COOP SCANDAL: ‘nothing to suggest problem in the 2012 accounts, but directors had been warned in 2009’

How the top men at the bank lied in the Company Report

Sources close to the Cooperative Bank insolvency issue are alleging that criminal fraud has been committed by the major management players on the bridge when the ship sank. Their evidence makes for compelling reading….and shows yet again how those who come into a Mutual – already infected by the universal greed apparent outside – can screw things up.

 The Co-op’s group accounts for 2012 asserted that:
‘Bank liquidity has been reviewed by considering the latest liquidity forecast for 2013–2015, as well as the stress testing results from period end for internal liquidity assessment, together with the Bank’s compliance with its regulatory required levels. The evidence from stress testing as at period end [January 2013] shows that sufficient liquidity levels can be maintained under the most severe scenarios. This is also documented in the Individual Liquidity Adequacy Assessment (ILAA).’
Not true. The Directors were warned by the PRA in 2012 as stated to the Select Committee, that its stress test of Co-op Bank’s assets in 2012 clearl showed the need for further additional capital, and [that] the Co-operative Bank  aspects of  liquidity-risk management, integration, governance and management – needed to be improved for the Co-operative Bank to proceed with the bid for Lloyds’ branches.The PRA told the Co-operative Bank on the record that it was ‘their duty to inform Lloyds of their position’.
But these Directors were also duty bound to draw that warning to the attention of  both auditors and Members in the annual report – which they quite clearly didn’t do.
The Directors appear to be bang to rights here: they camouflaged the true asset position deliberately in order to avoid detection. That is fraud, clear and evident. The context for reaching that judgement is irrefutable in the definition of fraud within accounting law:
“A false representation of a matter of fact—whether by words or by conduct, by false or misleading allegations, or by concealment of what should have been disclosed—that deceives and is intended to deceive another so that the individual will act upon it to her or his legal injury”

But then, past experience with the Government/Banker relationship might suggest otherwise.

When the Halifax Building Society demutualised in the mid 1990s, as their advertising agent I was given the task of creating the Member vote and flotation communications campaign. We took the business – to do otherwise would’ve meant making 27 people redundant – and it was without question the daftest, most disastrous decision I’ve ever made as an adult. If there is one association in life I’d wish to airbrush out, it’s that one.

For roughly 18 months before the float from Mutuality to plc, trying to get the client to focus on any normal product marketing was like trying to get a dyslexic kid to read War & Peace. The deal stood to make some twenty or so individuals in the management extremely rich: so with that scent in their flared nostrils, getting anyone’s attention without using the word “flotation” was difficult.

A Westminister-generated report in April this year confirmed that the desire of this tiny group to get rich quick has so far wound up costing the British taxpayer £30 billion. Just think about that number: each trougher’s greed cost this country £1.5 bn. You could build a lot of NHS infrastructure with that much. You could give 15o,000 SMEs defrauded by RBS a £10,000 interest free loan. You could have Jeremy Hunt and his mates in the Newscories sect buried under motorway stanchions, no questions asked guvnor. You could build the f**king motorway to go with them.

So far, one of the rich few, James Crosbie – who once referred to me as “a Trot” after I predicted what would happen – has been stripped of his knighthood. Two other senior managers were made to apologise to a Parliamentary Committee. Er, that’s it. The rest of them – from Dick Spelman to Mike Whitehouse – trousered milli0ns. Nobody has been asked to pay anything back for taking the world’s biggest mutual Society and turning it into a taxpayer debt. On this basis, the Coalition should be paying each Croydon rioter a bonus of at least £1m each. Which would of course be wrong…as indeed the HBOS disaster was utterly, unforgivably and disgracefully wrong. This is equality before the law in Cruel Britannia, 2013….and it has got worse since 2008.

However, when it comes to the Cooperative Bank case history, not only can we see that the Frontal Lobers have learned nothing whatever: we can also discern the very clear case for a fraud prosecution. Thus far, evidence is there none of such an eventuality. Sounds like a case for the UFD to me.

