Update on Newham Council London/Olympic/West Ham FC Stadium loses

On Thursday 14 December I was at the meeting of the Newham Council Investment & Accounts meeting.

I had a chance to question the Newham Council Finance Director on matters arising from the joint audit meeting on the 27 September 2017.

At that time we knew that the £40 million loan (& £4.4 million interest payment due) was "impaired" (no value) and that an unknown amount of other money ("working capital") was also at risk of being "impaired".

Since then of course the Council has admitted to losing some £52 million of money (original loan and working capital) in the stadium. Apparently we will still have some legacy regeneration benefits for the next "100 years".

However, leaving aside for the moment that the stadium does not have a shelf life of 100 years, I understand that West Ham FC nor any other user have no contractual obligations to do anything for the community but no doubt they will offer some charitable benefits that they see fit to provide. Plus, there was always going to be possible benefits from the redevelopment but this could have happened anyway without us risking our money.

I asked the Finance director for an update on the "impairment" shown in the accounts (which means that the £40 million loan had currently no value) and was told that the loan was not being "written off" but instead converted into some form of "Debt for Equity" swap? Whatever that means? I assume that the £40 million loan which I think is currently valued as being Zero is being converted into a shares into what must be a bankrupt company? Need more information.

I will ask further questions about the lost £4.4 million interest charge, the £5 million loan for investments in the Olympic South Park and the £12 million of "working capital" (I think) that has also be "lost".

Watch this space.

Mentioned in the Council accounts and during the joint audit meeting I had brought up the reference to a possible significant criminal fraud in Newham Council procurement, which I must also chase for an update. What has happened? Are internal audit involved and have the Police been informed if there is evidence of criminality?

http://www.johnslabourblog.org/2017/09/former-olympic-stadium-stratford-report.html

http://www.johnslabourblog.org/2017/09/the-stadium-loan-and-questions-to.html

Latest statement from David Cameron on "morally wrong" tax evasion

Love it :)  #resigncameron

Emergency Questions to Newham Council about LOBO toxic loans & Parliamentary Select Committee for Local Government

These questions below by Cllr Rokhsana Fiaz OBE were also ruled out of order by the Chair of Council at last nights Newham Council meeting on the same grounds as mine (see post below)

"Please note that in advance of this evening's Full Council, I wish to submit the following questions under Council Procedure Rule 23 (specifically 23.3) pertaining to Agenda Item 14:

1. Notwithstanding the complaint that the Mayor has said the council will make to Channel 4 about last Monday's Dispatches programme, which claimed that Newham residents are being ripped off by banks who have sold toxic loans to Newham Council and are charging excessive interest rates against Newham's LOBO liabilities, will he assure members that these allegations are being taken seriously and will be taking independent expert advice?

2. Will the Mayor and Cabinet Member for Finance support Newham Council's participation in any enquiry by the Parliamentary Select Committee for Local Government, if it decides to investigate the behaviour of the Banks, and advisors, concerning Local Authority LOBOs and possible bank rigging and fraud?

Cllr Rokhsana Fiaz OBE

Class Action and stopping the endless drip, drip of corporate fraud

A very good article by lawyer Katherine Dandy  on Class Actions in Pension Insight. I have added this comment to the on-line site.

"You make a lot of sense Katherine. There is also a wider governance point that trustees should consider.

It is not only a duty for them to recover such losses if possible but also as owners we have a responsibly to "punish" directors and companies who undertake fraud or such negligent behaviour in order to improve overall corporate governance standards.

Most class action claims are also settled by insurers so it should not necessarily damage a company you still have shares in.  More class actions will also increase pressure on insurance companies to insist on better governance standards to reduce their risk.

Directors who behave in such ways should be held personally liable. Next to more effective criminal regulatory powers this is the best way to stop the seemingly never ending drip, drip of corporate fraud and negligence cases.

(it seems that Pension Insight  haven't published my comment? So I have just tried again).

"Why don't defrauding bankers go to jail?

This is "a great rant" on Channel 4 news of BBC Economics editor, Paul Mason, following the report yesterday of yet another Banking Fraud. 5 major banks allowed their traders to fiddle foreign exchange rates to defraud their clients and increase their bonuses. Paul is clearly very angry that we have fraud after fraud after fraud in the City and nothing ever gets done about it. He calls for full and effective regulation of the sector and banks should stop whingeing about being held to account.

I totally agree but think that share owners also must share the blame for failing to act as owners and take responsibility for the companies they own. We in theory appoint the executives at annual AGMs to run these companies on our behalf and it is clear that we can be pretty rubbish at it. We often seem to appoint "numpties" to do this who are at best incompetent or perhaps equally dishonest.

Hat tip to Sunny Hundal on Facebook for clip and a great title.

In my world I see people being jailed for defrauding the state of relatively small amounts of money for claiming benefits and not declaring a partner or a part time job. Yet none of the the bankers who have defrauded the state of billions of pounds have seen any porridge? This is unfair.

How wrong public opinion can be on key social issues

Hat tip Redbrick "A fascinating paper published yesterday by the Royal Statistical Society and King’s College London – The Power of Perception - reported on a survey undertaken by Ipsos MORI which ‘shows just how wrong public opinion can be on key social issues’.

