Professor Sikka: the state, as ultimate sponsor of capitalism, must “coerce and cajole corporate beasts to curb their self-destructive tendencies”

 

Prem Sikka, professor of accounting at Essex University, is sending the same message as did Dr Ben Goldacre, recently, in his book, Bad Pharma.

“Overall, the problem is we don’t have a competent regulatory framework that prevents things from going horribly wrong. If companies are allowed to hide the results of clinical trials then they will, and that will distort clinical practice. Doctors and patients will be misled and make sub-optimal decisions about what treatment is best for them.”

Dr Sikka points out that nearly five years later, despite vast bailouts and the recent exposure of money laundering and London Interbank Offered Rate (Libor), regulators in Britain have shown little interest in cleaning-up predatory capitalism, adding:

Any mention of effective regulation sends corporate elites into a cold sweat. They use their chequebooks to fund political parties and find jobs for former and potential ministers with the aim of stymying regulation”.

Giving several enlightening examples of the lessons learnt in the United States he reminds “the elites” to remember that the state is the ultimate sponsor of capitalism and has to “coerce and cajole corporate beasts to curb their self-destructive tendencies”.

A poorly equipped patchwork quilt of regulators

The UK lacks an effective regulatory system and a political culture to curb predatory capitalism. Its patchwork quilt of regulators includes the Financial Services Authority (and its successor bodies), the Bank of England, the Serious Fraud Office, Her Majesty’s Revenue and Customs, the London Stock Exchange, Office of Fair Trading, Financial Reporting Council and myriad private sector regulators.

They are poorly equipped to call multinational corporations to account.

The UK regulatory impulse is to protect elites by sweeping things under dust-laden carpets

Giving a couple of examples to illustrate that points, he muses:

“With its reputation irrevocably tarnished by the banking crash and its imminent replacement by the Prudential Regulation Authority and the Financial Conduct Authority, the FSA now claims to be looking at some banks, but so far there is no tangible evidence of this.”

The state secret, censored codenamed Sandstorm Report

99% per cent of the codenamed Sandstorm Report, censored by the Bank of England, describes some of the frauds and names BCCI wrongdoers and various movers and shakers. Various parliamentary committees held hearings on the scandal, but none were given sight of the Report.

Last year, after some five-and-half years of legal battles against the Treasury and the Information Commissioner, Professor Sikka managed to secure the names of the wrongdoers and some related parties.These included members of the Abu Dhabi royal family, prominent Middle East businessmen, the head of Saudi intelligence, prominent political advisors and even the biggest funder of al Qaida, then considered to be an organisation friendly to Western interests. He comments:

Evidently, the British Government prioritised the appeasement of commercial interests over its citizens’ right to know, or even the desire to create effective banking regulation.”

The revolving door

“Britain needs to replace the ineffective patchwork of regulators with its own equivalent of the SEC, which could be called the Business and Finance Commission. This would need to be controlled by a board representing a plurality of interests, including taxpayers, employees, customers and other stakeholders, so that elites could not easily sweep matters under the carpet. The board should be required to meet in the open and its files should be publicly available so that we could all judge its efficiency and effectiveness. No document should be withheld from parliamentary inquiries into scandals.

“All political parties need to recognise that additional financial and human resources are needed for swift investigation and prosecution of corporate misdemeanours. Without change, the UK will not have an effective regulatory system.”
Read the whole article here.

One thought provoking comment from George B. Craig:

Arguably it was stupid regulators who caused the fiasco to happen. The free market would have allowed the Banks to collapse as they should have, no small company is given the assistance the banks were given, no small company gets small business aid like the lawyers who get legal aid or accountants who have the grant system. The regulators in really dimwitted fashion protected the Banks when they should have been folded. The money given to the Banks should have been then given to the depositors and they then could have deposited with a newly formed Bank and that way we could have at least got rid of some of the utter dross in the greed ridden London fiscal circles.

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Posted on October 9, 2012, in Banking and finance, Conflict of interest, Corporate political nexus, Democracy undermined, Government, Lobbying, Vested interests and tagged , , . Bookmark the permalink. Leave a comment.

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