It’s true: Gordon Brown and Ed Balls regulated the financial sector like Oliver Reed and George Best in charge of the booze at a keg party, which led to the alcoholic poisoning of the economy around 2008. The fact that the Conservatives weren’t in charge when this happened is a coincidence they will never cease to gloat about. But David Cameron doesn’t want you to know that while they were on the other side of the bar, the Tories were racking up huge tabs with their friends in the City—bar tabs that we’re all paying for with a stinking hangover in the form of job losses, home repossessions, tax rises, and slashes to public services.
A quarter of all the Tories sitting in this parliament have been on the payroll of the financial sector—most of them in executive roles—which means their claims not to have been responsible for the industry’s epic binge is dubious at best. And the more you examine their financial interests, the more ludicrous it seems. Trawling through the Register of Members’ Interests reveals that the Rt. Hon. Members on the Conservative side of the bar were members of a club whose disregard for the wellbeing of society while at the same time accumulating vast amounts of wealth bordered on the psychopathic.
Take a closer look at the Tories and you’ll see a kind of Brechtian disaster buddy movie, with politicians running an Al-Capone-style mob from their conduit in the City of London.
You will see: a Chancellor who concealed £250,000 worth of donations from Lehman Brothers executives—the same Lehman Brothers whose director, after presiding over the largest corporate bankruptcy in history, was then appointed to head the Tax Reform Commission; a Prime Minister who defends the corrupt system of who-you-know internships; a black-tie dinner where internships at hedge funds were auctioned off for up to £3,000 to Tory supporters and their children; an MP whose firm, Credit Suisse, was illegally funneling billions of dollars to the Iranian long-range missile and nuclear programmes; a multi-millionaire, expenses-fiddling cabinet minister who says people from Sheffield don’t deserve cheap holidays; and a wife-beating former MP who took sick leave from the House of Commons to go rake in the cash at an investment bank.
All of these things are funny little scenes. But they’re just comedy sideshows, really—minor tipples in a drunken odyssey that makes the Tories’ last ten years look like an English remake of Dude, Where’s My Car?
It beggars belief that the Conservatives can claim to represent fairness, prudence, the rule of law or family values when they still have anything to do with slapstick characters like William Hague’s best friend, the private equity fat-cat Guy Hands. Hague was on the advisory board of his mate’s financial juggernaut, Terra Firma, until the last election and was best man at his wedding. According to one of his former colleagues at Japanese bank Nemura, Guy Hands is “an example of what has always been wrong with private equity. They rode the wave of a bull market in debt but were not humble enough to know that was what they were doing.”
In 2007, Guy Hands indulged his passion for karaoke by buying EMI records—dubbed Every Mistake Imaginable—at the height of the credit boom. He borrowed £3.2 billion from Citibank to finance the purchase, and racked up hundred-million-dollar losses every year. When it turned out that EMI wasn’t going to turn profitable any time soon, he did what we all do when we’re massively in debt to a multinational bank and unable to pay: he begged them to cancel his debt. When his shooting partner, David Wormsley at Citibank refused to write off the addict’s bar tab, he sued them for fraud. And lost.
But probably most amusing is that Guy Hands is so committed to tax avoidance that he refused to visit his family in Kent after moving to the tax haven Guernsey in 2010. Add to his rap sheet a sexual harassment case when he was working for Nemura which came from a female worker being told to wear short skirts and give massages to the male employees, further claims that he treats his staff “like a plantation owner,” and you have the kind of character any respectable politician wouldn’t be seen in a body-bag with. But as a highly paid adviser to Terra Firma, it begs to be seen what was William Hague advising his best friend to do, other than to throw himself off a cliff: keep up the risky speculation, treat his employees like hookers, and avoid taxes like the plague?
Similarly, you have to question why the financial secretary to the Treasury, Mark Hoban, decided Oliver Wyman Ltd were the best people to help draw up plans for financial regulation before the last election. This is the same Oliver Wyman who named Anglo Irish Bank the hottest bank in the world in 2007. A year later, it had to be bailed out by the Irish government to the tune of 25 billion Euros—with some £9 billion of this eventually coming from the British government when we bailed out the Irish government. Oliver Wyman was also the one poking Citigroup in the sides and telling it to take on more of the suicidal subprime mortgages that eventually led to $50 billion being lost.
There are plenty more plot-lines that inspire as much confidence in Conservative economic policy as Harold Shipman would command as health minister. In 1992, Henry Bellingham, now the parliamentary under-secretary for the Foreign and Commonwealth Office, was concerned about his Norfolk constituents' rising mortgage payments. He gave a speech in parliament that included this heartfelt tale: “I am still worried about home owners in my constituency and about those trapped in mortgage equity debt. A home owner told me the other day that he had bought a house for a considerable amount of money and then seen its value drop.”
Until he was legally required to quit all outside jobs when he joined the government after the 2010 election, Bellingham had been a non-executive director at SUSD Asset Management (formerly Consolidated Asset Management Holdings). Under its new name, its shareholders include the Tory party chairman and notable tax avoider Lord Ashcroft. Previously, it was called Eurolife / Nvesta, but changed its name after scuppering its ‘low-risk’ bond investors’ money in 1999.
