Category Archives: Banking and finance

British-American democracy hijacked: Professor Luis Suarez-Villa

Professor Luis Suarez-Villa (Social Ecology and of Planning, Policy and Design at the University of California, Irvine) wrote in the FT recently:

American democracy was hijacked long ago by money and powerful interests, turning it into what amounts to a system of legalised corruption.

Lobbying, political action committees (super-pacs), myriad forms of campaign contributions and patronage are at the core of this phenomenon.

By comparison, the so-called Russian meddling in the 2016 election seems amateurish at best, and perhaps (more seriously) a way for the political establishment to divert the attention of the American people from the real problems of a corrupt system of public governance, whose patrons and beneficiaries want the rest of the world to think it is democratic.

A review of his book Corporate Power, Oligopolies, and the Crisis of the State (2015) expands his argument:

“The largest, wealthiest corporations have gained unprecedented power and influence in contemporary life.

“From cradle to grave the decisions made by these entities have an enormous impact on how we live and work, what we eat, our physical and psychological health, what we know or believe, whom we elect, and how we deal with one another and with the natural world around us.

“At the same time, government seems ever more subservient to the power of these oligopolies, providing numerous forms of corporate welfare—tax breaks, subsidies, guarantees, and bailouts—while neglecting the most basic needs of the population.

“In Corporate Power, Oligopolies, and the Crisis of the State, Luis Suarez-Villa employs a multidisciplinary perspective to provide unprecedented documentation of a growing crisis of governance, marked by a massive transfer of risk from the private sector to the state, skyrocketing debt, great inequality and economic insecurity, along with an alignment of the interests of politicians and a new, minuscule but immensely wealthy and influential corporate elite.

“Thanks to this dysfunctional environment, Suarez-Villa argues, stagnation and a vanishing public trust have become the hallmarks of our time”.

His charges apply just as accurately to the British scene: British democracy has also been hijacked by money and powerful interests, turning it into what amounts to a system of legalised corruption.

 

 

Emeritus Professor Luis Suarez-Villa is the author of several other books, including Globalization and Technocapitalism: The Political Economy of Corporate Power and Technological Domination and Technocapitalism: A Critical Perspective on Technological Innovation and Corporatism.

 

 

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Unwillingly herded towards risky online banking? Resist!

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Bank branches are closing all over the country, with huge savings in the upkeep of buildings and staff wages. This is due, it is said, to customers undertaking more transactions online. In many cases this is a result of firm persuasion by the banks urging customers towards the more profitable system.

A reader experienced this firm encouragement towards online banking a few days ago when phoning to transfer funds. The impression was given that this was essential, but when pressed the staff member admitted it was not. Indeed she wavered a great deal more when it was pointed out that her job could well be eliminated with the closing down of telephone operations.

America’s Central State Bank warns that – due to the open nature of the Internet – all web-based services are inherently subject to risks such as online theft of access codes/user ID/username, PIN/Password, virus attacks, hacking, unauthorized access and fraudulent transactions. 

The National Audit Office records that the volume of online ‘card not present’ fraud increased by 103% between 2011 and 2016

http://uk.businessinsider.com/national-audit-office-rise-in-online-fraud-policing-insufficient-2017-7

Online banking security rated by Which? At best, a 16% chance of being defrauded

In 2015 online bank fraud was described in the Guardian as the UK’s fastest growing area of crime – doubling from £60m in 2014 to an expected total beyond £130m this year – and the losses to consumers have in some cases been of the life-changing order of £90,000 each.

50 banks were surveyed by Which? and its August 2017 report revealed that all had experienced fraud – the best were 84% free of fraud, the worst only 56%. So even customers using the ‘best’ banks have a 16% chance of being defrauded.

Defrauded customers should accept the blame and not expect automatic refunds

Ross Anderson (right: professor of security engineering at the University of Cambridge’s computer laboratory) has seen the mass take up of online banking, and more recently the explosion in fraudulent activity. Financial fraud cost £2m a day in 2016, with older people disproportionately hit.

