Sunday, 22 February 2009
Stanford, Madoff, Ponzi, And Brown
Above - Charles Ponzi
Demetrius Submission to the OECD December 2008 re HNWI's:
As a resident, taxpayer, and pensioner of the UK, who was called to the colours to serve The Queen, and who had no national insurance entitlement as part of the economies in the payment of conscripts, it is my considered view that the UK Government is engaged in a vast system of payola for the benefit of the international HNWI elite. It may be more by accident than design but for the several elites of the London Mediocracy it is a happy accident whose arrangements they are reluctant to dispute or to reform in any way. The consequence is that the UK Social Security Budget has come to be a gigantic Ponzi scheme for which the ordinary people, and notably the poor, are paying a heavy price. There are associated dire effects across the world for the poor in regimes which are corrupt or vulnerable.
When I am obliged to go to my local hospital to have my inner workings divined, at the end of the line is an HNMI being recompensed for their contribution to a Private Finance Initiative. Unluckily the added costs this imposes is causing my local health trust to reduce key services in several sectors, notably the Accident and Emergency unit I and my neighbours too often need. The Government PFI has sown the wind; we are reaping the whirlwind. The block of flats I live in had a Property Management Services company that at one time was UK based and financed. After a series of takeovers the PMS then became a small part of a financial group owned by an HNWI, highly regarded in the worlds of the media and finance for a vigorous approach to realising income streams, yachts in Monaco Harbour, vintage Rolls Royce cars, and a celebrity lifestyle in St. Tropez. To achieve this, our service charges were increasing at well above the rate of inflation, and the accounts padded with junk fees and various other devices for maximising returns. The flats are inhabited by elderly and largely disabled pensioners many of whom are now desperately close to the margins of financial survival. When asked about this the PMS in question simply referred us to the local Benefits Agency that is to apply for government money to pay off the extra service charges. Then there is the rental housing market sector. The UK Housing Benefit Scheme to allow “affordable” rentals is notorious for fraud and manipulation, and has been a source of huge profit for property investors etc. very many of whom one way or another are exporting their income and profits as HNWI’s.
The UK has sharply rising Council taxes, also attributable to a clutch of expensive PFI schemes from financial firms owned and run by HNWI’s, the outsourcing of services to HNWI owned companies, and misguided investments in Icelandic Banks, fees payable to other HNWI’s. The electricity company we have was once a UK operation, now it is foreign owned with HNWI money and all of us have had endless trouble with the billing and direct debit charges. Those who have opted out to read our own meters and pay by cash face a significant penalty in the structure of charges. Both the Councils and the Power Utilities benefit from Government grants one way or another.
The trains I use sometimes, heavily subsidised by the Government, also are eventually owned by HNWI’s somewhere, and the fares have been going up sharply and as for travelling, well, sometimes you get on a train to find yourself somewhere totally unexpected having been rerouted to meet management targets during the course of the journey. My income is enough to pay tax, but my local Inland Revenue office is now only leased, having been sold to an HNWI who is based in Bermuda. My occupational pension, once state run, is now managed by a firm belonging to another HNWI who might be on Mars. One could go on through so many functions of Government, notably Defence, but enough is enough.
Beyond Government but still with the advantages of lax regulatory or tax facilities denied to the ordinary citizen or the poor, my insurance company, once a specialist UK firm has gone to a Private Equity HNWI based I believe on a remote Pacific Island vulnerable to rising sea levels and the odd tsunami. Since it was taken over, it seems to be the same; but detailed inspection of the micro footnotes in the documents suggests subtle changes that reduce the insurer’s risks. My bank, once centred on Birmingham, seems to have gone East somewhere in order to be able to pay huge bonuses to HNWI’s. When I go into the local branch it reminds me of the amusement arcade in the City where I grew up, which I was discouraged from visiting on the grounds of moral dangers, and the questionable nature of its staff. The other savings establishments still available are eventually HNWI based in places I can hardly spell, let alone find. They all churn their products and rates to my disadvantage.