And talking of the Unaligned Front for Decency, an update: solicitors have been engaged with a view to the formation of a mutual charity. Frankly, my brain hurts just talking to them. But things are moving forward: all those expressing interest in joining will be contacted as soon as possible.

Earlier at The Slog: The real reasons why the Wheels came off Detroit

29 thoughts on “COOP SCANDAL: ‘nothing to suggest problem in the 2012 accounts, but directors had been warned in 2009’

  1. Pingback: John Ward – Coop Scandal : ‘Nothing To Suggest Problem In The 2012 Accounts, But Directors Had Been Warned In 2009′ – 22 July 2013 | Lucas 2012 Infos

  2. I appreciate it’s just a typo and your maths are generally very sound, however the world needs to realise that a million seconds lasts roughly a fortnight, a billion seconds lasts 32 years. Your £1.5 bn could fund a free £10k loan to 150,000 SMEs (or indeed a £1m free loan to your original 1,500)


  3. I have been following this Co-op débâcle closely, looks like there will be a few extra pensioners freezing to death this winter as their supposedly ‘rock solid’ income generating bonds are torn up in their faces.
    If you can’t touch it, you don’t own it. This might seem a Neanderthal concept in these times of internet and technology but it is the one I’m running with….


  4. Hooray
    It’s looking like I’m going to be a rebel with a cause soon!
    UFD not quite how you spell Boxer Rebellion, but I’m gonna roll with it.
    I’m in…..sign me up


  5. The Co-op being strange folk with which to do business goes back at least to 1999 when ICL tried to implement some serious technololgy for them. It went to Court, ICL won and then the Co-op won on appeal. But what came out about Co-op behaviour in the original trial was an eye-opener, even for the IT industry.


  6. The equivalent of your idea runs under the name of Manos Limpias here in Spain, and they are making great inroads on the corruption cases. It is slightly different but operates with just 5,800 contributing members. Of course they did engage voluntary lawyers, which helps. Have you thought about recruiting wigs?
    How about an “Avaaz” type petition/recruitment page? With 24 million members might there be a creative way to use their organisation to spread your word?


  7. I think the above comment comes over as a bit callous.. what I was really trying to say was that I feel sorry for those who invested with Co-op thinking that their ‘ethical’ approach meant that they would be insulated from the casino lunacy. I read last week of a man who had power of attorney over their parent’s finances who had sunk a lump sum into co-op bonds in order to pay care costs in the long term – looks like the taxpayer is going to end up bailing them out too when they can’t pay for care, so again the banking shysterism has cost the rank and file double.


  8. Those that invested with the Co-op may have done so with the best of intentions and there may well be Greek Cypriots in a similar boat. But to expect 13% no-risk returns in this day and age on the basis of what is essentally a marketing ploy is just naiveity.


  9. Nobody has ever got a 13% investment return. At their launch in 1992, as Britannia Building Society PIBS, what became the 13% coupon Perpetual Unsecured bond was at an Issue Price: 107.125 per cent. At that time you could get 10% in a risk-free Building Society Deposit Account. Thereafter the bond price has always been above that – as high as around £2.00 and until a few months ago £1.70.


  10. John, several mentions have been made in the comments about the Harrogate Agenda…… and yet you havent said anything about it.
    Why is this?
    Could it be that one big ego (yours) cannot tolerate another big ego (Richard North)?
    I am sorry if this seems rude, but you are both singing from the same sheet – and yet ignoring each other.
    If we want any chance of change, we surely must all work together for our aims.
    I would really appreciate your reply on this.


  11. … and those figures (£10k to 150k SMEs) correspond to the public costs of just one of the twenty bankers. The £30 billion total cost would equate to a £200k free loan for the SMEs.


  12. When Halifax Building Society merged with the Leeds Permanent Building Society and convert to a plc statements were made about IT synergies (and hence cost savings) which were laughable. Was that deliberate or unintentional?