According to Anderson and other security experts, banks are shifting liability away from themselves and on to the customer – aided by a Financial Ombudsman Service that they claim rarely challenges the banks following a fraud. Miles Brignall in the Guardian comments: “The bank is on the hook for credit card losses, but not most bank frauds”.

The Independent reported that RBS’s chief executive Ross McEwan caused a storm when he claimed that it is not banks’ responsibility if customers are defrauded in such circumstances. The bank boss – who as part of his role also runs the NatWest brand, which has 24 million retail customers – said he didn’t think the bank had “a duty of care” to victims. They should accept the blame and not expect automatic refunds, he argued. 5,000 of his customers who were defrauded of £25m during nine months in 2015 – and anyone else who has suffered such losses – should consider taking class action.

Anderson, one of Britain’s foremost experts on cybersecurity, says he has never banked online – and has no plans to do so. He believes that system has become so weighted in favour of the banks that the customers now carry all the risk.  

Miles Brignall in the Guardian asks: “If a man who has chronicled the rise of online banking won’t use it, what hope is there for the rest of us?”

 

 

 

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Time for change: junk the Anglo-Saxon model* in 2018

The FT reports that senior executives at several of the largest US banks have privately told the Trump administration they feared the prospect of a Labour victory if Britain were forced into new elections.

It then referred to a report by analysts at Morgan Stanley arguing that a Corbyn government would mark the “most significant political shift in the UK” since Margaret Thatcher’s election and may represent a “bigger risk than Brexit” to the British economy. It predicted snap elections next year, arguing that the prospect of a return to the polls “is much more scary from an equity perspective than Brexit”.

Jeremy Corbyn gave ‘a clear response’ to Morgan Stanley in a video (left) published on social media reflecting anti-Wall Street rhetoric from some mainstream politicians in the US and Europe, saying: “These are the same speculators and gamblers who crashed our economy in 2008 . . . could anyone refute the headline claim that bankers are indeed glorified gamblers playing with the fate of our nation?”

He warned global banks that operate out of the City of London that he would indeed be a “threat” to their business if he became prime minister.

He singled out Morgan Stanley, the US investment bank, for particular criticism, arguing that James Gorman, its chief executive, was paying himself a salary of millions of pounds as ordinary British workers are “finding it harder to get by”.

Corbyn blamed the “greed” of the big banks and said the financial crisis they caused had led to a “crisis” in the public services: “because the Tories used the aftermath of the financial crisis to push through unnecessary and deeply damaging austerity”.

The FT points out that donors linked to Morgan Stanley had given £350,000 to the Tory party since 2006 and Philip Hammond, the chancellor, had met the bank four times, most recently in April 2017. The bank also had strong ties to New Labour: “Alistair Darling, a Labour chancellor until 2010, has served on the bank’s board since 2015. Jeremy Heywood, head of Britain’s civil service, was a managing director at Morgan Stanley, including as co-head of UK investment banking, before returning to public service in 2007”.

A step forward?

In a December article the FT pointed out that the UK lacks the kind of community banks or Sparkassen that are the bedrock of small business lending in many other countries adding: “When Labour’s John McDonnell, the shadow chancellor, calls for a network of regional banks, he is calling attention to a real issue”. And an FT reader commented, “The single most important ethos change required is this: publish everyone’s tax returns”:

  • In Norway, you can walk into your local library or central council office and see how much tax your boss paid, how much tax your councillor paid, how much tax your politician paid.
  • This means major tax avoidance, complex schemes, major offshoring, etc, is almost impossible, because it combines morality and social morals with ethics and taxation.
  • We need to minimise this offshoring and tax avoidance; but the people in control of the information media flow, plus the politicians, rely on exactly these methods to increase their cash reserves.

But first give hope to many by electing a truly social democratic party.

Is the rainbow suggesting a new party logo?

