Saturday, May 23, 2015

Final real proof that the global banking industry is an organised criminal enterprise.



Those of you who have read my blogs will know that I spare no niceties when it comes to describing and defining the global banking industry.


For those of you who are new to my observations, I reiterate my firmly-held belief that by far the majority of those who work in the major global banks have become corrupted by their remuneration, and their immunity from accountability, and have become little more than unrepentant organised financial criminals.


I am on record in many places saying that I do not believe that these institutions could return the level of revenues and achieve the targets they are set, without committing wholesale criminal offences, of theft, fraud, false accounting, forgery, insider dealing and wholesale market manipulation.


I have been roundly condemned by the institutions themselves who dislike the fact that a former Fraud Squad detective like myself will so openly denounce them for being the criminal mafias that they are.


I do so because these institutions appear to make no effort to put their houses in order, despite repeated fines for criminal misbehaviour. The latest fines imposed on the industry just join a long queue of other fines imposed for previous criminality. Despite all the evidence, as yet, no-one has been sent to prison for any of these criminal forays, and despite the fact that the institutions rarely put up any meaningful contest when charged with these scandalous affairs.


It is almost as if the entire regulatory and political galere has simply come to accept as a matter of course, that the financial services industry is staffed by a bunch of morally dysfunctional criminals who appear to think nothing of flouting the criminal law on a wholesale basis.


But what can it possibly take for these Mafiosi to be brought to heel, when the regulatory agencies, the SFO and the Police Intelligence Agency do absolutely nothing to confront them?


Only this week, yet another major scandal has broken involving the usual list of criminal suspects.

Barclays Bank has been fined £1.5 billion by UK and US regulators over foreign exchange (forex) failings. 

The £1.5 billion fine includes a £284 million fine by the Financial Conduct Authority (FCA), which is the largest financial penalty ever imposed by the FCA, or its predecessor the Financial Services Authority (FSA). 

US regulator the Commodities Futures Trading Commission has fined Barclays $400 million (£257 million), the New York State Department of Financial Services $485 million (£311 million) and the U.S. Department of Justice (DOJ) $710 million (£456 million).   

Barclays is one of five institutions including Royal Bank of Scotland, JPMorgan Chase , UBS and Citigroup that have been fined a total of almost £4 billion over the manipulation of foreign exchange rates.

The FCA said that Barclays’ failure to adequately to control its forex business was particularly serious in light of its potential impact on the systemically important spot forex market. 

Georgina Philippou, FCA acting director of enforcement and market oversight, said: 'This is another example of a firm allowing unacceptable practices to flourish on the trading floor. Instead of addressing the obvious risks associated with its business Barclays allowed a culture to develop which put the firm’s interests ahead of those of its clients and which undermined the reputation and integrity of the UK financial system.'

If Ms Philippou is not careful when it comes to describing the wholesale horror stories perpetrated by the banks, she will attract the same reputation for blurbspeak, as that which defined her predecessor in title, Tracy McDermott.

The FCA found that between 1 January 2008 and 15 October 2013, Barclays’ systems and controls over its forex business were inadequate.

It said these failings gave traders the opportunity to engage in behaviours that put Barclays’ interests ahead of those of its clients, other market participants and the wider UK financial system. 

These behaviours included inappropriately sharing information about clients’ activities and attempting to manipulate spot forex currency rates, said the FCA.  

So, possessing this damning knowledge, why has the FCA reverted to its traditional discredited methods of issuing fines. It doesn’t matter how much you fine these institutions, because it doesn’t come out of the pockets of the directors or responsible people. It is paid for by Shareholders yet again, while the directors and the board continue to pick up their bonuses and salary packages.

The FCA said that Barclays was among other banks already participating in an industry-wide remediation programme, which included senior management at Barclays taking responsibility for delivering the necessary changes.

Barclays chief executive Antony Jenkins said the misconduct at the core of the failings is ‘wholly incompatible with Barclays' purpose and values and we deeply regret that it occurred. ‘

He added that dealing with these issues and appropriate disciplinary action was a ‘key priority’ in its plan to transform Barclays.

Jenkins said: ‘This demonstrates again the importance of our continuing work to build a values-based culture and strengthen our control environment. We remain completely committed to that effort. I share the frustration of shareholders and colleagues that some individuals have once more brought our company and industry into disrepute.’

In November 2014 the FCA, alongside US and Swiss regulators, fined five banks – Citibank, HSBC, JP Morgan Chase and UBS – a combined £2.1 billion over forex failings.

The fines related to the five banks' G10 currencies spot forex trading operations.

In April, Barclays set aside an additional £800 million for provisions for its involvement in the forex scandal, bringing its total provisions over the rate-rigging probe to £2 billion.

These are facts and they arise out of pleas of gulty to the commission of criminal offences, so why are none of these guilty men facing lengthy gaol sentences?

