Monthly Archives: March 2011

What to do if you become involved with the criminal law

Robert Henderson (28 April 2011)

Paras 

1-2   What this guide is for

3-8   General tactics

9-13  Choosing a lawyer

14-22 The Arrest

23    Your mental state if under arrest or seemingly under arrest

24-29 How you will be treated after arrest

30-32 How to behave after arrest

33-35 Stop and Search

36-38 Searches with warrants

39-41 Searches without warrants

42-48 The caution

49-51 What to do when cautioned

52-58 The right to silence

59-65 Interrogation

66    The planting of evidence

67    If you are charged

68-71 Detention

72-74 The police

75-78 The Crown Prosecution Service (CPS)

79-81 The government law officers

82-86 What to do if you get to court

87-89 Should you go into the witness box?

90-98 Expert witnesses

99-100 Other paths to explore

101-102 Formal police caution or court?

103-105 When should you plead guilty?

 What this guide is for

1. Over the past twenty-five years fundamental safeguards have been removed or are in danger of being removed from our legal system through measures such as the Serious Crime and Disorder Act, various anti-terrorism laws, the retention of the fingerprints and DNA of those not found guilty of a crime and the breach of the convention that no one is placed in “double jeopardy” by being tried twice for the same offence. At the same time, the whole thrust of government policy and behaviour is ever more authoritarian, vide the neutering of Parliament, the series of gratuitous and aggressive wars and the increasingly intolerant treatment of protestors. In such circumstances the chances of becoming involved with the criminal law are increasing even for the law abiding. That being so it pays to be prepared to deal with the police, lawyers and the courts. This what the guide is designed to do.

2. The guide does not tell you what the law is with regard to a particular crime. Rather, it tells the reader what to expect from the police, lawyers and courts, what can and cannot be legally done by the police and associated agencies such as the security services and how you can best defend yourself whilst keeping within the law.  The law most useful to know in this context is that related to these Acts:

Police and Criminal Evidence Act 1984

Public Order Act 1986

Criminal Justice Act 1987

Criminal Justice and Public Order Act 1994

The Regulation of Investigatory Powers Act 2000

Terrorism Act 2000

The Police Reform Act 2002

Serious and Organised Crime Act 2005

 The full text of these acts can be found http://www.legislation.gov.uk/ Just put the title of the Act you want into the search facility. Bear in the law is an ever moving feast, this guide  should be read in the context of its date of publication, although the general advice about how to behave such as forcing the police to caution you and your manner when dealing with them will remain applicable. The laws I refer to may apply to only England and Wales, but the situation in Northern Ireland Scotland is broadly similar.

 General Tactics

 3. Your general tactics should be three. First, give the authorities particularly the police) as little cooperation as possible within the law, whilst remaining formally polite and reasonable. Second, lay down markers all the way along the line if official misconduct occurs. This covers everything from complaints by you about the failure to observe legal procedures, such as advising a suspect that he is under arrest, to complaints about physical violence. Such markers will provide you with powerful weapons to dissuade the police and the Crown Prosecution Service from mounting a prosecution against you (from embarrassment if nothing else), provide you at your trial with ammunition to taint the prosecution evidence and conceivably give grounds for appeal.  Third, ensure that those in authority know that you will fight to the limit any attempt to prosecute. Such behaviour will both give the police or the prosecuting authority (The Crown Prosecution Service) little to go on and be quietly intimidating to both.

4. Whenever you are abused, whenever you feel that your legal rights have not been observed, whenever you believe that police procedures have not been followed, do the following: (1) make it clear immediately to the nearest police officer that you will be making a formal complaint and (2) make a written note, as soon as possible, of what has happened and sign and date that note. If you have a solicitor, pass the note to them as soon as you physically can so that he or she may certify the date that they received it. Ensure that a copy of your notes exists.

5. If you have a means of recording conversations, use this to record any conversations relating to you by police officers after you are arrested. These may be conversations in which you are a participant or conversations about you but not involving you, by police officers. Make it clear on the recording who you are, when and where the recording was made and the people recorded. Hand this recording to your solicitor as soon as possible. Ensure a copy of any recordings is made. Nothing but nothing is as effective a check on official misbehaviour as their knowledge that they are being recorded.

6. If you have one on you, use your mobile phone to tell others about your arrest if you can. If you have the means of connecting to the Internet putout details of your plight through the Internet.

7. If the police stops you from doing (6) and (7), ask the reason why, the rank of the officer and the name of the officer. Make a written note of it as soon as you can. Include the time the refusal was made, where it was made, the time and date of when the note was made and your signature. 

8. If you threaten to make a complaint, always do so. Never cry wolf.

Choosing a lawyer

9. You will need a solicitor experienced in criminal law. Solicitors often appear in the magistrates courts, although they may also instruct a barrister to act for you. The solicitor will normally instruct a barrister if you get as far as the higher court. Specially licensed solicitors can also appear in the place of barristers in the higher courts(Crown Court, High Court, Court of Appeal and Supreme Court), but I would not recommend trusting your fortunes to one, especially if it is a very serious charge. 

10. If a barrister is instructed, make sure that he is experienced in the area of criminal law with which you are involved. Make certain that the person who turns up to represent you if you are taken to a police station is a qualified solicitor and not a legal executive. Refuse to say anything if a solicitor is not available. 

11. Wherever possible give your instructions to your solicitor and barrister in writing. Keep a copy. This will prevent them going their own sweet way. Barristers in particular always believe that they know best and often disregard or bend their clients’ instructions out of all recognition.

12. Written instructions can be useful if your lawyers let you down. If you feel your solicitor or barrister is incompetent or dishonest, you can sue them and/or make a complaint to their governing bodies, the Law Society (solicitors) and Bar Council (Barristers).  Moreover, if your barrister or solicitor does not follow your instructions, that could be grounds for appeal under the more liberal appeal rules which now apply.  Written instructions are also useful if you want to dismiss your barrister during a trial. The court will look on your request more kindly if you can show that your instructions have not been carried out. They could also provide grounds for an appeal or retrial.

13. The quality of lawyers you will get is largely governed by the amount of money you have. If you are on legal aid, you will probably have to take what you are given by way of a barrister. Your choice of solicitor will also be restricted to those willing to take legal aid work. The already unfair situation is about to become worse.  New rules governing legal aid are shortly to come into force. These will restrict legal aid to lawyers licensed by the government and in many parts of the country it will be difficult to find a lawyer able and willing to take a case. In addition, legal Aid is no longer automatically available for criminal cases (since 2010) and you may have to pay all or part of the defence costs (http://www.legalservices.gov.uk/criminal/criminal_legal_aid_eligibility.asp). However, if you are arrested you will get free legal advice at a police station.  If you are charged with a really serious offence, you should end up with competent lawyers and most probably get your full costs met from public funds.  

The Arrest

14. An arrest can be made with or without a warrant being issued. Until the Serious and Organised Crime Act 2005 (SOCA) there were significant restrictions on the power of arrest without a warrant, most notably the restriction of an automatic right arrest to  an arrestable offence. An arrestable offence was any offence which has a fixed mandatory penalty (e.g.  murder) or which carries a sentence of at least five years’ imprisonment. Inciting, attempting, or conspiring to commit, or being an accessory to, an arrestable offence was also an arrestable offence.  There were also a few other offences, such as taking and driving, which are arrestable offences even though they carry a sentence of less than five years.

15. Prior to SOCA a police officer could also make an arrest for a non-arrestable offence if he reasonably suspected that a non-arrestable offence has been or is being committed and (1) he thought that  “a general arrest condition” is satisfied (for example, he reasonably believed that an arrest was necessary to prevent a suspect causing injury) or (2) he had the statutory power to  make the arrest (for example, for drunken driving) or the common-law power to arrest (e.g. for a breach of the peace).  SOCA has made the power of arrest so broad that it in practice an arrest can be made for any suspected offence. Here is the relevant section from the Act:

(1)For section 24 of PACE (arrest without warrant for arrestable offences) substitute—

24 Arrest without warrant: constables

A constable may arrest without a warrant—

 (a)anyone who is about to commit an offence;

 (b)anyone who is in the act of committing an offence;

 (c)anyone whom he has reasonable grounds for suspecting to be about to commit an offence;

 (d)anyone whom he has reasonable grounds for suspecting to be committing an offence.

 (2)If a constable has reasonable grounds for suspecting that an offence has been committed, he may arrest without a warrant anyone whom he has reasonable grounds to suspect of being guilty of it.

 (3)If an offence has been committed, a constable may arrest without a warrant—

 (a)anyone who is guilty of the offence;

 (b)anyone whom he has reasonable grounds for suspecting to be guilty of it.

 (4)But the power of summary arrest conferred by subsection (1), (2) or (3) is exercisable only if the constable has reasonable grounds for believing that for any of the reasons mentioned in subsection (5) it is necessary to arrest the person in question.

 (5)The reasons are—

 (a)to enable the name of the person in question to be ascertained (in the case where the constable does not know, and cannot readily ascertain, the person’s name, or has reasonable grounds for doubting whether a name given by the person as his name is his real name);

 (b)correspondingly as regards the person’s address;

 (c)to prevent the person in question—

 (i)causing physical injury to himself or any other person;

 (ii)suffering physical injury;

 (iii)causing loss of or damage to property;

 (iv)committing an offence against public decency (subject to subsection (6)); or

 (v)causing an unlawful obstruction of the highway;

 (d)to protect a child or other vulnerable person from the person in question;

 (e)to allow the prompt and effective investigation of the offence or of the conduct of the  person in question;

(f)to prevent any prosecution for the offence from being hindered by the disappearance of the person in question.

(6)Subsection (5)(c)(iv) applies only where members of the public going about their normal business cannot reasonably be expected to avoid the person in question. (http://www.legislation.gov.uk/ukpga/2005/15/part/3/crossheading/powers-of-arrest)

16. There is one great exception to this arrest regime.  The Terrorism Act 2000 (sections 40-43 http://www.legislation.gov.uk/ukpga/2000/11/section/40) allows an arrest without reasonable suspicion for any suspected breach of the Act. In all other circumstances to make an arrest without a warrant the arresting officer must have a reasonable suspicion that a crime has been  committed, is being committed or is about to be committed. Offences include not leaving a designated area when ordered to do so or holding a demonstration without a licence in a designated area – an area designated by the government  (http://www.legislation.gov.uk/ukpga/2005/15/section/128).  If an officer cannot show that he had such reasonable suspicion, he has prima facie wrongfully arrested and falsely imprisoned. The officer might also be guilty of an assault if force was used.

17. In principle anyone may make an arrest, the popularly called “citizen’s arrest”. Such arrests are in practice fraught with difficulty for the arrester, because of the potential for disputes over the circumstances of the arrest and what constitutes reasonable force. Someone effecting what they thought to be a “citizen’s arrest” might well end up on charges of assault, the use of an offensive weapon and false imprisonment.  If you wish to chance your arm here are the situations which justify such an arrest:

24 Arrest without warrant: other persons

(1)A person other than a constable may arrest without a warrant—

(a)anyone who is in the act of committing an indictable offence;

(b)anyone whom he has reasonable grounds for suspecting to be committing an indictable offence.

(2)Where an indictable offence has been committed, a person other than a constable may arrest without a warrant—

(a)anyone who is guilty of the offence;

(b)anyone whom he has reasonable grounds for suspecting to be guilty of it.

(3)But the power of summary arrest conferred by subsection (1) or (2) is exercisable only if—

(a)the person making the arrest has reasonable grounds for believing that for any of the reasons mentioned in subsection (4) it is necessary to arrest the person in question; and

(b)it appears to the person making the arrest that it is not reasonably practicable for a constable to make it instead.

(4)The reasons are to prevent the person in question—

(a)causing physical injury to himself or any other person;

(b)suffering physical injury;

(c)causing loss of or damage to property; or

(d)making off before a constable can assume responsibility for him.”

(http://www.legislation.gov.uk/ukpga/2005/15/part/3/crossheading/powers-of-arrest)

18. For most practical purposes only the various police forces and Customs and Excise (now amalgamated with the Inland Revenue as Her Majesty’s Revenue and Customs) have an exercisable power of arrest. Members of the security forces (M15 and M16) have no powers of arrest beyond those of the ordinary citizen. However, a “citizen’s arrest” by the security services would almost certainly carry fewer dangers for the arrester than it would for the ordinary citizen. This is because the state authorities will generally protect the arrester through their de facto control of prosecutions. (Politicians and the Director of Public Prosecutions (DPP) will deny vehemently that such control is exercised. The facts are heavily against them.  Our justice system is controlled by law officers who are part of the government. The DPP is appointed by the government. One of the reasons the DPP may give for a failure to prosecute is that “prosecution is not in the public interest,” which can easily cover security service illegality. It is also doubtful whether any security officer, that is, an officer formally employed by the security services, has ever been prosecuted for offences committed during the course of his or her work.)  It should be borne in mind that Special Branch – which is often mistakenly thought of as part of the security forces – is part of the Police and its members consequently can effect an arrest as easily and safely as any other police officer.

19. If a warrant is sought for someone’s arrest, the officer applying to the magistrate (or judge) must satisfy the granting authority that there are sufficient grounds for an arrest, that is, there are grounds for a reasonable suspicion that an offence has been committed.

20. When making an arrest with a warrant the arresting officer must show the person arrested the warrant, but he need not do so at the time of the arrest. Always attempt to obtain a copy of the warrant, the name of the person who has granted it and the reasons given by the applying officer for its granting. If possible ask to photostat or photograph the warrant.  If this is not possible, ask for time to make notes about the detail of the warrant. If this is denied, note the officer who denies the request and the words in which the denial is given. Make a written note as soon as possible. Ask the person(s) engaged in the denial to sign the note you have made certifying it to be a true record.  As soon as possible either you or your solicitor should write to the magistrates (or judge) who granted the warrant asking them to confirm the reasons for granting the warrant. If necessary, call the magistrate (or judge) to your trial to justify the granting of a warrant.

21. When an arrest is made, the officer must tell the suspect why he or she is being arrested and give the grounds for the  arrest. The officer will probably do the former but may well  omit to do the latter. If you are arrested, and the officer  fails to give the grounds for your arrest, always ask  immediately what his reasonable grounds are and the crime of  which he suspects you. Note any failure to give the grounds. Never resist arrest. That in itself constitutes a criminal offence if the arrest is deemed legitimate. Moreover, it is very easy to end up on a charge alleging some form of assault.

22. The police’s favourite time to arrest is in the early hours of the morning. They do this because they believe – quite rightly – that the suspect will be at their most susceptible at that time. However, such arrests tend to be for serious crimes and more often than not crimes involving career criminals. Most arrests are made on the spur of the moment.

Your mental state if under arrest or seemingly under arrest

23 The bad news is that you will almost certainly panic if you have no previous experience of such circumstances. That is nothing to be ashamed of, it is just the way human beings are made. The good news is that panic can be controlled. Visualise now the circumstances under which you will be arrested before you are arrested. Do this regularly. When you are arrested, use deep breathing to control the panic, preferably with your eyes closed. It should calm you down. Then cling on tightly to the idea that if you follow my instructions, you have a very good chance of never being convicted of anything provided the evidence against you is not overwhelming.

How will you be treated after arrest?

24. The physical circumstances you will experience after arrest will vary greatly. At the police station, you will probably be held either in an interview room or a cell. The cell experience may be simply a question of being locked in a small room or, particularly in the inner cities, resemble something rather more demonic, with a rich stew of the mentally ill, the drugged and the drunk either in your cell or ensconced nearby. Ignore them as best you can. Even if you have someone seemingly threatening in your cell, it is unlikely they will be violent without provocation.

25. If you are unlucky enough to be remanded in custody, obey the golden rule of giving no provocation. If you do not go looking for trouble there is a fair chance you will not find it. If you are educated, offer your help to other prisoners with letter writing and such forth. Try to get yourself remanded to the hospital wing. If all else fails, ask to be put in solitary confinement for your own safety – you have legal right to this.  Time served in custody counts as time served if you receive a prison sentence.

26. With the restrictions created by the Police and Criminal Evidence Act (PACE), especially the requirement to record interviews, it is unlikely that you will be physically assaulted by the police. However, it is just possible that you may be. Your chances of being assaulted – other than in a resisted  arrest – are virtually nil if you are a woman, although you might be subjected to some form of indecent assault. If you are old, it is unlikely you will be assaulted.  If you are a middle class man they are small, unless you are extremely provocative or unlucky. If you are working class the odds of assault improve somewhat. If you are a career criminal they go up sharply. You also have to bear in mind the crime which is being investigated. If it is (1) serious, 2) causing public outrage and (3) intrinsically sick making, such as the rape and murder of a young child, your chances of being assaulted to gain a conviction will decidedly improve.

27. If you are physically assaulted your best means of resistance is to go inside yourself mentally. Exclude the outside world, make everything seems far off and unimportant. Remember also that the human body can take an immense amount of physical abuse without you dying or being permanently crippled. If you are young, you are practically indestructible if you  receive a routine beating. Moreover, the type of physical abuse you are likely to be subjected to is unlikely to be more than beating on non-vital parts. If you are attacked and free to move, go down on the floor and roll yourself into the foetal position.  Just try to hang in there. Unless you are arrested under the Terrorism Act 2000,  They can only keep you in custody without charge for 24 hours normally and 36 hours at most unless there are exceptional circumstances. If you are charged, you must go before a magistrate’s court as soon as possible. Make any complaint you have to the court. The Terrorism Act 2000 as amended  allows a person to held for 14 days without charge.

28. The police have the right to take from someone under arrest for a recordable offence fingerprints, DNA samples, blood samples from drivers who are incapable of giving consent (The Police Reform Act 2002 section 56 – http://www.legislation.gov.uk/ukpga/2002/30/contents) and non-intimate samples of such things as hair and saliva and shoeprints. Intimate samples, for example, taking pubic hair or semen, require the agreement of the person (http://www.inbrief.co.uk/police/police-taking-fingerprints.htm) . Recordable offences cover the overwhelming majority of arrests being any offence carrying a possible prison sentence and many others which do not, for example, section 13(8) of the Public Order Act 1986 creates a recordable offence for attending a prohibited march (http://gizmonaut.net/blog/uk/recordable_offences.html). At present a person arrested for a recordable offence has their details  kept permanently  on the police database in England and Wales (only convicted offenders samples are kept in Scotland)  even if no charge is brought or if a charge is brought but the defendant is found not guilty. The European Court of Human Rights ruled in 2009 that this was a breach of the Convention on Human Rights and any records held of those not convicted of a crime should be deleted. The UK  Government promised to bring forward a scheme but has not done so to date. (http://www.parliament.uk/briefingpapers/commons/lib/research/briefings/snha-04049.pdf).