*the Anglo-Saxon model

 

 

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A ‘racket’? Government departments and regulators are protecting elites by covering up large corporations’ failures

The growing public awareness of this unholy alliance is leading to a rapidly increasing loss of confidence in our institutions of democracy, lower tax revenues, and cuts in healthcare, pensions, education and infrastructure spend.

Professor Prem Sikka’s latest article scathingly outlines the way in which regulatory bodies and government departments are protecting elites and corporations from retribution.

He cites seven examples, the latest being the refusal of the Financial Conduct Authority (FCA), the UK’s banking regulator, to publish its 361-page report on misconduct at the state-controlled Royal Bank of Scotland (RBS).

The 2013 Tomlinson Report showed that instead of rescuing struggling businesses, banks made money by asset-stripping and destroying them. This was followed-up an investigation by the FCA and in November 2016 it published what purported to be a summary of its full report. Subsequently, the BBC obtained a leaked version of the report. It referred to “inappropriate action” by RBS’s Global Restructuring Group (GRG).

The inappropriate action experienced by 92% of the businesses included complex loans, higher interest rates, and unnecessary fees. Businesses could not easily return to good health.

For the period 2013-2015, GRG handled 16,000 companies – and about 10% survived. Many ended up in administration and liquidation, with their assets were sold cheaply. RBS has set aside around £400 million to deal with possible claims.

The secret FCA report is not only an indictment of RBS, but also of other banks, accountants and lawyers. People are entitled to see the full scale of the scandal, and remedial legislation cannot be drafted without sight of the whole report. Yet the regulator’s impulse is to shield RBS and its accomplices.

Professor Sikka’s comment: “We can’t afford this racket” refers to the ‘knock-on effect’ as lower tax revenues (and a self-centred, heartless ideology?) lead to cuts in healthcare, pensions, education, public services and infrastructure spending.

 

 

 

 

https://leftfootforward.org/2017/10/six-ways-the-uks-regulatory-system-is-a-protection-racket-for-the-elite/

Whistleblowers 11: the ones that got away?

In Britain whistleblowers are usually made to suffer, despite the nicknamed ‘Whistle-blowers Act’: There have been several general articles about whistleblowing on this site & others focussing on some brave individuals who suffered for revealing unwelcome truths. Before this site was set up there were health sector whistleblowers; Marta Andreasen & Paul van Buitenen also revealed shocking cases of EU financial mismanagement and suffered for it.

 Just for the record – covered profusely in MSM:

Professor Prem Sikka tweeted about a case involving Barclays chief executive Jes Staley, who started to work for Barclays in December 2015 and later recruited at least four senior executives who had worked with him at JPMorgan Chase. In June, when Barclays received two anonymous letters making allegations of what the bank describes as “a personal nature” about one of the investment bankers, Mr Staley asked Barclays’ security team to track down the author, though the bank’s compliance department had logged the letters as potential whistleblowing.

Barclays’ board only learnt of Mr Staley’s efforts to identify the tipster in January when a second whistleblower, this time a Barclays’ employee, came forward and directly contacted its outside directors.  In a letter, the Barclays employee pointed to flaws in the bank’s whistle-blower procedures and cited Mr. Staley’s attempts to unveil the anonymous critic.

The bank said it had instructed law firm Simmons & Simmons to conduct an investigation which found that Mr Staley erred in trying to identify the authors of the letters, who in the end were not unmasked. Barclays’ board also informed the FCA and PRA.  Barclays said it has given Staley a formal written warning and will slash his salary. The bank has promised to review its whistleblowing programme.

The Prudential Regulation Authority and the Financial Conduct Authority are now looking into the matter in Britain, while New York’s Department of Financial Services and the US Department of Justice are conducting investigations in the United States.

Paul Moore, a former HBOS banker, was dismissed from HBOS in the run-up to the financial crisis in 2004 for whistleblowing – warning that the bank was running risks it did not understand. He told The Mail on Sunday: ‘Staley should be fired. Trying to find out the identity of an anonymous whistleblower where the motivation is obviously to try to crush them is gross misconduct.’