  13. Why don’t we all chip-in and take a full page ad out in whatever newspaper,(just like someone did a short while back), asking some of the questions we have been asking ourselves, such as;
    As it has been shown, the spy services know the ins and outs of everyone on the world wide web, so why don’t they know where all the child porn is coming from?


  14. Pingback: At the End of the Day | The Slog. 3-D bollocks deconstruction

  15. @Jon
    and what? let them get away scot free simply because the promised rates were unrealistic?

    you can’t seriously see it that way. unless, …


  16. An extremely pertinent question.

    If you were to ask me, right now, in the mood I’m in, I’d say they have either been paid off handsomely by organized crime and associates, or are cowards, or are in cahoots with intentional destructive forces bent on destroying any remnant of social fibre which we may desperately still cling to. Although we have no choice but to cling to such things.

    Then there is the paradoxical ‘quantum of obedience’ cited by philosophical investigators after the horrors of WWII, and it may indeed be and inherited human condition.

    But the internet pornography is an inexcusable excrescence, boldly underlining hypocrisy transcontinentally and anywhere else. If people will take up this banner we will have an excuse to go anywhere and do anything in addition to the other excuses presently, Sir. Thank you very much.


  17. As I have said on Twitter before who did the due diligence on the Britannia deal? Stevie Wonder, forgive my obvious ignorance but wasn’t someone designated to shine a torch on the accounts and say aye or nay on the deal if it did not stand up. Once again some auditing firm, it really does not matter which one as they are all the same, took one cursory look at the accounts and gave them them the thumbs up the Co-op board wanted to hear because this meant big bonuses all round.

    You would have thought £1.5 billion was a number which was too big to miss but once again the authorities are lapping up the notion from the Co-op board and the auditors that whoops accidents happen. No one will loss their bonuses and the taxpayer once again bailout an idiot bank. This is once again a clear case of financial fraud but no one will ever have their collars felt.

    A former head of the SFO was asked to give back a 40% top up to her pension pot which had not been signed off by the Treasury, and she ran up a £100,000 in hotel and transport costs. Sir Ian Andrews Chairman of the Serious Organized Crime Agency thinks that it is imperative to protect the reputations of a number of Blue Chip companies that hired dodgy private eyes to use illegal means to spy on people. Therefore our law enforcement agencies tasked with protecting us from those with criminal intent at the top of a major corporation in this country can do so with impunity. Much like the regulators they are merely a means by which the find the lady merchants use to convince us dupes that we aren’t being conned.

    If you cornered Mark Carney or George Osborne and said this is rampant corruption what are you going to do about it, they would say they would do nothing. In a pained voice as though talking to the slow witted child they’d say do you really want to bring down the entire financial global economy, for those are the stakes. Honesty and integrity in the conduct of our major companies is now a luxury we can ill afford.


  18. Indeed, and £30 billion (£30,000,000,000.00) could have given 3 million small start up business £10,000.00 each!!!
    Then there’s the £billions wasted with the NHS computer system!!! et cetera, et cetera, et cetera……!!!


  19. I have been a Smile Internet bank customer since the bank was launched and a member of the Co-Op for many years too. I switched from NatWest because I preferred Co-ops ethical stance. When the Britannia merger came up I wrote to the Co-op about an HMRC criminal enquiry into Britannia’s involvement in a tax avoidance scam involving derivative instruments. Behaviour completely at odds with the Co-Ops ethical stance and bizarre for an alleged mutual but explicable in terms of the control frauds perpetrated by greedy bastards who took over the mutual sector. I got no reply to my letter. I would imagine whoever did the due diligence found this kind of behaviour run of the mill. As has become par for the course in these cases no prosecution was brought in this case. It may have been during the period when Richard Alderman who distinguished himself at SFO, was head of HMRC prosecutions.

    Although I still use Smile for current account banking I made my investment dispositions accordingly.


  20. Pingback: UK LENDING POLICY: Cable, Osborne and Carney lay groundwork for stimulation splurge | The Slog. 3-D bollocks deconstruction

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