Category Archives: Banking

Free Markets Just Mean Corporate Corruption

This week we saw yet another scandal involving our banking system, when it turned out that HSBC have not only been facilitating large-scale tax avoidance and tax evasion via their Swiss subsidiary, but have even been advising their wealthy clients on how is the best way to go about it.* It is estimated that up to $21.7bn has been sheltered from the treasury in this way, at a vast cost to the British taxpayer.

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HSBC: Yet another massive banking scandal. Picture © Danesman1

This all came to light as the result of a leak from a whistleblower in 2007, details of which were passed to the Inland Revenue in 2010. However, despite an estimated 1100 individuals being guilty of underpaying their tax, to date there has only been one prosecution. Even more scandalous, the man in charge of HSBC during this period, Lord Green, was made a Conservative peer and appointed to the government as minister for Trade & Investment 8 months after the Inland Revenue was made aware of wrongdoing at the bank. Far from being punished for his misdemeanors, Lord Green was handsomely rewarded with a position in the heart of government. HSBC’s response to all this is to admit to ‘past failures’ but assures us all that things have now changed. Lord Green himself has consistently said ‘no comment’. Full details of the scandal are in this BBC Panorama documentary.

Of course we all know this is far from being a one-off, as it comes hot on the heels of various other banking scandals including fiddlng interest rates (Lloyds, Barclays, Royal Bank of Scotland); fixing foreign exchange rates (HSBC, Barclays, Royal Bank of Scotland); money laundering (HSBC); sanctions busting (Standard Chartered); ‘dark pool manipulation‘ (Barclays); and fiddling precious metal prices (Barclays, HSBC).

The reality is that the priority of companies, and in particular banks, is to make money for themselves, and to do it they will employ whatever dodgy practices they think they can get away with. The less regulation there is the more corrupt they can become, so this idea that ‘light touch’ regulation and free markets is the best way to run things is a complete nonsense, and is in effect just putting the foxes in charge of the chicken coop. Given the chance, the clever and the unscrupulous will just fleece us all, and that is exactly what they are doing.

Even more evidence of how corrupt our system has become was produced a couple of weeks ago when it was announced that Price Waterhouse Coopers (PwC), the accountancy firm, has also been facilitating corporate tax avoidance on ‘an industrial scale’.* PwC is also a major corporate donor to both the Labour and the Conservative parties. Why would anyone support both the major parties? Ah yes… that’ll be a bribe, so that whichever party gets into power lets them carry on with their corrupt business practices. What a rotten system we live in, that allows such things to go on while poor people are forced to undergo ever-increasing Austerity.

And the government’s response? At a business leaders’ meeting recently David Cameron pathetically asked bosses if they would give their staff a pay-rise, and so spread their ever-increasing wealth around*. I thought in a Free Market Economic system wealth was supposed to naturally ‘trickle down’ anyway? Clearly not, and if Cameron thinks his desperate pleas will make any difference to their behaviour, he clearly has little understanding of the business community he claims to represent.


* PwC:

* David Cameron Speech:


Our Disgraceful Finance Sector

People would have been shocked today to hear of yet another scandal involving our beloved banks*. Apparently they’ve now been caught fixing foreign exchange rates, and fines totalling £2bn are being handed out to all the usual suspects including HSBC, Barclays, Royal Bank of Scotland (being owned by the taxpayer doesn’t seem to inhibit their criminal activity), plus UBS of Switzerland and America’s J P Morgan and Citibank. We’ve become used to hearing these tales of financial malpractice, but what was particularly galling in this case was the fact that the rate-fixing was going on until October last year. ie 5 years after the crash of 2008, and even after the previous LIBOR fixing scandal involving the exact same banks. In other words, these people have no intention of changing their behaviour no matter what happens around them. Of course criminal prosecutions might change their behaviour, but as usual, although the banks have been fined, no individuals have been held criminally accountable for what in everyone else’s eyes is blatant fraud.

