Skip to content

Isn’t it time for the Chairman of Lloyds and Barclays to resign?

07-Oct-08

At the weekend Gordon Brown appointed a National Economic Council to see us through the credit crunch. It includes Marcus Agius, chairman of Barclays, and Sir Victor Blank, chairman of Lloyds TSB.

Today their companies are effectively bust and are going cap in hand to the government for a bail out.

Now ask your self these questions:

1) Are these the people you’d want to guide us through a credit crisis?

2) Should they keep their jobs at their banks as they have clearly lead them to ruin?

3) Shouldn’t they resign from this new Council because of their own failure, and contribution to the crisis?

4) Shouldn’t we in the light of that review the selection criteria for appointment to this panel?

Take that last question.Why is Lord Browne, a man widely thought to have committed perjury a member? And why is the chairman of Vodaphone a member?

These are the people who have got us into this mess. They cannot get us out of it.

It’s time for Gordon Brown to start again.

Filed in Banking, Economics | | Comments (0) »

Get rid of tax havens now

07-Oct-08

Yesterday’s call on this blog to neuter the world’s tax havens has transferred to the Guardian today. As Larry Elliot says:

Robert Zoellick, the World Bank’s president, made a contribution to this debate yesterday when he called for the anachronistic G7 to be expanded to include seven leading developing countries. That would be sensible, as would toughening up credit rating agency rules and a general beefing-up of the IMF’s early warning role in spotting crises.

This list does, however, contain one crucial omission - the role of tax havens in undermining the policies of sovereign states. As Richard Murphy of the Tax Justice Network noted yesterday, tax havens provide a “get-out-of-regulation free” card for banks faced with tougher sanctions. This card needs to be taken off the table - but to do so will require the sort of global policy coordination so sorely lacking in recent years.

Whilst Polly Toynbee puts it this way:

Sadly international action now seems remote, but Britain has the power to close down the many tax havens it administers: days of turning a blind eye to offshore activities are over.

A number of other ideas from this blog are also to be found in her article, whilst Paul Collier says:

While the crisis will weaken our assistance for the poorest countries by curtailing aid, it could inadvertently have an offsetting effect if we use it to close the illicit outflow. Money flows out of Africa into our banks, and into the offshore banks that depend for their existence upon being able to transact with our banks. US rules on banking transparency are even weaker than the European rules: vast sums looted from the public purse in Africa are being held in nominee accounts and moved around the world at greater speed than our cumbersome legal processes can track them down.

Western legal systems are stacked, thanks to the hired hands of skilled lawyers, to protect the rights of the crooked over the rights of Africa’s ordinary citizens. At the time of the Commission for Africa, I urged that Britain revise its laws on banking secrecy. Yet despite the enormous emotional energy aroused by Gleneagles, there was no political appetite: aid, yes; banking openness, no. The silver lining in this grim cloud is that we have a second chance to clean up the banks.

There is a growing consensus on this issue, but the neo-liberals will still fight it, as Paul Collier notes they did after 9/11 and on Blair’s Commission for Africa.

This time though we’ll sink if we don;t do it. Surely that’s enough to kick start the change, or do the elite really want the chaos to continue? Never rule out that possibility: they think they’re immune form it, so what do they care?

Filed in Africa, Corruption, Development, Tax Havens, Tax Justice Network | | Comments (0) »

The neo-liberal agenda will close down Icleand

07-Oct-08

From this morning’s FT:

We would also not be surprised to see the Icelandic krona lose its function as a medium of payment

The neo-liberal model will kill the Icelandic economy. It won’t be the least to suffer that fate.

So why has Gordon Brown appointed neo-liberals as his economic advisers?