29. Being arrested is no longer a small matter. The retention of details of an arrest, especially your DNA, on a searchable database means that you are a potential object of suspicion even if you have never been charged with a crime. It would increase your chances of being investigated for other crimes significantly, not least because with a database contained thousands of DNA samples there is a reasonable chance of false positives, that is, another person’s DNA being identified as yours or vice versa. There is also a growing tendency of the police to go after close matches whereby the DNA of a close relative may lead to you being drawn into an investigation. Finally, planting another person’s DNA at a scene is easily done, a fag-end or used tissue will do the trick. 

How to behave after arrest

30. Use a polite but firm manner. Many people imagine that they can gain an advantage by showing the police that they are subordinate, normally by being ingratiating. This is an unqualified mistake.  The police will interpret such behaviour as weakness. On the other side, aggressive or abusive behaviour merely alienates those in authority and those who will judge you, magistrates, judges or juries.  Avoid it.

31. It is important that you maintain a psychological distance between the police and yourself  at all times. You may think that by becoming on ostensibly friendly terms with the police you will get better treatment. The reverse is the case. The police will identify your wanting to be liked as weakness and will use a surface amiability to lull you into a false sense of security. You are then more likely to volunteer information.  This may either be directly incriminating or prompt a line of questioning which either incriminates you or leads to a situation where you have to suddenly refuse to answer. That will not look good in court.

32. If you encounter behaviour from the police which you judge to be unacceptable, for example physical threats or serious verbal abuse, make it clear instantly that you will be making a formal complaint. Having issued the threat, you must always carry it out. Ask to see the most senior officer present to make the complaint. Such complaints can of themselves be useful in discrediting in court police evidence or defusing any suggestion that by keeping quiet you had something to hide. They can also ward off any further attempts at abuse. 

Stop and Search Laws

33. There is no general power of stop and search but there are a number of  laws which allows it in specific circumstances. Most of these can only be exercised where the officer has ‘reasonable suspicion’ that a particular crime has been committed, for example, the power to search a person for illegal drugs under the Misuse of Drugs Act 1971 and the power to search for stolen or prohibited items under the Police and Criminal Evidence Act (PACE). Two Acts provide for stop and search without reasonable suspicion, Section 44 of the Terrorism Act 2000 and Section 60 of the Criminal Justice and Public Order Act 1994.

33. Section 44 of the Terrorism Act 2000 allows a Chief Constable or the Metropolitan Police Commissioner to designate an area as stop and search areas. Within these the police can use stop and search powers without the need for any reasonable suspicion. In the past section 44 has been used within peaceful public protests. At the moment the whole of London is a designated area for stop and search under section 44. (http://www.legislation.gov.uk/ukpga/2000/11/section/44)

 34. Section 60 of the Criminal Justice and Public Order Act 1994, empowers  a police officer of the rank of inspector or above to issue a written authorisation for additional search powers on the basis of a reasonable belief that incidents involving serious violence may take place or that people are carrying dangerous instruments or offensive weapons in the area without good reason. The powers relate to pedestrians and vehicles in a specified locality, for a specified period, not exceeding 48 hours at a time. (http://www.legislation.gov.uk/ukpga/1994/33/section/60)

 35. Where an authorisation has been issued, any constable in uniform may stop and search any pedestrian or anything carried by the pedestrian, or any vehicle or anyone in it, for offensive weapons and dangerous instruments and may seize any such items which are found. In addition, the police may require you to remove any item which they reasonably believe you are wearing wholly or mainly for the purpose of concealing your identity.

 Searches with warrants

 36. Search warrants are authorised by magistrates or occasionally judges. When the police come knocking on your door you will not have time to scrutinise the document closely but check the warrant for the address and the magistrate or a judge’s signature.  If the first is wrong or the second  missing, point this out to the police and make it clear you consider the warrant to be invalid.  The police may well ignore what you say, but you have laid down a marker for the future. If the warrant was not valid the police will be unable to claim they did not know it was invalid and acted in good faith. If the police do ignore your complaint and search, record or make a written note of their response. If you can make a video or audio recording from the moment you realise what they have come for. If you refuse to let the police in, be prepared for them to make a forced entry. As with the arrest, it is better to allow the police to do what they will then argue the toss afterwards.  

37. If it is  an all premises warrant “no premises which are not specified in it may be entered or searched unless a police officer of at least the rank of inspector has in writing authorised them to be entered.” http://www.legislation.gov.uk/ukpga/2005/15/section/113

38. To obtain a warrant for offences under the Terrorism Act 2000, all the applying officer is required to do is show that the person falls within the very broad definitions offered in section 1 of the Act (http://www.legislation.gov.uk/ukpga/2000/11/section/1)

Searches without warrants

39. Under section 18 of the Police and Criminal Evidence Act 1984, where a person is under arrest because of a reasonable belief that an offence has been committed, a police officer of the rank of inspector or above may authorise a search of premises which they have reasonable grounds for believing contain evidence of the suspected offence. Such a search should be restricted to looking for such evidence, but in the nature of things if other evidence of unrelated offences is uncovered the police will act on it.

40. A search can also be made of premises without authorisation by an inspector or more senior officer if “the presence of the person at a place (other than a police station) is necessary for the effective investigation of the offence.]” (http://www.legislation.gov.uk/ukpga/1984/60/section/180. This would apply if someone is arrested and the arresting officer has reasonable grounds for believing that a search of premises before taking a suspect to a police station will provide evidence of a suspected offence. If such a search is made, the officer conducting the search must advise an inspector or more senior officer of the search at the first opportunity.

41. Whether a search is made with or without a warrant, there is a reasonable chance that the police will leave the place searched in a mess and/or with damage. If this happens, make a complaint at the time, take photographs and follow it up with a formal letter of complaint to the Chief Constable or in London the Commissioner of the Metropolitan Police. Depending on the circumstances, there may be grounds for either criminal charges or civil action against the police.

The caution

42. The present caution is this syntactical abortion:

“You do not have to say anything. But it may harm your defence if you do not mention when questioned something which you later rely on in court. Anything you do say may be given in evidence”

43. The police, Customs and Excise and certain Inland Revenue officers (Customs and Excise and the Revenue are now amalgamated with Her Majesty’s Revenue and Customs or HMRC for short) can administer the caution, question under the caution and take statements under the caution.

44. The caution must be administered in accordance with a code of practice issued under the Police and Criminal Evidence Act 1984 (PACE). It can only be administered where there are reasonable grounds for suspecting that a criminal offence has been committed. It must be administered as soon as is practically possible after the officer reaches the conclusion that such reasonable grounds exists. For example, if you are being questioned without caution, the questioning officer cannot continue questioning you without administering the caution if it becomes apparent from your answers that a reasonable ground for suspecting that you have committed an offence exists. An example of when a caution could not be immediately administered would be during an arrest involving violent resistance where the person being arrested was saying things which indicated guilt, for example, “Take your hands off me or I’ll do you like I did X”, X being someone injured in a brawl. 

45. Anything you say after the caution is administered is admissible in evidence unless you can show that the statements were obtained incorrectly.  Anything you say before the caution is given is not normally admissible in evidence. However, there are exceptions where pertinent statements are made in circumstances where the officer cannot  reasonably be  expected  to issue  a  caution.  Such circumstances are most commonly found where a resisted arrest occurs – see above. These statements, even though not after a caution, may or may not be admitted in evidence depending on the court’s judgement of the circumstances. However, in any circumstances, the officer must, as previously mentioned, administer the caution at the earliest possible opportunity.  It is unlikely but not impossible, that words uttered before the caution was given to a person peaceably under arrest would be admitted as evidence. However, bear in mind that statements you make to anyone else other than the police could be given in evidence. For example, if you are on remand, a cell mate might decide to give evidence against you based on conversations you have had.

46. When the caution is given, the officer must make clear whether or not the person to whom it was administered is under arrest. If he is not under arrest, the officer must make it clear that the person is free to go about his business. In any circumstances, the officer administering the caution must remind the suspect of his right to legal representation.

47. The officer administering the caution must note the fact in his notebook or interview record as appropriate.

48. After a caution has been administered, an officer continuing an interrogation after an interval or an officer beginning a new interrogation must remind a previously cautioned suspect that he or she is still under caution.

What to do when cautioned

49. If the officer giving the caution states that you are not under arrest you may leave immediately. Do so after asking what his reasonable grounds are for suspecting that you have committed a crime.  Say nothing in response to any further questions.

50. If the officer fails to advise you whether or not you are under arrest, ask whether you are under arrest. If you are not, make a note of the officer’s name and the failure to advise you of your arrestable status. Then ask what his reasonable grounds are for suspecting you of a crime. Then leave without saying anything further. The police cannot detain

51. If you are under arrest, try to obtain the officer’s identification whether it be a name, number or office or station from which he or she works. Make a formal complaint about any failure to advise you whether you are under arrest.  This is important because it may give grounds for invalidating the caution and thus affect the admissibility of evidence, in this cased your failure to respond. Ask what his reasonable grounds are for suspecting that you have committed a criminal offence.

The Right to Silence

52. Contrary to popular opinion, the Right to Silence has not been abolished by the Criminal Justice and Public Order Act 1994 (http://www.legislation.gov.uk/ukpga/1994/33/contents). In all but a few cases, all that sections 34-39 of the Act do is to provide an opportunity for the court to draw to the attention of the jury (or magistrates), the fact that the accused refused or failed to give information, at some pre-trial moment, on which they base their defence partly or wholly. The exceptions to a right to silence come from The Regulation of Investigatory Powers Act 2000 sections 49 and 53(http://www.legislation.gov.uk/ukpga/2000/23/contents)which make it a criminal offence (with a penalty of two years in prison) to fail to disclose when requested the key to any protected information held on a computer or like machine, the Terrorism Act (2000) section 19 (http://www.legislation.gov.uk/ukpga/2000/11/contents) which provides for a maximum 5 year sentence  and The Criminal Justice Act (1987) sections 13/14 which carries a possible six month sentence for a failure to answer questions or provide documents or other information when requested to do so by the Serious Fraud Office. (http://www.legislation.gov.uk/ukpga/1987/38/section/2). The change in the law of the right to silence has not resulted in a significant change in the overall conviction rate which suggests that it makes little if any difference in the vast majority of cases.  

53. Does the right not to incriminate yourself really still exist? It is a moot point. The enforced provision of material such as DNA and fingerprints is in a sense self-incrimination. Moreover, the exceptions to the right to silence described in the preceding paragraph are serious breaches of the right. Nonetheless, in most circumstances such requirements will either not apply or be irrelevant to a finding of guilt or innocence, for example, a DNA sample in a fraud case would be unlikely to have any bearing on a verdict.

54. If I had to give one piece of advice to anyone cautioned, arrested or charged with an offence it would be this: “Say absolutely nothing”.  That advice would apply whether or not the person had a solicitor in attendance during police questioning. Those who doubt that it is good advice should ask themselves two questions: (1) why do smart career criminals do it as a matter of course? and (2) why did the  last government circumscribe the right to silence? The answer is that it is generally the most successful tactic in both avoiding prosecution and if brought to court, conviction.  Always go with the professionals – in this case smart career criminals – is a good piece of advice in any circumstances. The reason for the tactic’s success is that many criminal prosecutions involve some self-incrimination from the accused. This does not necessarily mean that the accused has admitted to anything which directly implicates them in a crime. It may often simply mean that they have told a lie which is discovered or have inadvertently contradicted themselves when speaking of circumstances not directly linked to a crime. The trouble with that is that it casts doubt about their general truthfulness, which is an important consideration, particularly in a jury trial.

55. Information given in writing is a different matter. A letter to the police is obviously controlled by the writer. A formal statement is also controlled by the suspect. The police will almost always try to write statements for you. They will say it will be better because they know what the courts want. Resist these blandishments. Always write your own statement.

56. But written information should only be given where there is (1) a pressing reason such as the provision of an alibi and (2) where you are absolutely certain that the story you tell is not merely true but the whole truth. Where possible avoid giving any written information.

57. If you do refuse to answer questions, one question only needs to be addressed by the jury or magistrate:  was it reasonable for the accused not to have given information at an earlier time. Obviously there are particular reasons for a failure or refusal particular to a case, such as the information not having been available to the accused at an earlier time.  However, there are also general reasons.

58.  It would be reasonable to refuse to speak without a legal advisor being present. It would be reasonable to refuse to speak if recording facilities were unavailable. It would be reasonable to refuse to speak if you had just been arrested in an unexpected and/or violent manner. It would be reasonable to refuse to speak if you had been abused by the police. It would be reasonable for you to refuse to speak if you believed that police procedures had not been observed. It would be reasonable to refuse to speak if you feel ill. It would be reasonable to refuse to speak if you have been kept in circumstances in which you might reasonably be judged to be exhausted.  It is always reasonable to refuse to speak if your legal adviser tells you not to. 

 Interrogation

 59. The good old bad old days when people could be simply “verballed” by the police into prison or onto the gallows are happily gone, although many an old copper doubtless still sheds a tear for their passing and old, unreconstructed members of  the Met’s Sweeney doubtless moisten their pillows nightly.  The Police and Criminal Evidence Act (PACE) 1984 changed all that. The onus is now on the police to video record – interviews wherever possible. The police must show that recording was not possible. 

60.  Once you have been cautioned, a simple statement that you do not wish to say anything should be enough to prevent further questioning. However, the police will most likely keep pressing you to say something. The best tactic is simply to refuse to say anything. 

61. If you do decide to be interviewed, insist that your legal representative is present. Insist also that the interview is videoed. Insist further that a copy of the tape is given to the legal representative immediately the interview is completed. Get your legal representative to record the interview. Apart from obvious reason of ensuring the police do not doctor the interviews, such behaviour will be intimidating for the police.

62. Once the interview begins, refuse to answer any questions until the interviewing officer has answered some questions of your own. Ask first, do you have reasonable grounds for suspecting that I have committed an offence? If he answers no, get up and walk out. The police have no right to detain you and you have a prima facie case of wrongful arrest and false imprisonment. If the officer answers yes, ask: what are your reasonable grounds for suspecting that I have committed an offence? Let your legal representative judge whether the answer he gives meets the criteria for arrest. If it does not, seek to leave immediately. If prevented, do not answer any questions.

63. Doing interrogation, the police must make it clear within the recorded and written records when breaks are taken. Do not relax your guard if a break is taken. Reasonable refreshment must be provided to the suspect. The suspect must be given reasonable opportunity for rest. Bullying, in the form of a question being frequently repeated might well disqualify the interview from being admitted in evidence.

64. The police may still try to play their age old tricks on you – “tough cop, soft cop”, “You play ball with us son, and we’ll make sure the judge goes easy on you”, “Your mate’s coughed” etc. (Yes, policemen do actually speak like this. I blame this on them watching too many TV police series).  Do not believe a word they say. The police have no interest in  you beyond obtaining a conviction. They will lie to their hearts content in pursuit of that end.

65. If you are unlucky enough to be the subject of physical violence in an attempt to obtain a confession, what should you do? Resist signing if  you can. If you cannot, I suggest that you pretend to agree to sign a statement, but then write on it “I have been physically abused in an attempt to get me to sign this statement.” Then initial your words. Remember, initial not sign. Your action will present the police with a straight choice: do they leave the document intact (in which case it is evidence of sundry criminal behaviour on their part) or do they destroy it and commit the criminal act of perverting the course of justice? Alternatively, sign your name in a way it would not normally be signed. If your normal signature is John Smith, sign J.Smith. If you are right handed, sign left handed. This abnormal behaviour would provide evidence that you signed under duress.

The planting of evidence

66. Although “verballing”,is now a largely past black art, the police can still plant evidence. This can be extremely difficult to disprove. The main means of disproving it are circumstantial. If, for example, you have no history of drug abuse, it might seem implausible to a jury if the police claim that they have found a gramme of heroin in your possession. In your favour is the fact that modern juries are far less trusting of the police than they were even twenty years ago.

If you are charged

67. Being charged does not necessarily mean that you will be prosecuted. However it is a formal accusation of a crime. It indicates that the police (or other authority such as the Customs and Excise branch of Her Majesty’s Revenue and Customs)think that there is evidence which may lead to a prosecution. The charge should be entered in the charge sheet at the relevant station and a copy should be supplied to the accused.

Detention

68. You may be detained by an authorised officer, normally the police, only after arrest, You may be detained without charge. However, such detention may only occur when it is necessary to secure or preserve evidence or to obtain it by questioning. If detained without charge, always ask the detaining officer for justification of your detention.  Normally such detention should cease after 24 hours unless it is in connection with a serious charge such as rape, kidnapping, causing death by dangerous driving etc. Then a superintendent or more senior officer – chief superintendent, assistant chief constable, deputy chief constable and chief constable in all cases except the Metropolitan Police – may authorise an extension to 36 hours. Magistrate’s courts may authorise a extension of detention without charge for a further 36 hours. With exception of those held under terrorist laws who made be held for 28 days, a suspect held without charge may thus be kept for 72 hours at most.

69. If a suspect is charged with an offence, he or she must be granted police bail or brought before a court as soon as is reasonable. If the delay in bringing a suspect before court seems unreasonable, a writ of habeas corpus may be sought by the person detained. This will force the police to bring you before a court.

70. An arrested person held in custody may have one person told of this, although if a serious offence is concerned and a senior police officer reasonably believes that this would interfere with an investigation, this advice to the person can be delayed for up to 36 hours. If you are refused a chance to tell one person that you have been arrested, ask for the reason, the name of the person making the decision and the name and rank of the person making the decision.

