence the bar scene from Star Wars image), and it would begin to usher in a wider policy of decriminalisation.

This is the first time, as far as I am aware, that such an important enactment has been proposed, as it cuts, like a hot knife through butter, through the bullshit being talked at so many of the meetings. (One group was talking about decriminalising cannabis use for adults, while maintaining in the same legislation, criminal penalties for children caught using the stuff !!!)

I was very hopeful that our campaign would catch the imagination of delegates, and in one way, it did! We were almost routinely attacked by many of the major NGOs who were present. We were accused of failing to ‘discuss and debate’ our proposals with all the other groups, a process that would have been never ending and would have been subject to so many proposed amendments, that in the end, the poor bleeding rump that was left would not have had enough life in it to limp over the starting line of the amendment process.

At the same time, we attracted a lot of informed attention from a number of interested parties, and particularly delegates from a number of South American countries. (Now those boys and girls know the human cost of the war on drugs, I had a long and detailed discussion with a police colleague from Colombia, and I realised we were not even starting to scratch the surface when we talk about social harms from organised crime)!

So, how will things develop?

It’s very hard to say. Our amendment cuts through an enormous volume of red tape and bureaucracy and possesses some very desirable outcomes, if properly enacted. It enables member states to operate their own policies within the overall ambit of the UN, thus enabling them to create a Uruguayan-style outcome if they so wish. It also envisages through its flexibility, a Portuguese-style model format which many European states might find more to their taste.

We shall see. I do not expect any great speed to be generated in enacting our amendment, but it is there on the table, if the UN authorities want to bend down and pick it up!

This is the last-chance saloon for so many countries, if they are not to see and experience an entire organised crime makeover in the style of that experienced by Mexico, Colombia, Bolivia and other narco-states. There is a lot of good-will out there to bring forward and enact a sensible drug policy. We in the UK must start to examine our pathetic response to the conundrum, and begin to take steps towards developing an evidence-led debate, with information and medical facts supplied by people like Professor David Nutt. I don’t want to hear any more diatribes from Melanie Phillips or Peter Hitchens on this topic.

At the same time, we have to start really enforcing our anti-money laundering laws and Regulations and make them mean something, if we are not to be seen as merely pious hypocrites in the eyes of the rest of the world, to whom we are so willing to preach on their shortcomings. Our attitude towards openly accepting every narco-state's profits is doing us huge harm in the eyes and ears of those countries who know the reality of what dealing with 'Perfidious Albion' really means!

Finally, the papers this morning were all over Russell Brand and his personal contribution to the discussion in Vienna.

I find myself (again not unusually) in a small minority in my view of Mr Brand. It's not that what he says is wrong, it's that he is saying it! After all, this is the man who had an ill-advised obscene public discussion with Jonathan Ross, the tv presenter, and verbally defiled the grand-daughter of Andrew Sachs, a charming and harmless man who has given pleasure to countless number of people. This is the nature of the man, and he can be adjudged by his actions. Seductive though his message sounds, if we want to be taken seriously by international policy makers and law givers, the kind of people we really need to impress and influence, in order to see our side of the argument, then it is my personal view that Mr Brand, despite his high-flown rhetoric and his clever arguments, will not be the sort of person who will bring home the case for reform in the longer term. He is a celebrity, a creature of the night and the flashlight. He can put on an argument with the same ease he puts on a designer jacket, but, like the flashlight on the camera, which he seeks out in his lifestyle, he flares brightly, but fleetingly, and whether he will be there when the hard yards have to be put in to bring home the case for the reformers, I seriously doubt.

Time will tell, and I may well be proven horribly wrong, but for me, the jury is still out on Mr Brand!

Saturday, March 15, 2014

Financial Conduct Authority fails, yet again, to impose the rule of law on the banks!

Two firms are facing enforcement action from the Financial Conduct Authority for anti-money laundering failures, while the regulator is reported  to be considering similar action against three others.

Sharon Campbell, the FCA’s head of financial crime and intelligence, declined, predictably, to name the firms facing enforcement but stressed the issues were not new. The regulator, it is reported, is especially concerned with firms’ handling of high-risk customers such as politically exposed persons (PEPs).