It requires real courage for whistleblowers to act on what they see, especially in the UK. One FT article notes that a recent survey by the Ethics Resource Centre of employees in 13 countries found that 63% of British employees who reported wrongdoing experienced retaliation, second only to India and far worse than the 36 per cent global averageMore detail here:

 

 

 

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Murdoch press lists corporate spending on political and lobbying activities

Times journalists Alex Ralph, and Harry Wilson present and comment on material collected by the Times Data Team: Tom Wills, Ryan Watts, Kira Schacht. Links have been added by PCU’s editor to enable readers to learn more if they wish to do so.

“FTSE 100 groups, including banks, defence contractors, tobacco manufacturers and telecoms companies, have spent more than £24 million on lobbying in Brussels and about £335,000 funding all-party parliamentary groups in Westminster”.

They add: “There is no suggestion of any wrongdoing or rule-breaking by companies”.

FTSE 100 political spending (over the last two years)

The Times first focusses on All Party Parliamentary Groups (APPGs)

APPGs are run by and for Members of the Commons and Lords who join together to pursue a particular topic or interest. Many involve individuals and organisations from outside Parliament in their administration and activities – or as the journalists put it, “help to push industry agendas in parliament”. Read more here.

Unsurprisingly, BAE Systems, which spent £37,000 on a group “to promote better understanding of the Her Majesty’s armed forces in parliament”, is among the biggest backers of the parliamentary groups.

The writers comment that parliamentary groups have proved contentious because of the large amounts spent on reports that often support the views of industry and which grant access to parliament for companies and lobbyists.

BT’s £53,000 included backing the parliamentary internet, communications and technology forum, known as Pictfor, whose members include Tom Watson, the Labour deputy leader and Lord Birt, former Blair adviser and director-general of the BBC. A list of funders may be seen here.

Note: ’Donations to APPGs’ shows spending between Jan 2015 and Mar 2017 as declared on the Register of APPGs. ’Spend on EU lobbying’ shows companies’ minimum estimates for the most recent financial year declared on the EU Transparency Register at the time of research. Here is a snapshot taken from one of 10 pages listing donations/other spending and the companies’ rationales for these sums being given.

The Times’ second focus is on the denial of information to shareholders

Less than £10,000 of identified political and lobbying spending in the EU was disclosed to shareholders in the companies’ recent annual reports. ompanies are not required to disclose details to shareholders and little information on corporate political and lobbying activities is revealed in annual reports, which are published before shareholder meetings. The tens of millions of euros spent each year in the EU go largely undeclared to shareholders.

Corporate Europe, which campaigns for greater transparency in EU decision making, has spent years tracking how the business world moulds policy.

Vicky Cann, the group’s UK representative, said that the banking and energy industries were the most active lobbyists. “The financial services industry is a huge spender and even then we think the real scope of their spending is probably bigger than we can currently see,” she said. Her colleague gave the example of recent emissions legislation that was the subject of intense lobbying by BP and Shell.

As Peter van Veen, director of business integrity at Transparency International, said, “Corporate transparency over political activities is important to ensure the public can have the confidence that their politicians and industry leaders are conducting business ethically . . . If companies are not voluntarily willing to disclose their political activities and funding of these, then stronger legislation should be considered and a possible starting point may be to broaden the definition of political activities and expenditure in the Companies Act 2006.”

 

 

 

 

Media 68: social media militarising the young and pacifying the attacked: ‘a vital tool for the armed forces’

social-media-military-header

 

AKA Hell’s kitchen?

The blurb: “Social media has become an increasingly vital tool for the armed forces in the 21st Century.

“Not only in order to reach out to a wider and younger audience globally for recruitment and information purposes but as a new front in warfare. What soldiers, airmen and sailors post online can be crucial to winning the hearts and minds of local populations, weakening the enemy’s narrative and as an instrument in the proliferation of cyber warfare”.

