Three brass monkeys…..hear all, see all, say nowt
Lord Myners has been a busy bee on the subject of the Co-op scandal. Last week, he tabled the following questions in order to turn the screws on a Parliamentary Establishment already terrified of the truth coming out (my emphases) :
Lord Myners (Labour)
To ask Her Majesty’s Government what assessment they have made of the impact of the absence of warnings from the Financial Services Authority or the Bank of England on the market in the bonds of Co-operative Bank; and why the regulators made public their concern about the capital shortfalls at Barclays and Nationwide but did not in the case of the Co-operative Bank.
To ask Her Majesty’s Government whether they are currently investigating, or have plans to investigate or cause to be investigated, whether employees of the Cooperative Group or Cooperative Bank gave assurances to retail savers and investors in the bonds and preference securities of the Cooperative Bank that might have misrepresented the capital status of those investment instruments and constituted the making of a guarantee by the Cooperative Group.
To ask Her Majesty’s Government whether the Cooperative Group or the Cooperative Bank or their directors and employees are or will be investigated for allowing a false market in securities issued by either body; whether the Financial Services Authority’s role will be investigated in respect of the same issue; and, if so, by whom.
To ask Her Majesty’s Government when the Cooperative Group and its directors and officers were last assessed as to being fit and proper to own and manage a bank; and by whom.
To ask Her Majesty’s Government whether they intend to ensure that retail investors in securities issued by the Cooperative Bank receive advice in connection with the recapitalisation of the bank from an adviser or advisers independent of any firm advising the Cooperative Group and Cooperative Bank and its directors and officers; and, if so, whether they will protect such advice and its disclosure to investors from any interference by the Group or Bank.
To ask Her Majesty’s Government whether they are taking steps to review whether the Cooperative Bank has breached threshold conditions as a bank by failing to make interest payments to bond and preference shareholders in accordance with the deeds under which such instruments were issued to savers.
To ask Her Majesty’s Government whether they plan to investigate whether the suspension of interest payments to holders of Co-operative Bank accounts constitutes unfair treatment of customers; and whether they will take action to ensure that such investors receive independent advice from a competent firm on the proposed capital reconstruction.
What Myners is basically flagging here is fraud and cover-up. But beyond even the constititutional issue of how some Labour MPs are sponsored, and the electoral law ramifications of the Government nationalising the Co-op, another bigger agenda is now gradually seeping out from decent folks inside the Co-op.
Let’s revisit Lord Myners’ ‘fit and proper’ accusation above.
As of June 2011, Co-operative Financial Services was reported to be close to appointing Credit Suisse to advise it on a potential bid for the 600+ branches, and a large chunk of mortgage business, that Lloyds Banking Group was ordered to sell by the European Commission.
In July 2011, the chief executive Neville Richardson (former Britannia CEO) was replaced by Barry Tootell, who became acting chief executive of Co-operative Financial Services.
In May 2013, after the recognition of inadequate capital levels in the banking group, Euan Sutherland took over from Peter Marks as Co-operative Group chief executive. That month Moody’s downgraded the bank’s credit rating by six notches to junk status (Ba3) and the bank’s Acting Chief Executive Barry Tootell resigned.
That’s a pretty swift ongoing revolving doors situation. Myners’ contention is that a cooperative company has been hijacked by the usual looney tunes, and that they’ve taken advantage of Labour’s desire to bale out Britannia. The clue here is that the current Co-op difficulties appear to stem largely from the commercial loans against property of the Britannia Building Society, acquired in the 2009 merger. As the people and politicians involved at that time lied to all of us, I see no reason to assume that they’re telling the truth now.
This is also Co-op depositors action group head Mark Taber’s contention. Martin Wheatley, head of the FCA, told journalists recently:
“It’s not a deposit, it’s a bond, it’s subject to certain risks. The prospectus has all the risk warnings you’d expect to see.” Wheatley said that if the investors have concerns they can go to the Financial Ombudsman Service, which mediates between financial companies and clients
In a letter to Wheatley, Mark Taber flatly disputes this – and this extract from it is compelling:
‘Based on the above I fear you may have been misinformed on the background to the issuance of the Bank’s PIBS and preference shares. The vast majority of the 1,600+ individuals who have contacted me directly are long term holders of the Bank’s 9.25% Preference Shares and 13% former Britannia PIBS. These were issued in 1989 and 1992 respectively under very different self-regulatory regimes and at a time when building societies were seen as very safe havens…’
There seems to be some Director/political/regulatory conspiracy here to de facto ‘legalise’ the proposed bale-in. But as Taber makes obvious, new laws cannot be applied retrospectively – except of course in the mind of Harriet Harman.