“The thing that surprises me, when it boils down to it, the things we are finding are not new issues…the management of high-risk PEPs is not a new thing,” she told delegates at City & Financial’s financial crime conference on 4th March.

The FCA, previously the Financial Services Authority, has fined a total of nine banks in the past five years for AML failings, and much of the recent focus has been on firms’ handling of PEPs. In 2011 the regulator launched a scathing report on similar failings in this area.

The FCA is also concerned about the quality of AML compliance across the board and is worried firms are ‘de-risking’ their client bases to avoid proper compliance.

Campbell said she had found the failings “depressing” and said in one of the settled cases, a firm had an unemployed housewife as a client whose account had more than £1 million flowing through it over a period of time. “These are basic, simple principles,” she said. “The level of anti-money laundering compliance is a matter of concern.”

The regulator was worried the drive for profits was overriding the need to properly check high-risk clients. “Some firms are not willing to make tough decisions if profits are at stake,” she said, adding that some problems were serious and persistent.

Over the past year or so, many firms, as a result of the big fines imposed in the United States for serious AML failings, have started to quietly drop clients perceived as risky. This has become an issue in the UK and the FCA is concerned, Campbell said.

 “If firms are taking that ‘de-risking’ strategy because of competition [issues] we will have something to say on it,” she said.

Delegates were told the FCA had a range of available options aside from enforcement. Last year it made six ‘early interventions’ in banks where it discovered serious weaknesses. The banks were told to remedy problems immediately. Campbell questioned why the FCA had to go in and find the problems, however. “We are not a consultancy,” she said.

Sharon Campbell's observations possess all the predictably dreary and complacent attitudes expressed by British financial regulatory agencies. She talks about 'a range of available options aside from enforcement'!

What options?

One of these days, Sharon Campbell and her bosses are going to wake up to the realisation that they are a law-enforcement authority, whether they like it or not!

They are not a kindergarten, or a bunch of social workers, their job is to apply and enforce the law as it pertains to the administration of financial services.

The trouble is that too often and for far too long, those charged with the administration of these laws, whether it was in the old days of the Securities and Investments Board, or its successor, the unlamented Financial Services Authority, or now its doppelganger, the Financial Conduct Authority, no-one inside these agencies has ever wanted to grasp the nettle of taking on board the responsibility for prosecuting those financial practitioners who willfully flout the law!

Howard Davies, former Chair of the FSA was described as having no appetite for prosecution, because, as it was described to me by an FSA staffer, '...he didn't want his reputation to suffer in the same way as that of Barbara Mills or George Staple..."

If the head of the regulatory body refuses to accept the powers that Parliament had prescribed for him, perhaps we should not be surprised if that policy became enshrined in the culture of the agency and its successors in title.

But just because one senior Mandarin Administrator didn't have the bottle to take up the challenge, doesn't mean that the FCA should renounce its responsibilities.

Sharon Campbell doesn't have any right to be depressed by the findings of her review, and she is right when she states,“...these are basic, simple principles..,” she said. “The level of anti-money laundering compliance is a matter of concern.”

So what are you and Tracy McDermott going to do about this wilful and deliberate refusal to obey the law. These firms are sticking two fingers up at you and you are doing nothing about it.

It is futile expecting banks and financial companies to worry about the arcane minutiae of the Money Laundering Regulations, all the time you succeed in giving them the impression that you don't care about this egregious activity.
You can preach to these bastards all you like and they will still ignore you.

These wilful failures to implement meaningful responses to the Anti Money Laundering Regulations possess penal sanctions, and these have now got to be imposed, with rigour.

This is a battle you people can win, if you really want to, but it's no good just  hoping, you must take the fight to the enemy.

Any firm that has been under a compliance review and has still failed to take the necessary steps to implement the procedures and processes necessary to meet the legal requirements, should be summoned to court, and convicted.

And the buck should stop at the office of the Chief Executive. He or she should be told, by you, in no uncertain terms, where the failings were perceived to be, and what those failings were, and what steps you expected to be taken to rectify the matter, and a future date for a new inspection should be made.

Then if the processes were not  completed, criminal proceedings should follow.

I am not expecting these men to go to prison in the first instance, although their wilful refusal to take the necessary degree of responsibility for preventing and forestalling money laundering is a serious matter, but any fines will be levied on them personally and will not fall upon the institution. The errant director will also now have a criminal record, which will directly impact his ability to be construed as a fit and proper person.

I guarantee you, Ms Campbell, that after the second such conviction, you will observe a gadarene-like rush for directors to be observed to be putting their houses in order.

You have no excuses any more. You must name and shame the institutions you have presently sanctioned, so that we all know which banks are refusing to accept their responsibilities under the law and are flouting your authority.

Such knowledge would have a big impact upon the investing public, it would have a direct impact on me, because I would be using that information to write to the Chairman of the bank, if my bank was among those named, and demanding that he do something to bring the bank into line!

Fining banks is a waste of time, why do you want to punish the shareholders?

On Thursday13th March, Thompson Reuters plc held a webinar which attracted over 1,000 interested practitioners from all over the world. The discussion focused on 'The Key Priorities for Customer Identification and Monitoring in 2014'.

It was very obvious that the basic client identification procedures and the need to monitor transactions is still an issue which the financial services world is still managing to ignore, despite all the rules and regulations applied for their enforcement.

This country is facing a tsunami of dirty money flooding into the City, particularly from Russia and the Ukraine. These two countries are among some of the most corrupt criminal states in the world, and their oligarchs are men who in so many cases have become wealthy beyond the dreams of avarice, by criminally looting the assets of the former Communist state.

George Osborne, David Cameron, and their London mayor mate, Bo-Jo may welcome this influx of dirty money, as far as I can tell, the Tories are very relaxed about the sources of criminal cash being deposited in the City, but it does no exonerate banks from ensuring the full implementation of the regulations demanding full due diligence on the sources and provenance of the funds being deposited, and the nature and quality of any PEPs seeking client status.

So, time to dig out the handcuffs, Sharon, and start arresting some of these banksters who seem to believe that they can continue to commit criminal offences without your agency having the guts to do something about it!

Friday, February 28, 2014

We need more satirists to show the City how it really looks!

Every so often, the public prints get a news story absolutely right.
I have found in so many cases, the best interpretation of events is to be found in the cartoon sections, particularly on the business pages.
I have been blogging on the issues of the absence of moral responsibility in the financial sector for a long time now! So, imagine my great surprise (and pleasure) to see a cartoon which encapsulates, in its entirety, the whole moral conundrum which the City and the criminal banksters face every day.
The fact that this cartoon appeared at the same time as the announcement that RBS was paying out a raft of bonuses to its employees, merely makes the amusement even sweeter.
I will seek to describe the cartoon in greater detail in a later paragraph, but let me set the scene by commenting on the latest bonus nausea emanating from the Caledonian bank of unreformed criminals, conmen and clowns.
The RBS chief executive, Ross McEwan, acknowledged that the issue of paying bonuses was "highly emotional" as he explained the multimillion pound windfall at the taxpayer-owned institution.

I would have thought that emotion was the least of his worries, because he is clearly, in his own words, rewarding his staff for their criminality, I mean, he says so himself, in terms.

I had always thought that bonuses were paid when employees reached a specific target, but not in Scotland, apparently. This year the bank paid up huge bonuses despite suffering an £8.24bn loss in 2013 as it slumped into the red for the sixth successive year.

Now, as a tax-payer, I am a shareholder in this joke institution. We have been ploughing money into this shell for years, and still it hasn't finished paying off its debts and punishments.

The CEO avers; "...I need to pay these people fairly in the marketplace to do the job. I do need to make sure we are there or thereabouts and that is all I'm asking for..." he said.

Not unreasonable you may think, until you come to realise that the latest annual loss was caused by £3.8bn of costs for settling litigation and regulatory problems – including £1.5bn extra to compensate customers fraudulently induced payment protection insurance and interest rate swaps in the UK – and £4.5bn of losses on bad assets.

He was literally rewarding his people for the mess that they had created for the bank. When you fraudulently induce customers to pay for PPI insurance, secure in the knowledge that it isn't going to do what you are claiming, you commit the offence of criminal fraud, and you deserve to be nicked. Try clocking a second hand car before you sell it and see what sympathy you will get from the courts if it is discovered. The principle is exactly the same.

The company's shares fell 6.7% to 330.2p on the receipt of the news, wiping more than £2.5bn off the market value of a business that is 81%-owned by the taxpayer.
McEwan, who took over from Stephen Hester in October, at least got some things right. He said that RBS needed to regain the trust of its customers and the public.
"We happen to be the least trusted bank in the least trusted sector in the marketplace," he said.
Well, don't worry McEwan, there are a whole heap of banks queuing up behind to challenge you for that title!
Bankers' bonuses continue to plague the industry amid public uproar over past misconduct. Barclays increased bonuses to £2.4bn. HSBC said on Monday it would increase salaries for its bosses to get around a European union cap on bonuses.

McEwan, who has turned down his bonus for 2013 along with his executive team, declined to say whether RBS would ask shareholders, including the government, for permission to circumvent the EU bonus cap this year. "The board has not opined," he said.
I'll bet they haven't. Considering that such a move would hit them all, in the pocket if it goes wrong, I'll bet they are all sitting shtum and waiting for someone else to make the first move.!
McEwan replaced Stephen Hester as chief executive after Hester was forced out last year by chancellor George Osborne. At the time, RBS said Hester was leaving because a new boss was needed for the start of privatisation, possibly this year.
But McEwan said his plan would take up to five years to complete, casting doubt on the government's ability to sell its 81% stake any time soon.
So, yet another lie in a long line of lies and mis-statements from this pile of hopeless crap. Frankly, we would all have been better off, if when it was in so much financial trouble, the Government had just taken it over and wound it up in the public interest. We would have lost some money, admittedly, but each year we are forced to spend more and more on this criminogenic edifice, just to keep it afloat.
And what has all this got to do with a cartoon in the Daily Telegraph?
I am always amused when I hear the private protestations of bankers about wrong-doing in their institutions.
"...No no, we didn't know that anything untoward was going on...What do you mean I am the CEO and should know what happens in my bank...All our staff are fully trained in their compliance objectives..." etc, etc!
Well, the cartoonists who draw the Alex cartoon on the Business Section page, clearly have a very cynical view of such protestations too, indeed, I never cease to marvel how close to the truth and the reality of the City their cartoons get.
Alex is the epitome of the loathsome investment banker. He and his wimpy friend, Clive work for a huge banking institution. They are at a senior level in the process and Alex thinks only of the money he already has, and the greater amount of money he can acquire through bonuses
He has recently picked up his wife's I-Pad by mistake, and as she is a major non-executve director of a large corporate conglomerate, he not unreasonably believes that the I-Pad will contain a vast amount of confidential corporate information which he can use to gain business advantage.
In the cartoon, he has been busy trying to get the I-Pad open to read the information, but he cannot gain access as the contents are encrypted. Succeeding eventually because his PA knows his wife's birth date, Alex has of course forgotten it, he then decides to give the pad to a young intern to go through the information and summarise its usefulness. We pick up the story where the young intern is telling Alex what she has done with the pad.
Alex says: "...You did what with that I-Pad I entrusted to you, Amelia..?"
Answer: "...I handed it in to Compliance..."
Alex says: "...You utter idiot..."
Amelia says: "...Look, Alex, you were asking me to extract information from an illicitly-obtained device. This clearly breaches the bank's fraud prevention code..."
Alex: "...I don't believe this, you're a graduate trainee! Your only function is to do tasks that we delegate to you...What do you think gives you the right to lecture me on business ethics..."
Amelia: "...Maybe the fact that you all delegated the task of doing your on-line anti-fraud training modules to me. I got 100%..!"
Alex: "...But you weren't supposed to take it seriously..."
In this perfectly encapsulated small vignette, the cartoonists have amplified the whole gamut of how the City fails to take Compliance issues seriously, and how young trainees are shown the worst kind of business examples.
Alex and his friends abuse the young trainee's time by getting her to complete their electronic training requirements, a feature which is ubiquitous in all bank training, particularly money laundering awareness, and then when she demonstrates that she has learned the lessons the training was intended to inculcate, she is blamed for taking it seriously.
So the message that comes through is that Compliance is all a waste of time, unethical behaviour is acceptable as long as you make money, that breaching the bank's codes of procedure and crime prevention are there to be ignored, and that it is perfectly permissible to abuse young interns and trainees.
I know that the cartoonists are only doing this to raise a laugh, but underneath the laughter, there is a very serious message being spelt out here! All this wrong-doing, this criminality is driven by over-paid executives who are willing to flout the norms and ethics of conventional behaviour to make more money. They all know what they are doing, and they all know it is wrong, and we need to start locking them up.
We need more cartoonists and satirists to hold a mirror up to nature in the Square Mile. Perhaps if we had a Thomas Rowlandson, or a Hogarth, a Jonathan Swift  or a Daniel Defoe alive and working today, we would have a wonderful set of examples to pick from.

