A mad, mad world, my masters!

By Rowan Bosworth-Davies

colpThe state-owned Royal Bank of Scotland Plc has signed an agreement with the City of London Police to help them with free training and advice on financial crime.

When I first read this story, I had to make sure that it wasn’t being reported in one of the satirical spoof websites that one can find on the net.

When I read the same story in the Financial Times, I had to accept that it was probably true, hence the title of this blog!

Let me state straight away that I am wholly opposed to this move. I think it is far too generous to the Royal Bank of Scotland, and frankly, paints the City of London Police in a ridiculous light. If the City Police need to get free advice from RBS on financial crime, then things have truly sunk to a level from which there will be no good outcomes in the foreseeable future, and the City Police should be ashamed of themselves for even contemplating such a move.

Let me set out my objections to this proposal.

rbsThe Royal Bank of Scotland has, by its actions in the past, demonstrated more clearly than mere words can express, its utterly criminogenic profile and the organised criminal mentality of many of its controllers and staff. Whether it was through defrauding its customers through the wholesale rip-offs masquerading as PPI provision; through early foreclosing on valuable and profitable real estate projects and then benefiting from the asset values themselves; whether through Libor rigging or forex manipulation, it has been an organisation that is criminologically completely indistinguishable from an organised crime family, a mafia group. A definition of Organised Crime, taken at random from the UK Home Office and the National Criminal Intelligence Service makes the point.

Great Britain: Home Office/NCIS (early 1990s)

“…Organised crime constitutes any enterprise, or group of persons, engaged in continuing illegal activities which has as its primary purpose the generation of profits, irrespective of national boundaries…”

Well, when we examine the track record of RBS in light of this definition we find that it has many outstanding litigation issues. In its 2014 interim results, the bank published a long list that stretched to 17 pages, including suspected manipulation of foreign exchange markets and alleged mis-selling of US mortgage securities.

Some of these cases do date back to the financial crisis, such as the alleged mis-selling of US mortgage securities. Many, however, concern more recent activity, such as the investigations by at least 15 regulators and prosecutors around the world into collusion and market-rigging in the $5.3 trillion a day foreign exchange market. Almost three dozen staff have been suspended, placed on leave or fired by 10 banks, which launched internal probes into forex market rigging only last year. Not exactly a legacy issue.

In addition, the bank has become the latest bank to take a pre-emptive hit to cover the cost of an investigation into suspected manipulation of the foreign exchange market, making a £400m provision.

But on top of the forex provision, the bank also booked an additional £100m provision, on top of the £2.2 billion it has already repaid to compensate customers for mis-selling payment protection insurance.

Therefore, is it, I ask, a proper thing for the City of London Police to be organising such a close relationship with an institution which is facing so many wide-ranging investigations on a world-wide basis, many of which possess significant criminal characteristics?

The Huffington Post reports that the City force, which is national policing lead for fraud, handles some of the UK’s most high profile economic crimes, The City Police said that while its officers were already highly-trained specialists, it could benefit from banks “in areas such as equities and markets, financial instruments, international jurisdictions, cyber technology and foreign languages”.

But the RBS staff will not be involved in any operational police activity or be asked to advise on information relating to specific investigations.

Commissioner Adrian Leppard said he hoped it would be the first of many such agreements with the financial sector.

“…We can now tap into their massive knowledge base of financial products and digital technology and use their foreign language skills, which reflects the increasingly international dimension of economic crime investigation…”

Emma Smith, head of security, resilience and control at RBS, said: “I am delighted to have signed this agreement and look forward to working closely with the City of London Police in their fight against financial crime…”

As far as I can ascertain, in her 8 years reported service at RBS on LinkedIn, Ms Smith has not disclosed investigating any major financial crimes, and we are not told whether her experiences in audit and security will have helped her understand how her employing institution managed to make so much illicit profit from PPI fraud! She is reported as saying;

“…The experience and expertise of our employees will help safeguard our customers and others…”

Hmmmmm, clearly not how things used to work in the past when RBS was busily defrauding its clients of millions of pounds worth of spurious PPI cover.

And what does RBS get in return?

Well forgive my cynicism, but I cannot help but wonder if the price of this new-found love-in between the City Police and one of our major banking crime families will be cemented by greater police support for the tidal wave of cybercrime which is flooding the banking community and creating significant crime problems for banking clients.