After such a hefty blow to its reputation, the owners could have changed tack. But they didn’t. They changed the company’s name again to ARC Fund Management Holdings, where it continued the dodgy dealings. While Henry Bellingham was employed by them, ARC put investors' savings into Lehman Brothers, which was so loaded with toxic debts they may as well have cut out the middle-man and bought their investors a bag of anthrax, thrown them a rolled-up £20 note and told them to get stuck in. The Financial Services Compensation Scheme (FSCS) ruled in 2009 that ARC had mis-sold the investments to customers, luring them in with a load of phony literature that downplayed the risk and liability they were taking on.
According to Conservative dogma, the kind of deal where City wide-boys get rich by gambling people’s investments is all part of a healthy economy. There’s no stronger advocate of this dogma than the Mayor of London, Boris Johnson. Even at the height of the financial crisis, Johnson, like an apologist for an abusive, alcoholic husband, told us to stop “bashing” the bankers because “they put a roof over people’s heads.” He didn’t see the irony of making this statement at a time when unemployment and home repossessions were sky-rocketing as a direct result of the banks’ reckless behaviour. The pinstriped loan-sharks, he said, had contributed to 9% of GDP before the crash, so we should be careful about reducing their bar tab. What he fails to mention, of course, is that the UK’s bank bailouts cost more than 20% of GDP.
This free market fundamentalism runs in the Johnson family blood, and explains why they’re none too keen on calling last orders in the City. Boris’s brother, Jo Johnson, was one of the top dogs in the investment wing of toxic slag-heap Deutsche Bank. During the credit boom’s long-running Happy Hour, its employees were selling investments to clients that they knew to be crap, even referring to them in emails as pieces of “shit.” They sold $1 billion of these securities to investors while at the same time betting $10 billion that they would fail. It’s like a fighter backing himself to lose and then throwing himself to the floor in the first round. It’s not only ethical, it’s illegal. Jo Johnson is now a Conservative MP, as is Deutsche’s former global head of emerging markets structuring, Sajid Javid.
That’s not to say that Jo Johnson or Sajid Javid are personally responsible for sending those emails, or for the illegal securities trading. But none of the Deutsche Bank employees or executives in the London office have been arrested or prosecuted.
These guys are far from the only culprits to be involved with banks who created a bubble by selling investments they knew to be worthless and then backing them to fail. One of the biggest perpetrators of securities fraud was Goldman Sachs, whose influence in the UK and US governments is so large that it’s been beautifully referred to by Matt Taibbi at Rolling Stone as “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”
A SpinWatch report about GS reveals: in 2010, four Tory MEPs met with Goldman Sachs lobbyists 36 times in six months to discuss a new financial regulation bill; Peter Sutherland, the chair of GS International, is an adviser to David Cameron; Michael Sherwood, a GS partner and former classmate of Nick Clegg, is a personal friend of Boris Johnson; Lord Browne, an ex-GS director, is a Conservative peer and adviser to the government; Christopher French, the GS head of wealth management, donates money to the Tories, as does Sebastian Grigg, another ex-GS partner who is also a friend of David Cameron.
Of course, the government claims to have put in place all of the measures necessary to prevent another financial hangover. In 2009, George Osborne said, “We must never repeat the mistakes of the last decade, in which we built an illusion of growth on the biggest mountain of debt ever seen in an advanced economy.
“Given the scale of the misery and hardship inflicted on the public by the failure of the existing system, reform must be far-reaching to match the scale of the problem.”
Like so many addicts who claim to be reformed, nothing has changed. Besides a few platitudes here and there, they’re so blatant about their boozing that they may as well turn up to work in a Jim Beam lorry, stinking of booze and singing ‘I Think I’ll Just Stay Here and Drink’.
Evidence of this is some of the most brazen couldn’t-give-a-shit-what-you-think political appointments of the century. The four “austerity czars” appointed by George Osborne to advise how best to implement cuts to public services like schools and libraries are, believe it or not, multi-millionaire tax-avoiders from the world of finance who don’t use those services: Richard Sharp, formerly of Goldman Sachs; Douglas Flint, former finance director of HSBC; John Nash, founder of Sovereign Capital; and Adrian Beecroft, whose companies have avoided enough tax to feed the whole of Africa. And don’t forget Sir Philip Green, the tax-avoiding head of blah-blah-blah, and Lord Ashcr… and wait, what about Lord Griffiths…
It’s clear that the Conservative party and the world of finance have a major addiction, and they need help. But like all terminal addicts, they’re not going to reform themselves by hanging around in the same old bars with the same old faces. But that’s exactly what they’re doing. The Office of National Statistics revealed that the financial sector awarded £14 billion in bonuses in 2010, which dwarfs the £2.4 billion annual levy imposed on them by the government as some kind of punishment.
So after waking up bleary-eyed in their hotel with Mike Tyson’s pet tiger in the bathroom and some killer headaches, the guys who bankrupted us with their credit binge have washed down a couple of aspirin and are back on the lash with our money again. Like all of the best buddy movies, it won’t be long before we’re treated to an even more tasteless sequel.
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