The police

71. The police do not decide whether a prosecution is to be undertaken. Their responsibility is to gather evidence and then  prepare the evidence (with a covering submission) for forwarding to the Crown Prosecution Service.

72. The police may seek the advice of the Crown Prosecution Service at any point in an investigation, whether or not charges have been brought.

73. Many policemen are neither very bright nor well-educated. The minimum educational qualifications for most forces are still dire: 4 GCSE’s is par for the course. This means that they are not too hot on the paperwork side, either in its actual preparation or in their desire to undertake it. This natural reluctance has been built on in recent years by an immense increase in the paperwork required for a submission to the Crown Prosecution Service. Thus it is in your interest to make a case as unattractive to them as possible. Keeping silent does this. Occasionally, it may be expedient to flood the police with entirely legitimate paperwork, for example in the case of company fraud.

74. Bear in mind that policemen are only too human. If they make a serious mistake, they will wish to cover it up even if it means killing a strong case against a subject. It is in your interest to see they make mistakes if you possibly can.

The Crown Prosecution Service (CPS)

75. The CPS is headed by the Director of Public Prosecutions (DPP). The DPP is appointed by the government. The present DPP is Keir Starmer QC who was appointed in 2008. The DPP reports to the attorney-general, who is a member of the Government.

76. The CPS is the public body which determines whether most criminal prosecutions are to be brought – the DPP has the formal responsibility for these decisions.

77. At the decision making level, the CPS is staffed by qualified lawyers. Apart from the st senior, these tend to come in two sizes: the young and inexperienced and the older and incompetent. This is because it is rare for competent, experienced lawyer to work for the CPS as a case worker because(1) they can earn far  more in private practice and (2) he is not his own master.

 78. The incompetence of the CPS lawyers can be exploited. As with the police, they do not like either difficult or complicated cases. The action you take to dissuade police officers from submitting a case to the CPS will also work at the level of the CPS lawyer. In addition, as with policemen, bear in mind that CPS lawyers are human. If they make a serious mistake, they will also wish to cover it up even if it means illegally dropping a strong case.

 The government law officers

 79. These are the Justice Secretary/Lord Chancellor (the two offices are held by the same person), the attorney general and the solicitor general. They are all politicians of the ruling party. The formal position is that they act only as impartial law officers when concerned with legal matters. This is of course utter tosh. Their existence is the main means by which government of the day manipulates the justice system.

80. The few criminal prosecutions not left to the DPP to decide are matters such as treason, offences under the Corruption Acts and offences under the Race Relations Act. The decision on such prosecutions is made by a member of the government, the Attorney-General, the second most senior political law officer after the Lord Chancellor. In the Attorney-General’s absence, the decision is made by the Solicitor-General, the third most senior law officer.

81. The Attorney-General (or the Solicitor-General) also has the right to intervene in criminal prosecutions. He or she may enter a plea of nolle prosequi (Latin: to be unwilling to prosecute) to terminate criminal proceedings. In the case of criminal proceedings on indictment, that is those tried by jury and thus generally the most serious, the proceedings are automatically ended. In the case of summary proceedings –  those in magistrate’s courts – the leave of the court is required. This leave would normally be automatic. Pleas of nolle  prosequi  are  not appealable.  Nor does the attorney-general (or the solicitor-general) have to give a reason for their plea, although normally a reason will be given such as “not in the public interest” or “unfit to plead”.

What to do if you get to court

82. Tempting as it may be to represent yourself, there is a good deal of truth in the adage that a man who represents himself has a fool for a client.

83. Most people have little experience in speaking in public. That alone will make them very nervous. The court atmosphere will be intimidating even if the court is a modern one. Then there is the problem of court procedure which the novice will find bewildering. Above all, there will be the need to question witnesses. This might seem simple but it is not. The average person will not be able to keep the flow of questioning going or construct sequences of questions which logically build up to a “killer” question. The average person will also put questions to witnesses which are irrelevant or inadmissible (which tries the patience of the court), questions which allow the witness to embroider their reply (which slow proceedings and may influence the jury in ways you do not want) and questions to which no certain answer can be expected. Good barristers ask only questions to which they know the reply, which is ideally yes or no.

84. However, having said all that there are cases where it may be necessary to defend yourself. This is where you cannot reasonably have any confidence in any barrister (or these days, solicitor) presenting your defence, honestly, ably or energetically in court. Such cases are very rare and are likely to arise only where the charge being answered is essentially political. Charges under Section 70 of the Race Relations Act might fall into this category.

85. The only other occasion when you should consider presenting your  own case is when you come to the conclusion during your trial that your counsel is making such a hash of your defence that to take it over yourself could not make matters worse.

86. If you do end up defending yourself, you may make use of advice in court from someone who is not your appointed counsel (a Mckenzie’s Friend – http://www.mckenzie-friends.co.uk/), for example a friend with some legal knowledge such as a solicitor’s clerk. However, the person does not need any legal knowledge. The judge should also extend a good deal of latitude to you when it comes to questioning of witnesses. He may even question witnesses on your behalf if he feels that you are failing to do the job adequately.

Should you go into the witness box?

87. Generally I would say no for the same reasons that I hold to the belief that keeping silent is on balance the best tactic. Give the court as little to go on as possible. It also hamstrings the judge, for “summing ups” frequently revolve around evidence given by the accused in the box. Such advantages will more than counterbalance any disadvantage you may incur by the magistrate or jury questioning why you have not taken the stand. But there are other reasons as well.

88. If you go into the witness box you will probably be very nervous. Prosecuting counsel will hold all the cards. He determines what questions will be put. You will be restricted more often than not to yes or no answers. Even if you are completely innocent, you may well come out of the box seeming dishonest. Moreover, if you do not go into the box, the jury or magistrate do not get a glimpse of your personality. They have to go entirely on the facts of the case. That is generally an advantage, particularly where a jury is concerned, because most people who give evidence come across as either frightened (which tends to make the jury despise them) or bombastic (which makes the jury dislike them.

89. The one occasion you probably should go into the witness box is if you are engaged in a political trial for that will give you the chance to expose the nature of the charge against you.

Expert witnesses

90. If you want an “expert” opinion to support your case you can usually find one. Moreover, certain types of evidence are either intellectually worthless or so questionable that they should, rationally, immediately create a “reasonable doubt”, the evidential test for a criminal conviction. It is up to you and your lawyers to make sure the questionable nature of the evidence is brought out emphatically during your trial. Even the most famous of forensic evidence, fingerprints, are not as secure a piece of evidence as the courts make out. A few years ago an historian of science, Simon Cole, published Suspect Identities:  a history of fingerprinting and criminal identification (Harvard University Press) which demolishes their infallibility and attacks the science which underlies fingerprint evidence.

91. Such things as handwriting comparisons and voice prints are inconclusive – try getting a so-called handwriting expert to identify correctly fifty pieces of handwriting when he does not know how many were written by the same person. If you are faced with such an expert, get your counsel to set him such a test. If an audio recording is produced purporting to contain your voice, have it tested to see if it is edited and the recording is an original not a copy. Different recording machines of even the same model may produce different “electronic footprints”. Ditto video recordings. If you are faced with an audio alone, simply claim the person is not you. It is damned difficult to prove otherwise. Much video evidence is inconclusive because of camera angles and image quality. If all else fails, rest you claim on the fact that digital recordings can be manipulated in very sophisticated fashion and even what seems to be a cast iron recording of you doing whatever the prosecution says you were doing is no real proof.

92. Psychiatry is no better than institutionalised quackery. As the psychologist Hans Eysenck never tired of pointing out, people suffering from mental illness who receive treatment from psychiatrists show no greater rates of recovery than those who receive no treatment. Incredible but true.

93. You can refuse to be seen by a psychiatrist unless you have been sectioned under the Mental Health Act. If you agree to be seen by a prosecution psychiatrist before your trial, insist on (1) your solicitor being present and (2) the interview(s) being recorded by your solicitor. Then say that you will not answer any questions unless the psychiatrist can provide objective evidence that his understanding of the human mind is any better than the next man’s as a result of his psychiatric training. There being no objective evidence, the psychiatrist will be unable to provide it. He may or may not admit so much. However, he can be forced in court to make the admission when he is under oath. Moreover, you can enter the recording of your meeting with him before the trial as evidence of quackery and your willingness to cooperate if it could be shown that such cooperation would have any worth.

94. You may be faced in court with psychiatric evidence which has not involved your cooperation, for example “Cracker” type speculation. Again, get your counsel to ask the psychiatrist to show objectively that he has special expertise. If he cannot show that he has special expertise, then he should be disqualified as an expert. At the worst you will have demonstrated to the jury or magistrate that there are solid grounds for doubting the evidence.

95. Eye witness evidence is so suspect that it is a wonder it is allowed. Academic study after academic study has shown the same thing: eye witnesses are monumentally unreliable. Get a psychologist who specialises in the field to give evidence on your behalf. Pay special attention to the time lapse between the crime and the first time the eye-witness makes a statement – the longer the time, the more suspect the evidence.

96. If you require expert advice for your defence, you have two main problems: (1) finding and paying the expert and (2) getting counsel who can understand the expert. (If you want to see counsel making an idiot of themselves, go and see a case involving serious forensic evidence. Second favourite for this sport is a case where counsel has to deal with a company fraud case involving arcane accountancy practices.) A further problem is that much of the forensic expertise readily available in this country is to be found in government controlled laboratories.

97. If you cannot get your own forensic tests done, you could be convicted simply because of incompetence by the laboratory used by the prosecution. Quite a few instances have come to light in recent years. Moreover, there have been a number of cases where there has been a deliberate attempt to cover up mistakes. So do try to get your own forensic tests done.

98. There is also the question of forensic evidence being planted by the police. Take DNA. It is a simple matter to obtain DNA evidence from a suspect. Get them to touch something. Get them to eat something like an apple. Take a hair from them without their knowledge. Pick up a used tissue. I think a defence could reasonably be mounted against DNA evidence on the grounds that it was planted. Similar objections could be made against other forensic evidence. Juries are much more susceptible to claims of the planting of evidence than they once were.

Other paths to explore

99. Try putting prosecuting counsel into the witness box on the grounds that he is being dishonest and that cross-examination will reveal that dishonesty. (For example, why has counsel asked about Y when he also knew about Z and Z discounts Y?) I do not think that this has ever been done, but it would be interesting to see what the judge’s response would be. A refusal might also provide grounds for an appeal.

100. Similarly call the Crown Prosecution case worker who dealt with your case. It is a fair bet that cross examination will reveal him or her to be incompetent. This could cause a prosecution case to simply collapse.  Again whether you will be allowed to call this witness is dubious. But is worth trying.

Formal police caution or court?

101. The police are increasingly using formal cautions as alternative to taking a case to court. The caution has nothing to do with caution issued to warn you that anything you say may be used in evidence against you. It is a procedure whereby the person accepts their guilt and receives what amounts to a form of administrative justice by being formally advised of his offence, the acceptance of the crime and the consequences of accepting a caution, namely, that the caution and all the details of the crime  will go on the Police Computer together with their DNA and fingerprints (as things stand) for all time.  

102. There is a strong temptation to accept a caution even if you are innocent because it takes away the stress of a trial with the possibility of a significant punishment if convicted, the expense of defending yourself if you cannot get legal Aid, gets the matter ended rapidly, avoids publicity and does not leave you with as criminal conviction. However, a caution will be taken into account by a judge if you are sentenced for a future offence and may cause you difficulty with employers especially those needing a Criminal Records Bureau check. You need to take legal advice before accepting a caution. It could also cause problems if you want to go to countries which require a declaration of criminal offences – they may consider a caution a conviction even though it is not considered so in this country.

When should you plead guilty?

103. Discounts on sentences are available for those who plead guilty. An admission of guilt at the earliest opportunity could earn a one third discount on sentence although that would depend on the circumstances of an admission. Being caught redhanded during a burglary would count for less than the man who went to the police and gave himself up because he was troubled by a bad conscience.  Pleading guilty at a later stage will get smaller discounts.

104. The question of whether you should plead guilty is obviously dependant on circumstances. Listen to your lawyer. However, if you confess to your lawyer(s) that you are guilty then they cannot continue to represent you if you insist on a not guilty plea.   

105. A special circumstance is when plea bargaining comes into play. There is no official plea bargaining, but the prosecution may informally make it clear to the defence that they will drop a more serious charge if a guilty plea is entered on a lesser charge. There is a strong temptation to accept such a deal even if the defendant believes themselves to be innocent. If you find yourself in such a position, you will have to decide whether conviction even though you are innocent is the lesser of two evils.

Japan and The Big Society

The response of   Japan to the triple  disaster of a massive  earthquake, gigantic  tsunami and nuclear  power failure  has been surprising. One of the most advanced industrialised states  and the third largest economy in the world has struggled desperately to deal with what is admittedly a dramatic and unusually devastating multiple disaster .  Not only has there been no clear resolution of the  nuclear power station problem  after several weeks, but the response to the distress of those who have lost their homes and all the conveniences of a modern state has been strangely inadequate.  People have been left with not only no homes or power, but without food and clean water.  In the worst affected areas even the legendary honesty and social discipline of the Japanese has begun to break down with looting. (http://www.telegraph.co.uk/news/worldnews/asia/japan/japan-earthquake-and-tsunami-in/8395153/Japan-earthquake-Looting-reported-by-desperate-survivors.html)

Is the inadequacy of the Japanese response simply a result of the scale of the disaster or is there something within Japanese society which has caused the lack of  useful response?   The scale should certainly not be underestimated because the tsunami alone damaged hundreds of miles of coastline to a reported depth of ten miles in some places and the toll of those dead is officially put at 10,000 and the missing at 17,000 as of  25 3 2011 (http://www.telegraph.co.uk/news/worldnews/asia/japan/8405619/Japan-earthquake-death-toll-passes-10000.html).  Moreover, the on-going problem of the damaged nuclear plant must be  a tremendous distraction for the Japanese government. Nonetheless, it does seem rather odd to the outsider that the response to the provision of basic necessities to the dispossessed has been so slow and patchy. It argues for at best a lack of reasonable planning for civil disasters of which there is a high probability. Japan is part of the Pacific “ring-of-fire” earthquake zone and tsunamis are a regular feature of the area. It might be argued that building nuclear power stations in a notorious  earthquake zone   is not the brightest thing to do, but Japan has little by way of natural energy resources so it is possible to see  why they have done it. What is less easy to see is why they should have built stations close to the coast with the obvious danger of a tsunami following an earthquake or even a tsunami overwhelming the station on its own.  

If there was a serious  lack of civil disaster planning why would that be?   After all, the Japanese are famously good at paying attention to detail and behaving in a disciplined social manner.   Perhaps the answer lies in the very social cohesion which has meant that  the development of  the state has been much more restricted than it is in most developed countries.  Japan has a population of 125 million, approximately twice the size of that of  Britain.   The Japanese budget for the present year is  less than £700 billion (http://www.reuters.com/article/2010/12/24/us-japan-economy-idUSTRE6BN0FQ20101224?pageNumber=1). The British Government’s projected  spend for the coming financial year is £710 billion (http://www.telegraph.co.uk/finance/budget/8403115/Budget-2011-graphic-Spending-income-tax-shortfall.html).  Japan spends less than the UK on public provision despite have a population twice as large. This means that the proportion of public spending is very low compared with most developed economies, the Japanese GDP being around £3.2 trillion of which the state spends  less than 25% .  Compare that with UK public spending which is pushing 50% of GDP.  

The surprisingly  low level of  Japanese public spending in itself means that the capacity of the state to deal with major disasters is severely limited.   This difficulty is amplified by the very high Japanese National Debt  which is approximately twice GDP.  Servicing this takes up a good deal of the Japanese government’s budget.   Money for public projects is in short supply and  it is a moot point whether Japan can be said to have a welfare state (http://www.onejerusalem.com/2007/10/14/japan-no-welfare-state/). If you fall out of work or ill in Japan and you are without the support of your family or friends, you can rapidly become  destitute.

Why is Japanese state spending so low?  Most probably it is  a continuation of traditional Japanese social relationships where support comes from  not only family and friends, but the general neighbourhood  and,  in the case of large Japanese companies at least, the organisation of  a person’s life around the place of employment. There is nothing abnormal about such development because it is precisely what happened in other industrialised countries before the state grew large.  Moreover, for many Japanese after  1945 the security offered by a fully-fledged welfare state was  largely substituted  by the giant Japanese companies who offered a job-for-life and  organised an employee’s life around the  business.  Although the job-for-life  culture has suffered considerable degradation in the past twenty years,  it stood in the way of the expansion of the state.

There is an important lesson for Britain and other developed states here. Japanese society is organised broadly as Cameron’s Big Society is supposed to be organised, with the state standing back and individuals forming a nexus of social-help. The problems this creates are only too obvious.  Japan has insufficient state capacity to deal with dramas such as it is currently experiencing or to provide for those who fall by the economic wayside. More generally, the insecurity which prolonged economic weakness produces – Japan has arguably been in recession for twenty years – will tend to make people less and less willing to think of the common good  if the support mechanisms they rely on are  informal and local.  

There is no question that there is often considerable waste in public spending . However, too little public spending is a greater evil than too much (provided the spending does not overwhelm the economy)   because too little leaves no spare capacity  to deal with either chronic problems such as long term unemployment or sudden disasters such as earthquakes or tsunamis.

Why did auditors fail to blow the whistle on the banks?

1. Audit Failure

2. Why does the failure of large concerns matter?

3. Why false accounting happens

4. The incestuous relationship between auditor and audited

5. How collusion may arise between the auditor and their client

6. Is it possible to audit companies meaningfully?

7. The scarcity of IT skills

8. The responsibilities of directors

9. Non-executive directors

10. What can be done to improve matters?

1. Audit Failure

The failure of the massive US energy company Enron in the early years of the century and the incestuous relationship between the company and its auditors Arthur Anderson gave a graphic public example of the dangers of relying on company accounts to provide a true picture of the financial state of a company. Enron went from being worth $80 billion to virtually nothing in a year, yet Arthur Anderson kept on giving them a clean bill of financial health right up to the end.

Since the Enron crash, a series of major private enterprise failures has occurred culminating in the catastrophic financial implosion of major banks and their ilk, most notably those in the USA and Britain. Much has been written about the failures of formal regulatory regimes for banks and their ilk, but surprisingly little media and political attention has been given to the failure of the part played by the general regulatory rules for business – the audit of business accounts- in preventing the excesses of the banks, for example, how did the banks’ auditors persistently accept the value placed on the exotic financial instruments which underpinned the sub-prime debt or time and again fail to uncover fraudulent trading positions of dealers like Nick Leeson?

It is this aspect of failed regulation – the audit of companies – upon which I shall concentrate, an examination which will address the general problems of auditing rather than just those associated with banks.

What is the audit? Any limited liability company in Britain has by law to be inspected to some degree (the level of audit for very small companies is much less onerous than for the larger ones) once a year by a qualified accountant or firm of accountants. The auditors must either certify the annual accounts as a fair representation of the company’s business or certify the accounts with reservations. Where the accounts are blatantly and seriously flawed, the auditors will refuse to sign the accounts and resign as auditors. Such events are very rare indeed in the case of the largest companies.

The audit regimes of different jurisdictions vary in detail, for example, British companies are required to divulge substantially more financial information than their US counterparts. Nonetheless, the regimes in any advanced country are similar enough for statements about auditing problems to be generally pertinent.

2. Why does the failure of large concerns matter?

Before I turn to the practical difficulties of producing honest and accurate audits, there is a prior question to answer, namely, why is the audit necessary? after all, private enterprises which do not take public money for government contract work are simply risking the money of their shareholders and those who extend credit to them.  Pathological free marketers would say that even a large business failure it is merely the market at work and that all will come out in the competitive wash.  Those not afflicted with this quasi-religious belief will see things rather differently. However, the free market case does need to be answered because of its present dominance in politics. So, why is the failure of a large company so important?

Obviously those who lose money or their jobs through the collapse of a large company suffer, but what about the general population? Why should they care? Indeed, many people  shrug their shoulders when they hear of  business failures, thinking “I own no shares, I have no pension with them. I do not work for them. I am not a creditor. It will not affect me.” In the special case of banks they may be concerned about money deposited, but that fear soon evaporates in a country such as Britain as they discover that the government underwrites either all or a large proportion of their deposits.

Those with this I’m-all-right-Jack mentality dwell in a fool’s paradise. In aggregate, business failures of any size are important to an economy, but a large company going bust is particularly bad news, both immediately and in the longer term. To begin with there is a strong possibility that it will have most of its staff concentrated in a few areas or even in one area. If so, it will cause a local crisis. Structural unemployment on the heroic scale of the 1930s or even of the 1980s and early 90s,  when British industries such as coal and steel were rationalised” almost out of existence, may be a thing of the past in Britain  because the country has been cleansed of most of its great manpower demanding manufacturing and extractive industries,  but a company can still employ sufficient people in an area to cause severe economic and social dislocation if it stops trading for it puts out of work its own employees and the employees of firms dependent upon its orders and the  local economy as a whole shrinks as purchasing power is reduced. Beyond the local economy, the taxpayer generally suffers because those now redundant pay no income tax and have to rely on taxpayer funded benefits while the tax take generally in the area is reduced as demand shrinks.

Less tangibly, the failure of a company as large as Enron affects the general confidence of the population.  They think, not unnaturally, that if a company that big can go down the pan, what company is safe?  When people are unsure about the future they tend to reduce their spending. That deflates the economy. but not only do they fear for their immediate jobs. If they have  a private or occupational pension, they begin to ask awkward questions such as “Is it safe?” Those without pensions as yet ask “What is the point of paying into a pension if it goes the way of Enron’s pension scheme?”

These are very pertinent questions to ask.  Private and occupational pensions are heavily linked to the stock market because pension funds tend to hold much of their investment capital in shares. Any large pension fund will be likely to hold shares in  many  major companies. If a large company fails completely or even does very badly, non-state pensions  will suffer. Even state pensions may indirectly feel the pinch because  reduced tax revenues due to a slowing economy means that state funding cannot be so generous.  Moreover, the failure of large companies has a depressive effect on the stock market generally, which again is to the general disadvantage of pension funds, which hold a large proportion of their funds in equities.  

But the ripples spread even further. Companies rely directly and indirectly on the reliability of their audited accounts and the accounts of others. So do credit rating agencies and market analysts. Once confidence in audited accounts falls, then the cost of doing business rises as companies take steps to try to safeguard themselves against losses from honest business failures or outright fraud. They will become more cautious in their business dealings generally. They will attempt to insure against losses. The general cost of borrowing money will almost certainly rise as banks become warier. New investment may become impossible. This is what caused the Asian Crash in the late nineties. Far Eastern companies looked a good bet from their accounts, but many were far from sound in reality. Once the accounts of a few big companies were exposed as works of fiction, a general collapse in confidence followed and even companies which on a trading level were perfectly sound found their supply of new capital drying up.

Finally, there is the loss of the capacity to provide of goods and services . A  large company may fail through incompetence or fraud rather than a decline in demand for their products or competition from other at home and abroad. If that  happens the country and its people lose the opportunity to purchase the goods and services. This may mean either no goods or more probably imported goods  at a higher price. In the case of strategic industries, such as microchips or energy, it can also mean a dangerous dependence on foreign suppliers.

A single large failure will not capsize a first world economy on its own, although it can do a great deal of trouble – Wall Street lost 2% of its value after Enron collapsed.  But often one large failure will signal others. There is a good reason for this: such failures almost invariably occur in difficult economic times, either at the very end of overheated boom or on the downturn.  In boom times, incompetence and even fraud can be hidden by a company because confidence is high, money is plentiful and cheap and customers  easy  to  find,  legal regulation  becomes  lax  and self-regulation next to non-existent. Financial castles in the air can be  and are happily and rapidly constructed.  Come recession, the fruits of incompetence and fraud rapidly ripen to the point of collapse and exposure. If one large company has been caught by incompetence or fraud, you may bet the farm on a number of others having fallen into the same trap.

If audits are fair and accurate, the chances for reckless or criminal behaviour are greatly reduced. That is why they are essential to the efficient functioning of economies which are predominantly capitalist. The problem is that time and again audits fail to be either fair or accurate. To understand why this is so we need to understand the reasons and methods of those within companies who would  act dishonestly or incompetently, the process of auditing and what practical steps can be taken to prevent abuses by both directors and auditors.

3. Why false accounting happens

 False accounting occurs for two general reasons. The first is the “honest” reason: accounts are falsified simply to keep a  company afloat. This is very common. It may often have a moral slant to it as many employers who own the companies they run have a genuine sense of responsibility towards their staff as well as their own interests.

The other reason why accounts are falsified is fraud for the direct benefit of the individual.  This has three basic forms. The first is when the directors of a company dishonestly influence the price of shares through the provision of false information, directly or indirectly,  to the  markets to hide the poor performance of a company and persuade shareholders and suppliers that it is still a viable and attractive going concern. Higher share prices and misleadingly favourable accounts can also trigger very large bonuses and share options.  

The second form of fraud is the direct attempt to steal the assets of a company.  This often occurs in cases where directors are all in the know and have started off falsifying the accounts to keep a company afloat. They get to a stage where it is obvious the company is going under and the directors suddenly take what they can and run. However, it can also be fraud which consists simply of taking money or assets by one or more people – who need not be directors – without the directors as a whole knowing that fraud is being perpetrated.

4. The incestuous relationship between auditor and audited

The relationship between auditor and audited can be very close regardless of the size of a company (private limited companies with few shareholders are very prone to having a tame auditor, especially family owned businesses), In the case of very large companies the relationship between company and auditor becomes very incestuous. Very few firms of accountants have the capacity to perform such audits – in Britain, perhaps three could handle a company the size of Enron.  This means that the same handful of accountancy firms carry on auditing the larger companies more or  less regardless of their performance, simply because there is no one else to do it. For the same reason governments are reluctant to act against such audit firms no matter how they behave, because to do so could result in audits for the largest companies becoming a practical impossibility. There is probably not one large firm of auditors in Britain which has in the past 30 years not been involved in some serious failure to uncover financial wrongdoing.

The primary problem with the audit as a regulatory instrument is that the auditor has a vested interest in keeping the company audited sweet because there is money in “them thar audits”. Auditors go from year to year or  even  decade  to decade with the  same  companies, happily drawing their auditing fees, which can be very substantial in a large company – Enron paid Arthur Anderson $25 million for their last audit. The incentive not to kill the goose that lays the golden egg is obvious,  and the auditor may be tempted to turn a blind  eye  to irregularities ranging from trading whilst insolvent to outright and wilful criminality.

Accountants will often tell you there is no money in auditing. Well, up to a point, Lord Copper. As auditing is a statutory requirement and qualified accountants have a monopoly of the work, there is little excuse for auditing not to be profitable. Indeed, at the smaller end of the trade auditing is a staple of an accountant’s practice. The larger the company, the more complicated matters become. Small companies frequently have their accounts audited by their accountant and little else done. Large companies commonly purchase a range of non-audit related services from their auditors, for example, management consultancy and sophisticated accounting and financial services software. (Enron paid more in consultancy fees ($27 million) to Arthur Anderson than they paid for their audit.) Auditors will drop the  price of the audit to entice the customer to buy the non-audit services. The audit may even appear as a “loss leader” in the audit house’s ledgers. But of course it would not be offered at a “loss leader” price if the other non-audit fees were not forthcoming. It does not require much imagination to see that such non-audit fees are going to end if the accounts being audited are not passed as satisfactory. It is worth adding that amounts paid by large companies to auditors for non-audit services are small compared to the value of the businesses they audit and the financial resources they command.  What after all was the $27 million Enron paid Arthur Anderson for consultancy work in their last trading year when compared to the billions Enron commanded?

Why is this laxness tolerated? Because the government cannot act, even in a purely legislative sense, too harshly against auditors for they know that if they make the rules for auditing too onerous, it may dissuade so many accountants from undertaking audits as to make the legal requirement to have accounts audited a practical impossibility. In the case of those accountants auditing the largest companies, there is a particular problem because none of the accountancy practices which have the capacity to undertake such audits has clean hands.  If the largest audit firms were brought to book for their failures to audit meaningfully, the government might as well relieve the largest companies of their obligation to be audited for there would be no one left to do it.  

The sad truth is that whatever regulatory legislation a government might pass to improve audits would be virtually a dead letter in practice if the audit profession does not wish to play  ball.   Government  does  not have the  capacity to meaningfully police auditing and could not in practice acquire it.  Because of the technical expertise required, the only people who could do it are accountants and they are never going to work as paid government employees in any numbers. That is so because accountants in private practice can both earn much more than public service could possibly offer and be their own masters – this is a general problem for public service with jobs which require expertise with a high value in the private market.

But even if sharp accountants could be persuaded to work for the government, their numbers would always be vastly less than the numbers needed to police audits meaningfully. In fact, the active policing of any law involving a fraud is always something of a confidence trick because the numbers of fraudsters are invariably vastly greater than the forces the state can muster against them.

5. How collusion may arise between the auditor and their client

The turning of a blind eye to irregularities may happen tacitly, that is, both auditor and the company to be audited understand what the “deal” is without anything being said – you get the fees, we get the clean bill of financial health. However, outright conspiracy between the auditor and the audited to suppress the true financial state of the company must happen reasonably frequently because apart from those instances which result in criminal charges, there are  any cases of publicly reported company failure which involve such dramatic  failures of auditors to qualify accounts that it is difficult to imagine they are down to simple negligence or incompetence. In Britain, think of the failure of auditors to unmask the corrupt behaviour of Robert Maxwell (Mirror Group), Asil Nadir (Polly Peck) and BCCI.

Such a conspiracy might include all the partners in a accountancy firm or just one. Where a large company is audited, the number of people  required to carry out the audit is substantial.  There is consequently a good chance that irregularities will be known to quite a number of people and a conspiracy might seem impossible to keep within the conspirators.  However, most of the people who do the physical auditing are not partners or even qualified accountants, accountancy trainees being commonly used as the auditing footsoldiers. Such people have a vested interest – progressing their careers – in keeping quiet if  they think the audit is being conducted dishonestly and also lack both the expertise to unravel fraud and the access to the overall audit data, which access often may be necessary to see a fraud.

6. Is it possible to audit companies meaningfully?

he problem for the auditor is how to balance the time available for the audit with the amount of data to be audited. As the data for a company of any size always vastly exceeds the time available all an auditor can do is sample the data. But that is only the start of his difficulties. Take the most basic act of auditing, comparing one document with another to verify that a transaction has taken place. The auditor checks one against another, say an electronic record against a paper invoice. One substantiates the other. What then? Does the auditor simply take the records at face value or does he institute further checks such as contacting a supplier of the audited company to see whether an invoice ostensibly from the supplier was actually issued by the supplier? The norm is that records which seemingly corroborate one another will be taken as genuine because the auditor simply does not have the time to check further all of the documents he inspects. The  best that can be done is to investigate more fully a sample of the documents the auditor  has chosen for inspection. But that means he is down to investigating a sample of a sample, and even if he does it rigorously, the chances of discovering that data has been falsified are pretty slight because most frauds will only affect a small part of a company’s records.

Interrogation software can be used go “data mining” on computerised records, but the best one can ever do with the manual data (which is probably the most easily identifiable source of irregularities) is sampling. Moreover, even where computer files can be interrogated efficiently – something dependent upon the IT skills of the user – that produces another sort of problem: the large volume of extracted data to be scrutinised. There is only so much time and effort that can be put into an audit.

If the directors are determined to obstruct an audit by supplying false or incomplete data as Enron routinely did in the most complicated and opaque manner,  I doubt whether it is possible to meaningfully audit a company of any real size, let alone one as enormous and as complicated as Enron. Their main accounting trick  was the creation of fictitious revenue  by setting up a complex chain of dummy companies, that is, companies owned and controlled surreptitiously by Enron,  which pretended to trade with Enron as independent customers and the hiding of debt in those companies.  A satirical email which did the rounds at the time of the Enron collapse was perhaps not far short of the mark:

Capitalism – You have two cows. You sell one and    buy a bull. Your herd multiplies, and the economy    grows. You sell them and retire on the income.

Enron Venture Capitalism – You have two cows. You sell three of them to your publicly listed company,  using  letters  of  credit  opened  by  your   brother-in-law  at the bank,  then execute  a   debt/equity swap with an associated general offer so that you get all four cows back, with a tax  exemption for five cows. The milk rights of the six cows are transferred via an intermediary to a Cayman  Island company secretly owned by the majority shareholder who sells the rights to all  seven cows back to your listed company. The annual report says the company owns eight cows, with an option on one more.

But whatever the size of company, the auditor is always at the mercy of his client in the sense that he can only work from the data the client gives him. A false set of plausible “books” is presented and there is not much an auditor can do in practice because of the constraints of time and money. And a false set of “books” is all too possible these days because computers have made the business of falsifying records a doddle. Keeping two sets of books manually involves considerable effort, with computers all that needs to be done is keep two separate accounts programs running. one truthful, one bogus, Moreover, with computerised systems changes to hide fraud can be made without leaving the obvious tell-tale signs of alteration commonly found within manual systems such as rubbings out, pages torn from ledgers, obvious attempts to change data and other evidence of human interference.

Computers also affect the veracity of paper documents. As a reasonable stab at counterfeiting banknotes can be made using run of the mill IT equipment, it is not difficult to imagine how easy it is to forge other documents which have no security features built into them.

Suppose I want to forge an invoice from a regular supplier to account for money which in reality has been siphoned off illegally. I take an actual invoice from the company. I scan it in and then use a graphics package to remove the original sales data and to put in the false data. I then print out the forged invoice (using similar paper to the original) which for all the world looks like the other genuine invoices I have from the supplier.  

There is also the problem of the auditors ability as an investigator. Investigators like salesmen, are born not made. You can make a natural investigator better by training and giving him experience, but you can never make someone without the natural talent a good investigator. That is because an investigator must be someone with initiative, someone who does not require a textbook to tell them what to do. Many auditors frankly do not have that quality in any great degree and are literally incapable of conducting a serious investigation rather than a “tick and turn” inspection, that is merely satisfying an audit by taking things at face value. . Indeed, the type of personality which makes a good technical accountant – attention to detail, accuracy in small things and so on – may mitigate against him being an efficient investigator. As already mentioned, it is also true that the least able and experienced members of an accountancy firm are put to audit work, while the more able and experienced do the consultancy work.

7. The scarcity of IT skills

Even after 25-30 years of computerised accounting systems being the norm, auditors all too often lack the computer skills needed to interrogate electronic data in a sufficiently sophisticated manner, something which is far from simple for even someone with good IT skills when they are dealing an unfamiliar computerised records and accounting system. It could be argued that such skills should be made mandatory for auditors dealing with large companies with complex computerised accounting systems. That idea like many a legislative wheeze sounds attractive at first glance. The problem is that people with such skills are thin on the ground and very costly. If the employment of such people were made mandatory, large firms of auditors might well be unable to employ the staff they need. That  in turn could lead to the auditing of all  limited companies becoming impractical.

But let us assume for the sake of argument that there were sufficient people with IT skills and they could be enticed to work for  auditing firms, what then? Very few of those IT competent people will also have the accountancy skills needed to properly perform an audit. Nor is it probable that sufficient people could be trained to have both at a high level, because the dual training would simply take too long and be too costly. Consequently, auditors without high level IT skills would often have to work through IT specialists without accountancy skills. Apart from the immense cost implications of this, there is also the problem of meshing the IT specialist and the accountant together. As any systems analyst will tell you, the point in the creation of a new system where things are most likely to go wrong is the process of the computer illiterate customer telling the systems analyst what he wants of the system he is asking the systems analyst to design. Accountants without advanced IT knowledge are all too likely to ask for things which do not produce the data they want.

8. The responsibilities of directors

Directors, both executive and non-executive have legal obligations to take all reasonable steps to ensure that their company trades within the law. That obligation includes the presentation of an honest set of accounts.

Directors cannot be passive and automatically escape the consequences of any criminality or gross incompetence. Ignorance of wilful criminality or of gross incompetence in maintaining records adequate to show the true financial position of a company, does not excuse directors from their obligation, although it may be enough to save them from criminal charges.

