Greed of Profit Maximisation and the Robbery of the Century in London
- Kamran Mofid
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London financial district- Photo: cisl.cam.ac.uk
In May, 2016, Roberto Saviano, an expert on the workings of the mafia, stated that “Britain is the most corrupt country in the world.”
'It’s not the bureaucracy, it’s not the police, it’s not the politics but what is corrupt is the financial capital.'- More on these later!
“The truth is that hypocrisy is the occupational disease of British leaders. They lecture Africans and Asians on the venality of their politics, while blatantly selling seats in their own parliament for cash. I hope some insulted autocrat one day asks a British leader how much his party has garnered from auctioning honours. The government suppresses any inquiry into corrupt arms contracts to the Middle East. And when does lobbying stop and corruption start?”-Simon Jenkins
Banks, drugmakers and arms dealers are the new face of our piratical past
‘If British history is, as has been suggested, an endless struggle between dashing freebooters and conscientious plodders, the freebooters have been in the ascendancy for far too long’
‘Britain's bankers are swashbuckling pirates in a long tradition that stretches back 400 years. Pirating is not exclusive to Britain, but we have always been adept at stealing and extorting under the guise of free trade. Britain's merchant class created the largest empire the world has known using the techniques learned on the high seas: much of the booty our forebears crowed about was money deftly stolen from others (who mostly stole it themselves).
The East India Company gave the lead and successive governments followed.
In a recent BBC4 documentary, our history was characterised as a tension between roundheads and cavaliers. Cavaliers, from Sir Walter Raleigh onwards, rarely relied on efficiency or productivity or having the largest ships, but skirmished with frigates to bamboozle and destroy the enemy.
In the modern business world, that equates to waking up each day with a determination to live on your wits and deploy every tactic in your bag of tricks to sell whatever you have to hand.
David Cameron was cast as the inheritor of the cavalier tradition. Bob Diamond, the deposed Barclays boss, is less colourful but represents an industry that revels in dealmaking and bamboozling its clients. Each day is another opportunity to invent a form of words, a complex scheme, that can command a premium over the simpler fare offered by rivals.’...Continue to read
‘Robbery of the Century’ and the City of London
'The men who plundered Europe': bankers on trial for siphoning €60bn
‘Speaking at a regional court in Bonn, Martin Shields, one of two former bankers on trial for 34 instances of serious tax fraud between 2006 and 2011, painted a picture of a London banking scene which lured in the brightest scientists from the country’s top universities and used them to boost their profit margins – without teaching them about the moral and legal consequences of their actions in return.’
This is nothing short of the indictment of our values-less, money-making, for maximum profit education model:
'Sir, Around 1991 I offered the London School of Economics a grant of £1 million to set up a Chair in Business Ethics. John Ashworth, at that time the Director of the LSE, encouraged the idea but had to write to me to say, regretfully, that the faculty had rejected the offer as it saw no correlation between ethics and economics. Quite.' Lord Kalms, House of Lords, in a letter to the Times (08/03/2011)
Martin Shields and Nick Diable are accused of tax fraud in ‘cum-ex’ scandal that exposes City’s pursuit of profit
'Two British former bankers appeared before a court in Germany on Wednesday in the first criminal trial of an enormous case of tax fraud that deprived the German treasury of at least 7 billion euros between 2006 and 2012.'-Photo:eu-ocs.com
‘They have been called “the men who plundered Europe”: a group of cowboy traders, seasoned tax lawyers and mathematical whizz kids who are alleged to have conspired in the heart of the City of London to siphon at least €60bn in taxpayers’ money from the state coffers of several EU countries.
In Britain, the so-called “cum-ex” scandal, named after the complex derivatives juggling act employed, gained little attention amid the frenzied debate around the UK’s departure from the European Union when the fraud scheme was discovered in 2017.
But in continental Europe what Le Monde has described as the “robbery of the century” has done almost as much to shape the view of Britain as Brexit itself. Dutch media has called it “organised crime in pinstripe suits” and one of the original German whistleblowers saying he now welcomes Britain’s exit from the EU in the hope it could weaken the influence of London investment banking on European financial institutions.
This is how greedy individuals, educated with moral-free values, use their education not for the Common Good, but for the Common Bad!
This week, a British former investment banker involved in developing the scheme for the first time gave the public an insight into how the scheme worked and what spurred on its architects.
Speaking at a regional court in Bonn, Martin Shields, one of two former bankers on trial for 34 instances of serious tax fraud between 2006 and 2011, painted a picture of a London banking scene which lured in the brightest scientists from the country’s top universities and used them to boost their profit margins – without teaching them about the moral and legal consequences of their actions in return.
