Immoral but not Illegal: the Scandalous Domination of the Financial Sector on British Politics and other Institutions

11.07.2012 - London - Silvia Swinden

Published today the BIJ “Financial Lobby: Inside the City’s best-connected lobby group”, by Melanie Newman. “In 2009 a report from a group of industry representatives chaired by then chancellor Alistair Darling and former Citigroup chairman Sir Winfried Bischoff recommended the creation of a new independent body to ‘promote the industry at home and overseas’. The report also recommended the group should have a ‘formal link’ to a forum, led by government, which would focus on strategic issues relating to the financial industry. But the outcome was the formation of a single organisation – TheCityUK. Led by industry rather than government, it lobbies on tax, regulation and trade policy. It is heavily financed by the City of London Corporation, and its Overseas Promotion Committee is the sector advisory group to UK Trade & Industry (UKTI), which has formally outsourced to it the role of promoting the sector overseas.

‘Policymaker engagement’ is how TheCityUK body describes its key role and it promises its members access to policymakers in return for extra fees. Its ‘sponsor members’ are guaranteed a place on its advisory council and ‘access to senior domestic and international influencers and decision makers’.

Influence over financial regulation

Sitting on the organisation’s advisory board and various committees and working groups are five members of the House of Lords, regulators and senior civil servants as well as representatives from key private financial organisations. They include representatives of the Financial Services Authority (FSA), which regulates the industry, as well as personnel from the Treasury and Department of Business, Innovation and Skills. Four senior civil servants, including the Treasury’s director general of financial services Jonathan Taylor, and a member of the FSA are listed as observer members of the TheCityUK’s International Regulatory Strategy Group (IRSG) on the body’s website. Despite the name, the group lobbies on domestic as well as international regulation.

Taylor is a former director general of the London Investment Banking Association and a former banker with UBS. Two other senior Treasury officials sat on the group until recently: Michael Ellam, now the chair of the EU’s financial services regulation committee and Tom Scholar, second permanent secretary in the Treasury. All of this engagement with high flyers has an impact. At a TheCityUK meeting last October, financial secretary to the Treasury Mark Hoban openly acknowledged the group’s leading role in regulatory policy…”

Party Funding and Policy

Also researched by the BIJ, it has emerged that over half of the funding of the Conservative Party comes from the financial sector at a rate of £1m/month. It is not surprising, then, David Cameron’s staunch opposition to the Tobin Tax, (or Robin Hood Tax, or Financial Transaction Tax FTT), which has just been approved by the European Parliament for the Eurozone.

“This tax on the financial sector has the power to raise hundreds of billions every year globally. It could give a vital boost to the NHS, our schools, and the fight against child poverty in the UK – as well as tackling poverty and climate change around the world.” Instead “Government departments cut spending by £6.7bn more than they had planned in the year to March, according to official data from the Treasury…*The biggest underspend was in the National Health Service*, which came in £1.7bn under budget”.BBC News. Essential services are closing down, people are left to their own – private –devices (aka Big Society), all part of an ideology that seeks to shrink the State and increase profits for an ever decreasing minority.

Banks Behaving Badly

“From rate fixing to bumper bonuses and PPI – ‘reprehensible behaviour’ appears to be endemic throughout banking” reports Jill Treanor for The Observer. “A record £290m fine imposed on Barclays for attempting to manipulate the price of a crucial interest rate known as Libor – the London interbank offered rate – and its European equivalent Euribor – has raised the prospect that the entire market has been rigged since as long ago as 2005… When the regulators – the Financial Services Authority [see connections to TheCityUK, above] in the UK, and in the US the commodity futures trading commission and the department of justice – published their findings, they made it clear that Barclays was just one of the banks under investigation. As many as 20 others are co-operating with the authorities”.

Do they Pay their Taxes? And Other Scandals

Special tax arrangements and loopholes have been used by the Financial Sector for eons. The Royal Bank of Scotland and its subsidiaries failed to process their customers’ transactions. A “joke” circulating around the social networks sees a child asking his father: “Daddy, do corrupt people go to Hell? – No darling, they go to a Tax Heaven”.

GlaxoSmithKline, the pharmaceutical group, has just been fined $3bn for abusive practices in marketing drugs in the US. BP is still trying to challenge a number of lawsuits for the worst oil spill in history, after agreeing to pay £5bn in compensation to some of the victims.

Big Money, Big Business and Big Society working in tandem, dehumanising, eventually brought down by their own “success”.

This is not a system that needs a little tweaking but a profound change in values, with the human being rather than money as the central value.

Categories: Europe, Politics

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