Financial fuckery thread

[Cain]

But preventing banks from being too big to fail will make them too small to succeed.

I missed a promising career in PR. 

[Junkenstein]

Banking giant HSBC, which was hit with a US fine for money laundering last year, is facing fresh accusations of illegal activity in Argentina.

Argentina has alleged that the bank used "fake receipts" to facilitate money laundering and tax evasion, and launder 392m pesos ($77m; £50m).

The country's tax authority said it had filed criminal charges against HSBC.

http://www.bbc.co.uk/news/business-21840052

HSBC - Determined not to learn. Or more profitable to remain ignorant. Or Both.

[Cain]

http://www.huffingtonpost.com/2013/03/29/libor-lawsuits-claims-dismissed_n_2981513.html

A judge on Friday dismissed a "substantial portion" of claims facing a number of banks in a barrage of lawsuits accusing them of interest-rate rigging.

U.S. District Judge Naomi Reice Buchwald in Manhattan ruled for the banks, which include Bank of America Corp , JPMorgan Chase & Co and others, of allegedly manipulating the London Interbank Offered Rate, commonly known as Libor.

The judge granted the banks' motion to dismiss the plaintiffs' federal antitrust claims and partially dismissed their claims of commodities manipulation. She also dismissed racketeering and state-law claims.

[P3nT4gR4m]

I wonder if a judge these days is more or less expensive than before the recession?

[Junkenstein]

I've been reading through this on and off lately:

http://www.icij.org/offshore

Summary:

KEY FINDINGS
Government officials and their families and associates in Azerbaijan, Russia, Canada, Pakistan, the Philippines, Thailand, Mongolia and other countries have embraced the use of covert companies and bank accounts.
The mega-rich use complex offshore structures to own mansions, yachts, art masterpieces and other assets, gaining tax advantages and anonymity not available to average people.
Many of the world's top's banks – including UBS, Clariden and Deutsche Bank – have aggressively worked to provide their customers with secrecy-cloaked companies in the British Virgin Islands and other offshore hideaways.
A well-paid industry of accountants, middlemen and other operatives has helped offshore patrons shroud their identities and business interests, providing shelter in many cases to money laundering or other misconduct.
Ponzi schemers and other large-scale fraudsters routinely use offshore havens to pull off their shell games and move their ill-gotten gains.

Lots of good stuff. Enjoy.

Oh, and the price of a judge rises when times are tight. Those who need to bribe them tend not to suffer too much in recessions.

[Junkenstein]

http://www.bbc.co.uk/news/world-europe-22197970

IMF chief Christine Lagarde has been summoned by a French court to answer questions over alleged abuse of office during her time as France's finance minister, her lawyer has said.

Ms Lagarde is to be questioned before a magistrate in May over her role in the awarding of financial compensation to businessman Bernard Tapie in 2008.

Ms Lagarde, who took over as IMF chief in 2011, denies any wrongdoing.

Her apartment was searched last month as part of the ongoing investigation.

As finance minister, Ms Lagarde referred Mr Tapie's long-running dispute with bank Credit Lyonnais to an arbitration panel, which awarded him 400m euros (£340m) damages.

Mr Tapie was a supporter of ex-President Nicolas Sarkozy.

Critics say she abused her authority but Ms Lagarde denies any wrongdoing.

The IMF voiced their backing to Ms Lagarde in a statement last month, saying: "The executive board continues to express its confidence in the managing director's ability to effectively carry out her duties."

Ms Lagarde's flat was raided by French police in March, but she has not been formally charged with any crime.

Her lawyer, Yves Repiquet, told the AFP news agency she would now "finally have the opportunity to provide the court with explanations and clarifications that will exonerate her of any criminal responsibility".

Nothing suspicious here, move along.

[Faust]

And the Last Chair was up in court for sexually assaulting his hotel room maid. Glad to see the IMF isn't just an organisation run by exploitative monsters who treat the job like a toy box.

[Junkenstein]

http://www.bbc.co.uk/news/business-22227019

The UK government has launched a legal challenge against plans for a European financial transactions tax (FTT).

