The Conservatives have raised over £5m from HSBC clients with Swiss accounts.

This is a bank that has:

Rigged financial markets (from LIBOR and foreign exchange markets to gold, silver and oil).

“Missold” wholly inappropriate products such as interest rate swaps to “unsophisticated” customers.

Leaked files from HSBC’s Swiss private banking arm revealed the bank supported clients, which included international criminals, to hide millions of dollars from tax authorities. The clients ranged from celebrities and politicians to international criminals condemned by the UN. Some accounts belong to individuals involved in arms trafficking, money laundering, the illegal trade of blood diamonds (diamonds mined in a war zone, often to fund the war) and other precious minerals, and other types of organized crime and corruption.

Laundered money for Mexican drug cartels. This included transporting billions of dollars in armored vehicles, clearing suspicious checks, and helping traffickers buy planes through Cayman Island.

Helped rogue states such as Iran and North Korea avoid international sanctions.

Worked closely with Saudi Arabian banks linked to terrorist organizations.

Following search warrants and raids in 2013, Argentina’s main taxing authority accused HSBC of using fake receipts and dummy accounts to facilitate money laundering and tax evasion.

In June 2013, a media outlet in India did an undercover expose where HSBC officers were caught on camera agreeing to launder “black money.” HSBC placed these employees on leave pending their own internal investigation

In 2012 it was reported that HSBC had set up offshore accounts in Jersey for suspected drug-dealers and other criminals, and that HM Revenue and Customs had launched an investigation following a whistleblower leaking details of £700 million allegedly held in HSBC accounts in the Crown dependency

HSBC also held billions of dollars of assets for the Libyan Investment Authority, which was controlled by Colonel Muammar Gaddafi; after Gaddafi’s overthrow and assassination, the bank refused to reveal information about the funds, citing customer confidentiality.

In 2003, HSBC acquired HFC.

Notorious for predatory sub-prime lending in the US, HFC brought its business to the UK in the 1970s. The bank engaged in fraudulent schemes to overcharge consumers through the store accounts of household names like Dixons, Currys, PC World, and B&Q.

When HSBC made the acquisition, they took over the store accounts of John Lewis, extending a culture of corruption, and applying the illegal charges to John Lewis customers.

Nicholas Wilson is a former Litigation Manager and Head of Debt Recovery at Weightmans Solicitors LLP, company that has represented HSBC. The work involved customers of HSBC-owned HFC Bank and John Lewis Financial Services (JLFS) who fell into difficulty with credit card payments.

Between 2003 and 2009, the two companies referred customers having financial problems and difficulty with credit card payments to their solicitors. It then added 16.4% of customers’ credit card balances to their accounts as a “debt collection charge”.

Wilson told HFC Bank in 2003 that its actions were illegal. The bank ignored him. Wilson was sacked in 2006 by Weightmans following his whistleblowing. In 2010, the Office of Fair Trading said that HFC Bank and JLFS charges to customers were unreasonable. Following a ruling by the Financial Conduct Authority (FCA), the bank has agreed to pay back £4m to 6,700 customers after wrongly charging interest on credit card debt. Wilson says that the true amount HSBC owes is closer to £1bn.

Treasury Select Committee grill Financial Conduct Authority over HSBC fraud

The Conservative Party has already been fined £70,000 following an investigation into election campaign expenses, the Electoral Commission (EC) has announced.

The Tories failed to declare a total of £285,813 in campaign spending and failed to keep records in three by-elections during 2014. Simon Day, the registered treasurer of the party at the time, had failed to ensure spending was accurately reported, and has been referred to the Metropolitan Police for one of two offences committed under the Political Parties, Elections and Referendums Act 2000. Public or private interests? A further development on March 20, 2017 was reported in The Guardian. Hundreds of banks had helped launder KGB–related funds out of Russia, as uncovered by an investigation named Global Laundromat. Of course HSBC was listed among the 17 banks in the UK that were “facing questions over what they knew about the international scheme and why they did not turn away suspicious money transfers,” as HSBC “processed $545.3m in Laundromat cash, mostly routed through its Hong Kong branch.” Other banks facing scrutiny under the investigation included the Royal Bank of Scotland, NatWest, Lloyds, Barclays and Coutts. In response, HSBC claimed that it was against financial crime, and that the case “highlights the need for greater information sharing between the public and private sectors.” One of the problems in researching corruption is that it’s in the interests of all the participants to hide it. We know that there are lots of aggressive lobbying groups with vested interests, and often, some “surprising” policy decisions, laws and regulations are made in the interests of a small number who benefit financially. Some firms that employ former government ministers end up very poorly regulated, or with large government contracts.

There is also the revolving door of vested interest – the movement of personnel between roles as legislators and regulators and the industries affected by the legislation and regulation. We know that the Big Four accounting firms like KPMG seconded dozens of their own staff to the Treasury to advise on tax law – and we know that those accountancy firms’ corporate clients have benefitted greatly from the UK’s tax laws. The movement of senior civil servants and government ministers into business roles is overseen by the Advisory Committee on Business Appointments (ACOBA), but it is not a statutory body and has only advisory powers. The Channel Four Dispatches programme “Cabs for Hire”, broadcast in early 2010, which showed several sitting members of Parliament and former ministers offering their influence and contacts in an effort to get lobbying jobs, has generated renewed concern about this issue. A Transparency International UK report on the subject, published in May 2011, called for ACOBA to be replaced by a statutory body with greater powers to regulate the post-public employment of former ministers and crown servants. It also argued that the committee should be more representative of society. Andrew Lansley, the former Health Secretary, now works for a healthcare consultancy advising on NHS contracting, and former Defence Secretary, Geoff Hoon, and dozens of senior military officers are now working for defence companies, for example. Former Chancellor George Osborne, was made a Privy Councillor – privy to state secrets – and sworn to keep them… secret. As a newspaper editor I’m sure that he will be fearlessly pursuing transparency. Now for the news: the plot sickens It has come to light that HSBC gave a private investment firm called IPGL, run by former Conservative Party Treasurer Michael Spencer, a substantial loan of £214.2m loan to IPGL. At the time, IPGL was having financial difficulties, with one of its subsidiary companies (City Index), reporting £43m losses. Move Your Money and Debt Resistance UK uncovered fresh evidence raising questions over the Conservatives 2010 and 2015 election funding, exposing millions of pounds of dirty money flowing into the Conservative Party via IPGL Ltd and HSBC. A leaked internal email suggests HSBC has flouted anti money-laundering protocols which require screening of high risk political clients, ignoring its own claimed commitment to “political neutrality.” Loan documents obtained by Move Your Money and Debt Resistance UK show that HSBC lent over £214m to the private company IPGL Ltd, chaired by Conservative Party Treasurer and Chief Fundraiser for the Conservatives at the 2010 general election, Michael Spencer. Spencer had to put in £70m of his personal £1bn fortune to bail out the failing company. Despite the financial hardship, from 2007 to 2011, IPGL was donating between £500,000 and £1.1m a year to the Tories (pg 4). The company gave (pg 6) £1.03m to the Conservatives’ 2010 election campaign, including £18,706 directly to Cameron, which paid (pg 60) for him, George Osborne and four unnamed others to fly by private jet to the World Economic Forum in Davos, Switzerland. Months before the 2010 general election. The Guardian also named Spencer in Cameron’s “cash-for-access” scandal, as he attended private dinners with the former PM at Number 10. Spencer has stated that he would ensure enough election funding for the Conservatives to “blow Labour out of the water”. The party reportedly needed £40m for the election campaign. Spencer had also co-founded the Conservative Party Foundation, a group with the specific aim of “underpinning” the party’s finances.

IPGL and other subsidiaries controlled by Spencer donated more than £5m to the Conservatives, donations that would not have been possible without HSBC’s loan, and which HSBC must have known about, as they bank IPGL.

Labour MP John Mann, who is on the Treasury Select Committee, said: “This is a very major regulatory issue and needs assessing for potential criminal behaviour. It’s political games being played in the hope of a weaker approach to bankers fraud.”

Roger Mullins – Treasury Spokesperson for the SNP – said: “This is a very serious and deeply worrying case, suggesting that a major bank and a business customer have been involved in activities serious enough to warrant criminal investigation. I shall be writing to the Electoral Commission, there must be an investigation into this and before the General Election of 2017.”

Since the £214m loan, HSBC has gained significant concessions from successive Conservative governments, including escaping investigation for Mexican money laundering and terrorist financing, extraordinary light treatment for the Panama Papers and Swiss Leaks scandals, as well as successfully lobbying for a roll back on the bank levy in 2015. The bank denied claims of corruption and undue political influence when challenged by Move Your Money at the bank’s AGM last week.

The news emerges as 30 Conservative MPs are still facing charges for 2015 election spending fraud, and threatens to engulf the party in a fresh dirty money scandal with only five weeks until the country goes to the polls.

Releasing the evidence, campaigner for Debt Resistance UK, Joel Benjamin, said:

“Cash for Conservatives shows just how easy it is for big banks like HSBC to buy off the Tories, who are already being investigated for electoral fraud.”

“Michael Spencer’s donations were only made possible through an undeclared HSBC loan. Regulators must get a grip on City dirty money corrupting British politics.”

The donations to the Conservatives from IPGL Ltd include a £20,000 donation to Theresa May (reference: C0247748, on 13/07/2016).

A summary of IPGL & Michael Spencer’s donations to the Conservatives can be seen here.

The commodification of democracy

Wealthy individuals and corporations spend unlimited sums to affect elections, and rich donors can now give huge amounts to political parties. Transparency International, the leading international NGO in assessing and curbing corruption, defines it as “the abuse of entrusted power for personal gain.”

Big corporate political donations are having a very corrosive influence on our democracy. To understood the nexus of corporate money and politics, one only needs observe the toxic high tide of privatisation and deregulation, the rise of jaw-dropping levels of boardroom pay and the eye-watering squeeze on citizens’ standard of living; big business devotes massive resources to politics, and their large-scale involvement increasingly re-directs and constricts the capacities of the political system and shrinks our democracy.

Any suggestion of adjusting taxes for top earners so that they contribute to a society from which they have ganed so much, or tougher regulations on the abuse of market power is howled down as “dangerously anti-business“. What is the point of “wealth creators” if they hoard it? Transferring income from the “idle rich” to poorer sections of society through taxation is probably more of a pro-business policy.

We have vulture capitalists such as Adrian Beecroft, another Conservative donor, writing policy reports and framing the terms of our employment laws. Beecroft had donated a total of £722,276 to the Tories since Cameron became leader, including £20,000 in March 2014, while his wife Jacqueline donated £50,000. Beecroft was appointed by the Prime Minister to “review” employment law. He was rewarded with millions of pounds of taxpayers’ money spent on a venture capital fund.

The British Business Bank, which is run by the Department for Business, committed £7.8m to the Dawn Capital II investment fund, Whitehall documents showed. Dawn Capital II’s parent company is Dawn Capital, whose chairman is Adrian Beecroft.

As Beecroft donated more than £700,000 to the Conservative Party, making him eligible for David Cameron’s “Leader’s Group” of top donors who are granted exclusive access to the Prime Minister.

Our political economy too often rewards lobbying and donations over innovation and crucially, over public needs.

Corporations donate to Conservative governments because they regard them as a probable source of profits and supportive of their narrow interests. Neoliberalism incurs a lot of costs. A self defined “business friendly” government comes at a price.

But it’s the public that pay the highest price.

I checked out the donations declared by Theresa May and found (pg 270):

Name of donor: Michael Davis Address of donor: private Amount of donation or nature and value if donation in kind: £30,000 to support my campaign for leadership of the Conservative Party Date received: 6 July 2016 Date accepted: 6 July 2016 Donor status: individual (Registered 01 August 2016)

Name of donor: IPGL ltd Address of donor: Citypoint, One Ropemaker Street, London EC2Y 9AW Amount of donation or nature and value if donation in kind: £20,000 to support my campaign for leadership of the Conservative Party Date received: 12 July 2016 Date accepted: 13 July 2016 Donor status: company, registration 2011009 (Registered 01 August 2016).

—

The Seven Principles of Public Life (Nolan Principles for public office holders) have been amended over the years. The cash-for-questions affair was a political scandal of the 1990s in the UK, which prompted the then-prime minister John Major to instigate the Nolan Committee, to review the issue of standards in public life, .

It began in October 1994 when The Guardian newspaper alleged that London’s most successful parliamentary lobbyist, Ian Greer of Ian Greer Associates, had bribed two Conservative Members of Parliament in exchange for asking parliamentary questions, and other tasks, on behalf of the Egyptian owner of Harrods department store, Mohamed Al-Fayed.

I think the government need reminding of the principles that ought to govern their participation in public life. They are currently (2015) worded as follows:

Selflessness – Holders of public office should act solely in terms of the public interest.

Integrity – Holders of public office must avoid placing themselves under any obligation to people or organisations that might try inappropriately to influence them in their work. They should not act or take decisions to gain financial or other material benefits for themselves, their family, or their friends. They must declare and resolve any interests and relationships.

Objectivity – Holders of public office must act and take decisions impartially, fairly and on merit, using the best evidence and without discrimination or bias.

Accountability – Holders of public office are accountable to the public for their decisions and actions and must submit themselves to the scrutiny necessary to ensure this.

Openness – Holders of public office should act and take decisions in an open and transparent manner. Information should not be withheld from the public unless there are clear and lawful reasons for so doing.

Honesty – Holders of public office should be truthful

Leadership – Holders of public office should exhibit these principles in their own behaviour. They should actively promote and robustly support the principles and be willing to challenge poor behaviour wherever it occurs.

MPs’ outside interests: Committee on Standards in Public Life announces short review

See also:

Corporate and financial power have merged into the state – Seumas Milne