Directors have limited liability in normal circumstances. However, if it can be shown that the directors have not met their legal obligations as directors, for example criminality is proven or inadequate records have resulted in a company making a loss, their limited liability can be removed. However that is  extraordinarily rare, which suggests that either the law is inadequate or there is a tacit understanding amongst those with the power to take action to remove their limited liability, especially the large pension and other managed funds, that pursuing individual directors would not be playing the game. As we shall see the law would appear to be adequate if it were only enforced. .

Nowhere is this reluctance to act  better seen than in the aftermath of the banking crisis which caused the present recession. Not one of the directors of the Royal Bank of Scotland or HBOS has been subject to criminal or civil action. Being a banker is a small-risk occupation for those at the top. As the Government almost invariably steps in when it is a bank going bust, being a banker is a one way bet: the bank makes money you get the vast remuneration: the bank fails the taxpayer steps in and you do not suffer any punishment such as summary dismissal, the removal of limited liability if you are a director or criminal proceedings, but instead leave with a massive pay-off at worst

Section 174 of the 2006 Companies Act details the duties of the directors as follows :

(1) A director of a company must exercise reasonable care, skill and diligence.

(2) This means the care, skill and diligence that would be exercised by a reasonably diligent person with—

(a) the general knowledge, skill and experience that may reasonably be

expected of a person carrying out the functions carried out by the director

in relation to the company, and

(b) the general knowledge, skill and experience that the director has.

How can the directors of the nationalised or partly nationalized British banks –  RBS, HBOS, Lloyds TSB and Northern Rock – be said to have met these requirements? Lloyds TSB have even admitted that inadequate due diligence was done before the takeover of HBOS. Yet there has been no suggestion of taking criminal or civil action against them. .

There is also the question of general competence. The alarming truth is that the executive directors of the banks almost certainly did not understand the complex financial packages being devised by their investment arms which led to the crisis. On 10 February 2009 the recently removed executive directors of the RBS and the HBOS appeared before the Commons Treasury Select Committee: Sir Fred Goodwin (ex-RBS chief executive) and Sir Tom McKillop (ex-RBS Chairman),e Andy Hornby (ex-HBOS chief executive) and Lord Steveson of Conandsham (ex-HBOS Chairman).

During their examination by the committee, each of the four directors on show was asked to detail their formal banking qualifications. All four had to admit that they had none. I am generally an enemy of credentialitis, but in this case technical qualifications are necessary to ensure that the directors understand the very complex financial instruments being used and the exotic accounting practices employed by large corporations. If failure to understand such things does not amount to gross negligence what does?

The Companies Act allows shareholders, subject to the agreement of a court, to sue directors for negligence, default, breach of duty or breach of trust. No attempt has been made to removed their limited liability to allow this to happen. Nor, as far as I can discover, has any attempt has been made to get bank directors banned from holding directorships in the future. Why have the institutional shareholders not started such legal action to remove limited liability from directors so they can be sued? Why has no politician raised the possibility of banning ex-bank directors from being directors in the future? The only plausible reason is the tacit class interest encompassing politicians, bankers and large institutional investors, the last being the only non-governmental people generally with the financial muscle to fund actions to remove the limited liability of directors. There is a simple legal way to stop them enjoying the fruits of their ill-gotten gains: remove their limited liability and ban them from holding directorships for life.

As for criminal charges, I wonder if something could not be done under the laws relating to fraud. There must come a point where recklessness behaviour becomes fraud because the director knows they are taking chances which will most probably not come off. For the future we need a law of reckless endangerment which would make any director who endangered a bank or allied institution through their criminally reckless behaviour to be punished by the criminal law.

Far from being punished, bankers who have left the banks they have helped ruin have received  gigantic pay-offs to reward them for their incompetence. The case best known to the public is that of Sir Fred Goodwin of RBS who originally was to receive an immediately payable pension of more than £700,000 per annum,(since reduced to a more modest £400,000 odd ) but he does not stand alone. To take a couple of other examples, according to the Telegraph (27 Feb 2009) “Eric Daniels, the chief executive of Lloyds Bank, which has accepted tens of billions of pounds from the Government, could receive almost £10 million in pay, perks and bonuses this year”, while Adam Applegarth, the chief executive of Northern Rock when it failed, a bank so badly damaged that it is now wholly owned by the British taxpayer, reportedly  trousered £760.000 (Northern Rock boss to get £760,000 payoff Telegraph Tony Undercastle 31/03/2008).

When it comes to human behaviour, it is always risky to say that something has never happened, but I will stick my neck and say that there is no instance of a director of a large public company audited in Britain ever publicly blowing the whistle on criminality or recklessness verging on criminal irresponsibility and getting the backing of their board to publicly expose what was going on. I think one would even be hard pressed to find a director of such a company who has publicly exposed breaches of the law or recklessness on his own authority whilst still sitting on the board.  In the case of Enron a so-called whistle blower, Sherron Watkins, was not in fact a public whistleblower. She merely told senior Enron executives that massive debt was being hidden. When the senior executives did nothing, she followed their lead and kept quiet until after the company collapsed.

9. Non-executive directors

The sinecure is alive and well in boardrooms. Non-executive directors (or their foreign equivalents) are meant to bring some particular benefit, for example contacts or expertise, and a certain independence of mind to a board. That is the theory,  In practice, and especially with large companies, non-execs have a pretty dismal record of bringing neither particular benefit nor independence of mind to their position. Where were  Enron’s non-execs when what appears to have been outright fraud was being practised? How did Robert Maxwell manage to perpetrate the frauds that he did within the context of public limited companies  packed with non-execs? What were Marconi’s non-execs doing as the management  through sheer recklessness reduced a company worth £30 billion with a cash balance of £3 billion to one worth less than £1 billion with £4 billion of debt within 18 months in the 1990s? More dramatically why did the bank non-execs fail so spectacularly to raise concerns about the exotic financial instruments and other reckless behaviour which led to the banking collapse of 2008 They were  at best simply drawing their salaries whilst doing as little as possible .

The truth is that non-execs in the vast majority of cases are no more than PR wallpaper. The case of the former Tory Minster, John Wakeham, is instructive. Wakeham is an accountant by training with considerable commercial experience before he went into politics. Not only did he accept a non-exec directorship with Enron, he also agreed to chair  Enron’s audit committee.

In theory, Wakeham was the ideal non-exec. He had particular expertise (accountancy), contacts (politics) and was not dependent on Enron for his main remuneration – apart from his then position of Press Complaints Commission chairman (for which he received £150,000) Wakeham also held 16 other non-exec directorships. Yet it did not make a blind bit of difference. Enron and their auditors were able to do what they did without a peep from Wakeham. I will leave readers to judge why Wakeham behaved as he did.

Wakerham’s situation when he was with Enron also raises a very interesting question: how it is possible for any person to head the PCC and hold as many directorships as he did (and Wakeham is far from being the champion in terms of numbers of directorships) and meaningfully satisfy his obligations as a director. Commonsense says it is not possible, even for the most conscientious and able man.

But non-execs are all too often not conscientious or able. They sit on boards to lend their names (a title is always very useful on the letterhead) and to give the illusion that a company is being properly scrutinised by those not involved with its  day-to-day management. The non-exec in return gets handsomely rewarded for doing very little and causing even fewer waves.

How are non-execs appointed? The Old Pals Act is the answer often enough. In the case of very large public companies there is a magic circle of non-execs who circulate around the companies.

10. What can be done to improve matters?

When one contemplates the practical difficulties involved in policing fraudulent or grossly incompetent behaviour by directors and auditors, the temptation is to throw up one’s hands in despair, yet something radical clearly needs to be done for at present, directors can act negligently or even fraudulently with near impunity. If you want to be a fraudster with little chance of going to prison, go into business on your own account. If you maintain at least the semblance of attempting to trade normally, generally you will be safe from criminal prosecution. If action is taken, the worst that can happen is normally a ban for a few years from being a director of a company, although in practice this is often a dead letter for very little check is made on their future employment. They may not formally be directors, but all too often they are to be found controlling companies through nominees (if the companies are small) or are employed as consultants.

How can matters be improved? Consider the practical restrictions within which any state-prescribed audit must exist. The state could never undertake the business of auditing itself because it would be impossible for the state to employ accountants in sufficient numbers to undertake the auditing. Nor, for the same reason, can the state police auditing even to the degree that it can make checks on the reduction of VAT or income tax under PAYE.  The best the state can do is investigate after the damage is done and even then the lack of accountancy expertise directly employed by the state means that the state has to rely largely  on accountants  in  private  practice to undertake the work of investigation.

If a regulatory system is reliant on private individuals – the directors, auditors and suchlike – to behave honestly and competently but cannot make any meaningful general check on them, the only course left is to work on the minds of such people. The most potent way to do that is to make the penalties for fraud and incompetence by directors and auditors severe and their application exemplary, which means prison, heavyweight fines and banning them from any position of responsibility within a company for substantial periods, including life in the worst cases and any director who has liquidated three companies. The same willingness to prosecute should apply to any other person involved in a gross misrepresentation or outright fraud connected to a company, for example lawyers, credit agencies, financial journalists, and politicians. In addition, the state should provide the means to pursue civil actions for damages against those who defraud or act with. The strongest incentives they can have to behave properly are convincing threats of imprisonment and personal financial ruin.

If the removal of limited liability is to be effective, the ability to recover of assets passed to family members and any other third party by a director must be greatly improved.  At present all that can be done is to try to show that the assets passed to a third party were passed simply to keep the assets from the director’s creditors, something which in practice is the devil‘s own job. What is required is a law that would allow assets to be seized if the third party could not show they had acquired them in a manner other than by receiving them from the director in question either directly or indirectly – a frequent ploy by directors who own all or much of a business is to pay a third party, normally the wife, substantial remuneration for work they do not do.

I would also advocate a new criminal offence to deal with situations where a prosecution is presently difficult or impossible because the directors are claiming gross incompetence to explain the collapse of a company or the unexplained vanishing of company assets. Directors should face criminal charges for such failures as inadequate or missing records as and the inability to account for missing company assets. These should be strict liability offences, that is, offences where intent does not have to be proved merely the fact that something has or has not been done. 

The position of non-executive directors needs to be tightened. As many of them do little more than lend their names (and sometimes their titles) in the manner described by Trollope in “The Way we live now”, the complete banning of non-execs would be no great loss. Any particular expertise a company needs can be brought in at non-directorial level. The same applies to people with contacts. The same applies to general independent advice on running the company.

The argument that non-execs provide oversight is unsustainable because they rarely if ever blow the whistle on corporate misbehaviour. Nor, as the example of British banks has recently shown, do they often have the expertise to understand the business they are supposedly overseeing. There might be a case of a small number of independent non-execs voted for by the smaller shareholders (to exclude the class interest between directors and the big managed funds), but the problem there would be whether sufficient people with the right expertise could be found to fill such roles. I would very much doubt whether they could be.

It might seem logical for audit firms to be restricted to auditing work. That sounds fine in theory but it raises two severe practical problems. The first is obvious: what if insufficient accountants are willing to set up audit-only firms? Obviously the system of audit as we know it would collapse.  That problem could conceivably be overcome by the government using taxpayers’ money to pay audit-only firms a substantial retainer to add to their audit fees to make the work worthwhile.  However, even if that did work, such a solution is unlikely to overcome the second problem, at least for the larger audit firms. Bright young would-be accountants, particularly with the larger accountancy practices, join because of the variety of work which is available. This provides them with not merely a good accountancy background but also valuable general management and business skills.  An audit-only company would not provide such a background. It is also true that audit work is pretty dull.

What could be done instead of having audit-only firms? A halfway house is possible. Auditors could be forbidden by law to offer other services to a company they are auditing. That will mean they have to adjust their audit and non-audit fees, but it is a practical suggestion in the sense that it could be done. It could reasonably be objected that faced with such rules accountancy firms, especially the large ones, might drop auditing.  In theory they might, but the majority of firms undertaking audits either have that as their main business or it is profitable for them. Even the larger firms would find auditing profitable if they stopped using it as a loss leader to entice clients to buy other services. If no auditor was allowed to do this, all would be forced to raise the cost of audits.

Whatever is done would of course leave the problem that only a small group of audit firms can handle very large companies. That can to a degree be addressed by especially strict oversight of the auditors of such companies, but it will always be a problem. The application of penalties should be auspiciously rigorous where collusion or fraud occurs in such companies and audit firms.

Insolvency law needs to enforced more strictly. However, that does present difficulties. In theory, a company unable to meet its debts is insolvent and should cease trading,  but few if any companies have not been technically insolvent at some time, not least because trade is often strongly seasonal. But if that was the standard by which businesses operated the economy would collapse. What businesses do is trade while they have reasonable expectations that debts will be met in the course of normal trading fluctuations or they believe they have the ability to raise fresh capital through such devices as bond and rights issues.  Of course, what constitutes a reasonable expectation is debatable and that gives great scope for interpretation by auditors as well as directors.  The line between fraudulent trading and misjudgement of a company’s circumstances is not always an easy one to discern. However, there are many blatant examples of companies going into administration or liquidation with debts which are simply so overwhelming that it stretches credulity well past breaking point to imagine that the directors had any reasonable belief that they could trade or borrow themselves out of an insolvent situation. (Think Portsmouth FC).

It is also important to realise that the audit at present is a narrow exercise designed to assess the past financial year. It is not meant to judge the broader viability of a company such as its longer term potential to trade legally. There is a case for giving the auditor responsibility for making broader judgements, for example, whether a company‘s borrowing is such as to overwhelm it with a slight change in circumstances, for example, a hike in Bank Rate. 

But no matter what steps are taken to enforce penalties against directors or to improve oversight, the policing of private business like all other policing in any society with pretensions to be free, involves a large dollop of public consent. It relies on the honesty and good will of both those running a company and those with the duty to check the financial state of a company. Consequently, the general moral tenor of a society will to a considerable extent determine the volume of dishonesty in business.

The fact that at present directors rightly believe that they have little chance of being held responsible for their incompetence or criminality means, quite naturally, that they are more likely to behave in such ways. But their propensity for doing so is also bolstered by thirty years of laissez faire propaganda by businessmen, academics, politicians and much of the mainstream media which has promoted the idea that state regulation is an evil, that the “free market” will police itself in a way ultimately benign to society as a whole and that Gordon Gecko’s “Greed is good” is by implication a worthy aspiration for everybody. That has created a moral vacuum which desperately needs to be filled. We need to get back to the idea that honesty is not merely a moral virtue but a necessity for a stable and prosperous society. Enforcing the law more assiduously and creating new laws where necessary, is one way to achieve that. Another is for politicians to stop their uncritical acceptance of so-called free markets (in reality, state controlled markets through anti-monopoly laws and privileges such as patents and limited liability) and start advocating a more pragmatic and broader approach to economic policy based on what actually happens rather than what an ideology tells them will happen.

Film reviews – Inside Job

Documentary

Director Charles Ferguson

Narrator Matt Damon

Released 2010

Run time 1 hour 48 minutes

http://www.sonyclassics.com/insidejob/site/#/cast

The last time I felt so angry coming out of a cinema was after a viewing of  The Smartest Guys In the Room, the story of the Enron scandal.   In the case of the Inside Job,  it was not that I was  given much by way of new facts, for I know the story it told  only too well.  Rather, I became angry simply by watching the grotesque drama which led to the present global financial disaster unravel from its beginnings; a  story well flavoured with recordings of the main players in the catastrophe either showing their reckless disregard for society at large before the recession arrived or trying to justify their behaviour afterwards in the most contemptible  and frequently risible fashion. (Watch out  for Prof  Frederick Miskin  explaining why he resigned as Governor of the Federal Reserve Board when the going got tough. His reason?  That he had to go back to his university to revise a textbook).  To that was added the dismaying knowledge that nothing has really changed since Lehmann Bros went down in 2008, with  the bankers who caused the financial disaster  still pocketing vast amounts of money, most of it provided by taxpayers.  There are some outrages which never  cease to shock no matter how familiar they become. This is one of them.

Those who have seen The Smartest Guys in the Room  will have a good idea of the approach and tenor of Inside Job. For those who have not, imagine a Michael Moore documentary without Michael Moore.  There are no cheap tricks, no exhibitionist presenter; just  mercifully jargon-free explanations of technical financial instruments and interviews quietly conducted by the director which allow the virtuous to express their outrage and the guilty to hang themselves with their own words and behaviour.

The film concentrates primarily on the American experience,  but there is no harm in that because the USA  is both an exemplar for what happened in much of the developed world and was arguably the prime driver of the global crash because of its globally dominant economy, although Thatcherite Britain needed no encouragement to tread the same criminally reckless path.

The film leads us through the story of the wilful creation of instability in the global financial system.   Jimmy Carter  began the process with the Deregulation and Monetary Control Act  (1980) and  Reagan followed it  up with the Garn–St. Germain Depository Institutions Act (1982). These  Acts allowed  Savings and Loans associations  (equivalent to British Building Societies) to behave like banks without being subject to the then  tight regulations  (the Glass-Steagall Act from the Depression) which divided investment banking from institutions taking deposits on a retail basis.  This resulted in colossal losses in the late 1980s and early 1990s with a great deal of US taxpayers’  money being used to rescue to rescue the situation.  This  gave the green light to the unscrupulous who believed, broadly rightly, that if any financial institution was large enough, it would be bailed out by the US taxpayer.

The experience of  the Savings and Loans scandal did produce  legislation to regulate anew the homes loans industry with   the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA).  That Act had one great flaw: it gave the two quasi-state mortgage granting bodies  Freddie Mac and Fannie Mae a  responsibility to support mortgages for low to  moderate-income families. That drove  the sub-prime lending.

The greatest  breach in the regulatory wall occurred in 1999. In 1998 Citi Group was formed by the merger of the bank  Citicorp and financial conglomerate Travelers Group . The only problem was that the merger was illegal under the remaining provisions of the Glass-Steagall Act which forbade any one institution from acting as any combination of an investment bank, a commercial bank and an insurance company.  Citi Group did all three . But  Citi Group were given a temporary waiver to allow them to dispose of their conflicting business in an orderly fashion.  Happily for them and sadly for the rest of the world, they were never required to make the disposals because in 1999 the  Gramm–Leach–Bliley Act (GLB )  repealed the parts  of the Glass–Steagall Act of 1933 which regularised Citi Group’s position and opened the way for any other US financial institutions to follow suit.

The final nail in the economic coffin was the failure of the regulatory bodies  such as the Securities and Exchange Commission (SEC)  to take any meaningful action against the newly freed  financial monsters .

The film does two other things well.  It explains the complicated  method by which deregulation was exploited by banks and their ilk and graphically shows the incestuous traffic between  politics and finance  and the way that academic economists have been all too willing to compromise their integrity by becoming hired pens for whoever is willing to pay them.  

How did sub-prime lending  and the general derivative mania become so rampant? Well,  there was the boost given by  the Recovery and Enforcement Act of 1989 mentioned above, but that  could not  cause the reckless lending to spiral  completely out of control. That required  the  Gramm–Leach–Bliley Act. After that anything went.  Dealers could create derivatives to effectively make a bet on anything.  

Most devastating to economies was the creation of Collateral  Default Obligations (CDOs)  and Credit  Default  Swaps (CDSs). The beauty of these  for financiers was that they effectively allowed a seemingly unending shuffling of responsibility and risk to someone else. With CDOs the relationship between borrower and lender changed dramatically. In the old days the borrower obtained a loan and paid it back to the person who made the loan. With CDOs the lender sold on the debt to a third party who bundled up various loans –  be it a mortgage, credit card spending or some other loan – with of widely varying quality and called it a CDO. This CDO could be sold on to investors, frequently with an AAA rating by one of the main credit ratings agency who were paid by – yes you have guessed it – the people selling the CDOs to investors.  To make the business even more opaque, CDSs were created to insure against losses arising from defaulting CDOs, effectively a form of reinsurance.   The final act in this fantasy world was institutions insuring CDOs they thought were junk with CDSs.  This meant they were compensated  when the CDOs failed while the buyer of the CDOs lost.   

Eventually the game of financial musical chairs had to stop and Lehman Bros  came crashing down to signal the advent of the worst global recession since the 1930s.  An interesting claim in the film is that Lehman’s was allowed by the US government to fail because the financial officers of the Bush Government did not understand the international implications of Lehman’s failure, most notably in Britain where the administration rules are radically different from those  in the USA and resulted in Lehman’s London offices being immediately closed. .

As for the nexus of  vested influence, this includes politicians, bankers, lobbyists, academics and credit rating agencies. One of the most telling sequences in the film is battery of senior personnel from the three largest credit rating agencies Standard  and Poor, Moody’s and Fitches – who consistently valued worthless or near to worthless  derivatives as AAA – testifying before Congress that their ratings are “only opinions”.  Closely running them up for dissimulation, is Scott Talbott, leading lobbyist for the Financial Services Roundtable, a man sharing with Dr Pangloss a belief that everything is for the best in the best of all possible worlds.  Particularly striking is the predominance of ex-Goldman Sachs employees in US government posts, men such as Henry Paulson,  Larry Summers and Robert Reubin.  It is worth wondering what the US government’s response would have been if Goldman’s not Lehman Bros had been the first US banking bottle to fall off the wall.

If you think Obama has made a difference, think again. He has employed a host of people from the financial world with  hands still dirty from their involvement in the genesis of the financial mess,  many of whom have served in the previous administrations which presided over deregulation.  This went right to the top of his financial administration. He chose as his Secretary to the Treasury  Timothy  Geithner , a protégé  of George W Bush’s  Secretary of the Treasury Hank Paulson, a  man who was up to his armpits in the ideological swamp of deregulation, while  the current director of the White House National Economic Council is Larry Summers who was Clinton’s Secretary of the Treasury when the  Gramm-Leach-Bliley Act was passed  – Summers greeted the Act by saying  “This historic legislation will better enable American companies to compete in the new economy.” In addition,  Obama  successfully nominated Bush’s choice for  Chairman of the Federal Ben Bernanke  for a second term as Chairman.  Plus ca change….

The most contemptible  excuse given by politicians around the developed world for the present financial debacle is that no one saw it coming. This is a blatant lie.  The film parades a baker’s dozen of people  in positions prominent enough to have  their voice heard by those in power who did warn of what was coming;  people like Nouriel Roubini (Professor of Economics at the Stern School of Business),  Raghuran  Rajan (when he was chief economist of the IMF) and  Christine Lagrade (French Minister of Economy, Finance, Industry and Employment). 

The coda to the film is the stark fact that none of the people chiefly responsible for the financial meltdown  have either faced criminal charges or had the vast fortunes they made during the period removed.  That applies not only in the USA but Britain, where provision exists to remove limited liability from company directors where they have failed to behave responsibly. The only people who have lost are as usual the less well off.

The Quarterly Review Vol 4 No 4 (Winter 2010) is out

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Quarterly Review Vol 4 No 4 (Winter 2010) 

CONTENTS 

The end of the world (economy)? (editorial) Derek Turner (PDF 
available below) 
The rise of anti-Western Christianity 
Matthew A. Roberts on Third World Christianity (PDF available below) 

Too many people – the world’s worst enemy Robert Henderson on 
overpopulation 
The lure of false enlightenment Ezra Mishan on PC ‘logic’ 
The Amazons – source of sex equality? 
Kenneth Royce Moore on sex roles in ancient Greece (PDF available 
below) 
Banking on Germany 
Frank Ellis on Deutschland schafft sich ab by Thilo Sarrazin 
Lost in translation – the legacy of Edmund Burke 
Paul Gottfried on Edmund Burke by Dennis O’Keeffe 

Anti-commonsense conservatism 
Edward Dutton on 10 Books Every Conservative Must Read by Benjamin 
Wiker 

Futurology imperfect 
Derek Turner on Archeofuturism by Guillame Faye 

Cross of iron 
Leslie Jones on The Aryan Jesus by Susannah Heschel 

The last word in Holocaust scholarship 
Mark G. Brennan on Histories of the Holocaust by Dan Stone 

Ride of the Wagner debunkers 
Stoddard Martin on Cosima Wagner – The Lady of Bayreuth by Oliver 
Hilmes 

Taki’s Universe Taki on the new rich 

Assange is us Ilana Mercer on Wikileaks 

Conserve with alcohol Bill Hartley on binge-drinking in Wakefield 

The Mercenary Peter Stark (poem) 

Northwards J. K. Murphy (poem) 

  Sample article 

Too many people – the world’s worst enemy 

ROBERT HENDERSON says Third World overpopulation and industrialization 
are the real threats to the global environment 

This is an article about climate change with a difference. It does not 
deal with whether man-made global warming is occurring, for 
circumstances render that question redundant. Global greenhouse gas 
emissions will inexorably rise far above their current levels thanks 
to the industrialisation of the developing world and the still rapidly 
increasing population of the Earth. 

This article is about is the futility of the industrialised world 
imposing limits on its greenhouse gas emissions when it is clear that 
the developing countries continue incontinently to increase their 
emissions. I shall also cast a jaundiced eye over at the reliability 
of greenhouse gas emission estimates from the developing world. 

Our overcrowded planet 
A hulking elephant sits ignored in the green crusaders’ room. Amidst 
all the angst about man-made greenhouse gases, the greatest and most 
obvious cause of increases is ignored by mainstream politicians – the 
already great and rapidly rising population of the world and the rapid 
spread of industrialisation to major parts of what until recently was 
the Third World . 
The world population is projected to reach 7 billion in 2011. 
Extrapolations to 2050 go as high as 9.5 billion (1). At a generous 
estimate, a billion live in the developed world in 2010. If the 9.5 
billion projection for 2050 comes true, the disproportion between what 
are now the developed countries and the developing countries now will 
have become even more skewed in favour of the developing world, 
because the populations of underdeveloped countries have startlingly 
younger populations than those of the developed world, viz: 

“One of every six people on earth is an adolescent. In the developing 
world, more than 40 percent of the population is under age 20. The 
decisions these young people make will shape our world and the 
prospects of future generations.” (2) 

The US Bureau of Census projections for the populations of individual 
countries for 2050 show only one country (the United States) from the 
currently developed world in the largest twenty countries by 
population in 2050, with the first European country (Germany) coming 
in at number 22 (3). 

If the swelling world population was overwhelmingly due to increases 
in the still very white First World , you may be sure that we would be 
daily berated for our selfish breeding. We would be told that any 
increase in our population was at the expense of the Third World , 
that the production of every extra Western mouth to feed, house, 
clothe and supply with energy was absolutely unconscionable. Western 
governments would be signing up to programmes of ever more punitive 
reductions in their countries’ greenhouse emissions and some of the 
bolder would be advocating the rationing of children. 

But the overwhelming majority of people living today do not live in 
the developed world and the projected future expansion of the world’s 
population is due almost entirely to increases in the developing 
world, the developed world having at best stabilised their native 
populations and at worst actually set themselves on the path of 
decline through a mixture of contraception and too readily available 
abortion (4). Such population increases in the developed world as 
occur have been primarily due for several decades to immigration from 
the Third World and any increases in the next half century in the 
present developed world will probably come from the same source. 

The subject of a rising world population and its ever growing effect 
on greenhouse gas emissions goes largely unmentioned by politicians 
because it is beyond the Pale for the liberal internationalist elites 
who currently control the developed world to suggest that the 
developing world either restrain its breeding or its economic 
development and it is not in the interests of the developing world to 
raise it. This conspiracy of silence renders the debate about man-made 
global warming meaningless because the gross population imbalance 
between the developed and developing world obliterates any chance of 
reducing global greenhouse gas emissions. 

Let us suppose for the sake of argument that global warming is 
occurring largely or wholly because of man-made emissions. Even in 
those circumstances it would be madness for Britain or any other 
developed country to load themselves with taxes and other burdens, 
because quite clearly the five sixths of the world’s population which 
does not live in the developed world is going to carry on 
industrialising without regard to what the developed world is doing. 
China is already the largest carbon dioxide emitter and has reached 
that point much more rapidly than anticipated: 

“ China , one of the fastest growing economies of the world is all set 
to overtake U.S as the leading air polluter by as early as 2010; a 
whole decade faster than the previous estimates of 2020.” (5) 

Of course, vast and rapidly growing as she is, China is simply part of 
a larger picture of the developing world’s greenhouse gas output. Take 
the second largest country on Earth , India . Just as China is happy 
to build old-fashioned coal-fired power stations with abandon (one a 
week, if media reports are to be believed), India is content to engage 
in a policy of small wood-powered stations, a policy which not only 
introduces CO2 into the atmosphere but results in deforestation which 
reduces the natural capture of CO2. 

India is changing its greenhouse emissions contribution very rapidly: 

“Greenhouse gas emissions, such as carbon dioxide, methane and nitrous 
oxide, contribute to global warming and climate change. According to 
the US-based ‘think tank’ the World Resources Institute, India was 
responsible for over four per cent of total emissions in 2000 – making 
the country the sixth largest emitter in the world. Emissions are set 
to rise further still over the next 20 years as the Indian economy 
rapidly develops. Both the International Energy Agency and the 
government of the United States ’ Energy Information Administration 
predict over 90 per cent growth in carbon dioxide emissions alone by 
2025…. 

“ India ’s coal consumption has increased from 110 million tonnes in 
1980 to more than 350 million tonnes in 2000, representing an annual 
growth rate of almost 6 per cent. Natural gas consumption has grown 
similarly, at 5.6 per cent a year, to 75 million cubic metres in 
2000. 

“But petroleum consumption has grown fastest since the 1980s, at an 
annual rate of 14 per cent, to over 350 million tonnes in 2000…. 

“ India emitted 16 million tonnes of methane in 1990, and 24 million 
tonnes in 2000 — a little under 35 per cent of the country’s overall 
greenhouse gas emissions.” (6) 

The hopelessness of the liberal internationalist’s belief that the 
West sets an example to the developing world is clear. Even if the 
developing world population was stabilised immediately and they 
restricted their emissions growth to half of the average of the 
developed world (roughly 13 tonnes per capita, although which 
countries are included in the developed world is debatable), something 
wildly improbable, that would increase global emissions by several 
times the current levels. If the developed world ceased to emit 
anything at all, the increase in the rest of the world’s emissions, 
through development and expanding population, would still push the 
emissions level way beyond today’s levels and what climate scientists 
who support the idea of man-made global warming consider to be safe. 
This can be seen from the current differences in per capita CO2 
emissions between developed and developing countries: 

United States               19.10 tonnes 

United Kingdom            8.60 tonnes 

China                             4.57 tonnes 

India                              1.18 tonnes (7) 

As will be seen shortly, there are problems with the way that CO2 
statistics are collected and the treatment of greenhouse gases other 
than CO2. But regardless of their veracity, the statistics have great 
importance because they are used by supporters of man-made global 
warming to justify the differential treatment of emissions between the 
developed and developing world. If the advocates of global warming 
honestly believe the statistics which support their case then they can 
draw only one rational conclusion: if greenhouse gas emissions are to 
be kept to the levels they advocate, the developing world must stop 
industrializing. 

Calculating emissions 
How is that the developed world, with only one billion of population 
at most living in countries which monitor and control their emissions 
ever more rigorously, is judged to be so much more at fault for 
emissions than the six billion who live in countries where most energy 
is generated either by the direct burning of fossil fuels or through 
power stations, mainly coal-fired, which pump pollution into the air 
with poor filtration and who are responsible for far more agricultural 
generated greenhouse gas emissions than the developed world? 
The answer lies in the availability of statistics and the convenience 
of scientists. The UN Environment Programme website gives the game 
away: 

“Central to any study of climate change is the development of an 
emissions inventory that identifies and quantifies a country’s primary 
anthropogenic sources and sinks of greenhouse gas. Emissions are not 
usually monitored directly, but are generally estimated using models. 
Some emissions can be calculated with only limited accuracy. Emissions 
from energy and industrial processes are the most reliable (using 
energy consumption statistics and industrial point sources). Some 
agricultural emissions, such as methane and nitrous oxide carry major 
uncertainties because they are generated through biological processes 
that can be quite variable.” (8) 

In other words, scientists rely on models primarily based on the sort 
of statistics which the developed world produces (and the developing 
world does not) while ignoring at worst and grossly under-estimating 
at best emissions which are not readily calculated or available. Take 
the cases of methane and nitrous oxide, the most plentiful greenhouse 
gases after water vapour and carbon dioxide: 

“The primary sources for the additional methane added to the 
atmosphere (in order of importance) are rice cultivation; domestic 
grazing animals; termites; landfills; coal mining; and, oil and gas 
extraction…an accurate estimate of how much methane is being produced 
from rice paddies has been difficult to ascertain. More than 60% of 
all rice paddies are found in India and China where scientific data 
concerning emission rates are unavailable. Nevertheless, scientists 
believe that the contribution of rice paddies is large because this 
form of crop production has more than doubled since 1950. Grazing 
animals release methane to the environment as a result of herbaceous 
digestion. Some researchers believe the addition of methane from this 
source has more than quadrupled over the last century. Termites also 
release methane through similar processes. Land-use change in the 
tropics, due to deforestation, ranching, and farming, may be causing 
termite numbers to expand…Methane is also released from landfills, 
coal mines, and gas and oil drilling.” (9) 

There is an important point on methane from domesticated animals, 
important because it is another string to the bow of those who wish to 
demonise the developed world as arch-polluters because the diet of the 
developed world is much more dependent on meat than that of the 
developing world. The implication is that fewer domesticated 
herbivores would equal less methane. This makes the unwarranted 
assumption that the land freed by having fewer domesticated grazing 
animals would not be turned over to methane-producing agriculture such 
as paddy fields or be left to Nature to populate it with large wild 
herbivores or to turn it into methane-producing marshland. 
As for nitrous oxide: 

“Sources for the increase of nitrous oxide in the atmosphere include: 
land-use conversion; fossil fuel combustion; biomass burning; and soil 
fertilization. Most of the nitrous oxide added to the atmosphere each 
year comes from deforestation and the conversion of forest, savannah 
and grassland ecosystems into agricultural fields and rangeland…The 
use of nitrate and ammonium fertilizers to enhance plant growth is 
another source of nitrous oxide. How much is released from this 
process has been difficult to quantify. Estimates suggest that the 
contribution from this source represents from 50 % to 0.2 % of nitrous 
oxide added to the atmosphere annually.” (10) 

As with methane, the major emitters of nitrous oxide seem to come from 
the developing not the developed world. 
It is also important to understand that the quantity of the various 
gases in the atmosphere is not a simple guide to their effectiveness 
as greenhouse gases. Methane and nitrous oxide are thought to be much 
more effective than carbon dioxide at warming the atmosphere. 
According to the campaigning group Envocare, the global warming 
potential (GWP) of methane is 21 times that of carbon dioxide, and 
nitrous oxide 310 times. (11) 

Where responsibility really lies 

The only sensible conclusion to draw from the foregoing is that 
nothing is going to prevent a massive increase in greenhouse gases as 
the developing world industrialises. This being so, the rational 
response of Western politicians would be to stop burdening their own 
countries with expensive green laws and concentrate instead on dealing 
with the effects of global warming, if they materialize, insofar as 
they affect their own countries. This should not be impossible because 
any changes will be gradual and our technological ability, already 
very substantial, will increase greatly over the next century. 

If man-made global warming really is occurring, the two main arguments 
used to justify the call for swingeing cuts in the CO2 emissions of 
the developed world whilst developing countries have no such 
restrictions placed upon them make no sense. 

The first argument is that the developing world has the right to 
industrialize in a polluting way because that is how the developed 
world industrialized. The second argument is that greenhouse gas 
levels should be calculated on a per capita basis rather than the 
total emissions from each country, that is, each person living should 
have the right to generate the same greenhouse gas emission. Both 
arguments are clearly absurd if man-made global warming is true, for 
what is important is the global total of greenhouse gas emissions not 
whether the developed world or whether there can be worldwide equity 
in greenhouse gas emissions. 

