sme alliance - it's about real people and real lives

​SME Alliance - It's about Real People and Real Lives
​
​11/09/18

​SME Alliance is four years old this month.   I wanted to write something for the blog and also to make the piece more widely available. These are my personal views, although they are based to some degree on my having been part of SME Alliance since it began. 

SME Alliance is, as many who will read this know, a support, knowledge sharing and lobby group, mostly for those whose lives and businesses have, to a greater or lesser degree, been destroyed by the actions of certain senior and junior bankers and certain professional advisors. If I could wave a magic wand and have everyone’s claims against the various banks “fairly” (a big word) settled tomorrow, I would. But, if anything, the number of requests for help are growing and the queries becoming more complex as we become better known.

But what we are not, is also important. We are not a law firm, so we can’t give formal legal advice. We aren’t able to solve every problem thrown at us. We are a small core group, supported by a much wider group who provide advice to numerous people who are and have been for years, in various degrees of distress—some of that distress is very, very serious. Maybe what we also try and provide is hope—and that should never be ignored.

A while ago I put the following piece on LinkedIn about HBOS/Lloyds and the immoral, and criminal practices of certain people associated with the HBOS Reading fraud. I must have hit a nerve, as it was read by more than 7,000 people.

"I wish I could write a post about the World Cup. Sadly, the HBOS, Lloyds Bank nightmare (see below) continues to exercise my mind. I have read the Turnbull Report—which is both terrifying and disgusting. The UK was the place to get finance for SMEs really? Transparency and disclosure – not really. Breach of numerous disclosure rules—apparently. Vendetta against those who discovered the cover-up-definitely. Tough it out against those who sought the truth-- yes.  And remember, even though these events took place initially, in the early years of the century it seems only now are various key groups finally waking up to the cover up, following publication of Turnbull last week. 

For me the worst is this: The “Collateral Damage” which was never recorded on any balance sheet of Lloyds Bank or anywhere else, includes early deaths / suicides / loss of home/ loss of family and loss of businesses. That’s all."

I am certainly not intending to ignore the other banks in particular RBS and its laughingly descriptive Global Restructuring Group.  No one should forget that RBS is, and has been for a decade, majority owned by the UK government. That bank, or again better to say, several highly placed individuals in RBS, were instrumental in ruining many individual lives and ruining many thousands of small and medium sized businesses. To say recompense has been slow, would be a huge understatement.

I’d like to make this general point, although I am not a great lover of generalisations.  Whether it’s directors of Lloyds or RBS, or their senior executives, or their lawyers, their IPs, their property advisors, too many of these people dislike having to deal with (or even look at) the nasty, messy, human aspects and the results of immoral, unethical, unprofessional and corrupt behaviour.  In respect of some of those people, as has been noted by others, we should include criminal behaviour. But it is of course nasty, dirty and messy. Real life is like that, particularly when crime or ignoring basic rules of business, ethics and governance, is involved. As one of my colleagues wrote:

“I’m disappointed to see the [Linda Dobbs/ HBOS /Lloyds] review may take until the middle of next year.  As Nick knows we have clients who month to month are struggling to make the interest payments alone to keep their homes and businesses because they can’t access decent rates (and actually wouldn’t need any borrowing if their compensation was paid to them). 

The money aside, they are struggling to actually keep getting up each day and their families are falling apart. “

I also want to mention an excellent article by John Lanchester. He wrote a long piece which was published this summer, in which he looked at the financial crash and life 10 years on. There is much in the piece worth thinking about. I have picked out just a few points and I believe if members of SME Alliance discussed these points, there would be wide agreement with them.

“The first weekend of October 2008 was a point when people at the top of the global financial system genuinely thought in the words of George W Bush” this sucker could go down”… RBS was within hours of collapsing”

“The immediate economic consequence was the bailout of the banks. I’m not sure if its philosophically possible for an action to be both necessity and disaster but that, in essence is what the bailouts were.”

 “So, we had austerity which meant that life got harder for a lot of people – but this where the negative consequences of the bailout start to be really apparent – life did not get harder for banks and for the financial system.”

“Here in the UK [we are in] the longest period of declining incomes in recorded economic history.”

“It would be easier to accept all this if, since the Crash we had made some progress towards the reform in the operation of the banking system and international finance. but there has been very little. Overall remuneration in finance has not gone down. The bonus pool last year was £15 billion, the largest since 2007. It’s not that there haven’t been changes. It’s just that it isn’t clear how much of a change the changes are.”  “Bonuses are one example”.

“For the people inside the system that caused a decade of misery, no change. For everyone else a decade of misery, magnified by austerity policies. Everywhere, people are surrounded by images of a life they are told they should want yet know they can’t afford.”

And without in any way wishing to get involved in a political debate in this piece, but it is of course particularly relevant, various commentators have noted (as Lanchester said), “the sense of a system gone wrong has led to political crises all across the developed world”

If we look at RBS/GRG and HBOS /Lloyds we see an apparently impotent regulatory and legal system which seemingly overprotects, whether deliberately or not, the status quo of the UK financial structure. We also see the undiminished power of the big financial institutions. SME Alliance members understand, better than most, the gulf between how the banks’ boards, senior management and their advisors see things and real life. Finally, we see that without huge amounts of financial and other support, justice is too often nearly, but not quite, unachievable.
​
For the vast majority of people, what RBS and HBOS/Lloyds have done, is “overwhelming and almost unbelievable”.  Again, those words were chosen carefully. Here is my LinkedIn piece which tried to get this point across.

