Andrew Goodall

Greedy bankers and reckless expansion

The BBC series Credit Crash Britain could be well worth watching if, like me, you can't quite believe what's been happening in the last few weeks. This first episode asked how on earth it was that HBOS got into such a mess that it had to be bailed out with billions of pounds of taxpayers' money – shortly after the government said it would waive competition rules to pave the way for a takeover of the bank by Lloyds TSB.

Paul Mason was only able to scratch the surface. HBOS and the Financial Services Authority declined interviews, we were told. Here's a clue, perhaps, as to why HBOS declined – the Treasury select committee of MPs, which is conducting an inquiry into the banking crisis, has decided that ...

during the current period of heightened instability, it would not be appropriate for the Committee to take oral evidence from listed financial institutions.

So I guess we're not going to hear much from the banks for a while yet. But Mason did manage to get hold of Paul Moore, a former head of risk management at HBOS who likened his compliance function to ...

a man in a rowing boat trying to slow down an oil tanker.

HBOS was, according to Moore, a sales-driven retail bank going at breakneck speed. Staff bonuses were based on the number of mortgages sold. The obvious danger was that over-selling of loans would pose a serious risk to customers, HBOS colleagues and ultimately the system itself.

HBOS was built around wholesale funding – borrowed money – Mason said. The party was over when the banks stopped lending to each other and the housing bubble burst. The Lloyds TSB deal has been approved, and Gordon Brown today said that ...

he was "absolutely sure" that without the government's rescue "HBOS would not exist"

An anonymous contributor to the Telegraph, who was made redundant by HBOS, responded to the programme with his own assessment of the reasons behind HBOS's downfall ...

greed and poor risk management.

Mason declared – and I hope he's right – that for the banks ...

the days of reckless expansion on borrowed money are over.

Tax on the political agenda

These are tough times and it's no surprise to see tax in the headlines daily. I get the feeling that almost anything could happen but one thing is pretty clear – developed nations are going to be focusing more than ever on protecting revenues and, in particular, countering evasion and structured avoidance via tax havens. The UK government's record here is not good. More on that (and that Christian Aid report) soon, I hope. In the meantime, the current issue of Tolley's Practical Tax newsletter* has this:

HMRC urged to step up efforts to tackle "serious tax avoidance": the House of Commons public accounts committee has called on HMRC to analyse and explain every year variations in the tax bills of the largest UK companies. Simon's experts talk taxes: a report on the Simon's Taxes inaugural conference. Be prepared to be worried: Mark Lee anticipates an increase in negligence claims and warns tax practitioners that now is not the time to be complacent. And in the newsfile, the Low Incomes Tax Reform Group calls on HMRC to do more to return overpaid tax and claims that delays in handling tax credits complaints are 'unprecedented'.

* TPT is published by LexisNexis. Simon's Tax Briefing has the same content and goes out to Simon's Taxes subscribers.

Mining project 'imposed' on community

CAFOD is claiming that a nickel project run by mining company BHP Billiton has been "imposed on a Philippine community through bribery and poor information". Islanders claim that BHP Billiton’s joint venture partner AMCOR and Philippine government officials "have offered members of the community bribes in return for supporting the proposed mine and to silence opposition". CAFOD said: 

“Kept in the Dark” ... reveals how the Macambol community has been kept in the dark about the proposed mine and how the process to secure indigenous people’s consent for it, as required under Filipino law, was seriously flawed.  It also highlights how the project - known as the Hallmark project - could lead to increased soil erosion, landslides and flash-floods and pollution from mine waste or chemicals could endanger the livelihoods of the 65,000 people living near Pujada Bay.

The Telegraph and BBC News have picked up the story. CAFOD is calling on BHP Billiton to let communities in the Philippines have a say over their future.

Added 25 October: The BBC quoted BHP Billiton as saying:

BHP Billiton has a strict code of conduct governing all aspects of our business conduct, including relationship with joint venture partners.  We take the allegations of bribery extremely seriously and, as noted in their report, Cafod acknowledge they have no evidence to suggest BHP Billiton has been involved in such activity. As also acknowledged in the report, BHP Billiton is in dispute with Amcor and until this issue is resolved we are not in a position to further address the allegations in the report.

This is a disturbing report although the ongoing dispute between the joint venture partners clearly isn’t helping matters. As CAFOD says, modern industrial societies “could not function without metals and therefore without mining”. But mining may be posing an unacceptable risk to local communities and the environment in some cases.