The SMi PR group held its 6th Annual Social Media Within The Defence and Military Sector in the Holiday Inn, Bloomsbury earlier this week. 

Their programme:

  • to present the latest concepts and ideas on how to enhance the outreach of the military in the digital sphere,
  • the integration of social media activities within the whole spectrum of operations conducted by the military both at home and abroad,
  • to hear from some of the leading voices of social media within the industry and NATO and allied militaries,to focus on the effects of social media on and off the battlefield through training and application,
  • to learn from the commercial sector on how to create an effective social media strategy,
  • to learn from the military about how they are utilizing digital media channels to project their activities to a wider audience,
  • to discover how social media is intertwining with other aspects of warfare to create a multi-levelled war zone both in the real world and the virtual one
  • and to discover how popular social media brands operate with militaries in a defence environment

The only named sponsor: Thales, the French multinational company that designs and builds electrical systems and provides services for the aerospace, defence, ground transportation and security market.

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COMING SOON, SMi CONFERENCES ON MORE OPEN OPPRESSION

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smi-conference-header

 

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Future armoured vehicles – used to quell dissident or invaded populations

 air-refuelling

And military airlift and air to air refuelling – to facilitate bombing them

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every-gun-that-is-made

 

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Keep the engines of capitalism working? Or find a beneficial alternative?

 huffington-post2

Following the summary of yesterday’s article by the Times’ Jenni Russell, a second analysis is made by John Wight in the Huffington Post article. He writes:

“The liberal order has collapsed and no one should mourn its demise, for on its tombstone is engraved the disaster of Afghanistan, the murder of Iraq and Libya, and the unleashing of an upsurge in global terrorism and religious fanaticism on the back of the destabilisation wrought across the Middle East in the wake of 9/11. Married to a refugee crisis of biblical dimension and the closest we have ever been to direct military confrontation with Russia since the Cold War, these are the fruits of this liberal order abroad.

“Meanwhile at home its moral and intellectual conceit has produced obscene levels of inequality, alienation, and poverty, exacerbated by the worst economic recession since the 1930s and the implementation of that mass experiment in human despair, otherwise known as austerity, in response.

adams-common-good“Tony Blair, Barack Obama, and Hillary Clinton epitomise this failed liberal order – leaders who perfected the art of speaking left while acting right, presenting themselves as champions of the masses, of ordinary working people, while worshipping at the altar of the free market, cosying up to the banks, corporations, and vested interests”.

  • Are Brexit and Donald Trump ‘unleashing the dogs of racism and bigotry’ as John Wight fears?
  • Is hope in Jeremy Corbyn lost? Wight thinks he failed to understand the danger posed by Brexit and mounted a dispassionate and lacklustre nature of the campaign.
  • Was the manner in which Bernie Sanders folded his tent after Hillary Clinton won the Democratic Party nomination in decidedly dubious circumstances was tantamount to a betrayal of the passion, commitment and hope that millions across America had placed in him?

He emphasises that politics is not a mere parlour game and says that both Jeremy Corbyn and Bernie Sanders are fully deserving of criticism for taking positions and an approach which has suggested that for them it is, continuing:

mlk-live-together-smaller“Demoralisation and defeatism is never an option”.

Agreed, but there are better prescriptions than those he outlines in his final paragraphs.

Jenni Russell sees ‘the anguished question’ as being how to remedy the acute problems of inequality, while keeping the engines of capitalism working.

Should we instead try the engines of co-operation, peacebuilding, mutuality and increasing self-provision?

 

 

 

 

Revolving door 37 – confession time?

Recently Patrick Jenkins, Financial Editor of the FT, explored the history of the revolving door, saying that the practice of former politicians and central bankers seeking high paid work in financial services has a long pedigree, particularly in the US.

