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The City cesspit stinks of corruption

A recent class action law suit against two British banks over allegations of rigging the foreign exchange market are only the tip of a dirty iceberg in a sea of effluent, writes STEVEN WALKER

THE latest revelations about British banks’ squalid, illegal and corrupt behaviour is another in a long line dating back to the Thatcher government’s deregulation of the City of London in the 1980s.

This enabled City financial institutions to become saloon-bar brawlers in a gambling casino where risks to customers’ money were taken and money laundering of Mexican and Colombian drug cartels was facilitated.

Barclays and RBS are among five banks being sued in Britain over allegations of rigging the foreign exchange market.

The banks are facing a class action claim by investors understood to be in excess of £1 billion, alongside US giants JP Morgan, the bank which pays Tony Blair £2 million a year for “advice.”

The suit was filed last week with Britain’s competition appeal tribunal (CAT), alleging that the five banks broke competition laws by unlawfully manipulating the foreign exchange market between 2007 and 2013.

In a ruling designed to offer a more effective route to compensation for consumers and businesses that fall victim to anti-competitive behaviour, British-based members of a defined group are automatically bound into a legal action — unless they opt out.

The class action suit comes after all of the banks except one were fined a total of €1.07bn (£936m) in May, for taking part in foreign exchange trading cartels dubbed the “Three Way Banana Split” and the “Essex Express.”

The European Commission handed out the penalties relating to collusion over trading in 11 currencies dating back more than a decade.

UBS was named in the investigation but avoided punishment after it blew the whistle on the cartels. The commission said the traders involved exchanged sensitive information and trading plans and occasionally co-ordinated trading activities through chatrooms.

Last year following the collapse of Carillion the “Big Four” accountancy firms were put on notice they were to be forced to restructure by regulators.

This is due to their role in some of the most outrageous financial scandals that have led to the collapse of businesses and thrown thousands of workers onto the dole.

The Carillion collapse is set to cost taxpayers at least £148m.

The Big Four accountancy firms have been forced to draw up contingency plans for a break-up of their British businesses to solve conflicts of interest embedded in the industry.

The pressure on the four firms that dominate the sector — KPMG, Deloitte, EY and PwC — to prepare for a forced break-up has increased following high-profile corporate collapses with their fingerprints all over them.

So many are the accountants’ conflicts of interests and so limited the choice of firms for large pieces of work, however, that when Carillion collapsed in January 2018 the same PwC landed the job as government-appointed special manager.

The Big Four have relied on their international dominance to act as gamekeeper and poacher so they keep passing dodgy audits for massive fees, and then offering their services to the government to tackle accountancy fiddles, while later on getting back to companies advising them how to get round new government regulations on tax avoidance which they have designed.

They are also up to their necks in advising on outsourcing public services which frequently fail to provide adequate or safe services.

The danger is not a new one. The financial crisis began a decade ago and intensified through flawed accounting, as, first, US sub-prime lenders and, then, mainstream British banks such as Royal Bank of Scotland, Lloyds TSB and HSBC polluted and fiddled their balance sheets without auditors raising any objections.

A later parliamentary committee concluded that “the complacency of the bank auditors was a significant contributory factor” in causing the 2008 crash.

PwC was also in up to its neck in the recent Tesco accountancy scandal when a £263m black hole in its accounts was discovered in 2014, which later grew to £326m because it had incorrectly booked payments from its suppliers early.

The scandal was not revealed until 2017 and led to a programme of store closures and mass sacking of workers.

In 2007 KPMG audited HBOS Bank and found everything fine and dandy until six months later the bank collapsed went bankrupt and had to be taken over by Lloyds Bank Group.

The City of London is widely acknowledged to be the money laundering capital of the world, with accountancy firms hard at work with the soap and detergent.

In 2017 the Guardian reported that HSBC, the Royal Bank of Scotland, Barclays and Coutts Bank had waved through up to £65bn of transactions linked to a major scam in Russia.

This had first come to light in 2014. Much of the money is believed to be linked to organised crime and corrupt officials, who were seeking to clean their cash so that it could be spent without suspicion.

Governments and gutless watchdogs are in awe of the City and the financial institutions who constantly remind them that they are the engine driving the British economy and return billions in taxes to the Treasury while upholding the highest standards of fiscal rectitude and probity.

The reality is they are a squalid gang of corrupt spivs gambling with the livelihoods of millions of workers while awarding themselves obscene salaries and bonuses.

They know they are almost untouchable, operating outside the law in a financial sewer polluting and contaminating politics.

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