Tuesday, 29 October 2013

What a Balls Up!

Ed Balls, shadow chancellor, today reacted with disgust to the news that Sharon Shoesmith has been awarded compensation for her summary dismissal in the wake of the Baby P case.

Sharon Shoesmith was head of social services for Haringey Council.  She was dismissed because of pressure exerted by Ed Balls, then Children's Secretary.

Baby P was a child who was abused by his parent and step parent until he died.  No one remembers the names of the adults involved.  Blame was placed on Sharon Shoesmith, although she did no harm to the child.  The parent and step parent did everything in their power to keep authorities away from Baby P, with lies and clever ploys to conceal bruises and injuries (including smearing him with chocolate).

Ed Balls was a senior Labour government minister.  Employment law in the UK, that protects people from arbitrary decisions by management, was developed over many years, partly because of the pressure exerted by trade unions in support of their members.  The Labour Party is largely funded by trade unions and is, historically, the party of working people.  However Ed Balls behaved like a Roman emperor condemning Christians to the lions with an autocratic judgement.

The only reason Sharon Shoesmith received a payout is because Ed Balls did not follow due process and effectively deprived the woman of the means to earn her living, without any opportunity to give her side of the story.

I wish to complain to the Universities of Oxford and Harvard.  They both conferred higher education degrees on Ed Balls, implying that the man can think.  I disagree.

We have form in this regard.  Victoria Climbie was a little girl who was placed with relatives in the UK so that she could have an education in England.  The parents lived in the Ivory Coast and did not go through a formal adoption or fostering procedure.  Victoria was abused and killed by her carers.  No one remembers the names of the aunt and her partner who killed her.  A junior social worker was blamed and can never work with children again.  None of her senior managers were held to account, nor the Minister responsible for children or social services.

I believed that public services should function well and be held accountable.  However I realise that they can only achieve so much, given the duplicitous nature of abusers.  We also had a notorious case where social workers were condemned for being over zealous (damned if you do and damned if you don't).

The worst aspect of these cases is the behaviour of hypocrital politicians like Ed Balls, who appeal to tabloid headlines, but fail to admit to their mistakes.  I think this is known as dog whistle politics.

Ed Balls, you screwed up.  If Ms Shoesmith received a payout, it's because of your mistake.

The Talking Egg

The Parliamentary committee for Energy and Climate Change met today to grill the Big Six energy retailers on prices charged to the consumer.  They were of one voice complaining about costs and recommending the scrapping of environmental taxes as a way of reducing prices.  Simon Carr gives a good account of the light coddling provided by MPs of E.ON, British Gas, NPower, EDF, Scottish Power and SSE.

One voice offered a different story.  Ovo is a small energy company.  Stephen Fitzpatrick, the Managing Director, said he was confused by the large price rises demanded by the Big Six, given that wholesale energy prices had dropped since a high in 2011 (and were lower than in 2009).  He seemed to suggest that they're running a cartel.

Great marketing for Ovo Energy.

Saturday, 19 October 2013

The Co-op Bank and the long grass

'If an issue or problem is kicked into the long grass, it is pushed aside and hidden in the hope that it will be forgotten or ignored'.

Origin:  'kick it into the long grass' is golf-derived, essentially describing a form of cheating:  a player whose ball lands in the rough so as to be unplayable without adding multiple strokes to the hole can cheat by kicking the ball out-of-bounds into the really long grass and take a one-stroke penalty for a lost ball.

This is the story of elderly people, who worked hard, built up savings and then invested with a traditional institution they trusted, the Co-operative Bank.  They shop with the co-op, buy insurance with them, travel with them and have probably bought a funeral plan with the same company, ie the Co-operative Group.

The bank built up a £1.5bn debt through maladministration.  Part of this occurred when the Co-op Bank merged with Britannia Building Society, relying on 'due diligence' by accountancy firm KPMG, and found they'd bought a turkey.  Another loss was incurred in a failed attempt to buy branches of Lloyds bank, (an enforced sale by the government).  This was Project Verde.  TSB has now come back from the dead to run the branches as an independent bank.

Both the Co-op Group and Co-op Bank concealed the level of debt from retail investors until June 2013, after the AGM.  The regulator also concealed the problem.  This created a false market in retail investments.

I could have told the government, regulators and the Co-op Bank that it would end in tears.  If the idea was to create an enlarged bank on a par with the big boys, then something was missing.  If you visit a branch of the Co-op Bank today, you'll find they are still inputting data from cheques manually, rather than swiping the digital codes as their competitors do.  That's a non starter for a grown up bank.  One former executive reports that the Co-op Bank consistently refused to agree investment in major IT renewal.