Western politicians should start pointing out certain facts to the 
developing world. These are that greenhouse gas emissions from the 
developing world are on schedule to dwarf those of the developed world 
– that developing countries must take responsibility for their 
population growth, the pollution they create and its effects on their 
own people – and that the developed world should no longer be expected 
to pay for the ill-effects of industrialization created by the 
developing countries. 
Overpopulation, headlong industrialization, and the resultant 
greenhouse gases, deforestation, pressure on resources and mass 
migration are all the responsibility of the developing nations. If 
they cannot or will not reform their practices, it is they rather than 
we who should take the consequences. 

ROBERT HENDERSON is a freelance writer in London who blogs at 
livinginamadhouse.wordpress.com 

NOTES 

1. See GeoHive – http://www.xist.org 

2. See Oxford University ’s Department of International Development 
website at www.forcedmigration.org 

3. GeoHive, ibid. 

4. Britain does not have a fertility crisis but an abortion crisis, 
with 200,000 abortions being carried out a year. If those babies were 
born, Britain ’s birth rate would be above replacement level 

5. themoneytimes.com, 11 July 2006 

6. SciDev.Net, 31 August 2006 

7. www.carbonplanet.com/country_emissions 

8. www.maps.grida.no, National carbon emissions per capita, 2002 

9. www.physicalgeography.net/fundamentals/7a.html 

10. www.physicalgeography.net, ibid. 

11. http://www.envocare.co.uk/aboutus.htm

Enoch Powell’s ‘Rivers of Blood’ speech

Below  is the full text of Enoch Powell’s so-called ‘Rivers of Blood’ speech, which was delivered to a Conservative Association meeting in Birmingham on April 20 1968.

Powell  was remarkably prescient in every respect but one. He foretold the demographic consequences with great precision predicting  that by 2000 around 10 per cent of the UK population would be black or Asian (the 2001 census gave a figure of 8%);  he saw that to deal with the tensions which arose from mass black and Asian  British governments would become ever more repressive in their  suppression of the native population’s resistance to such immigration  and that in the course of doing this  would effectively  subordinate  native Britons  to immigrants; he drew attention to the pressure on jobs and public services by immigrants;  warned of the formation of immigrant ghettos and the rejection of  British culture  by immigrants and the promotion of their ancestral customs and, finally,  made the central point that  mere existence of such large numbers of those who cannot or will not assimilate  changes  Britain dramatically.

The one thing Powell  failed to do was to understand  the dynamic  of competing racial and ethnic groups within the black and Asian population, most particularly the influence of Islam.  

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The supreme function of statesmanship is to provide against preventable evils. In seeking to do so, it encounters obstacles which are deeply rooted in human nature.

One is that by the very order of things such evils are not demonstrable until they have occurred: at each stage in their onset there is room for doubt and for dispute whether they be real or imaginary. By the same token, they attract little attention in comparison with current troubles, which are both indisputable and pressing: whence the besetting temptation of all politics to concern itself with the immediate present at the expense of the future.

Above all, people are disposed to mistake predicting troubles for causing troubles and even for desiring troubles: “If only,” they love to think, “if only people wouldn’t talk about it, it probably wouldn’t happen.”

Perhaps this habit goes back to the primitive belief that the word and the thing, the name and the object, are identical.

At all events, the discussion of future grave but, with effort now, avoidable evils is the most unpopular and at the same time the most necessary occupation for the politician. Those who knowingly shirk it deserve, and not infrequently receive, the curses of those who come after.

A week or two ago I fell into conversation with a constituent, a middle-aged, quite ordinary working man employed in one of our nationalised industries.

After a sentence or two about the weather, he suddenly said: “If I had the money to go, I wouldn’t stay in this country.” I made some deprecatory reply to the effect that even this government wouldn’t last for ever; but he took no notice, and continued: “I have three children, all of them been through grammar school and two of them married now, with family. I shan’t be satisfied till I have seen them all settled overseas. In this country in 15 or 20 years’ time the black man will have the whip hand over the white man.”

I can already hear the chorus of execration. How dare I say such a horrible thing? How dare I stir up trouble and inflame feelings by repeating such a conversation?

The answer is that I do not have the right not to do so. Here is a decent, ordinary fellow Englishman, who in broad daylight in my own town says to me, his Member of Parliament, that his country will not be worth living in for his children.

I simply do not have the right to shrug my shoulders and think about something else. What he is saying, thousands and hundreds of thousands are saying and thinking – not throughout Great Britain, perhaps, but in the areas that are already undergoing the total transformation to which there is no parallel in a thousand years of English history.

In 15 or 20 years, on present trends, there will be in this country three and a half million Commonwealth immigrants and their descendants. That is not my figure. That is the official figure given to parliament by the spokesman of the Registrar General’s Office.

There is no comparable official figure for the year 2000, but it must be in the region of five to seven million, approximately one-tenth of the whole population, and approaching that of Greater London. Of course, it will not be evenly distributed from Margate to Aberystwyth and from Penzance to Aberdeen. Whole areas, towns and parts of towns across England will be occupied by sections of the immigrant and immigrant-descended population.

As time goes on, the proportion of this total who are immigrant descendants, those born in England, who arrived here by exactly the same route as the rest of us, will rapidly increase. Already by 1985 the native-born would constitute the majority. It is this fact which creates the extreme urgency of action now, of just that kind of action which is hardest for politicians to take, action where the difficulties lie in the present but the evils to be prevented or minimised lie several parliaments ahead.

The natural and rational first question with a nation confronted by such a prospect is to ask: “How can its dimensions be reduced?” Granted it be not wholly preventable, can it be limited, bearing in mind that numbers are of the essence: the significance and consequences of an alien element introduced into a country or population are profoundly different according to whether that element is 1 per cent or 10 per cent.

The answers to the simple and rational question are equally simple and rational: by stopping, or virtually stopping, further inflow, and by promoting the maximum outflow. Both answers are part of the official policy of the Conservative Party.

It almost passes belief that at this moment 20 or 30 additional immigrant children are arriving from overseas in Wolverhampton alone every week – and that means 15 or 20 additional families a decade or two hence. Those whom the gods wish to destroy, they first make mad. We must be mad, literally mad, as a nation to be permitting the annual inflow of some 50,000 dependants, who are for the most part the material of the future growth of the immigrant-descended population. It is like watching a nation busily engaged in heaping up its own funeral pyre. So insane are we that we actually permit unmarried persons to immigrate for the purpose of founding a family with spouses and fiancés whom they have never seen.

Let no one suppose that the flow of dependants will automatically tail off. On the contrary, even at the present admission rate of only 5,000 a year by voucher, there is sufficient for a further 25,000 dependants per annum ad infinitum, without taking into account the huge reservoir of existing relations in this country – and I am making no allowance at all for fraudulent entry. In these circumstances nothing will suffice but that the total inflow for settlement should be reduced at once to negligible proportions, and that the necessary legislative and administrative measures be taken without delay.

I stress the words “for settlement.” This has nothing to do with the entry of Commonwealth citizens, any more than of aliens, into this country, for the purposes of study or of improving their qualifications, like (for instance) the Commonwealth doctors who, to the advantage of their own countries, have enabled our hospital service to be expanded faster than would otherwise have been possible. They are not, and never have been, immigrants.

I turn to re-emigration. If all immigration ended tomorrow, the rate of growth of the immigrant and immigrant-descended population would be substantially reduced, but the prospective size of this element in the population would still leave the basic character of the national danger unaffected. This can only be tackled while a considerable proportion of the total still comprises persons who entered this country during the last ten years or so.

Hence the urgency of implementing now the second element of the Conservative Party’s policy: the encouragement of re-emigration.

Nobody can make an estimate of the numbers which, with generous assistance, would choose either to return to their countries of origin or to go to other countries anxious to receive the manpower and the skills they represent.

Nobody knows, because no such policy has yet been attempted. I can only say that, even at present, immigrants in my own constituency from time to time come to me, asking if I can find them assistance to return home. If such a policy were adopted and pursued with the determination which the gravity of the alternative justifies, the resultant outflow could appreciably alter the prospects.

The third element of the Conservative Party’s policy is that all who are in this country as citizens should be equal before the law and that there shall be no discrimination or difference made between them by public authority. As Mr Heath has put it we will have no “first-class citizens” and “second-class citizens.” This does not mean that the immigrant and his descendent should be elevated into a privileged or special class or that the citizen should be denied his right to discriminate in the management of his own affairs between one fellow-citizen and another or that he should be subjected to imposition as to his reasons and motive for behaving in one lawful manner rather than another.

There could be no grosser misconception of the realities than is entertained by those who vociferously demand legislation as they call it “against discrimination”, whether they be leader-writers of the same kidney and sometimes on the same newspapers which year after year in the 1930s tried to blind this country to the rising peril which confronted it, or archbishops who live in palaces, faring delicately with the bedclothes pulled right up over their heads. They have got it exactly and diametrically wrong.

The discrimination and the deprivation, the sense of alarm and of resentment, lies not with the immigrant population but with those among whom they have come and are still coming.

This is why to enact legislation of the kind before parliament at this moment is to risk throwing a match on to gunpowder. The kindest thing that can be said about those who propose and support it is that they know not what they do.

Nothing is more misleading than comparison between the Commonwealth immigrant in Britain and the American Negro. The Negro population of the United States, which was already in existence before the United States became a nation, started literally as slaves and were later given the franchise and other rights of citizenship, to the exercise of which they have only gradually and still incompletely come. The Commonwealth immigrant came to Britain as a full citizen, to a country which knew no discrimination between one citizen and another, and he entered instantly into the possession of the rights of every citizen, from the vote to free treatment under the National Health Service.

Whatever drawbacks attended the immigrants arose not from the law or from public policy or from administration, but from those personal circumstances and accidents which cause, and always will cause, the fortunes and experience of one man to be different from another’s.

But while, to the immigrant, entry to this country was admission to privileges and opportunities eagerly sought, the impact upon the existing population was very different. For reasons which they could not comprehend, and in pursuance of a decision by default, on which they were never consulted, they found themselves made strangers in their own country.

They found their wives unable to obtain hospital beds in childbirth, their children unable to obtain school places, their homes and neighbourhoods changed beyond recognition, their plans and prospects for the future defeated; at work they found that employers hesitated to apply to the immigrant worker the standards of discipline and competence required of the native-born worker; they began to hear, as time went by, more and more voices which told them that they were now the unwanted. They now learn that a one-way privilege is to be established by act of parliament; a law which cannot, and is not intended to, operate to protect them or redress their grievances is to be enacted to give the stranger, the disgruntled and the agent-provocateur the power to pillory them for their private actions.

In the hundreds upon hundreds of letters I received when I last spoke on this subject two or three months ago, there was one striking feature which was largely new and which I find ominous. All Members of Parliament are used to the typical anonymous correspondent; but what surprised and alarmed me was the high proportion of ordinary, decent, sensible people, writing a rational and often well-educated letter, who believed that they had to omit their address because it was dangerous to have committed themselves to paper to a Member of Parliament agreeing with the views I had expressed, and that they would risk penalties or reprisals if they were known to have done so. The sense of being a persecuted minority which is growing among ordinary English people in the areas of the country which are affected is something that those without direct experience can hardly imagine.

I am going to allow just one of those hundreds of people to speak for me:

“Eight years ago in a respectable street in Wolverhampton a house was sold to a Negro. Now only one white (a woman old-age pensioner) lives there. This is her story. She lost her husband and both her sons in the war. So she turned her seven-roomed house, her only asset, into a boarding house. She worked hard and did well, paid off her mortgage and began to put something by for her old age. Then the immigrants moved in. With growing fear, she saw one house after another taken over. The quiet street became a place of noise and confusion. Regretfully, her white tenants moved out.

“The day after the last one left, she was awakened at 7am by two Negroes who wanted to use her ‘phone to contact their employer. When she refused, as she would have refused any stranger at such an hour, she was abused and feared she would have been attacked but for the chain on her door. Immigrant families have tried to rent rooms in her house, but she always refused. Her little store of money went, and after paying rates, she has less than £2 per week. “She went to apply for a rate reduction and was seen by a young girl, who on hearing she had a seven-roomed house, suggested she should let part of it. When she said the only people she could get were Negroes, the girl said, “Racial prejudice won’t get you anywhere in this country.” So she went home.

“The telephone is her lifeline. Her family pay the bill, and help her out as best they can. Immigrants have offered to buy her house – at a price which the prospective landlord would be able to recover from his tenants in weeks, or at most a few months. She is becoming afraid to go out. Windows are broken. She finds excreta pushed through her letter box. When she goes to the shops, she is followed by children, charming, wide-grinning piccaninnies. They cannot speak English, but one word they know. “Racialist,” they chant. When the new Race Relations Bill is passed, this woman is convinced she will go to prison. And is she so wrong? I begin to wonder.”

The other dangerous delusion from which those who are wilfully or otherwise blind to realities suffer, is summed up in the word “integration.” To be integrated into a population means to become for all practical purposes indistinguishable from its other members.

Now, at all times, where there are marked physical differences, especially of colour, integration is difficult though, over a period, not impossible. There are among the Commonwealth immigrants who have come to live here in the last fifteen years or so, many thousands whose wish and purpose is to be integrated and whose every thought and endeavour is bent in that direction.

But to imagine that such a thing enters the heads of a great and growing majority of immigrants and their descendants is a ludicrous misconception, and a dangerous one.

We are on the verge here of a change. Hitherto it has been force of circumstance and of background which has rendered the very idea of integration inaccessible to the greater part of the immigrant population – that they never conceived or intended such a thing, and that their numbers and physical concentration meant the pressures towards integration which normally bear upon any small minority did not operate.

Now we are seeing the growth of positive forces acting against integration, of vested interests in the preservation and sharpening of racial and religious differences, with a view to the exercise of actual domination, first over fellow-immigrants and then over the rest of the population. The cloud no bigger than a man’s hand, that can so rapidly overcast the sky, has been visible recently in Wolverhampton and has shown signs of spreading quickly. The words I am about to use, verbatim as they appeared in the local press on 17 February, are not mine, but those of a Labour Member of Parliament who is a minister in the present government:

‘The Sikh communities’ campaign to maintain customs inappropriate in Britain is much to be regretted. Working in Britain, particularly in the public services, they should be prepared to accept the terms and conditions of their employment. To claim special communal rights (or should one say rites?) leads to a dangerous fragmentation within society. This communalism is a canker; whether practised by one colour or another it is to be strongly condemned.’

All credit to John Stonehouse for having had the insight to perceive that, and the courage to say it.

For these dangerous and divisive elements the legislation proposed in the Race Relations Bill is the very pabulum they need to flourish. Here is the means of showing that the immigrant communities can organise to consolidate their members, to agitate and campaign against their fellow citizens, and to overawe and dominate the rest with the legal weapons which the ignorant and the ill-informed have provided. As I look ahead, I am filled with foreboding; like the Roman, I seem to see “the River Tiber foaming with much blood.”

That tragic and intractable phenomenon which we watch with horror on the other side of the Atlantic but which there is interwoven with the history and existence of the States itself, is coming upon us here by our own volition and our own neglect. Indeed, it has all but come. In numerical terms, it will be of American proportions long before the end of the century.

Only resolute and urgent action will avert it even now. Whether there will be the public will to demand and obtain that action, I do not know. All I know is that to see, and not to speak, would be the great betrayal.

The liberal war mongers satisfy their urges

Like all addicts the liberal warmongers cannot resist satisfying their unnatural urges for long. Having had a lull of a year or two,  they have grabbed the opportunity presented by the widespread upheaval in North Africa and the Middle East to sate their thirst for political exhibitionism and the  promotion of liberal internationalism.

The resolution passed by the  UN, an organisation overwhelmingly composed of the vicious and the corrupt, supposedly makes this latest  act of unprovoked liberal aggression legal. It is a strange legality which rests on a self-arrogated authority by those who are guilty of the same or worse than Gadhafi , and a most peculiar system of law which says that the prosecution of offences depends on the strength  a regime or its utility to the main players at the UN. Gross oppression and violence are routinely used by China (Tibet) and India (Kashmir)  and nothing is done because they are too large and powerful; Saudi Arabia and Bahrain escape censure and punishment because they are possessed of oil and useful to the  West; Zimbabwe and the Congo remain ignored because the main UN players do not care.

There is no clear international foreign policy either  in Britain or the wider developed world . Like the perpetual warfare in 1984 the status of international political players is transitory. For much of Gadhafi ’s 42 years in power the West was more than happy to supply him with arms and buy Libya’s oil. Ten years ago Gadhafi  was overtly a pariah to at least Western states, although he still managed to trade and obtain arms.  Since 2003  he has been not merely accepted back into the international fold of respectability following his ending of Libya’s nuclear weapons programme,   but positively feted by the likes of Tony Blair and pandered to in the most repellent fashion by the release of the convicted Lockerby the convicted  bomber Al  Megrahi.  Now he is a pariah again not because he has broken  his agreement to stop his nuclear weapons programme, but because Libya has  been swept up in  the general turmoil in North Africa and the Gulf, a turmoil driven to a significant extent by Western media and politicians who talk fancifully of the “Arab Spring” and the need to support “Islamic democrats” and generally behave as those protesting  throughout the region are (1) all wearing white hats while the rulers wear black and (2)  coherent political entities which could form new governments.   

History tells the same story, the overthrow of an abusive government, whether that be an outright dictatorship or simply an oligarchy which becomes too greedy and self-interested,  rarely if ever produces government which can be said to be unequivocally better than what went before. Often the upheaval  creates  vastly more mayhem while the decision of who is to rule is being decided than would have occurred had the old regime remained, while the new regime is frequently more cruel and abusive than that which it replaced, for example, the Russian Revolution.   Frequently  the result of such upheaval  is not a clear cut winner but interminable civil war.  Moreover,  even where improvement eventually occurs, it is difficult to judge  if  the improvement  compensates for the period of greater turmoil and violence or whether the improvement is more desirable than would have occurred had the old regime continued and become, as commonly happens,  less abusive with time.  