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Price Waterhouse – helping write tax laws and then advising companies how to avoid the laws they’ve just written! Picture © Unshaken City

However, as shocking as all this is, far more insidious was the announcement earlier this week that the Labour Party has received £600,000 worth of free advice from PwC (Price Waterhouse Coopers) the accountancy firm, to help formulate its tax policy*. Now, why would PwC want to give free advice to the Labour Party? Ah yes, that’ll be because PwC makes a lot of money advising businesses on how to avoid tax, and that job will be much easier for them if they get to help write the legislation which they can then advise businesses how to avoid. Absolutely disgraceful, and Labour’s justification for it that PwC are experts in the field holds no water whatsoever. PwC, like all the big accountancy firms, are a threat to the very fabric of our society, as they are at the heart of the system which undermines government revenue collection, and so forces Austerity and poverty on millions of ordinary people. To have them help formulate tax legislation is simply putting the fox in the charge of the chicken coop. Just imagine if the government wanted to formulate new legislation on paedophiles, and put Gary Glitter in charge of the inquiry. And then justified it by saying Gary Glitter was chosen because he’s an expert in paedophilia! There would be justifiable outrage at such nonsensical logic, and yet the government does this all the time with financial legislation, completely undermining our democratic processes. Whether it’s through companies framing legislation like this, or the so-called ‘revolving doors’, where individuals pass effortlessly between Whitehall and the corporate world, the tentacles of business are firmly entwined in our legislative processes, ensuring we now live in world where those with money control all the levers of power.

We need change. The Tory Party, as the party of business, are of course beyond hope in this area, but with the Labour Party now acting in exactly the same way it should be absolutely clear, if it wasn’t before, that they offer no meaningful alternative either. The only hope for getting a government which represents the interests of ordinary people is to sweep both these parties into the dustbin, and start afresh with a completely new breed of politician, driven by a desire to help other people rather than just to look after the interests of themselves and their cronies.

* Bank Fines: Labour Party/Price Waterhouse Coopers:


Banking – The Corrupt Core of a Rotten System

Yesterday it was announced that Lloyds Bank was being fined £218m for fiddling interest rates in order to manipulate the market for its own benefit*. The particularly shocking thing about this incident – the latest in a long line of corrupt practices by the banks – is that the offence happened after the crash of 2008, and involved abuse of the very fund the government had set-up to help the banks survive. (The government was providing emergency cash for when banks were in difficulties, and by fiddling interest rates Lloyds was able to reduce the fees it paid to use this cash). This effectively meant Lloyds was stealing money from the government.
LLoyds – The latest bank to be fined for manipulating the market. Picture © TubularWorld

Mark Carney, the governor of the Bank of England called the offence ‘reprehensible’, and in reply Lord Blackwell, chairman of Lloyds, described it as ‘truly shocking conduct’ (though whether he was referring to the fact they fiddled interest rates, or just the fact they were careless enough to get caught doing it, is of course open to debate). All were agreed that it amounted to criminal conduct for which individuals ‘could’ face prosecution (don’t hold your breath).

This scandal of course follows other scandals involving Barclays* (fiddling interest rates; fiddling the price of precious metals;  ‘dark pool’ manipulation); Royal Bank of Scotland* (fiddling interest rates); HSBC* (money laundering, fiddling the price of precious metals); and Standard Chartered* (sanctions violations). There is also an ongoing investigation into the fiddling of foreign exchange rates involving, not surprisingly, Barclays and the Royal Bank of Scotland*.

After all the events of the last few years, it’s quite clear that Free Market Capitalism is a completely broken system, whose only purpose is to enrich the clever and the unscrupulous at everyone else’s expense. Banking is at the rotten heart of this corrupt system, and rather than providing a service to the rest of society, it has become an enormous leech whose only function is to accrue as much wealth for itself as it can. Greed and selfishness rule, leading to corrupt and frequently criminal activity, which the criminals then either cover up, or if they can’t do that they try to pass the buck in endless circles, so that no one individual is ever held accountable or responsible. It is now obvious to any decent person that if the private finance sector is to continue at all, it should only be under tight regulation, with severe penalties for those who step out of line. Unfortunately there are still people around who believe in ‘light touch’ regulation, and more importantly the banking sector does its damnedest – through lobbying and the financing of political parties – to fight any changes that might diminish its vast wealth and power (the Tory Party gets over half its funding from the City of London). Which is why we must fight the system as hard as we can from the outside, because it will never reform itself from within.