The Co-operative Group claims to be independent of the bank and have no responsibility to bail it out, as it is not a financial holding company.  Strangely the Co-op Group Chief Executive, Euan Sutherland, seemed to be steering the bank through capital appraisal, recapitalisation plan and negotiations with the regulator culminating in similar announcements from both on 14 June 2013.  Mr Sutherland was hastily co-opted onto the bank's board as a non-executive director some time later.  The regulator told Co-op retail customers 'You're on your own'.

The big plan was outlined as a way to take a load of money off retail investors, who seemed to be a bunch of casino gambling customers in the eyes of the Co-op senior management.   Co-op bank executives seemed happy to lend money at low rates to a near bankrupt organisation, the Labour Party, while planning to fleece loyal retail customers of their hard earned life savings.  Representations were made to the bank, the regulator and the Co-op Group but fell on deaf ears until commercial investors (hedge fund managers) moved in for the kill.

Retail investors are still not invited to any of the talks on recapitalisation.  Mark Taber, of the action group, called for a Hardship Fund to be set up.  It seems as if this may happen without involving retail customers.  The idea is to split retail investors into hardship/non-hardship cases, with someone acting as God and making life changing decisions.

This reminds me of the case of Equitable Life.  People were encouraged to manage their own investments and pensions.  Rumours developed that Equitable Life was in big financial trouble.  A statement was made in Parliament that all was well.  Insiders allege that politicians extracted their investments from the company.  Ordinary investors waited in vain for years for compensations, many dying without redress in the interim.  They were characterised as wealthy people who didn't need the money.  I still meet Equitable Life investors who are in hardship as a result of the failure of the company and financial oversight by government and the regulator.

One member of the regulatory staff, Andrew Bailey, raised concerns as early as mid 2011, but was ignored.  The Bank of England redacted paragraphs from its report, that would reveal the state of the banks finances, leaving retail investors in the dark.  There is some indication that government pressure led to regulatory failure to protect customers.

Lord Myners, Jess Norman MP and colleagues have worked hard to interrogate regulators and senior figures in the Co-op Bank and Co-operative Group in the House of Commons Treasury Committee.

Ed Miliband, Ed Balls and Labour MPs have been silent about the Co-op Bank and not responded to queries from constituents.  The preferential Co-op Bank loan to them at a time of fragile party finances seems to have caused them to forget core party principles.  Labour are focusing on press regulation and utility bills and ignoring elderly people about to lose their life savings.

What's the long grass?

Mark Taber has outlined this, with supporting evidence, in his open letter to Sajid Javid.

HM Treasury states that this is a private matter between Co-op bank and its bondholders.  It does not intend to use its powers to investigate the actions of the regulator.

The Bank of England concealed information from the public.  The regulator colluded with the bank in concealing the capital shortfall for 2 years.  The regulator authorities ignored the warnings of one of its own senior staff.

Is this a private matter between the bank and its bondholders?

The FCA (regulator) has taken no action to investigate the Co-op Group or Co-op Bank.

Mr Wardle misled a shareholder's meeting in May 2013.  Mr Sutherland exercised powers to which he was not legally entitled, determing policy for a bank in which he had no position.  Bank and Co-op Group executives overreached themselves, ignoring the warnings of peers, plunging the bank into huge financial losses.

Is this not a matter to be investigated by the current regulator?

HM Treasury is referring bondholders to the Co-op Group's own 'independent inquiry.'

Commentators allege that Project Verde was instigated by senior people in government, who put pressure on the bank and the regulator to carry on despite warnings about the state of Co-op Bank finances and capacity.

Is pressure being put on HM Treasury to deflect attention away from government?

The Co-operative Group has commissioned an 'independent inquiry'.  This has no status or powers and does not include retail investors as stakeholders.  The remit does not include investigations into the Co-op's dealing with the regulators, nor the false market established by concealing information from the public.

In the UK we are familiar with inquiries as a great way of showing that something is being done.  Questions can be batted away with 'Let's wait for the results of the inquiry', which may take years.  The heat is off and those involved in dodgy dealing can escape scrutiny.

MP Sajid Javid is a new appointment to the Treasury.  He is an able young man, who is grappling with the issues surrounding the Co-op Bank.  Much rests on his ability to go beyond strict compliance.  Many hope for great things from him.  I reserve judgement.

Update:  Many thanks to Mark Taber for an interesting piece of news.

Euan Sutherland, Group Chief Executive, has made an announcement that includes the words 'small investors'.  Now we don't know exactly what he means by this term, but it is a tiny step forward in a hard fight to accept liability for maladministration and avoid fleecing the unwary.