“Too big to take on? Thanks to everyone who read my LinkedIn piece last week about the human cost of the HBOS Reading fraud and the decade long cover up that followed. 

When we mention the enormity of what started early in the 21st Century, the ripples of which continue today and the names of some well-known City “players”, the standard response isn’t surprise or anger. It’s more that old line “oh, c’mon you cannot be serious”. 

I think it’s the absolute scale of what happened that most people can’t take in. First, the fraud itself within HBOS. Next the 2008 HBOS rights issue; then the 2009 takeover (both based on "incomplete" financial information) by Lloyds. Finally, the long, long cover up, until the recent release of the Turnbull Report and the interest of the Treasury Select Committee and others. 

This despite Paul and Nikki Turner having a fairly clear idea of what happened by 2008 and telling everyone they could. But most of those people turned away as well. 

The near over-whelming scale of all this might also explain the silence, from those at law schools and business schools, those interested in corporate governance and company law and those who write about the law. For most people (but thankfully, not quite everyone), apparently, it’s all just too much. “

I think it’s the phrase “(but thankfully not quite everyone)” that is crucial. We are all part of that “not quite everyone “group. I would like to encourage more people who have the same aims, to join SME Alliance and work with us as a team. We welcome help from anyone and everyone who accepts what we are trying to do and how we are trying to do it. It may not be perfect, but it works more than fairly well.

We understand we don't meet everyone's expectations and aspirations and some people have alternative ways of doing things. That's fine, we have no monopoly on any of this -- but please do support what, to my mind, is the enormous effort put in over so many years by so many extraordinarily kind and generous people. Or at least, don’t try and diminish what we are trying to do.

Me, I used to be a deal-doing corporate lawyer for many decades before helping to set up SME Alliance. Deal-doing is good—it’s about common sense, compromise and finding a “sort of” fair solution--where all parties come out feeling they have more or less (but not quite), got what they want. The alternative, which seems to be the banks’ position, whether through arrogance, fear, greed or a combination is to fight an all-out war, in some cases literally, to the death. They also seem to think – maybe because of this mindset they apparently have, of people dying before the end of this war--they will be the winners.

It is remarkable to think that even with unlimited money and massive other resources behind them, rules and regulators which can only help them and a supine group of Treasury and other Ministers over the last decades, the banks are still fighting this war (as they see it) nearly 20 years on. You would think that might tell them something, but of course there is no one willing to do so and even if there was, I guess there is no one to listen or to hear. 

The arrogance / head in the sand attitude keeps coming back to me when I hear that Lloyds senior executives/ directors were unable to admit (maybe confess) until very, very recently the story of the HBOS fraud was known to them and their predecessors more than a decade ago. But (unbelievably) I understand, I am wrong about this statement and I say “unbelievably” because I have been told that …………………

…………Lloyds public position is still that it didn't know of any criminal conduct before the end of the HBOS Reading criminal trial in January/ February 2017.  In simple terms, the directors and senior executives of a major / multi-billion pound, FTSE 50 company—a bank-- didn’t know about a half a billion (£500,000,000) fraud for over a decade. Lloyds keeps stating that it is up to the review currently being undertaken by Dame Linda Dobbs and her team to decide who knew what and when, as if the bank can’t work it out, itself. If the directors didn’t know, they should be sacked and if they did know, they should be sacked –it’s not difficult. If HBOS Reading hadn’t destroyed so many lives, it would be a joke—but of course it did, so it isn’t--funny at all I mean.

Is it really true to say that no one at Lloyds, except of course Lyndon Scourfield who admitted his guilt in 2016 and was jailed and Mark Dobson who was found guilty in 2017 and jailed, has admitted or confessed to anything? As I said above, if no one else knew – that says something, and if they did know, well that says something else. You can make your minds up.

Even today, having aided and abetted in the destructions of those businesses, gravely ill victims of that fraud are often forced to fight for every penny of compensation. So, you will no doubt understand my reluctance and those of other directors and members of SME Alliance to believe in the reality of Corporate Governance, of appropriate banking regulation, of laws regarding directors’ duties, in the FRC and the FCA, and so on. 

According to Anthony Stansfeld, the Thames Valley Police Commissioner, and to whom enormous thanks are due from SME Alliance, fraud cost the UK economy as much as £190 billion last year. If you take £2,000 from petty cash, in most places it’s “out you go”. Cover up a half billion-pound plus fraud and the attitude seems to be “move on sir, nothing to see here”. If just a small percentage of that money was recovered and spent on investigation and enforcement, it might start to level the playing field, just slightly. Having just about finished this blog, I was then delighted to see a comment from Anthony during a speech he gave at the Cambridge Economic Crime Symposium in early September which included the words “I call today either for the resignation of the Lloyds non-executive directors or the sacking of the executive directors”.  At long last, someone is prepared to stand up to the bankers, who, as I have noted above, still admit nothing.

Finally, and again, to all those people everywhere who have supported SME Alliance and have given so much of their time and effort from the outset and over the last four years, thank you. As I said above, you help to give people hope – and that is incredibly important.

Best wishes

Nick Gould