“This was the environment at that time: a financial industry that – at least as far as I could see – was geared towards maximum profit optimisation,” the 41-year-old told a packed courtroom on Wednesday.
“One tool to achieve this goal was tax optimisation: avoiding taxation as far as possible – and taking advantage of any opportunities that could be found or created. This was not the clandestine approach of a few. Rather, I saw it as the clear and openly communicated expectation of most major banks and their customers.”
Hailed as a maths prodigy at school, Shields accepted a junior position at Merrill Lynch after studying engineering, economics and management at Oxford University because the trading room floor offered him a thrilling, dynamic environment. He was not alone: of 120 engineers in his year group at university, Shields added, only five went into engineering.
Wearing a navy blue suit and the latest Apple Watch 5 with a white strap, Shields on Wednesday used a Powerpoint presentation to talk the court through the “cum-ex ecosystem” of labyrinthine trade chains he helped conceive and control, which prosecutors say cost the German state €450m. A translator tasked with rendering City trader jargon into German legalese was struggling to keep up.
The financial rewards were breathtaking: for the five years in which Shields practised cum-ex trades through Gibraltar-based investment vehicle Ballance Capital, his personal income amounted to €12m. In 2010 Shields and his wife managed to purchase a £9.7m mansion on Chelsea’s Egerton Crescent, followed by a €6m Edwardian terrace on Shrewsbury Road, Dublin’s most expensive residential street.
While Shields did not respond directly to the charges of serious tax fraud this week, he said in hindsight he had started to feel regret about devising the schemes, which hoovered up money that could have otherwise been spent on building roads, hospitals or nurseries.
He told the court: “I often ask myself whether if I had my time again I would do things differently. Knowing what I now know, the answer is obvious. I would not have involved myself in the cum-ex industry.”
He had made the “difficult decision” to cooperate with the investigation, which increases his chance of reducing a potential 10-year jail service. Co-accused Nick Diable (39), who worked with Shields for Germany’s fourth largest bank HypoVereinsbank (HVB), will also give a testimony in the trial, which is expected to last until next year.
Shields said cum-ex trades were practised on an “industrial scale” in the first decade of the 21st century, and involved a vast network of banks, companies, brokers, lawyers and financial advisers. Even the most basic cum-ex deal involves at least 12 transactions.
The banks and financial institutions he mentioned in Wednesday’s and Thursday’s court session included Clearstream AG, a 100% owned subsidiary of Deutsche Börse AG that processes the dividend compensation payments and which Shields appeared to suggest played an active part in keeping the cum-ex bonanza going after German lawmakers tried to close a loophole in 2007.
A spokesman for Deutsche Börse, which was raided in connection with the wider investigation in August, said it was cooperating with the authorities.
During Shields’s appearance this week, the back benches of the court were packed with numerous lawyers representing high-profile banks and financial institutions that could be dragged into the scandal if the judge in Bonn rules that cum-ex trades did not merely exploit a legal loophole but violated the law at the time.
Three characters mentioned in the testimony were notable by their absence from the court proceedings: Shields’s long-time boss and later business partner Paul Mora, and the renowned German tax lawyer Hanno Berger, who allegedly introduced him to cum-ex methods at HVB. A third man, Dubai-based British citizen Sanjay Shah, is alleged to have copied their methods to defraud the Danish treasury on a vast scale.
Until 2015, Mora was a director of the Cinnamon Club, an opulent Indian restaurant located in a grade II-listed Victorian building next to the Department for Education and popular with politicians and business people. According to Die Zeit, the restaurant was where cum-ex deals were contrived and later celebrated, and one insider referred to it as the “cum-ex lounge”.
Mora has denied wrongdoing, telling New Zealand media that all his trades were “approved by legal experts and undertaken in accordance with advice”.
In separate investigations into the same scheme, the justice minister of North-Rhine Westphalia said that Cologne prosecutors are now conducting 56 probes with a total of about 400 suspects related to cum-ex. More than 400 individuals and companies have been charged in connection with the scheme in Denmark.
Estimated losses include an estimated €31.8 bn Germany, at least €17bn for France, €4.5bn in Italy, €1.7bn in Denmark and €201m for Belgium
“The Cologne investigations have now reached a point that prosecutors say that cum-ex wasn’t a legal tax-driven trading strategy, but organised white-collar crime of unimaginable magnitude,” the minister said.