At a City dinner, a senior UK banker complained to me that he was infuriated that the Police would or could do little to help him with his cybercrime problems. When I pointed out to him, not unreasonably, that the Police are not merely there as a free adjunct for his bank’s crime prevention strategies, he became spiteful.

“…And that’s why I don’t bother to spend any time analysing STR’s (Suspicious Transaction Reports). I tell my staff, “…send down the first ten alerts out of the box and ignore the rest. If they can’t help me, then I am damned if I am going to help them…”

Nice man, but typical of his class and breed!

There was a time (nearly 30 years ago now) when we in the Metropolitan Police Fraud Squad undertook all our own enquiries into major financial crimes. We dealt successfully with crimes in the securities markets, the derivatives and futures markets, the options exchanges, and the new traded OTC markets in alternative securities. What has happened to that expertise over the years, how has it been lost along the road?

My Commander sent me to America to study with the Securities Exchange Commission and the Commodity Futures Trading Commission as well as studying at all the major futures and securities exchanges in Chicago, Philadelphia and New York.

From our colleagues in arms in the United States I learnt about the emerging problems and crime types we would be called upon to handle and came home wiser and better advised as to how to confront these crimes. It was all written up and the reports lie, as far as I know, today in the Commissioner’s library.

We certainly didn’t go scuttling round doing deals with the very people we wanted to be arresting, we did it ourselves and provided our own levels of training and expertise. We had a fraud course then which lasted ten weeks at Hendon. It doesn’t exist any longer. We had our own access to foreign language experts if we needed translation services, we didn’t ask the employees of our biggest suspects to translate the documents for us.

We were not about to give financial institutions, many of whose employees deserved to be in prison, the benefit of an accepted public relationship with us.

My real objections to this kind of cosy deal are that by being seen to tie in to a partnership with the City Police, RBS will be able to operate under a false flag of honesty and incorruptibility. They will use the existence of the partnership to promote themselves as creatures of truth and integrity. They will say, when the next financial scandal emerges in which their dodgy dealers are found to have their grubby fingers rootling around in the bottom of the pie; ‘Well we had no idea that such was the case, and the police would not have partnered with us if they had suspected that this kind of thing was going on…”

It is far too early yet for RBS to be allowed to emerge into the sunlight, free from the whiff of crime and graft that attaches to them. Let us not forget, they and their appalling former management team succeeded in turning one of the world’s largest banking empires into one of the world’s biggest potential bankruptcies within a few short years.

They, along with other dishonest banks predicated the banking crisis. They have cost the unwilling British tax-payer a minimum of £45 billion to just keep them afloat, and we have yet to see a penny of that money returned, and it is unlikely we ever will! Not one of their egregious management has been forced to pay any kind of meaningful penalty for their reckless conduct, (I don’t include the removal of dubiously-earned knighthoods), and now they sit on their Caledonian estates, enjoying their copper-bottomed pensions, and no doubt slaughtering the furred and feathered denizens of the glens, much in the same way presumably as they savaged the interests of their customers.

Their present directors demand bonuses and payment schemes far beyond the dreams of avarice, and while the rest of the country is forced to submit to austerity-driven pay freezes and state service cut backs, the suits of Throgmorton Street and Princes Street are queuing up for another pair of handmade shoes or silk shirt.

No, RBS has in no way paid sufficiently yet for her crimes and misdemeanours, and now is not the time for the British public to be condoning her ‘get out of jail card’ by paying lip-service to the suitability of this grubby deal with the City Police.

It is all very well for the fat, overpaid bankers in the City of London to believe that they can ride roughshod over every shred of public sensitivity for their past criminal antics, and be allowed to continue to add to the inexhaustible pile of public privileges and rewards that go with the trade of banker! I know they want to put the past behind them and to get on with the next round of money making as if nothing had ever happened, but the only way in which we, the undefended and the proto-victims of their greed and dishonesty can protect ourselves in the future, is to keep reminding ourselves and them that we have not forgotten their rotten conduct and their dishonest behaviour, and until such time as it can be properly felt that they have, finally paid sufficient penance, for their wrongdoing, then any deals which portray them in a privileged light should be denied to them.

And the City Police should give some consideration to the observation that advice given for free is worth nothing!

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