Mark Carney Esq.
Governor Bank of England
I start this letter by asking you the following question. Is it really a fact that no-one is above the law?
It appears to me that hardly a day goes by without yet further exposure of corruption, deceit, fraud and downright criminality among what, for centuries, was deemed to be a respectable, honourable, trustworthy and most importantly, honest occupation. I am of course referring to banking.
The media has, over recent years and specifically since 2008, had a field day in reporting on numerous scandals concerning banks and bankers. The media has to be congratulated in doing their job by reporting such stories with massive public interest, comment, criticism and condemnation from all in society with calls for severe penalties and criminal charges to be brought. Sadly this last demand, and to the mind of an overwhelming majority of the public, not least of which are the victims of the banks’ rapacious conduct, appears to have fallen on deaf ears as far as those in a position to do something about it are concerned.
Only this week, I read in Rolling Stone about Alayne Fleischmann, an ex JP Morgan Chase securities lawyer who has lived the last eight years with a devastating secret concerning the utterly incredible criminality at the very top of the bank she used to work for. I am sure that you are well aware of this case, however I merely use it as an example of the culture that is prevalent in banking today; that of being in the position of having vast resources and a willingness to use these resources to ensure that the wrongdoing committed by a bank can be covered up with all regulatory, judicial and government agencies being bought off in order to escape any censure whatsoever. In order to achieve such a result, it is reported that JP Morgan Chase used bank funds of $9 billion for this bribe.
The papers and other media are now reporting on the £2 billion of fines levied collectively by UK and US regulators against RBS, HSBC, JP Morgan Chase, UBS and Citigroup. From my understanding of reading these stories it is very clear that traders, on behalf of their employers, and undoubtedly for their own self enrichment, engaged in a deliberate and wilful manipulation of the Forex market. Integrity, honesty, trust and commercial morality never entered their minds, but were driven solely by the obscene culture of huge unwarranted bonuses.
The very obvious fact apparent to any ordinary citizen that what they were engaging in was fraud does not seem to enter their minds whatsoever. This conduct has been encouraged by the complete inability, or perhaps I should say, incompetence, of regulators, prosecutors, government and its agencies, including your own, to take the necessary steps to stamp out this abuse from the very outset when it was first exposed. The only sensible and blatantly obvious deterrent and penalty is to bring criminal charges against every perpetrator and their superiors. There can be no doubt that the conduct of the bank employees could only be undertaken if it were sanctioned and condoned at the very top of the institution for which they worked.
My father trained as a lawyer and practised in Glasgow and then Aberdeen, where latterly he was appointed as an honorary sheriff at Aberdeen Sheriff Court. His brother, my uncle, trained as a lawyer in Glasgow but pursued his career in England where he was called to the Bar, became a QC and latterly was Recorder at Portsmouth. I have a sister and nephew both qualified solicitors. Accordingly, I was taught from a very early age to respect and obey the law.
I eschewed the life of academia, instead deciding to follow a career in business which I entered in 1968 following College. In 1973 my wife and I started our first business venture on our own and over the following twenty five years nurtured, developed, and expanded our business, despite being presented with difficult and testing trading conditions during the recessionary periods in the seventies, eighties and early nineties. None of these periods had any significant adverse affect on our business when we learned to deal with the downtrends that these occasions dealt our business. Indeed over successive years our business grew even more than prior to the recessions.
Throughout these years we considered ourselves to be hard working, trustworthy and above all honest, treating all customers and suppliers, along with business colleagues and professional advisors with the respect we expected to receive in return. We maintained good relationships with our bankers and I believe earned respect and trust from them which we reciprocated with trust in them. In all our dealings from the start of our business in 1973, it was taken for granted that our words were our bond and a handshake secured the understanding that a trustworthy agreement had been reached. Never did we ever have cause to question any discussion and verbal arrangement and agreements reached with our bankers.
That situation changed dramatically in 1997 when we took the fateful decision to transfer our business banking requirements to Royal Bank of Scotland. At that time we had a very successful 60 bedroom hotel in Montrose, recording strong sales revenue with 25% profit margins. We sought to buy a second hotel reporting equally strong sales and profitability. We were introduced to RBS and following very lengthy and detailed discussion and negotiation agreed to become customers of this bank on the basis of the assurances from the bank that all of our aspirations and detail of the funding arrangements we sought would be provided.
It is not necessary for me to give all the detail of the premeditated, wilful and deliberate conduct of this bank thereafter to defraud us, however, suffice to advise at present, there have been extensive forensic investigations undertaken by independent and impartial experts on all aspect of our banking relationship, and, without exception, all the experts have concluded that RBS engineered our total economic collapse by fraudulent means. Three of the forensic experts have compiled reports for court use and will affirm what I have written. Should you wish to learn further of our experiences and treatment at the behest of RBS, I will be pleased to provide as much detail as you wish.
Over twelve years since this bank ensured our economic collapse, I have written repeatedly to The Financial Services Authority and its successor the FCA, the Financial Ombudsman Service, the Serious Fraud Office and the police. Until recently none of these organisations has shown the slightest interest in what has been explained to them or indeed interest in investigating the allegations I have made of fraud committed by this bank against us, despite the evidence
Clearly, from the example of the exposures by Alayne Fleischmann, the authorities in America are very willing to turn a blind eye to such endemic criminality, and from this it is also clear to me and to scores of other people I have spoken with in recent months, that UK authorities are following the lead of their American counterparts and dismissing such criminality.