The alleged architects of the scheme
A prominent German tax official turned tax lawyer whose past clients include the owners of BMW and companies like Adidas, Berger has been described as the mastermind behind the cum-ex scheme and was charged with tax fraud at a court in Wiesbaden last year. Based in Switzerland, he insists all of his dealings were within the law and has not appeared in court so far.
Paul Robert Mora
A 51-year-old Kiwi with a penchant for rugby and Hawaiian shirts, Mora had a background in tax law before moving into investment banking in the City of London. At HypoVereinsbank and his own investment vehicles Ballance Capital and Arunvill, Mora is alleged to have worked with Berger to construct a vast number of cum-ex trades. Believed to have returned to New Zealand, where he has property investments in Christchurch, Mora has also not appeared in the German courts to far.
A British-born son of Indian immigrants from Kenya is the key figure for investigations in Denmark, where prosecutors say he defrauded the treasury to the tune of €1.3bn, mainly through his hedge fund Solo Capital LLP, by copying the system used by Berger. Shah has denied any wrongdoing.’
*This article by Philip Oltermann, the Guardian's Berlin bureau chief, was first published in the Guardian on Saturday 21 September 2019
In this age of darkness, where can we find the light of hope for a better, more trustworthy world?
Having read the above and many other similar articles, you may rightly say: Ok. We all know that our education, by and large, is crap. We know that our politicians, our so-called leaders are crap. We know that we are destroying the world, our mother nature, our sacred earth, our home, our lives. We know all these.That is, if we are at least honest with ourselves. We know that we are all living in the age of perpetual crisis, in a world seemingly spinning out of our control.
Thus, the pertinent question must surely be: What can we do, to put the wrongs, right? To my mind, the answers are two folds: Values-led Education, and an Economy for the Common Good. That is it.
The time is now for a radical departure from our recent troubled past. Let us seize this opportunity and stand side by side to build a better, kinder, faier, more just and less corrupted world for the good of all. Let's make the world great again. Carpe Diem!
If you wish to learn more about these, please see the following suggested reading list:
(It will be very helpful and useful if, first, we reflect on a few vitally important and timely questions to focus our mind on the big picture:
Why are there so many continuing and deepening crisis in our world and in our lives today? Why so much hopelessness, fear, anxiety, depression, misery, self-harm and suicides? Why are we hurting and degrading our sacred earth and mother nature? Why so many wars and conflicts? Why so much wealth in the hands of a few, whilst the huge majority of people live in abject poverty and destitution? Why so much xenophobia, racism and intolerance? Why so much corruption and lack of trust? Why the breakdown in traditional, old, trusted, timeless values: families, friends, fun, festivals, time for each other, time to tell and hear stories, grandpa, grandma, uncles and aunties, cousins and nieces? Now, there is no time for anything. We are all living in a virtual life, me, myself and I, lonely and miserable together in the company of our virtual friends on Facebook and Instagram.
Why populism, ignorance and arrogance are on the rise again? Why the lessons of the 1930s are forgotten? Why the buffoons, jokers, craps, untrustworthy demagogues with big, loud mouths, telling the crowd what they like to hear, get elected to high office the world over, in elections with predictable outcomes, bought by and sold to the highest bidders, the lobbyists in Armani suits and golden, diamond studded rolex watches?
All in all, why, despite so much beauty and love all around us, that is, if we care to notice, why then, have we created such a hell on earth?
Below, for those interested enough, and wish to get more engaged with these questions, I have noted a few links with a hope that they may shed some light on our better understanding of what is really going on.
To build a better world we need to be guided by values, other than money, money and more money.
“Values represent our guiding principles: our broadest motivations, influencing the attitudes we hold and how we act.”
Debunking the Myth of Pseudo Modernity, Progress and Development
Why we need Education for the Common Good
The Broken Anglo-Saxon Socioeconomic Model which has Dazzled and Fooled the World
Homo Economicus Model of selfinterst and selfishness, extreme forms of competition and the outright rejection of Homo Sapiens Model of cooperation and the common good:
This is Why we need Economy for the Common Good
Corruption, Corruption,... Corruption, Everywhere. Photo: wordpress.com
”We need to understand what it is about British public life that has permitted the normalization of corruption”
”We need to ask why the successive governments have consistently failed to tackle the epidemic rise in corruption in our country. Is it because, they, themselves, are the cause of it?”
A-Must-Rad Book on the epidemic rise in corruption in Britain
Britain engulfed in corruption: The chosen economic model is the culprit: HOW THE NEOLIBERAL PROJECT EMBEDS CORRUPTION IN BRITAIN