* Refs: Lloyds: Barclays: and and  Royal Bank of Scotland: HSBC: and Standard Chartered: Foreign Exchange:


Free Market Fundamentalism

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Mark Carney: The Bank of England governor finally recognises fundamental problems in our Economic System. Picture © World Economic Forum

Those of us opposed to the mantra of ‘The Market’ which is forever espoused by devotees of Free Market Capitalism, were pleasantly surprised when the Governor of the Bank of England, Mark Carney, spoke out last week against ‘Free Market Fundamentalism’. He was talking at a conference entitled ‘Inclusive Capitalism’ where he stated that if bankers didn’t give up the “heads-I-win-tails-you-lose” way of doing business, then their industry would collapse*. That someone in such a high position in the City of London should utter such words was really quite extraordinary, and a sign that some at least at the heart of our Free Market system are starting to wake up to its flaws.

Many of us are campaigning to build a system and society that provides social and economic justice for all, as well as caring for the planet we live on. The far left Socialist view of tightly planned, highly regulated, state run economies has largely been discredited after the collective failure of Soviet Russia and the old Eastern Bloc. However, in proving that Capitalism was the superior system, we’ve now swung completely the other way, in favour of private ownership of everything with minimal regulation. This directly led to the financial crisis of 2008, and ever greater levels of inequality, with the already-wealthy able to play the system to increase their riches, while the poor are forced to endure falling living standards under Austerity. In addition the endless pursuit of profit means environmental concerns are constantly left by the wayside, threatening the very eco-system we need to survive.

Unfortunately fundamentalist thinking, in whatever area, is very difficult to shake off once entrenched, and that’s what we’re seeing with those people who have so strongly wedded themselves to the ideals of Free Market Capitalism. Even with all the evidence of how broken a system it is, many still cling to its ideology with an almost religious fervour.

Capitalism is indeed a powerful, efficient  and effective economic system, but in its pure ‘free market’ form it is utterly devoid of ethics, has no concept of social responsibility, places no value on the environment, and it encourages people to pursue short-term monetary reward over long-term social benefit. Therefore if Capitalism is to continue as our economic system of choice, it must be tightly regulated, with safeguards put in place to ensure it operates for the good of all, not just the few. Many of us have known this for quite some time, and perhaps, at last, some of those in power are starting to get it too.


Fat Cats Return

As the government claims the economy is heading into a recovery, it seems the fat cats at the top of the heap see this as an opportunity to increase their pay and once again lap-up as much wealth as they can for themselves, regardless of how poor their performance may have been, and regardless of what everyone else might be forced to go through in the name of Austerity.

Firstly Barclays*, which has been rocked by several recent scandals including Libor fixing, Foreign Currency fixing, and customer mis-selling, is nevertheless paying out £2.4bn in bonuses to its top staff this year, which means that 481 of its staff now earn over £1m/year each, including 8 on more than £5m/year. It is also introducing special ‘allowances’ of up to £1m for 1000 of its senior staff, in order to circumvent the EU cap on bonuses. All this despite their profits falling 32% last year.

Meanwhile over at Lloyds Bank*, which is 33% owned by the taxpayer, they are similarly introducing special ‘allowances’ to avoid the bonus cap, which means 27 of their top staff now take home over £820,000 each, including chief-exec Antonio Horta-Osorio who is getting paid no less than £4.9m this year.

The Co-op: Ethical investors have been left bitterly disappointed by recent events at the bank.
Picture © Mtaylor848

Even more outrageously the Co-op*, long beloved by many customers as an ethical alternative to a corrupt banking system, also now seems to be succumbing to greed, and is introducing massive pay increases for its top staff, despite recent scandals and the fact the bank is currently in dire financial straits. Even though they lost around £2bn last year and are being forced to lay-off 5,000 staff, their new chief-exec, Euan Sutherland, is set to receive a £3.66m pay package this year, which is a massive increase on last year when his predecessor, Peter Marks, was paid a ‘mere’ £1.3m. Seven other top execs are to be paid over £½m/year, more than double what they were paid last year.