But insider sources suggest that, not only are the depositors and PIBs owners being thwacked to save the MPs’ bacon, further jiggery-pokery may well be at work beyond even that level.
The other element here, allegedly, involves property. And there are some telling coincidences along the way.
2002 – under our old friend Tony Blair – was quite a busy year. The Land Registration Act was passed. It enabled a lot of Councils to cover up past naughtiness in relation to ‘public’ land, and allowed for the transfer of such lands to those Councils as assets. The Co-op group has an enormous land portfolio. Then, there was a massive restructuring of the Co-op: Co-operative Group Limited brought the bank and the Co-operative Insurance Society under the control of a newly incorporated holding society, Co-operative Financial Services.
In 2011, the 2002 LRA Act’s allowance for the afore-mentioned land transfer was put into force: all public land and assets are now registered as council owned. And also in 2011, Co-operative Financial Services became the Co-operative Banking Group. And even more also in 2011 – under the auspices of Vince Cable – Co-op began the due diligence prior to making a bid for the 600+ branches that Lloyds Banking Group was ordered to sell by the European Commission. Bear in mind here folks, that branches are property.
But then things went badly awry when senior Lloyds bods spotted how “poorly” capitalised the Co-op Banking Group was. Which is odd really, because Co-op Group itself was doing very nicely thank you. Part of the reason it was doing well was that it had been quietly raping the banking group – getting it to announce dividends and so forth when, in 2008, all the other banks had pulled up the drawbridge. The regulator, many now allege, knew full well this was going on. But somebody or group of a political nature put pressure on the then FSA to look the other way.
Effectively, the Co-op bank depositors are helping (unwillingly) to bale out a bank whose holding company could chip in an enormous amount – but isn’t. Labour MPs are sponsored by the Holding ‘movement’, but Labour, Trade Union and LibDem funds have their deposit accounts with the Co-op Bank. Labour bigwigs want their sponsorship protected at all costs; and the Coalition wants its LibDem partners’ money to be in the same happy state.
So that’s yet another reason for the eerie quiet coming from the political class at Westminster. But the property transfer/Co-op restructuring may well be the key to even grubbier goings on. They seem to involve the East of England Co-op which, with very discreet help from land investment banking advisors, has been doing some very sweet deals in the region. And there are good reasons for this.
The Land ownership transfer that followed the 2002 Act has enabled Suffolk County Council to both reassign the land use for building development…..and also sell it as an investment opportunity to some of the usual suspects. Sources allege that JP Morgan probably already owns quite large tracts of land there. JP Morgan employs Tony Blair as an advisor; he brokered the sale of Northern Rock’s ‘good assets’ to Morgan. Suffolk is a Tory-controlled Council. David Cameron received £3.5m in donations from the construction industry to fight the 2010 election, in return for which he has relaxed planning permissions and ignored legally sound objections to development elsewhere. He too is going to benefit from the 2002 LRA.
So then: yet more reasons for the Trappist nature of all Westminster MPs on this now designated non-subject.
I have to confess in the midst of all this complexity, there are still hidden depths to this cess-pool of bad decisions, political interference, regulatory corruption, and asset transfers that I don’t yet understand. That’s because, once a can of worms is opened, it usually turns out that its contents are in there for all sorts of nasty, wriggly reasons.
But one thing is for sure: given their direct interest in these various elements, George Osborne, Vince Cable, David Cameron, Ed Balls, Harriet Harman, Alistair Darling, Tony Blair and more than ninety Labour MPs are desperate for this Co-op disaster to disappear with the help of the only innocent players involved – Co-op customers. The last thing they want is to discuss it, lose out on it….or go back into their murky histories. In this sense, the whole thing is horribly reminiscent of the Establishment’s view on systemic paedophilia.