Further update:  US Hedge Funds have driven a hard bargain in the re-financing deal.  The Co-operative Group say they will still be the largest overall shareholder with a 30% stake.  They won't control the bank.  In my experience of other US mergers/take-overs/re-financing deals, the original owners find it tough to deal with the US incomers.  In my experience as a retail customer of such organisations, the US parent companies tend to run the organisation into the ground and extract as much profit as possible for little beneficial input.  There are probably exceptions, but I am not optimistic about the future of the Co-op Bank for customers.

Nor is another blogger, who has written about the interesting history of the 2 Hedge Funds now controlling Co-op Bank:

'But make no mistake, Sutherland and his fellow Board members will be on a very short leash. They must return the Co-Op Bank to profitability within a very short time - otherwise the hedge funds are likely to turn nasty. They will not hesitate to asset-strip the Co-Op Bank if the management fails to meet the profitability targets that they expect. And as between them they DO have a controlling stake, they can unquestionably do this. Sutherland's statement was made with a gun to his head.'

Tuesday, 8 October 2013

Pharm Mafia 3

I am grateful to Dr Malcolm Kendrick once again for alerting me to some disturbing news.

Sherif Sultan, a consultant vascular surgeon in Galway Ireland, stated that statins may do more harm than good for people with high cholesterol, but no heart disease.  He and his colleague, Niamh Hynes, recommended life style changes to reduce cholesterol and avoid the risk of side effects from statins.  Sherif Sultan founded the Western Vascular Institute, a charitable research foundation committed to vascular research, technical innovation, professional and public education.  Sultan and Hynes reviewed research data on statins and came to their conclusion based on science.

The Health Service Executive condemned these eminent surgeons and warned them not to liaise directly with the press as an HSE consultant.  Dr Pat Nash, a cardiologist and group clinical director at University College Hospital said that Sultan and Hynes's recently published views were 'not representative of those in Galway or neighbouring hospitals.'

What reason did the Irish HSE give for this decision?  Where's the science?

According to Wikipedia, HSE is Ireland's largest employer.  It has the biggest budget in the public sector (13 billion Euros).  The HSE provides health and social services for everyone living in Ireland.

In a previous blog post, I quoted a story of how legal redress is being blocked by Big Pharma, who have penetrated medicine and charities with financial support, making it difficult for individuals to speak out in a just cause.

Here are my simple questions to members of the board of HSE:

The members of the New Interim HSE Board, as of 17 February 2013, were:
  • Dr. Ambrose McLoughlin, Chairman and Secretary General, Department of Health,
  • Mr. Tony O’Brien, Deputy CEO/Director General Designate, HSE
  • Dr. Tony Holohan, Chief Medical Officer, Department of Health
  • Mr. Paul Barron, Assistant Secretary, Primary Care & Eligibility Division, Department of Health
  • Ms. Bairbre NicAongusa, Assistant Secretary, Finance, Performance Evaluation, Information, EU International, Research & Resource Allocation Division, Dept of Health.
  • Dr. Aine Carroll, HSE National Director, Clinical Strategy & Programmes (replaced Dr. Barry White)
  • Dr. Philip Crowley, HSE National Director, Quality & Patient Safety
  • Ms. Laverne McGuinness, HSE National Director, Integrated Services - Performance & Financial Management
  • Mr. Jim Breslin, Secretary General of the Department of Children and Youth Affairs.
  • Ms. Frances Spillane, Assistant Secretary, National Human Resources and Professional Regulation Division,Department of Health
  • Ms. Geraldine Fitzpatrick, Assistant Secretary, Department of Health (replaced Mr. Brian Gilroy, former HSE National Director, Integrated Services – Reconfiguration)

How many of you depend on pharmaceutical funding for your job, some jobs in your department and your research projects?

How many HSE dinners, meetings, courses and conferences have Big Pharma funded?

How many advisory roles or non-executive directorships do you hold with Big Pharma?  

How many HSE committees have co-opted members of Big Pharma onto them to determine policy?

When did the HSE take the decision to ignore scientific research in favour of Big Pharma marketing?  How does that sit with your aim of quality and patient safety?

Saturday, 5 October 2013

Miliband Minor is Naked

Hans Christian Andersen tells the story of a courtiers and subjects who fawn on the king, admiring his new clothes.  It takes one small child to point out that the king is naked.

I think of HC Andersen's tale when Ed Miliband, Labour opposition leader, speaks in public.  Who is he?  What policies does he propose?  He repeatedly espouses his parents' values and echoes his former boss, Gordon Brown, the son of the Manse.  This neatly covers the immigration problem, as Miliband Minor can say he is the son of refugees from oppression, without highlighting his party's efforts to curry favour with those who feel disadvantaged by competition with cheap migrant labour.

