At the height of the banking crisis in 2008, I took a phone call from one of the people closely involved in the banks’ rescue.
He pleaded with me to opine in print that Lloyds must be allowed to merge with the beleaguered HBOS and that the government must pump taxpayer money into HBOS. My source said it would trigger an economic tsunami if the institutions were allow to fail.
When I asked for evidence, he said it was common sense and promptly rang off.
That is where, by an large, the justice system has left the Global Financial Crisis, a mega event that was stunningly seen as axiomatic, rather than as a calamity for which the main actors should have been held responsible.
I was reminded of this exchange when the news surfaced — slipped out more like, on the eve of a long holiday weekend — that City watchdogs have concluded that no prosecutions will be brought against the former bosses of HBOS over its near collapse in 2008.
You may think that 14 years is a long wait. That might tell you something about the enthusiasm of the beaks, in the form of the Bank of England and Financial Conduct Authority, or FCA, to get involved.
In fact, this inquiry took six years. It was set to conclude in 2017, having been launched in 2016, but then the authorities discovered a cache of previously unexamined material.
In all, they had to go through a further two million documents before reaching a verdict of no action against those who presided over a fast-growth strategy in which the bank lent like crazy and ran up bad debts of £45 billion before being bailed out by the taxpayer to the tune of £20bn and being taken over by Lloyds.
The truth is that the 2016 investigation only began because the Bank and FCA were forced into action. They’d previously looked at HBOS’s failings and decided in 2015 that “ultimate responsibility for the failure of HBOS rests with its board”.
Despite this stark finding, they decided against bringing prosecutions.
It was only when a separate report by Andrew Green QC, also released in 2015, found that public interest decreed actions against the bank’s ex-chiefs be reconsidered that they reluctantly began their latest scrutiny.
Mr Green has described the earlier decision not to pursue the executive board directors — including chairman Lord Stevenson, former finance chief Mike Ellis and ex-chief executive Andy Hornby — as “materially flawed”.
The Bank and FCA said: “Independent decision-makers reviewed the matters under investigation and have each determined that no enforcement action should be taken against these former HBOS senior managers. These investigations have therefore been closed.”
The 2015 report had described a boardroom that lacked banking experience and a management team that drove a culture of growth at all costs. It said the bank “failed to set an appropriate strategy and also failed to challenge a flawed business model that placed inappropriate reliance on continuous growth without due regard to the risks involved”.
However, after “rigorous and forensic investigations”, after gathering more than two million documents, interviewing former bank managers, and undertaking “substantial analysis” of the bosses’ roles and responsibilities at what was then the country’s biggest mortgage lender and savings institution, the outcome is no further action.
This means that only one HBOS executive — former head of the commercial lending arm Peter Cummings — has ever been punished over what happened. Mr Cummings was barred from working in the City again and fined £500,000 in September 2012.
The logical extension of this is to suppose that Mr Cummings acted entirely alone — which, of course, is ludicrous. Certainly, he is entitled to feel more than a little angry over his apparent scapegoating.
What was the “too big to fail” argument, so eloquently explained to me above, spilt over into “too big to jail”.
No senior banker anywhere stood trial, let alone went to prison, for bringing the world’s financial services industry to its knees, for forcing governments to mount lifeboat operations that cost several billions of pounds and for causing a global recession with the loss of untold numbers of jobs, not to mention the infliction of misery on countless people, sparking mental and stress-related health issues.
HBOS was a shocking, basket-case of a bank. As well as the growth and lending policy, its Reading branch, which specialised in the rescue of small businesses, was at the centre of an enormous fraud.
Tens of smaller business customers were ruined between 2003 and 2007 when corrupt bankers conspired with so-called turnaround consultants to loot the businesses that had been placed in the bank’s “high risk” unit.
The scheme's discovery did lead to the conviction and jailing of six people. But they were not at the top and again, there is the sense of a prevailing attitude of sweeping things under the carpet rather than pursuing the bosses.
A whistleblower, Sally Masterton, was forced out in 2015 after writing a report that was critical of the bank’s handling of the Reading affair. Lloyds eventually apologised, paid her compensation and admitted she had acted with “integrity and good faith”.
In 2012, as I detail in my new book Too Big To Jail, HSBC was fined a record $1.9bn for enabling the laundering of money by the Sinaloa Mexican drugs cartel, headed by the notorious Joaquin “El Chapo” Guzman.
As much as $1.9bn was, it amounted to only five weeks of HSBC profits. Under the Deferred Prosecution Agreement, reached with the US Department of Justice, HSBC agreed to pay the sum and to undergo a six-year reform programme.
The HSBC bankers were pursuing a high-growth strategy — sound familiar? Warnings about what was unravelling in Mexico were simply ignored.
Make no mistake, the Americans wanted to prosecute, partly because they were acutely aware that no senior banker had been indicted over 2008. But the UK government, in the form of George Osborne, who was chancellor at the time, and the Treasury intervened, maintaining that indictments and possible convictions jeopardised the bank and with that the edifice of the banking system.
No evidence was offered for this assertion. The upshot, and this latest news from the Bank and FCA affirms this, is that bankers are somehow above and beyond. Fining them has minimal effect; what they understand and dread is the prospect of personal ruin, of prison.
To date, they have nothing to fear.
Chris Blackhurst is author of Too Big To Jail — Inside HSBC, the Mexican drug cartels and the greatest banking scandal of the century (Macmillan).
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MATCH INFO
Uefa Champions League, Group C
Liverpool v Red Star Belgrade
Anfield, Liverpool
Wednesday, 11pm (UAE)
Why it pays to compare
A comparison of sending Dh20,000 from the UAE using two different routes at the same time - the first direct from a UAE bank to a bank in Germany, and the second from the same UAE bank via an online platform to Germany - found key differences in cost and speed. The transfers were both initiated on January 30.