This is a deeply worrying and wholly unjust situation for all law abiding citizens. The very bedrock of democracy is the rule of law and the sustainability of a functioning economy. Justice has to be seen to be done and the rule of law obeyed. Each and every citizen has to know that the law will protect them and that miscreants will be punished. Each and every citizen expects that their elected representatives will do their duty as politicians and public servants to ensure that the laws of the land are obeyed by each and every sector of society without fear or favour. Without that basic tenet, chaos will ensue and any democracy will descend into anarchy and revolution with anarchists taking the law into their own hands. One only has to recall the riots of three summers ago to realise what could become the norm.
It is becoming more and more evident that western democracies are rapidly approaching this mind chilling possibility as we learn day after day, that despite the enormity of their corruption, deceit and fraud, the banking sector, with the support and complicity of the authorities, appear able to act with impunity, continue to escape any censure whatsoever and are allowed to persist in their corrupt practices. Such a situation cannot be allowed to continue unchecked and unpunished.
I accept that the Bank of England may have no influence on the prosecutors or other authorities who ought to be forcing the banks to desist. However, in your position as Governor, you do have a senior position of respect among those who can act, and I would sincerely trust that you do not condone such deliberate, wilful and persistent criminality without recording your observations and disdain at the lack of any meaningful action to permanently eradicate such conduct. Clearly, fining the miscreant banks has no affect since there is no-one personally within the banks who will suffer. This leads once again to my initial question and why has there never been any prosecution when the laws are in place to effect such prosecutions.
I have lived with the unpunished consequences of being defrauded for more than twelve years, and have the deepest sympathy for everyone who has suffered the same fate. From contacts I have made over the years I have been introduced to a number of different groups and the numbers of victims of banking fraud that I know of personally has rapidly multiplied and continues to do so month on month. The incredulity that we all share at the lack of positive action in instituting criminal charges against these fraudsters is now turning to anger.
Everyone I speak with or have heard about, are law abiding citizens not given to joining protest marches and demonstrations, however we would have sympathy with and give tacit support to anyone who may choose to take the law into their own hands since the law refuses to protect us from this criminality. We are clearly faced with what is becoming a corrupt justice system where banking elites can buy and bribe their way out of criminal prosecutions because of the size of their wallets. If such action is the only remedy that can be achieved in order to bring down the arrogant and unlawful conduct of these people who have been allowed to act with impunity at the expense of the silent majority of the population, then the authorities have only themselves to blame for allowing it to happen and ignoring huge and growing groundswell of public opinion against the bankers and banks.
As a consequence of my determination to achieve justice and some redress for what we have endured, I have eventually persuaded the police and prosecuting authorities in Scotland to reconsider my complaint. I have provided significant amounts of evidence, all fully supported, detailing the conduct of RBS and of most significance clear evidence that this bank instructed lawyers to lie at the Court of Session in order to gain pecuniary advantage.
In this endeavour, I do have the full support of my MSP who has been very active in meeting and discussing our case with the prosecuting authorities and members of the legal profession. At present there is no certainty that the Crown will pursue a criminal prosecution. In that instance, if the state fails in its duty to prosecute, I will do whatever is necessary to pursue a private prosecution by one means or another since the evidence is irrefutable. It is hoped that this course of action will not be required.
I would merely request that you give very careful consideration to my comments, which in many instances mirror what much of the media has been reporting over recent days. What I can confirm is that from all my contacts, the same expressions of hopelessness and misgivings for the future direction of our democracy are echoed. The SME sector of the business community has had enough of being used as footballs at the whim of reckless, dishonest, inconsiderate and uncaring bankers. None of my fellow victims that I have encountered are callow youths, but mature business people who have dedicated many years of their lives, or like us, over forty years, to running our own businesses. We are not crooks, gangsters or fly by nights, but law abiding citizens whose patience has been stretched to breaking point.
You will be aware that there are approximately 4.9M SME businesses in Britain employing approximately 25M. That equates to the largest individual sector of employers in Britain. We are a voice which collectively can bring considerable influence on the political stage if we all grouped together and formed a cohesive organisation. This is exactly what many of my business colleagues are now advocating and setting out to achieve with the recent formation of SME Alliance Ltd. (www.smealliance.org)
I am not deriding the FSB or Chambers of Commerce; however it is very clear that these organisations are only interested in gathering annual subscriptions whilst doing little or nothing constructive about addressing the growing concerns of a significant percentage of the business community.
The FCA, SFO, prosecutors and Government are clearly supporting the banks and completely ignoring the victims as can be seen from the farce that is the review of the mis-selling of IRHP etc and a complete refusal by the FCA and every other authority to competently address the issue of redress including consequential losses suffered by the SME sector as a consequence of this wholesale criminality.
I ask you again Governor, if you believe that no-one is above the law and if so I challenge you to use your position and ensure that all my points are considered and acted upon for the sake of democracy, faith and trust in the justice system and for the stability in society for the future of Britain.
NIGEL K HENDERSON