Filed in Economics | | Comments (0) »

My del.icio.us bookmarks for October 6th

07-Oct-08

These are my links for October 6th:

Filed in Delicious | | Comments (0) »

A politician who is saying what is needed

06-Oct-08

John McDonnell is not a popular man in Westminster. He’s the leader of labour’s awkward squad: the Campaign Group. But I admit I like John, and have been happy to work with him. This is the programme he’s put out in response to the credit crisis:

1) Nationalise the banks and establish democratic control over banking decisions, ensuring democratic representation on boards, ending the bonus binges, controlling executive pay and share holder rewards;

2) Cut interest rates significantly and immediately, restoring democratic control over key economic decision making by not only widening the remit of the Bank of England beyond ensuring price stability to advising on the wider economic health of the country but also reverting the bank’s role to being one voice amongst many others to be taken into account;

3) Secure people a home by converting repossessions to social rentals so that people have a ‘right to stay’ in their homes and embarking on a massive council house-building programme;

4) Enhance security in employment by ensuring people have a say over the future of the companies by strengthening rights and representation at work;

5) Bring fuel bills under control with price controls on the consumer price of gas and electricity, so that people are not being forced to choose between heating and eating this winter, with the threat of nationalisation if needed.

It’s hard to argue: it’s what we need. So long as we deal with offshore too. But I’ve told him that.

Filed in Economics | | Comments (1) »

If you leave out that many companies how can the accounts be true and fair?

06-Oct-08

Fortis has collapsed. Some are suggesting this could have been because of debt not consolidated in its accounts.

The follwoing companies were not consolidated in its last accounts:

Abic Holding, Acens Technologie, Albankerb Investments, Alchinofin B.V., Antilope Invest, ASLK-CGER Services
ESV, AstenJohnson (Holland) B.V., Autor Publicidad Esterior S.L., Avinguda Holding S.A., BPC Developpement,
Basement Holding B.V., Battery Technologies, Bigblue Investments S.à.r.l., Bohemia Corporation, Brampton
Corporation, Carinthia Corporation N.V., Ceedsa Holdings S.L., Cherras Investments S.à.r.l, Cixi Investments
S.à.r.l., Colfridis Invest, Coppefis, CP (New Zealand) Trustees Ltd, Decom Services Ltd, Directiepensioenfonds
Hesse B.V., Discontokantoor van Turnhout, Dis Globus Malta Ltd., El Paso LNP Holding BV, Embon Investments
S.A.R.L., Emerald Shipping B.V., Eurl Gourville Immobilier, Euroheart Investments S.à.r.l., Fagus, FB Sector
Finance LP, Fidass I B.V., Fidass II B.V., Fortis Agency Limited, Fortis Asia Limited, Fortis Bank Escritorio de
Representacao Ltda, Fortis China Limited, Fortis Far East Limited, Fortis Foreign Fund Services AG, Fortis
Futures Limited, Fortis Greater China Limited, Fortis Group Ltd, Fortis Insurance Limited, Fortis International
Limited, Fortis L Capital, Fortis Limited, Fortis Management Limited, Fortis Private Equity Arkimedes N.V., Fortis
Services Limited, Fortis Services Monétiques, FP Consult (Guernsey), Generale Branch Nominees Ltd., Geneve
Credit & Leasing SA, GeschäftsführungsGmbH der Generale Bank, Grandall International Holding Ltd, Gúzman,
Gymna Uniphy B.V., Gymna Uniphy N.V., Hedonaï Estetica Integral S.L., Heijboma B.V., Holding Vreedenlust
Fund II, I.D.B.P., Imag SPV, Innovative Medical Solutions BV, Innovative Medical Solutions Holding B.V.,
Jetowner Investments S.à.r.l., Jmex BV, Kathmandu Holding BV, Konzeptual Holding S.A., Mine.be, Mitsou
Fashion S.à.r.l., Nathan Beheer B.V., Newton Green Air Investments I, Newton Green Air Investments II, Nicolas
Investments Corporation, Nimox Invest B.V., Novy N.V., OB Invest, Oboist Holding B.V., Packing Invest, Par 3,
Paradize Investments S.A., Parisienne d’Acquisition Fonçière, Penne International, Pensioenfonds J.G.H.M. van
Lier B.V., Queensland Corporation N.V., Relf Beleggingen, Rothesay, Savina International Inc, SCI Norlum,
Sybetra S.A., Tentaclo Nets Holding II BV, Tondola Holding BV, Tripan International B.V., Uniphy Elektromedizin
Beteilgungs GmbH, Uniphy Eltektromedizin Gmbh & Co KG, Veldpoort Beheer BV, Velleman International, VIAZaventem
N.V., Von Essen GmbH, Von Essen KG - Handelsgesellschaft, Wa Pei Nominees Ltd, Wassenburg
Beheer B.V., Wendilo Investments S.A.R.L.

