(5 years, 8 months ago)
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I agree, and there are many cases like that. I will talk about the redress processes shortly.
There are three elements to what we are discussing: the fraud itself, the potential cover-up of the fraud, and the review that supposedly provides justice for the victims of the fraud. There were finally convictions for the fraud in January 2017. Six people, including three former HBOS employees, were convicted of defrauding business customers over 10 years earlier. More than £250 million in total was defrauded, and the people who were guilty of the crimes got 47 years in jail.
Many people lost millions of pounds—in some cases, it was tens of millions—yet these issues did not come to light because of the regulators. They came to light because of individuals who were so persistent and determined; I am thinking particularly of Paul and Nikki Turner, journalists such as Ian Fraser, and Sally Masterton, who worked for Lloyds. Had it not been for them, the issues would never have come to light. Of course, their efforts have taken a great toll on them and come at great cost to them.
I am sorry to interrupt the flow of the hon. Gentleman’s speech. He has referred to the people who are in jail at the moment. One of my constituents was working for a company called Carringworth. Through its dealings with those people who are in jail now, her company was forced into administration. Now, after 10 years of hell, the administrators are putting huge pressure on her to settle. Is it not wrong that she should be forced to settle before the establishment of an independent set of organisations that can adjudicate and ensure that she gets the justice that she deserves?
Yes. The hon. Gentleman is absolutely right, and he touches on the human cost of these issues as well as the financial cost, which is critical. What we want to see, which I will come on to, is an opening up of all the cases that have been through the Griggs review by means of examination through a completely impartial arbitration process that will fairly adjudicate and arbitrate the claims.
As if the fraud were not bad enough, there was a cover-up. HBOS and Lloyds became aware of the issue from 2006 onwards. The current chief executive, António Horta-Osório, was made aware of the fraud as soon as he took up his post in 2011 by the Turners and many others. Famously, in September 2013, Sally Masterton, a senior risk officer at Lloyds Banking Group, on the instructions of her line manager, produced a report called the Project Lord Turnbull report. Its findings were shocking. There was a corporate strategy within Lloyds and HBOS to conceal the fraud, which caused substantial loss to shareholders and investors.
At that point, there was another opportunity for the bank to hold its hands up and say, “Right, enough is enough. Let’s get all of this out in the open and get to the bottom of these issues.” Did that happen? No, that is not what happened. Sally Masterton was suspended from her job and discredited to the Financial Conduct Authority. Scandalously, she was prevented from working with the police, despite being told that she was vital to the investigation, and then she was fired. The senior management did not make the report available to non-executive directors or the chair of the board for three years. Finally, last month, the bank reversed its position and confirmed that Sally had
“acted with integrity and in good faith at all times”.
There were other elements of cover-up. Thames Valley police said that Lloyds had led them a “merry dance” in their £7-million investigation of these issues. There is evidence of a wider fraud, certainly from victims going through the Griggs review to whom I have spoken. They talk about other senior managers, including Paul Burnett, high risk managing director at HBOS Edinburgh, personally having involvement with HBOS Reading. HBOS compliance officers were embedded in the fraudsters’ operations, and of course gagging orders are used across the board to prevent more disclosures from coming to light.
Let me move on to the review. It was supposed to be an independent review and was headed by Professor Griggs—that is why we call it the Griggs review. It was supposed to provide swift and fair compensation to the victims. However, the SME Alliance, which has done so much work for so many of the victims, instructed Jonathan Laidlaw, QC, who names among his clients the Bank of England, to review the review itself. He determined, in a short report, that the review is “procedurally defective”, and its principles are “flawed and appear partial” to the bank’s interests. That description is consistent with the experiences and stories of the victims. They have described the review to us as corrupt, disgraceful, one-sided and evincing an absence of due diligence, with manipulated documents and lies about evidence. Agreed payments are not met, and the process makes life as difficult and unpleasant as possible. These are victims of fraud.