His current tiff with tabloid journalists brings him a lot of media coverage.  He is repeating previous threats to restrict 'press intrusion'.  One of the loudest voices on his side is one Alastair Campbell.  Mr Campbell, formerly spin doctor to Tony Blair, has a poisonous reputation for 'tackling the man and not the ball'.  He was party to the construction of the notorious dossier that persuaded Parliament to send us to war against Iraq, even though the weapons claims turned out to be fabricated and lifted from a student thesis.  He is alleged to have leaked the name of Dr David Kelly to the media and bullied the BBC over the weapons inspector's account of dealings with Iraq, leading to the death of David Kelly.

“Campbell has been on his high horse all week saying he never briefed against Tony Blair’s ministers – apart from the time he lost his temper with anti-Iraq leftie Clare Short and suggested Gordon Brown was “psychologically flawed”. Those of us with longer memories know this is spin. In May 1997 when he first arrived in Downing Street, Campbell shocked senior civil servants by telling them that two Cabinet ministers “couldn’t keep their trousers on”, that Derry Irvine, the Lord Chancellor, hated Donald Dewar, the Scottish Secretary. Smirking, he said “Nick Brown, was ever the bachelor” – before he was outed as gay. He went on to hint at the Foreign Secretary Robin Cook’s then adulterous affair with his secretary Gaynor Regan. All that was just in the first month he was in Downing Street and before he went on – as Michael Howard famously told him – “bullying and lying his way across our political life”.”  Guido Fawkes

Miliband Minor wishes to distance himself from the policies and practices of his former boss, Gordon Brown.  He and Ed Balls were bag carriers for the Prime Minister and strongly shaped policies enacted during that time.  He also distances himself from the behaviour of Damian McBride in smearing the opposition and unsupportive bloggers.  Various blogs and publications, such as Private Eye, indicate that he was complicit in some of the nasty tricks used in the past.  The re-emergence of Alastair Campbell, attempting to re-write history and portray himself as a saint, in Miliband's fold is not reassuring.

What does the Labour Party stand for?:

'Britain's democratic socialist party. The values Labour stands for today, social justice, a strong ... and strong values, reward for hard work, decency and rights matched by responsibilities, are those which have guided it throughout its existence.'

Miliband seems to be a little short on social justice and rewards for hard work.  In party conference season and earlier he has railed against bankers and asserted the need to create a stronger, more just system to meet the needs of ordinary people.

How strange then that he is so quiet about events at the Co-operative Bank.  This is part of the Co-operative Group, which was originally formed by workers for workers (ie labour).  Indeed the Co-op Bank lends the Labour Party significant sums of money at very low interest rates. The Labour Party has been in a very weak financial state for many years, but with the prospect of funds from trade unions reducing drastically, their position is even more vulnerable.  If I wanted a loan from the Co-op bank at 2.5% interest, I'd have difficulty obtaining it.  How interesting that the Labour Party is deemed a good risk.

The Co-op Bank has been in trouble for some time, but taken great trouble to conceal this fact.  Merger with Britannia building society, investment in IT systems and the aborted attempt to buy branches from Lloyds Bank left a large hole in capital reserves.  Members of the Co-operative Group had some cosy meetings with regulators and decided on the amount needed to restore stability and a plan to raise it.

2 things went wrong:  first they decided to take the money from bond and preference shareholders, second they concealed the true financial position of the bank from investors as late as May 2013.  The regulator was a party to the concealment, it seems.  A bank in difficulty needs time to rebuild its capital position, without causing a run on the bank.  However, concealing the information from 2 groups of investors, saying they'll get a take it or leave it offer and then effectively characterising them as risk takers, after reassuring public and online statements all through 2013, is not my idea of ethical behaviour.  The bank implies that investors should accept their offer or the bank will go into liquidation, which is a form of bullying in my book.

The Co-perative Group has obtained a ruling from the regulator that it is not a financial holding company and cannot be forced to bail out its bank.  How strange then that Euan Sutherland, its Chief Executive, was taking action on behalf of the bank and holding talks with the regulator long before he was hurriedly appointed as a non-executive director some time later.

The people most likely to lose their life savings are ordinary working people, who have trusted the Co-operative movement in the UK and chosen to do business with its various enterprises all their lives.  Where is the party of working people in all of this?  I do not hear Ed Miliband speaking up for social justice, rights and responsbilities.

I suspect that the current huffing and puffing about crass articles in the Daily Mail is a substitute for action in support of core Labour Party values.  It has drawn publicity from the Tory Party conference and given Miliband Minor a little sympathy vote.  Much coverage has been given to the spat on the BBC.  Bashing the tabloid press may be Miliband's idea of a substantial crusade to champion.  It seems from press ratings that the population are more concerned about other matters.

I pity the poor pensioners invested with the Co-operative Bank.  Frankly Miliband Minor doesn't seem to give a damn.