In his Prison Diaries, the convicted former MP and ex-Labour minister Denis MacShane endures a meal in Belmarsh.
“I barely have time to glance at my mail when there is the call for lunch. OMG. I ordered a tuna baguette – but this unpleasant white cotton-wool bread and fishy slush is horrid. I would give anything for some wholemeal bread.”
MacShane was jailed for six months in December last year for fiddling his expenses while an MP. He served his time in Belmarsh, then Brixton. He’s now working with Prison Consultants, an organisation that helps prisoners, and he’s campaigning for white-collar criminals to avoid imprisonment. For such people, he says, jail achieves nothing, turns them into hardened criminals or sends some over the edge, to depression and attempted suicide, and costs a fortune.
I interviewed him this week for London Live, The Independent’s sister TV channel (londonlive.co.uk). MacShane claimed it’s “preposterous” that taxpayers had to spend £1,000 a week to lock him up.
Our prisons are already overcrowded and many of them are old and no longer fit for purpose. We spend more on prisons than we do on the Foreign Office – £3bn more to be precise. And we will soon have more prisoners than we do soldiers in the reduced British Army.
So, says MacShane we need to look at other punishments for fraudsters, such as fines and electronic tagging, rather than incarceration. I can’t agree. I admit to not seeing the sense in locking up MacShane in maximum-security Belmarsh – a less secure prison would have sufficed.
But fraud currently costs the British economy more than £85bn per year and instances of financial crime are increasing at the rate of 27 per cent a year, according to the Office for National Statistics.
Imposing fines on those who can easily afford to pay them is ludicrous – witness the fines handed down in the City by official watchdogs and the negligible impact they’ve had. Tagging is not much of a punishment, either. Community service might do the trick. But more of a deterrent, surely, is the prospect of jail.
We need to crackdown on white-collar crime. And we have to get an important message across: that those who commit fraud are no different from other criminals, and that means treating them no less leniently.
Noam Chomsky put it well when he said: “For the powerful, crimes are those that others commit.” We cannot have one rule for them, and another for the majority. Sorry Denis, but disgusting tuna baguette it is.
London as money-laundering capital? India thinks so
More on our attitude towards financial crime, I must relate this tale from a friend just back from Mumbai.
A very senior official told him they were driven to distraction by the British lackadaisical approach to money laundering. In his country, the booming black economy was a huge problem – one that we are critical of India for not bringing under control.
But all the chat among those who deal in cash and bungs, and worse, he said, was of London. It was the best way to wash dirty money. You set up a company in the British Virgin Islands or Mauritius, the two favoured places for the Indian criminal fraternity. That company then buys an apartment or two or three in London, off-plan in one of the new developments shooting up across the city.
You hold on to it for three years, after which, under Indian law, the money used to purchase it is deemed to be clean. You’re not bothered too much whether London property prices go up and down – your main concern is washing the dosh – but these days there’s an added bonus because prices have been climbing.
He accepted, did the official, that the Indian rule about ownership for three years did not exactly help matters. But the main target for his opprobrium was the British. The “KYC” or “know your client” rule applicable to individuals did not seem to kick-in where companies were concerned. We were making it incredibly easy for the Indian criminals.
Yet, he made plain, we love to tell the world how tough we are; how London is the world’s most upright financial centre; and we’re great ones at telling other countries how to behave.
London, he charged, was the money-laundering capital of the world and our authorities were content to sit back and do absolutely nothing about it.
Another way RBS could help the fraud squad inquiries
Yet more. The City of London Police fraud squad has asked Royal Bank of Scotland to provide it with free training and advice on financial crime. The police are keen to access RBS staff’s knowledge of the markets, financial products and cybertech.
This is the same bank that published in July a guide to the litigation, investigations and official reviews it was involved with. It begins with the legal cases alleging RBS issued a false prospectus for its rights issue in April 2008.
Then it moves seamlessly into lawsuits arising from the issue of $64bn (£40bn) of mortgage-backed securities that failed.
Next, are the manipulations of the Libor and forex markets. They’re followed by a claim in the US from the Bernie Madoff scandal.
Then there’s the breakdown of the bank’s IT in June 2012 that prevented customers getting to their money. That incident is the subject of a joint UK Financial Conduct and Prudential Regulation Authority investigation, which may result in a record fine for such a glitch.
It’s followed by a discourse on the mis-selling of interest rate-hedging products to small businesses and how RBS has provided £1.4bn to cover the legal claims.
Still to come are the official Mystery Shopping Review that saw the FCA require RBS to contact customers about the sale of lump-sum products; mis-selling of credit card protection; the Tomlinson Report disclosing how RBS put small businesses into default so it could make more profit out of them; mis-selling of PPI for which £3.2bn has been put aside; official reviews into the treatment of overdrafts, competition for SME accounts and wholesale banking; investigations in the US into collateralised debt obligations; and US sanctions breaking.
In Edinburgh, there’s a former senior RBS employee who is kicking his heels, out of work, and could certainly help the police in their efforts with their training and imparting his considerable expertise. His name is Fred Goodwin.Reuse content