Friday, February 21, 2014

Finally taking financial crime seriously.

Three former Barclays employees have been charged over the alleged manipulation of Libor benchmark interest rates.

The Serious Fraud Office (SFO) named them as Peter Charles Johnson, Jonathan James Mathew and Stylianos Contouglas.

The men are accused of conspiracy to defraud between 2005 and 2007 and are due to appear at London's Westminster Magistrates' Court on a date still to be announced.

The SFO said its Libor investigation was continuing.

Just in case you hadn't noticed recently, the City and its banks have been continuing to live down to their shabby reputations and men like these represent but the visible tip of an iceberg-sized problem of alleged criminogenisis within the Square Mile.

The City of London has, over the past few years, become synonymous with every kind of skulduggery, sharp practice, flaky conduct and downright criminality it is possible to imagine.

The banking sector has developed into a mafia-like organised criminal enterprise, where every kind of wrongdoing has been permitted and encouraged in order to earn profit for the organisation.

Oh, there are many who will cavil at this description and who will accuse me of hyperbole, but what other description can you apply to a business sector which repeatedly has to set aside many millions of pounds in order to pay penalties and fines imposed for its criminal conduct, and which has had to repay billions of pounds in restitution for criminally-acquired revenues arising out of downright fraud, deceit and lies.

Despite all the attempts by Government to soft-soap the criminal activities committed by the banks by calling their wrong-doing 'mis-selling', a concept hitherto completely unknown to English criminal jurisprudence, the fact is that someone has been committing the crimes which have penalised so many innocent clients or investors. The banksters have been receiving their bonuses, that's for sure, and they couldn't have been paid these figures unless they had delivered the level of profits to justify them.

The British banking sector has been committing financial crimes for many years and it has relied upon the spineless regulatory model which oversees its activities, coupled with its friends and fellow-travellers in the Houses of Parliament who can be relied on, when a particularly egregious example of criminal conduct become public, to call for a cessation of any investigation, for fear of damaging the so-called 'good name of the City of London'.

What good name? Who do you know who has any good word to say for the vast majority of bankers? The sort of people who seek recourse to the dubious services the City bankers offer do so because in so many cases, they have money they don't want to have to explain in too great a degree of detail and they know it is a place where crooks and fellow scumbags can congregate, sure in the knowledge that they will be among friends and that no-one will ask any awkward questions.

The level of moral probity and decent honourable conduct has sunk to an ebb so low that one would have to be of extra-sharp sight to identify it (or what was left of it, to be more precise).

At a time when the vast majority of ordinary people in this country are struggling to make all the ends meet; where thousands of householders have been flooded out of their homes following the worst floods for centuries, the bankers, who have been supported by billions of British tax-payers' pounds to keep their flaky jobs intact, are still, even where they have made vast losses, managing to pay themselves levels of bonuses, of such obscene levels as to make any ordinary decent human being want to vomit.

In any other walk of life you couldn't make this scenario up and expect people to believe it, but when it comes to the City, the Square Mile, the denizens of Throgmorton Street, you have no choice but to believe the true foulness of its ability to demand more and more money, and to be allowed to continue their life as a protected species.