With apparent surprise – though it has been established practice in Britain involving senior politicians and corporates – he says. “Now it seems to be an accelerating trend in Europe”.

revolving-door-largerYet for the last six years sites such as Spinwatch, less directly Corporate Watch and the Private Eye magazine (see this article) – have highlighted this phenomenon. This Political Concern website was set up in 2010 to raise awareness of the ‘revolving door’, rewards for failure, widespread behind-the-scene lobbying and party funding which corrupts the decision-making process. A ‘media’ category was added later.

Patrick Jenkins’ article prompted the writer to count the articles on this website which have ‘revolving door’ in the title; there were 37 – but many more had incidental references and others added the graphic on the right. Jenkins writes:

“News that Lord King, the former governor of the Bank of England, has taken a key advisory role at Citigroup follows only weeks after it was announced that former European Commission president José Manuel Barroso would chair Goldman Sachs International. Rumours are growing, too, that senior members of the last UK government may follow a similar path, following in the footsteps of the previous Labour administration”.

After citing Tony Blair as ‘one of the most famous examples of the phenomenon to date’ and listing the many roles he has taken on in his post-politics career, Jenkins moved on to focus on central bankers and policy-makers switching from public service into the private sector and vice versa.

He ends: “Defenders of the practice say it helps break down barriers between financial services companies and policymakers, but critics think it can leave an unpleasant taste. “The potential is certainly there for conflicts of interest — both real and perceived,” says Bob Jenkins, who has worked as an asset manager, regulator and market reformist”. 

Brandon Patty, a young American politician, gets nearer the truth

brandon-pattyHe wrote in the FT yesterday, with reference to America, that the general public has zero confidence in . . . career bureaucrats, professional politicians looking out for our best interests:

“From immigration and trade deals, to excess regulations and scandals at far too many government departments, there is a very real sense that (the public’s) concerns and priorities do not matter to decision makers” adding that a September 2015 poll found 75% perceived corruption as widespread in the country’s government.

But will the shameless in Britain and America take the slightest notice of these commentators?

 

 

 

Is anyone seriously contending that the UK is not corrupt?

Via John Wight’s Twitter account we saw a link to an article by Saurav Dutt, novelist, independent film producer, playwright, screenwriter, graphic design illustrator, accomplished author and writer. After James Landale, BBC diplomatic correspondent -amongst many others – reported David Cameron’s description of Afghanistan and Nigeria as corrupt, Saurav Dutt asked if anyone is contending that the UK is not corrupt?

”What the City and the tax havens are up to isn’t anything as morally defensible as corruption – it’s that good old fashioned criminal act of “receiving”. It gives corruption a bad name . . . There isn’t a lot of corruption in the UK, well, not in cash . . . “

india corruption demo

The well-filled envelope type of corruption is common in some countries. How people laughed at Neil Hamilton when it was alleged that he received money in this way – British corruption is less obvious but now well realised by the general public. When will we protest like the Indian people?

As noted in the earlier post, readers send many links to news about the revolving door, rewards for failure, the political influence wielded by the corporate world and lucrative appointments for the friends and family of those with political influence; this is the British way.

Dutt says that corruption comes from the ‘top’ down and is endemic in Western society: “In a fiscal sense it is the banks, financial institutions and ‘big business’ with acceptance from politicians (who also get their cut one way or another) and moves on to a more moral sense with the Police and the legal professions”.

anti corruption APPG header

An All-Party Parliamentary Group on Anti-Corruption was established in November 2011 to raise awareness of the impact of international corruption and to enhance and strengthen UK anti-corruption policies and mechanisms. Could they answer Dutt’s questions?

  • How many MPs voted for health legislation when they have interests in private health care?
  • Why does Cameron appoint Ministers to the education department who have a direct interest in academies that their companies are involved in?
  • Why does this government give honours to people who have given their party money?
  • Why does this government pass legislation that directly benefits their donors?

As Dutt says “The Transparency International corruption index shows we have some way to go before we reach the dizzy heights of Denmark, and a short stroll down the slippery path to the likes of Qatar and the UAE”.