In the finest traditions of his calling, the Barclays whistleblower has lobbed a sizeable hand grenade into his own place of work, no doubt sending both his bosses and colleagues diving for cover. In doing so, he has shed some fascinating light upon the bank's highly secretive, enormously lucrative and – we should stress – entirely legal tax-dodging operation.

But he has done much more than this. He also provided a 3,200-word covering letter that offers a vivid picture of life at the heart of this anxiety-ridden and testosterone-powered enterprise. Along with the documentation that Vince Cable, the recipient of the letter, felt compelled to pass on to HM Revenue & Customs, the whistleblower has given us Fear and Loathing in Canary Wharf.

"Hidden away on the top floor of 5 The North Colonnade sit the formidable Barcap SCM (Structured Capital Markets) team," he writes. "A team of some 110 people with the sole purpose of structuring tax-aggressive transactions to avoid tax not only for Barclays but also for banks and companies across the world. Once upon a time the story was about the avoidance of UK tax, this rapidly expanded into the avoidance of US tax too but now the business has grown to encompass Europe, Brazil, the Middle East, South Africa and other emerging markets.

"It is true to say no other tax arbitrage team has the financial resources or the senior management support from the very top that the SCM team enjoys at Barclays. Indeed many joke within SCM that they are the tax structuring market, thinking up all the ideas in all the major jurisdictions, sourcing the counterparties, instructing counsel (for themselves as well as for the counterparty) and executing the trade for both sides. Indeed all the counterparty need do is turn up, sign some documents and collect a large sum of money from the fiscal authorities.

"Where the world sees turmoil and destruction, the leaders of SCM see opportunities arising from tax loss exploitation and corporate restructurings throwing up all sorts of new and juicy areas of the tax code which can be profitably exploited. For the last 10 years the SCM team has generated a formidable amount of profit peaking in the last few years at circa £1bn per annum." (Barclays disputes this figure.)

The whistleblower could not be more scathing about the organisation's managers. One, he declares, "rules over all in his world through fear", a second has an intimidating manner and "resembles a stock cube", and a third metaphorically clubs members of his team in a manner "similar to that of the clubbing of baby seals". There is one individual with "a fearsome reputation of extracting revenge on employees for the mildest of errors," he writes. "It was widely known that if you even looked at (this man) the wrong way in the lift you would that afternoon receive a call to attend a meeting in the Plaza room of 5 The North Colonnade where the unlucky SCMer would be met by a HR member and a crisp P45. (This man) likes to make sure this process is well known to all as it does wonders."

Not that these people are to be confused with interesting folk, he cautions. "Normally a man who has made the study of the taxes act and the accounting legislation a priority above all other things in life would be looked upon with some surprise. But within SCM these men are Masters of the Universe commanding multimillion pound bonuses and publicly humiliating those of lesser knowledge. These men are not the types who will light up a party and tend only to be able to communicate through snorts and grunts whilst thumbing the pages of Tolley's Yellow Tax Handbook. Hand-picked from the major accountancy firms...(they) craft structures spanning the globe of such complexity that one wonders whether they ever have the time or the interest to do anything else in their life other than draw countless boxes on paper."

The organisation is expanding in the US, he writes. In New York, he says, the 15-strong team has been "swelled by the numbers from the Lehman acquisition, to establish a US business aimed at destroying rivals and taking the new administration in Washington head on. Indeed, with a new administration burdened with two wars, economic meltdown and the choice of new drapes for the White House, SCM management is banking on the administration taking their eye off the ball."

The whistleblower concludes by explaining to Cable why he has sent him the documents. "The last year has seen the global taxpayer having to rescue the global financial system. The taxpayer has already had a gun put to their head and been told to pay up or to watch the financial system and life as we know it disappear into a black hole. It is increasingly difficult to accept that an unintended consequence of saving the financial system is that teams such as SCM will grow more aggressively to reduce tax globally whilst their competitors wilt under increased government scrutiny (as a result of the UK and US governments taking stakes in these banks). Banks should now be encouraged to pay a fair tax (and restrict the sizes of their SCM teams) on their profits given the service provided by society to banks thereby easing the pain taxpayers all face today."

He writes that the way in which SCM reduces tax "has made many in the industry feel uncomfortable especially when this means less hospitals and less schools being built" during a recession. "It is a commonly held view that no agency in the US or the UK (and least of all the European agencies) has the resources or the commitment to challenge SCM. SCM has a huge amount of resources, the best minds rewarded with millions of pounds. Compare this with HMRC recently advertising for a tax and accounting expert with the pay at £45,000. The Revenue will always be behind the curve. Indeed even the recent much-trumpeted disclosure regime has no impact on SCM as through the use of lawyers and client confidentiality SCM regularly circumvent these rules, just one example of why HMRC will never, in its current state, be up to the job of combating this business."

And with a flourish, the poacher-turned-gamekeeper makes his final point: "An open debate on the future of banks promoting aggressive tax trades is necessary, especially now given the role of public money in saving the global financial system."