And over at British Petroleum*, which is still recovering from the massive Gulf of Mexico oil spill, Chief Exec Bob Dudley saw his pay triple last year to £5.2m, along with similarly huge increases for several other top execs.

As is so familiar now, these corporations all justify their massive pay increases with arguments about ‘market rates’ and ‘paying for talent’, never mind that ‘market rates’ never seem to apply to the rest of society where ordinary people are forced to suffer Austerity, and never mind that these people get their huge pay packets whether they’re talented or not. It’s all a big con, with fat cats lapping-up the wealth and the rest of society footing the bill. Free-market theories can only ever create an increasingly unequal and unfair society, and will continue doing so until people decide they’ve finally had enough, and get rid of our corrupt economic and political system. For more on the fundamental flaws of ‘free market’ economics click here.

*References: and and


Bankers’ Bonuses Roll On

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HSBC – The big pay-outs continue. Picture © Danesman1

This week we’ve seen two major banks announce their results, and their response to recent pressure to limit their bonuses has been all-too predictable. Firstly HSBC – following on from recent EU legislation limiting bankers’ bonuses to an amount no greater than their basic salary – have now announced they will be paying their top staff an additional ‘fixed pay allowance’, in order to circumvent the rule. So this year Chief Exec  Stuart Gulliver will be giving himself an extra £1.7m on top of his £1.2m salary, to make up for any cuts to his bonus (this allowance will not be performance related), while a further 1,000 top employees will be given similar payouts. This follows on from last year’s figures which show that top employees at the bank were paid on average £900,000 each per year, with Mr Gulliver himself receiving a total package of £8.03m.*

And now taxpayer-owned Royal Bank of Scotland, despite astronomical losses last year of £8.2bn, has announced it will nonetheless still be paying out £576m in bonuses to its top staff. This despite requests from many senior government figures to show restraint.

In both the above cases the banks justified their action with the argument that in a market economy they have to pay ‘market rates’ in order to get the best people. Never mind that ‘market rates’ don’t seem to apply to the rest of the workforce who are still being asked to undergo Austerity, and no care at all for the 13 million people in this country living in poverty, half a million of whom were forced to visit foodbanks last year. Any economic system which can create such vast inequalities between rich and poor is a broken system, which any decent person would try to change, not justify or defend.

For more on how our free-market system inevitably leads to constantly increasing executive pay, and an ever-widening gulf between rich and poor, click here.



The Barclays Money-go-Round

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Picture © Nadia Isakova

Yesterday Barclays Bank published its results and unashamedly demonstrated that the City bonus culture is back in full swing. Never mind the fact that profits have fallen by 32%, never mind the fact that over 10,000 people are going to be laid off because of commercial problems – no less than £2.4bn (a 10% increase) is still going to be paid out in bonuses to their top bankers. When questioned about this their chief exec, Antony Jenkins, resorted to the old free-market capitalist mantra of ‘market rates’. It’s a shame market rates only ever seem to go up for top earners , while for broader society wages stagnate and living standards go down.

These big corporates really are just money-making machines for their top staff, which the rest of us have to finance.

Many people believe that the owners – the shareholders – are also coining it in, but in reality they are getting fleeced too. The £2.4bn that is being paid in bonuses to staff is almost triple the £859m that is being paid in dividends to shareholders. To put this rip-off culture into even starker contrast, in 2009* (the latest year for which complete figures are available), of the £11.6bn profit made by Barclays, it paid a mere £113m in tax (a rate of just 1%); £734 in dividends to its shareholders (a lot of whom are pension funds); but a thumping £2.5bn in bonuses to its own staff. It’s daylight robbery and we’re all getting mugged. Question is: how much longer can it go on for?