Well, now we may have the evidence we have long needed to demonstrate the true level of criminal corruption which has gripped the financial industry. This proves, once and for all, that these egregious crimes are not simply committed by a few rogue traders, which is, of course, what the directors would have us believe, but proves that wrongdoing and criminality is inherent throughout the entire business model.

Quoting from a damning report by a US law firm Labaton Sucharow LLP on the findings of a survey of financial services professionals, reveals widespread disregard for ethics, and an alarming use of secrecy policies to silence employees 


So whatever the bank CEOs may want to tell us about ‘...building a values-based culture and strengthening our control environment...’ any efforts to reform Wall Street and The City of London may be faltering dangerously.


The survey, the most expansive of its kind, polled more than 1,200 U.S. and UK-based financial services professionals to examine views on workplace ethics, the nexus between principles and profits, the state of industry leadership and confidence in financial regulators. With findings pointing to a continued disregard for ethical engagement and alarming new tactics to silence potential whistleblowers, the industry appears to be faltering in its reform efforts.


In one of the most concerning findings, 47 percent of total respondents feel it is likely that their competitors have engaged in illegal or unethical behaviour to gain an edge. While nearly one in five professionals feels it is at least sometimes necessary for financial services professionals to engage in illegal or unethical activity in order to succeed, a full 32 percent feel compensation structures or bonus plans pressure employees to compromise ethical standards or violate the law. Of those surveyed, 27 percent don't agree that the industry puts the interests of clients first.

How severe is the ethical breakdown? An astonishing 22 percent of respondents say they have observed or have first-hand knowledge of actual wrongdoing in the workplace. On an individual level, a quarter of those surveyed say they would likely engage in insider trading to make $10 million if there was no chance of being arrested. Employees with less than 10 years of experience are more than two times as likely to use non public information than those with over 20 years of experience, reporting 32 percent and 14 percent respectively.

"Most disappointing is the lack of change in many of the results when compared to surveys from previous years. Despite significant energy and efforts, it appears we need to continue to think about how to improve the culture of ethics in the financial services industry and most likely, in other sectors as well," said co-author Ann Tenbrunsel, Ph.D.

Perhaps the most disturbing findings relate to efforts to stifle reports of misconduct. Despite the unwaivable right and indeed, legal duty to report potential wrongdoing to law enforcement, and the federal government's public effort to identify and punish organizations that illegally attempt to silence employees, a shocking 16 percent of those polled say their company's confidentiality policies and procedures prohibit reporting potential illegal or unethical activities directly to law enforcement.

One out of every 10 respondents report they have signed or have been asked to sign a confidentiality agreement that specifically prohibits reporting potential illegal or unethical activities directly to law enforcement. For those who make over $500,000 annually, that number rises to 25 percent. Of the total sample, 19 percent feel it is likely that their employer would retaliate against them for reporting wrongdoing.

"When corporate whistleblowers are prohibited, discouraged or retaliated against for reporting crime to cops, we should all be scared—very scared," said Jordan A. Thomas, Chair of the Whistleblower Representation Practice at Labaton Sucharow and co-author of the report. "The widespread, systematic and previously unknown scope of gag orders in Corporate America is a wake-up call for the SEC and other law enforcement authorities. These tactics are particularly insidious because they keep local, state and federal law enforcement organizations in the dark about all types of wrongdoing—everything from large-scale corporate frauds, environmental accidents and public safety concerns." 


According to both U.S. and UK survey respondents, financial regulators and law enforcement authorities play a critical role in detecting and deterring corruption.


These are highly disturbing statistics and clearly demonstrate that the financial industry is riddled with criminal behaviour, behaviour which is recognised by management and not only tacitly condoned, but positively approved of by the use of gagging clauses, effectively preventing employees from speaking out.



This report must now be read by the entire Investigations Division of the FCA and its contents discussed and its findings analysed. These figures are reflective of the UK banking industry as well and demonstrate a very high level of criminal misconduct. This information must be assimilated into professional knowledge by the FCA and its enforcement staff and used to define and drive its investigative decisions.



There is no longer any room for complacency on the part of the FCA and those persons wh have played such a leading part in facilitating the criminal wrong-doing which has resulted in such huge fines, must be identified and prosecuted.



The Barclays CEO has made great play of the bank’s new ethical policies and its programmes to teach ethics and business transparency. In the light of findings such as these it is highly unlikely they will be successful.



When I tried to bring the evidence of Organised Criminality in banking to the attention of the Parliamentary Commission on Banking Standards, my evidence was withheld and suppressed and never published, because it was said ‘the banks wouldn’t like it’. Now we are in possession of facts such as these, I should be interested to hear what the Banking Commission has to say about banking standards today!



I won’t be holding my breath waiting!


4 comments:

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There appears to be some nasty work going on in relation to the repossession of mortgaged properties by lenders who seem to be using every trick in the book to make a killing on evicting people where there is some scope for doing to. The there is property management of leaseholds, see the Carlex website. Given the mayhem in the property market generally it could get a lot worse.

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