At one time, in all these basic connections common in developed countries, I knew who I was dealing with, where they were based, and with a little effort, find how they operated, financed, and dealt with their businesses. This is no longer the case, and moreover if I feel inclined to comment adversely in public I am all too liable to find an expensive firm of City of London solicitors coming after me with writs and demands for millions as compensation for hurt feelings and unwonted comment.
I confess, I may just be a little, only a little I assure you, prejudiced by personal experience.
This is in what is often laughingly called a “developed” nation. What the scale of the harm done to the poor and the ordinary people in countries that are far more vulnerable is can only be imagined. In my own view the UK is not simply a victim but has a governing and media system, The London Mediocracy, that is at the centre of the problem through its complicity in the worst of the abuses in the City of London financial system and the network of tax havens in UK related jurisdictions. I can hope that the OECD is sincere and determined to confront, act, contain and control the tax evasion and avoidance implicit in the global world of the HNWI’s.
The key is a reliable information stream that enables action. Neither the OECD nor an individual tax jurisdiction will find this easy, and the concept of “Co-operative Compliance” is simply a fond hope in an ugly world, there is little or no hope of extracting full disclosure from the HNWI’s or their helpers. The present arrangements in Tax Information Exchange Agreements do not give automatic or certain exchange because of the constraints imposed. A person becomes an HNWI by working the system and playing the angles, this will not change by voluntary action. They are part of interlinked elite who serve firstly their own interests, and secondly the interests of their peers if only as self interest.
The financial centres of the world are full of firms of very able, highly educated and trained people who are dedicated practitioners in the trade of tax avoidance, and structuring funding, income, payments, fees, and accounts to that effect. In those countries, such as the UK, where the political capital is also the financial centre of the jurisdiction, there are major vested interests all highly involved with existing processes of government and legal systems with impact at all the highest levels. At its extreme, as in the UK those who question the operations of HNWI’s cannot publicly discuss or criticise them because the UK Government in alliance with the EU has put in place stringent privacy conditions.
There are systems already in place in banks across the world, allegedly making them all in effect one large mega-bank that allow communication and data recording across the world. This is done through the support office systems. Consequently, it has to be possible to find some means of accessing this source through the establishment of some sort clearing system designed for the collation and audit of tax and related data. Failure to co-operate should mean some sort of exclusion from a licensing or other means of control of status and function for the banks and other financial entities concerned. At the same time knowledge of information of the need for action and the role of the OECD should be conveyed to the peoples of the world at large.
It is the UK Government that presents the prime problem, not only because of its complicity with the excesses in the City of London, but its attachments to very many of the more active tax havens. It is claimed that they need to be financial centres because there is no other economic role for them. In fact, many of the local population consist of very low paid service labour living in either shanty towns or quasi-barracks dominated by gang cultures, with often a large disenfranchised even lower paid migrant population to support them. In the wider world the Department for International Development may seem very active, but if the money trails are followed they lead inevitably to financial organisations in the grip of the HNWI element. The DFID has a web site that presently features radio and TV soap operas as a major achievement, doubtless to the benefit of the London media. One wonders if they feature the shopping malls being provided, and the other consumer delights of urban life, that all lead back inevitably to an HNWI in a tax haven, that seem to be the characteristic features of UK funded development. In all this the activities of a Madoff and his like in New York are simply provincial small fry. It is the big boys and girls in government who the Godfathers (and mothers). The damage that has been done is all too visible and it is the greater damage that they are capable of in the future that has to be stopped, by whoever can take on the role and the work. The OECD should lead the charge.
Sunday Times 22 February 2009 - Dominic Lawson:
A Ponzi scheme that's conning us all
I’m sorry to ruin your weekend but I believe you are the victim of a gigantic financial fraud. This does not mean that you are a holder of one of Antigua-based Sir Allen Stanford’s certificates of deposit, which the US Securities and Exchange Commission alleges were sold on an entirely false prospectus. Nor am I referring to the victims of Bernard Madoff. The British public has been unaffected by that gargantuan Ponzi scheme, which was marketed almost entirely in North America. Yet here in the UK we have our own fraudulent scheme, on a scale dwarfing even Madoff’s operations - and it is run by the British government. For more: