FRIENDS IN LOW PLACES

Shock - Horror - OMG! Banks rip off their customers and steal their businesses.

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This week's news that two Official Reports find that the Royal Bank of Scotland (RBS) sets up business customers to fail by imposing "complex" (complex = crooked) incomprehensible "Interest Rate Swap" agreements on loans; then pushes the business into bankruptcy; then sells their prime assets at knockdown prices to a disguised RBS subsidiary; would be shocking if it had not been UK banking practice since the beginning of time.

I suppose it is doubly shocking because RBS was bailed out by HM Government in the 2008/09 banking crash, which "lost" The City of London and Wall Street (in fact lost taxpayers) about $3 trillion (8 million jobs for ten years) - leaving RBS 80% owned by the British taxpayers.

It may be trebly shocking because the British Government (currently the Tory Trust Fund Babes and Liberal Democrat Private School - Alliance), as majority shareholder in RBS and in Lloyds Bank; banks which service 50% of the UK's SME's (small and medium sized enterprises); SMEs which in turn employ 60% of the UK workforce - have set targets for increased lending and support by RBS and Lloyds. Targets which are being ignored by the bankers - and in fact reversed, as RBS sees SME's as easy meat which it can isolate, destroy and consume - without reprisals.

So, it isn't surprising that Mark Carney, the new Governor of The Bank of England, is deeply concerned. But it isn't really news at all; because it isn't new. But the scurrilous, gutter practices may have, almost certainly have, increased ten or twenty fold in 30 years (since monetarist, Big-Bang, filthy rich, Thatcher). MARK CARNEY - MONEY-WARS

The rip-off system relies on having friends in low places, in dark dismal corners of disgrace, where decent people do not look. It works like this:

...Most SME's are essentially funded by and guaranteed by owner/managers; and need strong bankers to provide liquidity for survival and growth - for most of the lifetime of the business. The better the business, the more it is a beacon in the darkness that attracts financial sewer rats, maggots and diseased parasites. The crooks fit-up the business with unserviceable loans, tighten the screws, send in their pals to "rescue" the business - bent accountants, lawyers, non-exec directors, consultants and "experts" who gouge out monthly fees - often doubling the so called financing costs. The business is forced into liquidation with the bank as the major secured creditor; the accountants and lawyers reveal their true identities as (government licensed) official Liquidators. 

The owners are brow beaten into ignominious personal bankruptcy; are exhausted, strangled with red tape* and unable to fight back. All polite people walk away on the other side of the street. The (bank's) Liquidators fix all the creditors meetings - and push their more controversial scams through The Courts, where they have more co-conspirators (friends in low places) - and rapidly sell off all the valuable assets to the bank or other conspirators - all the while extracting large fees for themselves. When  everything has gone - they disappear.

* The UK's Companies Act is the longest, most complex law ever written. A cornucopia for bent lawyers.

Such scams in the past, were most often triggered - in the UK - by tax debts. More than 50% of all SME liquidations were forced by government tax collectors - who had and probably still have the same sorts of friends in low places - in the recovery units in banks - with dirty raincoat Liquidators - in the Court Houses - among Court Bailiffs. We had such a case last year where a profitable small hotel was forced by tax-collectors who "lost" all the payments the hotel made (credited to the  wrong account), into a fixed, high speed, knock-down price auction by the tax-collector's liquidator. The hotel owner's father, a skilled and determined colleague of mine, had the whole 2 year's tragedy reversed, got the hotel back from the conspirators and won substantial compensation from HM Tax Collectors. A one in a million success and triumph for honesty. Do not try this at home. 

The losses and costs are borne by the owner-managers who are generally ruined; by the firms' trade creditors and suppliers and by the redundant workforce. The banks, accountants, lawyers, auctioneers etc. make fortunes - from the years of hard work and risk taking of the owners. 

Best advice - Never do business with a firm where the executives gouge out millions for themselves - they have become habituated greedy crooks - and will screw you.  Read the loan /derivatives contract; if you don't understand it, it is crooked. Split up your banking so no single bank can salivate over your profits - don't let them easily see your success; and like all successful SME owners - be deeply paranoid - trust no-one; they are out to get you -  and they do have friends in low places.

MONEY WARS