The FTT, which aims to raise public funds and discourage speculative trading, will be adopted by 11 EU states - but not by the UK.

Ministers fear it could be imposed on UK firms trading with businesses based in one of those states.

The Robin Hood Tax campaign group said the legal move was about "defending one rather rich square mile".

The 11 countries going ahead with the FTT are Germany, France, Italy, Spain, Belgium, Austria, Portugal, Greece, Slovenia, Slovakia and Estonia.

Under their plans, transactions of shares, currencies and bonds would be taxed.

"Britain doesn't want to take part but it also doesn't want to be caught in the effects of this tax being introduced by other countries. Let's be clear - financial transaction tax is not a tax on banks or bankers, it's a tax on pensioners and people with savings and investments.

The bolded just shows again how disconnected Government can be from the populace. I know a few pensioners, not many with huge portfolios though.

I've seen these kind of tobin taxes pushed around for a while. Gut feeling tells me it's a good idea. Gut also says there will be many loopholes and the actual amount of cash raised will not be as expected.

[Cain]

In the history of the world, there has never been such a thing as a tax that applies on a progressive scale depending on the size of the transaction, ever.

[Junkenstein]

Ah, to clarify, I mean I've seen the idea pushed around. Guessing it's pretty much doomed to fail?

[Cain]

I was being sarcastic.

If the tax were set in such a way that financial transactions over a certain limit were hit, in small but progressive ways (0.1-0.5% is the range I see bandied around) it would have a minor impact on savings and pensioners, while increasing state revenue.

[Junkenstein]

My brain appears to be made of shit today.

[Junkenstein]

Surely deserving, first I've heard of this lot:

The government has been defeated in the Lords over plans to allow employees to give up workplace rights in return for shares in the company they work for.

Before the loss - by 69 votes - it was suggested that workers should get free legal advice before taking part.

The Treasury has tabled two new amendments offering to provide written details of any proposed scheme and a seven-day "cooling-off" period.

The proposals now return to the House of Commons.

This will result in "parliamentary ping-pong", meaning the Growth and Infrastructure Bill goes back and forth between the two Houses until a resolution is reached.

'Unrealistic'
Ministers want to introduce a new owner-employee contract, which allows business owners to award shares worth between £2,000 and £50,000 to their staff. They say the change would cut red tape and help businesses.

In return, the employee would give up certain rights, including unfair dismissal, redundancy, training rights and also the right to ask for flexible working.

http://www.bbc.co.uk/news/uk-politics-22258699

This seems aimed at a very particular kind of employee. "Cut red tape" is clearly lies, and these surrendering of rights looks easy to turn compulsory.

[Junkenstein]

Nice HBOS piece from Private Eye. Well worth the subscription if you can, worth checking the 3 new articles every couple of weeks otherwise.

http://www.private-eye.co.uk/sections.php?section_link=news&issue=1338

DAVID CAMERON, ever keen on people who "do the right thing", authorised his officials to tell the press last week that former HBOS chief executive Sir James Crosby had done just that in giving up his knighthood and a third of his pension entitlement. It was now up to the "consciences and judgement" of other executives whether they followed his example.
"The comments from the prime minister's office shift the focus from Sir James to his successor, Andy Hornby, and Lord Stevenson, the bank's former chairman," reported the Financial Times, whose own parent company also used to have Stevenson as chairman.

But Dennis Stevenson may be a harder man to chasten than the wretched ex-Sir James Crosby. As the parliamentary commission on banking standards noted two weeks ago in its damning report on HBOS, which needed a £20bn bail-out: "Lord Stevenson has shown himself incapable of facing the realities." Not quite true, actually: he has long understood the reality that it's not what you know, it's whom you know. Stevenson's career shows how far you can get with a genius for networking and schmoozing.

In 1990 he had the foresight to hire Peter Mandelson – then at a loose end while awaiting election to the Commons in 1992 – as a £28,000-a-year "consultant" for the market-research firm SRU, which Stevenson ran with Harpers & Queen style-guru Peter York. Through Mandelson he came to the attention of Tony Blair.