I am sick and tired of watching while the City of London and its banking sector manages to add yet another notch to its tally of wholesale wrongdoing and criminality, and I know that, increasingly, I am not alone. More and more, ordinary people are writing to me saying how enraged they are at the activities of the banks, and sharing tales of squalid horror with me, describing how they have been ripped off, defrauded, or had their mortgages foreclosed on, even though they were not in arrears or in any breach of their agreements.

So, I was delighted to learn that these charges were being brought against former Barclays (where else) employees over the alleged wrongdoing inside the LIBOR manipulation story.

But don't hold your breath.

Already there are rumours leaking out of the enquiry team itself and beginning to circulate in Whitehall and beyond, that certain highly-placed civil servants are already voicing 'concerns' that this investigation will be 'bad for the national interest'. 

This is the start of a Mandarin-inspired campaign of quiet advice being proffered to Ministers that this case would be far better off being quietly buried.

Such episodes happen more often than any of us would wish to see taking place in what we are told is a democracy.

As a detective, I once worked on a case, at a time when exorbitant levels of taxation were levied on unearned income, involving a large number of hugely wealthy British investors who had placed money with a Commodity Broker because it was known that he had a fool-proof method of spiriting the money out of the country and laundering it into Swiss Bank accounts.

All the individuals concerned had benefited from this clever form of wholesale tax evasion, but when the time came to prefer charges against them and their broker, we suddenly discovered that the Director of Public Prosecutions had determined that 'It was not in the public interest to continue with the investigation, and the whole case was wrapped up and quietly dropped.

At a wash-up meeting, I, and my colleagues were livid with anger and we accused a representative of the DPP's Office of being leant on and subjected to political interference.

The man looked at me in that patronising way that civil servants have perfected over the years when dealing with those not of their clique, and said;

"...I can assure you officer that we are never subjected to political interference.....We merely receive advice as to the public interest..."

Make of that what you will!

It is this kind of interference with the judicial process that has allowed the financial sector to continue to operate their criminal scams with impunity. It is what makes them believe that they are a protected species. It is what sets up a false set of parameters within which the crimes of the elites and the powerful get covered up and disguised, all in the name of some form of cynical 'pragmatism' designed to benefit UK plc. It is completely unjustified, it has no moral justification, and it arises out of a misguided sense of elitism that falsely teaches that the interests, (real or imagined) of the UK must be protected. I am of the belief that the greater interests of this country would be served by these wicked men being investigated, charged and convicted of their crimes.

For this reason, among so many others too numerous to mention, from that time I formed an almost unreasoning hatred of the senior British civil servant, which time has not managed to diminish!

Their overweening arrogance and their elevated sense of their own importance, to say nothing of the self-perpetuating, mistaken belief in their own superior intellectual capacity, places them in a special category of dangerous individual, and more public mischief and damage to the common weal has been caused by their influence, than anything else I can determine.

I once worked with a former senior civil servant from the Department of Trade and Industry at one of the City Regulatory bodies. He would often try to put me down in internal meetings by accusing me of adopting 'consumerist' attitudes towards victims of financial fraudsters, and when I stood up for their interests, he would say that when it came to regulatory decision-making, "...wiser minds than yours will prevail..."

That is why, when I heard from a friend that there were already the insouciant mutterings emanating from faceless Whitehall warriors that the investigation into the LIBOR case might possess the quality of needing to be buried very deeply away for fear of damaging some spurious interest which does not benefit you or me, I felt the urgent need to write this piece, in the hope that we can muster enough public support to ensure that this investigation is not quietly put to bed.

We simply cannot go on, allowing every Tom, Dick and Harriet, to play fast and loose with every norm and every standard of decent and honest conduct, without something being done about it.

We have to support the SFO in their investigations and insist that when the decision-making time comes, well, let the cards fall where they may. We have already infuriated the Americans very much in this case already, and that is not necessarily a clever move, regardless what the Mandarins of the Treasury might feel.

The SFO first announced that it would look into the inter-bank lending rate set in London and its alleged manipulation, in July 2012, and it launched an investigation in conjunction with the City watchdog, the Financial Conduct Authority, and the United States Department of Justice.

Barclays had already paid $454 (£290m) in July 2012 to settle allegations from US and UK regulators that it had manipulated Libor interest rates. Its previous fine was over the manipulation of Libor and Euribor interbank rates between 2005 and 2009. The impact of this scandal led to its chairman and chief executive resigning amid a barrage of criticism about standards and culture.

UBS, Royal Bank of Scotland and Rabobank have since paid bigger settlements for alleged Libor manipulation, and more banks are expected to face fines. Three other people, not connected to Barclays, have previously been charged by the SFO.

What this demonstrates is that this is a case that goes to the root of what is wrong with the culture of criminogenisis which is perpetuated within the Square Mile!

The Libor rate is used to set trillions of dollars of financial contracts, including many car loans and mortgages, as well as complex financial transactions around the world.

Last month, three former Rabobank employees were charged in the US over allegedly conspiring to manipulate the Yen Libor benchmark interest rate since 2006, and if convicted, the traders could face up to 30 years in prison.

Authorities in the US, Asia and the UK are trying to convict companies and individuals they believe manipulated the key benchmark Libor rate.

Officials in the U.S. Justice Department and the U.K. Serious Fraud Office clashed late last year in their mutual pursuit of Tom Hayes, a trader who is viewed by prosecutors in both countries as a ringleader of banks' attempts to rig the Libor rate.

British citizen Tom Hayes, a former UBS and Citigroup trader, has  been charged in connection with the SFO's investigation. But this case has led to a breakdown in relations between the UK and the US investigators.

The friction in this case possesses all the hallmarks of being capable of jeopardizing trans-Atlantic cooperation on future financial-fraud investigations. The Americans already have a long and bruising history of bad dealings with the UK authorities when it comes to protecting the financial interests of the City of London.

This latest row revolves around events that played out in rapid succession last December. The trouble began, it is alleged,  when the U.K. government unexpectedly blocked a Justice Department request to interview Mr. Hayes, who lives outside London.

Then, without notifying the U.S, British fraud prosecutors arrested Mr. Hayes and two others in connection with their own probe on Dec. 11th — infuriating American officials, according to sources familiar with the U.S. investigation. The U.S. prosecutors punched back the next day by filing sealed criminal fraud charges against Mr. Hayes.

It is highly unlikely that Mr. Hayes will ever see the inside of a U.S. courtroom, according to the same sources familiar with the matter. The reason: If Mr. Hayes strikes a deal with U.K. officials, it could block his extradition to the U.S. thanks to British double-jeopardy laws.

The US Justice Department started investigating potential rate manipulation about three years ago, in conjunction with the U.S. Commodity Futures Trading Commission and the U.K. Financial Services Authority. The SFO didn't get involved until last July, shortly after Barclays PLC, agreed to pay the fines to settle charges that its employees tried to rig the benchmark interest rate. Since then, the SFO has been scrambling to catch up. The process was facilitated by the extensive evidence already collected by the U.S. and the FSA, which those agencies shared with the SFO, according to sources familiar with the case.

It is most likely that both Mr Hayes and the UK Government will want him to be charged and tried in the UK, if he is to be tried at all. He may prove to be ultimately more valuable as a witness, but who knows what he might say under aggressive cross-examination.

This unpleasantness over Mr. Hayes reflects a strained relationship between U.S. and British law-enforcement, according to law-enforcement officials and lawyers in both countries, a bad relationship which goes back many years. A fairly modern example was the BCCI investigation, where the then head of the SFO refused to allow US investigators to even remain in the building of the SFO in Elm Street and ordered them to return to their hotel, pending 'clarifications' of their role!

Whatever the outcome, we must all hope that this case does come to trial. During the BCCI investigation, when the British were being remarkably obstructive towards the US authorities investigations, a senior New York prosecutor, John Moscow made a comment at a Cambridge conference. Standing in a packed hall, he threw down a challenge to the British civil servants present by saying;

" ...Don't even think of trying to sweep this mess under the carpet - If you do, you won't have any space between the carpet and the ceiling..."

How right he was then, and his words still have the same resonance today