Most of the members of the UN do not have anything we in Britain would recognise as a government.  The majority keep order after a fashion and that is about it. There is a small elite who benefit by embezzling the country’s wealth. If  it happens to be oil rich territory,  some bones of comfort thrown to the  general populace by way of  cheap petrol and the occasional hospital.  In many supposedly independent nation states the “government”   controls the large cities and towns and that is it. Quite a few supposed states are in a condition of endless civil war. Even large and relatively developed states such as Mexico  suffer constant battles with drug barons and the revolt of the landless.  In more developed places such as Russia it is gangster government in a western democratic shell,,  whereby  a pretence of democracy and the rule of law is mocked by the frequent use of the courts to subdue political opponents of those with power and  business deals are  often decided at the point of a gun.  That is the world we live in.

The idea that representative democracy (more correctly called elective oligarchy) can be consciously created is absurd. It is a fantasy which was tested to destruction by the British post-colonial experience when the Westminster –style political systems bequeathed by Britain to her colonies  at the time of independence failed dismally. Representative  government is something which grows organically with the development of a society. It is also a very rare beast having developed from scratch in only one country (England) and been successfully exported only to countries which were either colonies in which the dominant culture was derived from England  or small European countries such as the Scandinavians. All the major countries of western  Europe – France, Germany, Spain, Italy – have in the past century suffered either dictatorship or a change of political power through methods other than the ballot box.

The UN is behaving disingenuously in sanctioning only what it describes as action to protect the civilian population.  The clear intention is regime change, something which is illegal under UN statutes.  The so-called no fly zone is a declaration of war in its own right, but the reality is that it is not merely a no-fly zone but a no-fly plus ground attack from the air zone.  If implemented this will inevitably result in causalities both amongst non-combatants and  those who are fighting Gadhafi . UN REsolution  also raises the question of what  happens if anti-Gadhafi  forces start massacring people in revenge  or various factions amongst the rebels start fighting amongst themselves?. How will the  claimed UN “duty to protect the defenceless” sit in that context?  Where will this all lead?  Either to a humiliating failure  by the West or Western invasion of at least part of the country.

Why is Libya subject  to this action when so many other vicious  regimes are left untouched?  Here is an  unpalatable explanation.   European politicians  got carried away as they saw the long-term rulers of Egypt and Tunisia fall and assumed the same would happen to Gadhafi . This showed a tremendous political naivety because Libya is organised on a very different  basis , being a personal fiefdom of the ruler  in a way which the other two countries were not.   There was no professional Libyan army to hold the ring as happened in Egypt because Gadhafi   ensured there was not one because he feared that such an army might overthrow him. Instead he relies on a kind of Praetorian guard plus mercenaries.  

 The upshot of this miscalculation by the likes of Cameron and Sarkozy was that  they publicly nailed their colours to the mast by calling for Gadhafi ’s overthrow and,  in Sarkozy’s case, giving diplomatic recognition to “the opposition” whoever they might be.  When Gadhafi did not flee, get himself killed by someone close to him and fought back successfully,  these over eager politicians  were left with the prospect of both a tremendous loss of face and Libya still in the hands of an enraged Gadhafi  with nothing to lose by going back to his old terrorist promoting ways.  Left high and dry,  Cameron and Sarkozy pressed for military action to get themselves out of a hole.  

Would Libya be a better  place without Gadhafi ?  Probably not.   Is Gadhafi   a deplorable human being? Indubitably. Does Gadhafi  deserve to survive?  It is not a question of deserve,  but whether he has the will and capacity to do so. Would his survival make things more or less precarious in the Arab world as a whole?  It is difficult to see how as  the likelihood is that the other unsettled  countries will end up with dictatorships, admitted or otherwise, whether through the military taking over in places such as Egypt,  existing regimes continuing  or Islamic groups such as the Muslim Brotherhood gaining power.

The questions the British people will be asking themselves is why are our politicians yet again putting British servicemen at risk?  What is our national interest here? How is that when we are being told we are in a dire financial state that money can always be found for projects politicians favour?  Do not hold your breath waiting for answers.

Universal distraction

When was the last time that your politicians concentrated seriously  on British domestic issues?  Unable to recall? I’m not surprised because increasingly British politicians spend  their time involved with matters foreign.  This is partly because the ever more comprehensive media coverage of world events drives politicians to at least express opinions on every catastrophe, natural or man-made, in the world, but it  also  occurs because it is politically convenient. One week it is a war; the next a flood or earthquake; the following week a mining disaster; the next a famine.  There is always somewhere in the world which can be relied on to provide the diversion.

The political convenience has several aspects: it provides an opportunity for politicians to posture on what they fondly imagine is a world stage;  it  acts as propaganda for the liberal internationalist politics to which all leading British mainstream politicians subscribe and most importantly it  provides a distraction from  problems  at home and the domestic policies of governments and parties, policies which are generally at odds with what the mass of the population believes and wants.

The mainstream media generally supports the liberal internationalist creed of  the politicians and they are happy to pump out as much international coverage of turmoil and disaster as they can get because it both makes compelling viewing and they can always present this as evidence that “we are all part of  one world” with the politically correct add-on, implied or overt,   that “we”  should do something to alleviate matters. As a tasty coda the media will, whenever possible,  try to imply that “we”, that is, the developed world in general and Britain in particular, are to blame for what misfortune is being covered.  The real “we” is of course not the British people but the British elite.

Tied into the national political class are all those who are involved  at the international level. This includes the British public servants involved with international matters; politicians engaged at the supra-national level such as MEPs; British  bureaucrats attached to the likes of the EU, NATO and the UN and all its agencies;  NGOs including charities and multinational companies.  All of these have a vested interest in at least seeing that the status quo is maintained and,  in the case of the politically motivated who subscribe to “one worldism” and large multinationals,  it is in their interest to see that Britain have  its sovereignty diluted as far as possible.

That leaves the general public who are constantly being asked by politicians and mediafolk  to concentrate on matters over which they have no control and frequently no interest in.  This results either in a disengagement from politics generally or a bemused and increasingly stunned concentration on foreign happenings to the exclusion of what is happening or not happening under their noses.  It is at best a modern version of bread and circuses.

The upshot is that British politicians are increasingly able to ignore what  Britain needs and what its people want.  Mass immigration goes unchecked;  the EU moves with increasing speed to rob Britain of her remaining sovereign powers;  Britain is still involved in illegal wars and our politicians show a worrying appetite for more of the same; the coalition Government  purely  for reasons of crude party politics causally calls a referendum (without any minimum turnout) to change Britain’s voting system from one which generally gives a clear electoral decision to one guaranteed to saddle her with more or less perpetual  coalition government ; ever more repressive laws are passed both giving the state and police more powers ;  political correctness is enshrined ever more deeply  in official British life; our armed forces are driven into an ever smaller and more misshapen remnant of what is needed to defend Britain; there is a continuing failure to ensure Britain’s future energy supplies;  Britain’s ability to feed itself is rapidly diminishing;   England remains without a Parliament unlike the other home countries; English taxpayers money continues to massively subsidise the Celtic Fringe;  British taxpayers money is cavalierly given to foreigners, most substantially through Aid;  UN funding and to the EU while British public services are culled;  the mania for privatisation goes on,  most tragically in the NHS; a housing shortage on a par with that after 1945 is developing; Britons on even average incomes are finding it impossible to raise children in decent comfort; the genuinely poor are increasing raidly; British politicians continue to behave corruptly and venally despite the Parliamentary expenses scandal  and the bankers who brought Britain to her present dire financial state remain not only unpunished, not one having even had their limited liability removed let alone criminal charges preferred,  but scandalously continuing to draw grotesquely high pay and promoting the same time of insanely risky investment behaviour which caused the present financial turmoil.

Those are the most important issues Britain faces . They are being ignored by  Britain’s politicians who increasingly are powerless actors on a stage delivering the words and actions of others.  The British public are left as a helpless audience knowing that no matter how loud they boo the show will go on.

How corruption entered public service

In modern times the British Civil Service has been remarkably free from corruption (local government is a different matter), a fact made all the more surprising because of the truly colossal amount of money it disposes of each year – government spending for the financial year 2011/12 will be around £700 billion. There are two reasons for this. The first is the hard-won tradition of public service which in which the Civil Service as an apolitical institution and as such serves no political ideology or party but provides politicians of all stamps with disinterested advice and executes their policies. This tradition has been underpinned by the lifelong working careers which public servants, especially senior ones, have commonly had. Of course, that was merely the ideal and, as with any human institution, the reality fell some way short of the ideal. Nonetheless, such sentiments and conventions have affected the behaviour of public servants for the better, especially in the area of honesty.

The second reason for a lack of corruption has been the direct provision of most the services provided by central government. This has meant that the number of large central government contracts offered to private business has been small in relation to the money spent on the direct provision of public service in all its aspects. In such circumstances serious fraud becomes difficult going on impossible for most civil servants because they do not have access to large amounts of taxpayers’ money. (Where they do have access, for example in the Inland Revenue, in most instances there are strict accounting procedures which make the embezzlement of large amounts of cash  extremely difficult). Moreover, where there are few government  contracts, most civil servants are not in a position where someone  would find it fruitful to bribe them because they have nothing to sell.

Unsurprisingly, where serious corruption amongst public servants employed by central government has occurred in the past, it has been overwhelmingly in those areas where large government contracts exist, most notably in Defence Procurement and building contracts. It is a reasonable assumption that the more public contracts offered to private companies, the greater the corruption will be simply because the opportunity for corruption increases.

The Thatcher and Major Governments began the attack on these two anti-corruption pillars of public service – the public service tradition and direct provision – by appointing people from outside the civil service to senior posts within the civil service, introducing private enterprise culture to public bodies (for example, the NHS “single market”), privatisation and by increasing the use of private finance and contractors in public services. But what they did pales before the Blair and Brown Governments, which showed a truly obsessive drive to replace direct public provision with private money and private firms. Literally nothing seems to be off  limits, with public provision as disparate as the Prison Service and logistical support for the NHS being treated as suitable.

The Blair Government also did two things the Thatcher and Major Governments did not do. First it  radically altered the terms of employment of new civil servants, especially with regard to their retirement age (raised to 65 for new entrants as opposed to 60) and ever less generous pensions for new entrants, .  (http://www.bbc.co.uk/news/business-11446835) . This  undermined  the unspoken pact between government and civil servants that relatively poor pay was balanced by a relatively generous pension and created tensions between long serving civil servants (on the  old generous terms) and newer entrants (on less generous terms). Second, the Blair Government  classified “special advisers” i.e., political advisors, as civil servants, the most notable of whom was Blair’s Press Spokesman, Alistair Campbell. These people have been given authority over career civil servants. The Brown Government continued the practices of Blair.

The Coalition Government is attempting to go much further. It has  announced that  it wishes to switch from using the Retail Price Index (RPI) to the generally lower Consumer Price Index (CPI) for inflation uprating, increase employees’ pension contributions, raise  the civil service retirement age further in line with the proposed age increase in the state pension and base all future civil servant pensions not on the final salary but an average of pay  throughout a civil service career.  The Coalition has also frozen civil service pay for two years. Most dramatically, the Government is also intending massive reductions in national public service employment.

All this change is undermining the British public service culture. The appointment of special advisors as civil servants is destroying the apolitical nature of the civil service. The idea of a career civil servant is falling into disuse because no one can be sure what is next to be privatised or where a department may be moved to. The morale of civil servants is generally depressed. All of that translates into less commitment to the job, on average less time in a job and probably the employment of fewer able and trustworthy people as civil servants because the more able and trustworthy are now less willing to come into public service and standards have had to be lowered to recruit sufficient staff.

The weakening of the public service ethos and the probable lowering of the quality of the people employed is likely to have increased the number of civil servants willing to behave corruptly if the opportunity arises is increasing at the very time that the opportunities for corruption are multiplying because of the large number of private companies being given government contracts. Put those two circumstances together and it is odds on that civil service corruption has increased substantially. What is applicable to national politicians and civil servants applies to other public servants, at both the national and local government level, and politicians below the national level.

In theory competitive tendering for public contracts should be a guard against corrupt practices. The problem is that in most instances the number of firms tendering will be small. Quite often there will be only two bidders. On occasion the process lapses into farce and only one firm will bid. This happened in the London borough of Camden where a £62.5 million contract for renovating an estate called Chalcots attracted only one bidder, a consortium going under the name of United House. The council’s housing director Neil Litherland claimed bizarrely that talking to just one bidder would lead to “better uses of [council] resources by reducing the negotiation and evaluation period” (Camden New Journal 12 12 2002). There are good reasons why the number of bidders is often small. First, the size of the operations and their frequently unusual nature (often there is no comparable private sector work) means that there will only be a few private companies able to plausibly bid for a contract. Second, the bidding process is very expensive both in terms of money and time, especially management time. These two entirely rational and legitimate reasons for a paucity of bidders build great opportunities for corruption into the system of bidding. Where there are, say, only four companies capable of undertaking work in a particular area such as social housing, they can act as a cartel and effectively deal out public contracts amongst themselves by agreeing who will put in the highest bid for any contract. An Office of Fair Trading investigation resulted in a report in 2009 which found such contract fixing widespread in public construction projects. (http://www.oft.gov.uk/news-and-updates/press/2009/135-09)

Corruption is more than people receiving money in brown envelopes or  material benefits in kind such as expensive holidays. It is also the  granting of jobs years down the line, directorships for politicians and civil servants who have controlled the granting of Government contracts or who have used their influence to progress things such as planning applications.

The current rules regarding ministers and public servants taking posts in private industry are so lax as to be next to meaningless – they can take up posts after a year or two, regardless of how closely the private sector job is linked to their previous post. Moreover, the definition of which private industry posts are sensitive enough to demand even that slight obeisance to common decency is open to an elastic interpretation by those supposedly enforcing the rules if the secret view of politicians and senior public servants is that the rules are simply a public fig-leaf to cover their indecency. In effect, successive governments have legalised corruption and of course the more government contracts offered to private business the more opportunity there is for this type of “legalised” corruption.

Corruption can also be the giving of an honour or public service appointment in return for corrupt behaviour. For example, a contract could be granted to a private contractor corruptly through a conspiracy between the contractor, a cabinet minister and a senior public servant near retirement. The public servant corruptly facilitates the granting of the contract, retires and is rewarded with a quango sinecure. Again, the increase in contracts offers greater scope for such corruption.

That which is corrupting national politicians and the Civil Service is also evident in other public bodies, both national and local.

Market economies and the illusion of choice

One of the prime arguments for introducing business practices, private money and private business into public provision is that it improves choice. British citizens, increasingly referred to as consumers or customers rather than patients, passengers or any other appellation which emphasises the public nature of the provision, supposedly want choices of schools for their children and to go to the “best” hospital or to enjoy the “superior” service coming from private companies with public provision contracts such as those running the railways or utilities such as water or gas.

Take the case of the privatised railways. Before privatisation all a passenger had to do was buy a ticket and get on a train. The only thing the passenger had to consider was whether there was a time or date restriction on the ticket. Now, the passenger has to not merely worry about time and date, but whether he or she is getting on a train run by a particular company – how many people have been on an intercity train when the ticket inspector has got into a dispute with someone who has bought a ticket for the train’s destination but it is the wrong ticket for that particular train? The customer is also besieged by a bewildering array of pricing, far more than was on offer when the railway was state owned.

I doubt whether the average passenger welcomes either the multiplicity of carriers or ticket prices. A person can have too much choice. Human beings want some but not a vast amount, which merely becomes confusing. If you want to travel somewhere you do not want it to be a demanding exercise in both finding out what the cheapest fare is and ensuring that the terms of the ticket are not inadvertently breached.

Does market competition produce greater choice even in a “free market”? There is a good argument to say it does not. The natural tendency of a free market is to produce reduced competition. Governments of all colours in countries which have a large free enterprise component to their economy recognise this by maintaining anti-monopoly legislation. (What are called free market economies are in fact state regulated economies and regulated in the most fundamental way, ie the prevention of increase of market share beyond a certain point).

But anti-monopoly legislation only prevents the worst anti-competitive excesses. There is still very wide scope for anti-competitive forces, especially in capital intensive and technologically advanced industries – think Microsoft and operating systems or airliners in a market of two or three suppliers.

But the process is a general one. Even enterprises which are not innately capital intensive are affected. Retailing is a good example. A hundred years ago department stores were still in their infancy. Supermarkets and shopping Malls unknown. The vast majority of purchases were made from small, privately owned shops or from open air markets. Most of the shops specialised in a narrow trade.

Today we have far fewer shops and markets. Supermarkets and Shopping Malls abound. The chain stores of at most a few dozen companies become ever more pervasive. There are many fewer specialist shops. The private retailer is assaulted from all sides by the large multiple-store retailers and increasingly succumbs as the public is seduced by the immediate temptations of price and convenience without regard to the social long-term consequences of what they do. The privately owned shop does not even have to be in the immediate vicinity of a giant chain store to suffer. It merely has to be within reasonable driving distance of the chain store. The consequence is that the poorer areas of larger towns and cities and country villages and small towns are denuded of their shops. The choice of the poorer residents of such places is tremendously reduced. The wealthier do not of course care about this because it has no direct effect on them. They have the wherewithal to either live in areas well serviced by stores and services or can afford to drive to the large supermarkets or have goods delivered from far afield. Such developments fall within the remit of government. It is not for Government to operate supermarkets but it is within their remit to prevent commercial behaviour which is anti-social.

What constitutes choice anyway? Is it, for example, having more shops offering a smaller range of products or fewer shops offering a greater range of product? In practice fewer shops will mean reduced variety of product as well as service. But what of all the choice in giant supermarkets you say? Do they not have a much greater range of product? Surely they provide more choice. They may provide a greater range in one place but that is all.

The advent of industrial-style agri-farming, the bringing in of increased amounts of imported food from around the world and introduction of new manufactured foods may give the impression of greater choice, but is an illusion. The number of varieties of staple fruits and vegetables has been massively reduced, as have the various breeds of farm animals.

Of course, the providers of anything which sells can always say “If people didn’t want it they wouldn’t buy it”. But that begs the question of what alternatives are available. If only three types of washing powder were available doubtless they would sell massively more than any one brand does now. That does not mean they are more popular merely that people have to have such a product and were forced to buy one of the three brands available. Such restriction of choice is increasingly commonplace . We fool ourselves if we buy into the laissez faire economics  = more choice.

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