Fiddling while HBOS burned
Stevenson was duly knighted in 1997, soon after Labour's election victory. In 1998 he joined the advisory panel of Demos, New Labour's favourite think-tank, and a year later entered the House of Lords as Lord Stevenson of Coddenham. By then he had become chairman of the Halifax, and when the former building society merged with the Bank of Scotland in 1999 he took charge of the new HBOS, where he remained until the crash of 2008 – presiding over the reckless incompetence described in the banking commission's recent report.

A talented violinist who used to play for the National Youth Orchestra, Stevenson fiddled while HBOS burned. Or, as he told the commission in December: "There was a lot of mistaken lending. I wasn't there in the trenches with the people making the decisions. I was only there at the most part-time." For this part-time divertissement he earned £815,000 a year.

'Intellectual snob'
Being "in the trenches" never appealed to Stevenson. As he had told the Sunday Times in 1996: "I am a terrible intellectual snob." With HBOS and other directorships financing his agreeable lifestyle, he could devote himself to higher things such as his trusteeship of the Tate Gallery and his seat on the red-leather benches – though even there he was exceedingly part-time. (In his 14 years in the Lords he has voted just 10 times.)

Nevertheless, in May 2000, a year after his elevation, he was chosen by Blair to supervise the appointment of "people's peers", a now-forgotten Labour stunt whereby people such as hairdressers or firefighters could apply to join the Upper House. In the event, the great unwashed were rejected: the new peers consisted of the same old establishment grandees – ex-diplomats, business chiefs, professors. Half of them already had knighthoods.

Clod-hoppingly negligent
Stevenson explained loftily that ordinary folk might not "feel comfortable standing up in debates and talking and cutting it". While not ruling out the possibility that "someone of that kind" would become a peer, he said "it would be a great responsibility on our part appointing them; we would have to do it very carefully".

If only such due diligence had been exercised before Stevenson – a man with no banking qualification or expertise – was given the chairmanship of HBOS. Would any hairdresser or firefighter have been so clod-hoppingly negligent?

[Junkenstein]

Same issue of PE, UK tax/Goldman-sachs/whistleblowers related

http://www.private-eye.co.uk/sections.php?section_link=in_the_back&issue=1338

IN CONNIVING with HM Revenue & Customs to cover up dodgy tax deals with multinationals like Vodafone and Goldman Sachs, National Audit Office (NAO) boss Amyas Morse has broken his own rules on the crucial task of dealing correctly with whistleblowers.
In Eye 1336 we reported how, after the NAO had initially given the deals relatively clean bills of health, it was forced by MPs on the public accounts committee (PAC) to look again, this time with the help of a retired judge. According to an email from the tax boss who did the deals, Dave Hartnett, to senior colleagues before the judge had started work, NAO boss Morse had confided at a private meeting that the findings, which would be filtered through him, would not amount to much.

Grave breach of trust
Hartnett also reported that "Amyas told me that the PAC was relying heavily on advice/evidence from [one other and] Osita Mba", the man who, we now know, originally blew the whistle on the Goldman Sachs case. Thus Morse was privately divulging confidential information about sources to the body under investigation, which in this case was also the whistleblower's employer. According to Hartnett, the auditor-general also "told me in confidence that he had grave doubts about Mr Mba's analysis and evidence" [which turned out to be accurate], again showing his preference for helping HMRC out of a hole rather than investigating serious allegations against it.

As well as being a grave breach of trust, Morse's snitching to Hartnett breached the NAO's whistleblower policy, which says that "great care should be exercised in pursuing our inquiries of the body under investigation to avoid revealing the name of the whistleblower, or any associated details... which could effectively identify him or her". This is precisely what the NAO and Morse did; and future whistleblowers might now not trust Britain's public spending watchdog.

Curious silence
Oddly, nobody seems willing to hold the NAO chief to account. This is the first real test of NAO chairman Sir Andrew Likierman, brought in four years ago after the Eye exposed an expenses scandal under Morse's predecessor, Sir John Bourn. But since he first heard about it three weeks ago when the Eye called him, there is no sign of action from Sir Andrew. Margaret Hodge's generally outspoken Commons committee is curiously silent on the point too. Why the reticence?