Route 1: bank transfer
The UAE bank charged Dh152.25 for the Dh20,000 transfer. On top of that, their exchange rate margin added a difference of around Dh415, compared with the mid-market rate.
Total cost: Dh567.25 - around 2.9 per cent of the total amount
Total received: €4,670.30
Route 2: online platform
The UAE bank’s charge for sending Dh20,000 to a UK dirham-denominated account was Dh2.10. The exchange rate margin cost was Dh60, plus a Dh12 fee.
Total cost: Dh74.10, around 0.4 per cent of the transaction
Total received: €4,756
The UAE bank transfer was far quicker – around two to three working days, while the online platform took around four to five days, but was considerably cheaper. In the online platform transfer, the funds were also exposed to currency risk during the period it took for them to arrive.
The National Archives, Abu Dhabi
Founded over 50 years ago, the National Archives collects valuable historical material relating to the UAE, and is the oldest and richest archive relating to the Arabian Gulf.
Much of the material can be viewed on line at the Arabian Gulf Digital Archive - https://www.agda.ae/en
Directed by Sam Mendes
Starring Dean-Charles Chapman, George MacKay, Daniel Mays
4.5/5
Islamophobia definition
A widely accepted definition was made by the All Party Parliamentary Group on British Muslims in 2019: “Islamophobia is rooted in racism and is a type of racism that targets expressions of Muslimness or perceived Muslimness.” It further defines it as “inciting hatred or violence against Muslims”.
The%20Genius%20of%20Their%20Age
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'Nightmare Alley'
Director:Guillermo del Toro
Stars:Bradley Cooper, Cate Blanchett, Rooney Mara
Rating: 3/5
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
The specs: 2018 Nissan 370Z Nismo
The specs: 2018 Nissan 370Z Nismo
Price, base / as tested: Dh182,178
Engine: 3.7-litre V6
Power: 350hp @ 7,400rpm
Torque: 374Nm @ 5,200rpm
Transmission: Seven-speed automatic
Fuel consumption, combined: 10.5L / 100km
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Classification of skills
A worker is categorised as skilled by the MOHRE based on nine levels given in the International Standard Classification of Occupations (ISCO) issued by the International Labour Organisation.
A skilled worker would be someone at a professional level (levels 1 – 5) which includes managers, professionals, technicians and associate professionals, clerical support workers, and service and sales workers.
The worker must also have an attested educational certificate higher than secondary or an equivalent certification, and earn a monthly salary of at least Dh4,000.
Skewed figures
In the village of Mevagissey in southwest England the housing stock has doubled in the last century while the number of residents is half the historic high. The village's Neighbourhood Development Plan states that 26% of homes are holiday retreats. Prices are high, averaging around £300,000, £50,000 more than the Cornish average of £250,000. The local average wage is £15,458.
The Pope's itinerary
Sunday, February 3, 2019 - Rome to Abu Dhabi
1pm: departure by plane from Rome / Fiumicino to Abu Dhabi
10pm: arrival at Abu Dhabi Presidential Airport
Monday, February 4
12pm: welcome ceremony at the main entrance of the Presidential Palace
12.20pm: visit Abu Dhabi Crown Prince at Presidential Palace
5pm: private meeting with Muslim Council of Elders at Sheikh Zayed Grand Mosque
6.10pm: Inter-religious in the Founder's Memorial
Tuesday, February 5 - Abu Dhabi to Rome
9.15am: private visit to undisclosed cathedral
10.30am: public mass at Zayed Sports City – with a homily by Pope Francis
12.40pm: farewell at Abu Dhabi Presidential Airport
1pm: departure by plane to Rome
5pm: arrival at the Rome / Ciampino International Airport
Jumanji: The Next Level
Director: Jake Kasdan
Stars: Dwayne Johnson, Kevin Hart, Karen Gillan, Jack Black, Nick Jonas
Two out of five stars
House-hunting
Top 10 locations for inquiries from US house hunters, according to Rightmove
- Edinburgh, Scotland
- Westminster, London
- Camden, London
- Glasgow, Scotland
- Islington, London
- Kensington and Chelsea, London
- Highlands, Scotland
- Argyll and Bute, Scotland
- Fife, Scotland
- Tower Hamlets, London
Anxiety and work stress major factors
Anxiety, work stress and social isolation are all factors in the recogised rise in mental health problems.
A study UAE Ministry of Health researchers published in the summer also cited struggles with weight and illnesses as major contributors.
Its authors analysed a dozen separate UAE studies between 2007 and 2017. Prevalence was often higher in university students, women and in people on low incomes.
One showed 28 per cent of female students at a Dubai university reported symptoms linked to depression. Another in Al Ain found 22.2 per cent of students had depressive symptoms - five times the global average.
It said the country has made strides to address mental health problems but said: “Our review highlights the overall prevalence of depressive symptoms and depression, which may long have been overlooked."
Prof Samir Al Adawi, of the department of behavioural medicine at Sultan Qaboos University in Oman, who was not involved in the study but is a recognised expert in the Gulf, said how mental health is discussed varies significantly between cultures and nationalities.
“The problem we have in the Gulf is the cross-cultural differences and how people articulate emotional distress," said Prof Al Adawi.
“Someone will say that I have physical complaints rather than emotional complaints. This is the major problem with any discussion around depression."
Daniel Bardsley
Company%20profile
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Women & Power: A Manifesto
Mary Beard
Profile Books and London Review of Books