1. Teenage pregnancy: on average, we think teenage pregnancy is 25 times higher than official estimates: we think that 15% of girls under 16 get pregnant each year, when official figures suggest it is around 0.6%.
2. Crime: 58% do not believe that crime is falling, when the Crime Survey for England and Wales shows that incidents of crime were 19% lower in 2012 than in 2006/07 and 53% lower than in 1995. 51% think violent crime is rising, when it has fallen from almost 2.5 million incidents in 2006/07 to under 2 million in 2012.
3. Job-seekers allowance: 29% of people think we spend more on JSA than pensions, when in fact we spend 15 times more on pensions (£4.9bn vs £74.2bn).
4. Benefit fraud: people estimate that 34 times more benefit money is claimed fraudulently than official estimates: the public think that £24 out of every £100 spent on benefits is claimed fraudulently, compared with official estimates of £0.70 per £100.
5. Foreign aid: 26% of people think foreign aid is one of the top 2-3 items government spends most money on, when it actually made up 1.1% of expenditure (£7.9bn) in the 2011/12 financial year. More people select this as a top item of expenditure than pensions (which cost nearly ten times as much, £74bn) and education in the UK (£51.5bn).
6. Religion: we greatly overestimate the proportion of the population who are Muslims: on average we say 24%, compared with 5% in England and Wales. And we underestimate the proportion of Christians: we estimate 34% on average, compared with the actual proportion of 59% in England and Wales.
7. Immigration and ethnicity: the public think that 31% of the population are immigrants, when the official figures are 13%. Even estimates that attempt to account for illegal immigration suggest a figure closer to 15%. There are similar misperceptions on ethnicity: the average estimate is that black and Asian people make up 30% of the population, when it is actually 11% (or 14% if we include mixed and other non-white ethnic groups).
8. Age: we think the population is much older than it actually is – the average estimate is that 36% of the population are 65+, when only 16% are.
9. Benefit bill: people are most likely to think that capping benefits at £26,000 per household will save most money from a list provided (33% pick this option), over twice the level that select raising the pension age to 66 for both men and women or stopping child benefit when someone in the household earns £50k+. In fact, capping household benefits is estimated to save £290m, compared with £5bn for raising the pension age and £1.7bn for stopping child benefit for wealthier households.
10. Voting: we underestimate the proportion of people who voted in the last general election – our average guess is 43%, when 65% actually did.

Myths and Misconceptions about Welfare

A very good report in the indie about voters being "brain washed by Tory Welfare myths".

I would go further and say these are not myths but deliberate lies and distortions being put out by this Tory led Government to justify ideological attacks on the most vulnerable.

Not only on the chronically sick and the unemployed but mostly the working poor who depend upon the state to top up their employer poverty wages.

Actual benefit fraudsters should be dealt with harshly as they are thieves and criminals. However, so should the many City and business thieves who in practise steal far more from the public purse, yet rarely end up facing the justice at the Criminal Courts they deserve.

UPDATE: Check out Channel 4 FactCheck here on more Tory welfare porkies.

Why the financial services industry can be so corrupt (and yet so smug?)

Amidst the current media fury about the Barclays Bank LIBOR fiddle and the latest miss- selling scandal to small businesses, the only thing that really astonishes me is the shock and horror about what has gone on?

Already we have excuses that this was a “one off” or “all the fault of the last government” as well as it’s just a few “rogue traders”.   Rubbish. It is not.

Does everyone forget already that we are in the worse recession for 60 years due to either fraudulent or at best reckless behaviour by Banks and financial institutions?

Barclays Bank has been ripping off its customers for years, it not for decades. Does no-one remember the Personal Pension scandal during the 1980’s and 1990’s? When Barclays (and practically all the other Banks and life assurance companies) persuaded its loyal and but completely naive customers to  come out of their guaranteed Company defined benefit pension schemes and buy their expensive personal pensions? When people wanting short term saving plans were sold 25 year life insurance endowment bonds?

When, very like the current debacle over small business interest hedges,  the Banks instructed all their retail staff that they had to make so many sales a week of these products or they were in trouble. All senior management knew exactly what was going on since it made no financial sense whatsoever for anyone to leave their company pension scheme.  But they did nothing to protect their customers nor ultimately their shareholders who had to pick up the bill for compensation. These corrupt practices are due to widespread bad company and industry wide governance.

Yet time after time, whenever I go to governance conferences and meetings, we are told how wonderful UK governance is especially compared to the rest of the world (Which is probably true but if so, then God help the rest of the world). When sensible proposals are made to improve corporate behaviour and governance such as the compulsory publication of Company AGM voting by fund managers or putting employee representatives on remuneration committees then they are too often simply dismissed - often sneeringly.  

This frankly smug and self satisfied attitude has change.  The UK financial services is very, very important to the UK economy. We can argue that maybe it is too important which is another matter. But at the moment it is responsible for 10% of our tax take, employs hundreds of thousands of workers and is the main source of finance for our economy.

While there is some very good people work in finance there is not enough of them to stop us, the principles who own assets (such shareholders in pension and insurance funds) being robbed off by the agents, we employ to look after our assts. 

Cosy crony remuneration committees must stop. Shareholder votes on pay at company AGM’s should be binding and compulsory. Retail and investment banks should be separated to stop casino capitalism.  The Government should retain a significant shareholding in the Banks we own at the moment and we should buy shares in those we do not own.  Better regulation is not enough we need a state holding not to run the Banks but to try and make sure that they are run by grownups who will act in the long term interests of shareholders and customers not the selfish short termism driven by Bollinger Champagne dudes.

The massive life insurance funds and Mastertrust pension schemes which have no beneficiary governance at all should have a trustee structure set up to ensure that they are not being robbed either.  Doing so would help put UK PLC in order as well. 

Finally fraudsters should be brought to book and locked up as well as those higher up who turn a blind eye to matters in order to ensure their own well paid positions and bonuses. Anyone making a deception in order to gain a pecuniary advantage is guilty of a serious criminal offence while aiding and abetting any criminal offence is a crime as well.  These people must be dealt with in the same way we treat rioters.

Rant over. Hat tip great cartoon by Steve Bell from The Guardian