They say:

In global the impact of not consolidating subsidiaries of minor importance is not material in the annual accounts of
Fortis Bank.

I don’t believe them.

There were €159 billion of off balance sheet items at the end of their financial year 2007 (note 47 to the accounts). That’s what is being bailing out.

I hope KPMG and PWC as joint auditors carry the can for this. They deserve to.

Filed in Accounting, Banking | | Comments (0) »

The first tax haven needs bailing out. Who’s going to save Iceland?

06-Oct-08

The BBC has reported that:

Share trading in six of Iceland’s biggest financial firms has been halted temporarily, the country’s stock exchange has said. The includes the country’s three biggest three banks, Kaupthing, Landsbanki and Glitnir. Iceland’s government said it was drafting a plan to deal with the country’s financial crisis. Banks now dwarf the rest of the economy, leaving Iceland heavily exposed to the global credit squeeze.

The country’s largest banks have now agreed to sell off some of their foreign assets and bring them home, to help bolster the banking sector. This money will be brought back into Iceland, in an effort to shore up the economy and prevent the currency, the krona, from sliding any further. Last week, it lost a fifth of its value against the dollar. The government is now trying to persuade the trade union pension funds to repatriate some of their funds too. But in return, the unions want Iceland to apply for EU membership - a move it has resisted for decades.

Analysts have warned the troubled banking sector may be too big for Iceland to be able to save.

The sting is in the tail. The Icelandic economy is going to fail, as is its currency.

This will be the first country brought to its knees by the credit crisis. It won’t be the last. We need to work out two things: the first is how to bail out tax havens, and on what terms. The second is how to bail out other countries.

Iceland is firmly in the first category. But this crisis is far too big to think it will stay in places as small as it is. The action has to begin now.

Filed in Banking, Economics | | Comments (3) »

Even the ACCA says the existing non-exec directors of banks are to blame

06-Oct-08

I mentioned earlier today that we need a new breed of non-exec directors of banks to make re-regulation and re-capitalisation work. The likes of Prem Sikka, Frank Field and Will Hutton, I suggested. The awkward squad who are not afraid to ask difficult questions.

Then I noted an article on the Guardian blog by ACCA president Richard Aitken-Davies. He says:

something has gone seriously wrong with corporate governance. This catastrophic failure highlights the need for ethics and professionalism to be at the heart of business. And in order to change business culture, this ethos needs to be extended to schools and other business professions.

Some of us have been saying that for some time. Welcome to the club. He goes on:

The roles of the chairman and chief executive are ultimately ones of accountability - to shareholders, to customers, to staff and, whether they like it or not, to government, the taxpayer and society at large. But our increasingly well-defined principles of corporate governance have not prevented this crisis. We therefore need to open our thinking to alternative models and, in particular, to the role and effectiveness of independent non-executive directors.

At last: welcome recognition from a UK professional institute that there is an obligation to pay tax. And that companies do not owe their sole responsibility to shareholders (who they cannot identify). He does not end there though; he adds:

And perhaps we accountants haven’t said no enough, either. The world of finance has made billions. Those privileged to lead this sector need to explain what is happening and why. They need to be part of the solution, because regulators can’t be cleverer than entrepreneurs on the front line. However, where entrepreneurs prove to be negligent or irresponsible, it’s right that they should find themselves in court.

I agree with the last sentiment. I agree that these business people (they are not entrepreneurs: they did not risk their own money so they cannot be classified as such) will need to make their knowledge available on regulation. But most of all, they have to be held to account. Those best able to do that are those who saw these issues long before the ACCA did. Remember, it was not long ago they resigned me from one of their committees for asking my own awkward questions about quite shocking comments made by their head of tax, Chas Roy-Chowdhury. The ACCA has a lot to do as yet to get its own house in order, I’d suggest. But this is a welcome start.

Filed in Accounting, Ethics | | Comments (0) »

My del.icio.us bookmarks for October 6th

06-Oct-08

These are my links for October 6th:

Filed in Delicious | | Comments (0) »

My del.icio.us bookmarks for October 6th

06-Oct-08

These are my links for October 6th:

Filed in Delicious | | Comments (0) »