Jim Armitage: This tale of corruption and greed should be an election issue in US

Global Outlook General Electric is one of those companies that touch our lives from the moment we wake to the moment we turn in. And then it's present while we sleep as well.

From wind turbines generating electricity, to lighting, to power distribution, you just cannot escape this behemoth. As such, it's a true barometer of the economy.

Its figures for the third quarter were predictably poor as it fessed up to flagging sales of many of its product lines around the world. Now, you may say: "No doo-doo, Sherlock." The economy's flagging all over the joint – even in China and Brazil. How on earth can GE not be feeling the pain?

But, as is the way of these things, Wall Street's jaw dropped in astonishment and the shares tumbled. They didn't do a Google, you understand, but they dropped a good 2 per cent in afternoon trade.

"We did expect some messiness in the numbers," said a disappointed Sanford C Bernstein analyst Steven Winoker. "But we thought GE would find a way to pull out all the stops and beat estimates."

Unfortunately, the only way to really pull off a stellar set of growth figures for a diverse conglomerate like GE in these markets is by that tried and tested business plan: steal some stuff.

There's no sign of that kind of behaviour in GE today – hence an honest set of slightly weak numbers. But a court case that just wound up in New York showed how some of its staff were perfectly willing and capable of bending the law to boost its earnings back in the heady days before the financial crisis.

Three former bankers from its finance unit were jailed on Thursday for up to four years for effectively nicking money from taxpayers in the municipal bond market.

Muni bonds are debts issued by states and local councils across the country. When a council issues bonds, it doesn't spend the cash all at once. So it invests the spare money until it needs it, hopefully clawing back some of the cost of the original bond by lending at interest.

They hire brokers to find the best return on the money from the likes of UBS and JP Morgan, who line up to compete with the best interest rate. Except in this case the banks lined up to bid only after having agreed with each other beforehand who would bid what price. In other words, a good old price-fixing cartel was under way. The result was simple: big profits for the banks and a rip-off for taxpayers, who ended up shelling out way over the odds for their local authority's financing costs.

Only three GE staff were jailed this week, but the scam is far bigger. A total of 19 people and one company have been convicted or pleaded guilty so far as the government investigates municipal bond trading. Similar charges to those against the GE mob saw three former UBS bankers convicted in August.

In the GE case, the trio were paying kickbacks to brokers to solicit bids, win auctions and, of course, increase their profits.

According to the government's claims, this scam was going on for nearly seven years. GE, JP Morgan, UBS and Wells Fargo have all admitted illegal activities by former employees and paid more than $670m (£418m) in penalties and compensation.

Given the sheer scale of this scam, it seems remarkable that it isn't a major election issue. Here you have a whole bunch of bankers who were able to rip off provincial state bureaucrats with their fast and loose ways.

As US district judge Harold Baer said when he imposed the sentences "Corruption and greed certainly is what this case was about."

If I were on the stump in the US right now, I'd be asking: where are the checks and balances to stop this happening again? Was it really only 20 or so employees who were culpable? How far up the chain of command did the punishments go?

This is a major, systemic scandal of the order of the Libor-fixing outrage, but with a key difference: the Libor culprits nudged rates up some days and down on others. So it's nigh on impossible to count yourself a victim or a winner. With muni bonds, the public lost out on every trade.

It is a story that deserves far closer attention than it has received.

Suggested Topics
Rumer was diagnosed with bipolarity, attention deficit hyperactivity disorder and post-traumatic stress disorder: 'I was convinced it was a misdiagnosis'
peopleHer debut album caused her post-traumatic stress - how will she cope as she releases her third record?
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvOnly remaining original cast-member to leave long-running series
Life and Style
Couples have been having sex less in 2014, according to a new survey
Holly's review of Peterborough's Pizza Express quickly went viral on social media
Arts and Entertainment
musicBiographer Hunter Davies has collected nearly a hundred original manuscripts
A long jumper competes in the 80-to-84-year-old age division at the 2007 World Masters Championships
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
Walking tall: unlike some, Donatella Versace showed a strong and vibrant collection
fashionAlexander Fury on the staid Italian clothing industry
Arts and Entertainment
Gregory Porter learnt about his father’s voice at his funeral
Arts and Entertainment
tvHighs and lows of the cast's careers since 2004
Life and Style
Children at the Leytonstone branch of the Homeless Children's Aid and Adoption Society tuck into their harvest festival gifts, in October 1936
food + drinkThe harvest festival is back, but forget cans of tuna and packets of instant mash
Lewis Hamilton will start the Singapore Grand Prix from pole, with Nico Rosberg second and Daniel Ricciardo third
F1... for floodlit Singapore Grand Prix
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam