Newsnet Main Articles
By G.A.Ponsonby
Former Chancellor Alistair Darling was in the headlines yesterday after calling First Minister Alex Salmond a “complete fool”.
The senior Labour MP was referring to the SNP leader’s judgement after Mr Salmond indicated his support for the RBS takeover of Dutch bank ABN Amro back in 2007.
Speaking at the Aye Write literary festival, Mr Darling, who replaced Gordon Brown as head of the UK Treasury in June of the same year, said:
“This is the man who wrote to RBS saying he had looked at the deal with ABN Amro and was confident it was good for Scotland.
“Well, if he honestly thought it was good for Scotland, he’s a complete fool because it brought the entire RBS edifice crashing down. So, he does get judgment calls wrong.”
In 2007 Mr Salmond had written to former Chief Executive of the RBS Group Fred Goodwin wishing him good luck in the organisation’s bid for Dutch bank ABM Amro, which at the time was seen as a sound business move.
RBS were competing with Barclays Bank who was also after ownership of the Dutch bank and who looked like the likely victors until RBS stepped in with a better offer.
In October 2007, Barclay’s conceded defeat and the consortium that included RBS, Fortis Bank and Banco Santander announced the formal acquisition of the Dutch bank.
The acquisition of ABN Amro caused severe problems for RBS when the credit crunch hit just when the banks reserves were depleted. The financial collapse exposed ABN Amro’s debts and the UK Government was forced to borrow £billions in order to bail RBS, and other UK banks, out.
Fred Goodwin lost his knighthood as a result and the term “Scottish banks” was born. Previously well respected UK institutions contributing billions to the UK Treasury, RBS along with HBOS, were now Scottish outcasts.
Barclays’ rival bid for ABN Amro is now widely forgotten as is the identity of the man who led their transaction team.
The ‘mystery’ figure who led the Barclay’s group’s bid to acquire ABN Amro was one Naguib Kheraj.
Kheraj, was Barclay’s former finance director, who was paid £600,000 a month to stay on for eight months to lead the Barclays’ team in its bid for ABN Amro. The aborted bid netted Kheraj a cool £5 million.
According to Alistair Darling, Mr Kheraj is apparently a complete fool for believing a takeover of ABN Amro was a good thing.
Readers will be surprised therefore to learn that within months of the failed Barclays’ bid, high flyer Kheraj was recruited on an undisclosed retainer as a special adviser to the Financial Services Authority (FSA).
The FSA is of course appointed by the UK Treasury which is ultimately controlled by the Chancellor of the Exchequer. At the time of Mr Kheraj’s appointment to his advisory role in April 2008, the Chancellor was none other than Alistair Darling.
Mr Kheraj’s role was to advise on reforms to banking regulation after the collapse of now long forgotten English bank, Northern Rock.
But what of Mr Kheraj’s role in Barclay’s aborted bid to purchase ABM Amro only months earlier?
Well the FSA appeared to believe that this was something to be proud of. For on their official announcement of Kheraj’s appointment they wrote:
“Kheraj has held numerous senior roles within financial services. During 2007 Kheraj led the transaction team working on Barclays’ proposed merger with ABN Amro and significant investments in Barclays made by Temasek and China Development Bank.”
Speaking at the time FSA Chief Executive Hector Sants said: “We are fortunate to have access to the valuable industry perspective Naguib, as a senior banker of many years’ experience, will bring to the FSA.
“His insight and understanding of financial services will be invaluable to the newly created SEP team as they begin their task of strengthening our supervisory process.
“A successful regulator has to seek constantly to learn, change and improve, skills which Naguib has amply demonstrated over his long and distinguished career.”
So, using Alistair Darling’s own definition of the phrase, he, and others in his charge, presided over the appointment of a “complete fool” in order to help implement the UK’s banking regulation.
But Darling’s respect for Mr Kheraj’s abilities went even further. For in 2008 Kheraj was one of a handful of hand-picked informal network of advisers who devised a plan for the UK Government to take a direct stake in UK banks.
On 3 November 2008 The Chancellor of the Exchequer, on the advice of this group, announced that a new commercial company – UK Financial Investments Ltd – would manage the UK Government’s shareholding in banks subscribing to its recapitalisation fund.
Of course, neither Alex Salmond nor Naguib Kheraj are complete fools for their belief that the purchase of ABN Amro was a good move. The acquisition of ABN Amro was widely thought to have been a good business decision, that’s why Kheraj was competing with Goodwin’s consortium.
It’s also why Alistair Darling signed off the ABN Amro deal and why his Labour Government, prompted by one Jack McConnell, decided to knight Fred Goodwin and why Darling sought Goodwin’s advice on banking.
It’s also presumably why when consulting with UK officials, including Darling, at the time of the ABN takeover bid on their plans to develop links with a Chinese bank, that Barclay’s were not advised to drop their plans to up their ABN bid using Asian investor money.
However the story doesn’t end there. For the recent scandal over Barclay’s unpaid tax bill uncovered another aspect of Mr Kheraj’s CV.
Last month it emerged Barclays Bank had used two schemes in order to avoid paying half a billion pounds in tax to the UK treasury. The scam resulted in a new law against corporate tax dodging that will be announced by Chancellor George Osborne in the budget later this month.
But Barclay’s reputation for tax avoidance isn’t new, it was apparently known as far back as 2009.
According to the Guardian newspaper, Barclays Bank was said by some industry insiders to have been Britain’s most active legal tax avoider operating not two, but five tax avoidance ploys.
One of these involved Barclays’ personal customer’s accounts. UK tax inspectors estimated that holders of 20% of those accounts were dodging tax worth up to £1.5bn, Barclays were forced to hand over details of these accounts.
This lucrative private banking arm, known now as Barclays Wealth, was run by the aforementioned Naguib Keraj until 2004.
Following Kheraj’s departure in 2007, he was appointed by HMRC’s Dave Hartnett as an adviser to HMRC itself. He is listed on official Government documents in 2008, although by then on his small ‘biog’ there is no mention of his once proud role as leader of the Barclay’s failed bid for ABN Amro.
Such was the extent of Barclays’ tax avoidance that until early 2009, according to insiders, the company had an informal agreement with HMRC to divulge all its schemes, in return for inspectors challenging only a small proportion of them.
Something that might surprise supporters of Glasgow Rangers who are now being pursued, it seems to the death, for a sum that is but a grain of sand to the vast desert of real tax avoidance.
So, this one time pursuer of ABN Amro, became a close adviser to Alistair Darling, an adviser to the Financial Services Authority and an adviser to HMRC.
A “complete fool”? Of course not. However, here’s how Kheraj described himself in October 2005 – just two years before joining HMRC and less than two and a half years before advising the FSA and Darling:
“I was clearly very financially literate. I knew a lot about funding and how to perform financial analysis and strategy and planning. I didn’t know much about controls and regulation and the IT required in financial reporting and I didn’t know much about managing tax risk, so I had to learn all of those on the job. Actually, it was a lot more complicated than I ever thought. I hadn’t thought enough about these things,’ Kheraj admits.
“…I think arbitrary changes to tax or regulation could result in the UK being a less competitive place to locate important parts of the financial services industry. The government understands that it is in the country’s interest to have strong and profitable banks,”
Alistair Darling achieved his headline yesterday and the Scottish media had an excuse to have a go at Alex Salmond using the ABN Amro takeover.
How many will report on Mr Darling’s real views on people who thought the acquisition of ABN Amro a good idea?
If you found this article interesting then please consider donating a small amount to help maintain the site. Click Here.
We would like to thank everyone who visited and contributed to our stall at the conference at the weekend.
Slowly the truth slips out.
Also, I see Brian Currie at the Herald is trying to put a union jack on Peter Fraser’s comments – the man who yesterday said the end of the Union is inevitable.
‘English will bomb our airports’. Ha Ha Ha, desperate stuff. These are our neighbours ???
This the same Peter Fraser who botched the prosecution of Megrahi and brought Scottish justice into disrepute
Should we all email this article direct to him at:
alistair.darling.mpparliament.uk
what fun we’d have!
You mean purely as a humanitarian gesture? To help the poor chap with his (obviously) debilitating memory loss issues.
I’m sure he’d appreciate that and I’m happy to help.
And have done.
O/T NEW SCARE STORY.
“English ‘would bomb our airports'”
Not on John Smeaton’s watch they won’t.
Slighty O/T
‘Labour proposes Buckfast ban as alternative to minimum pricing
news.stv.tv/…/…
What have the Monks of Buckfast Abbey ever done to Labour to deserve this attention?
Labour are complete idiots on this, they blaim high levels of caffeine in the drink.
So by that same token they should also ban ‘Red Bull’ [caffeine content of a single can of Red Bull is 80 mg/250 ml], caffeine content in Buckfast is around 90 mg/250 ml, it also contains 15% Alcohol. However Red Bull is usually mixed with 43% proof Alcohol as a drink of choice.
What Labour just cant grasp is the fact that its not the caffiene content in drinks that affect people (it does effect people), but it the alcohol mixure. Take away Buckfast and you still have kids binging on Cider and Vodka, with the latter being mixed with Red Bull.
Labour’s continueing attack on Buckfast is down purely being seen by Labour as some kind of ‘common man/ wifey up the close’ populous ideal. The reality is, Labour are not contributing ANYTHING to the over indulgence of alcohol
Is this groundhog day??
SEE;
newsnetscotland.com/…/…
Labour have ben threatened with legal action several times by the producers of Buckfast.
Seriously, I do hope the producers of buckfast act this time. This rubbish by the Labour party about caffeine has been going on for too long.
Do Labour have NO IDEA how stupid they are looking starting to bang on about caffeine yet again? Seriously, did they learn nothing from May 2011??
The nonsense being spouted by Labour and Richard Simpson on this topic is seriously, seriously cloud cuckoo land stuff.
How freaking bizarre. Labour really have lost the grip on reality.
I wanted you to know that I am watching events closely on the ABN front. It is in Scottish interests for RBS to be successful, and I would like to offer any assistance my office can provide. Good luck with the bid.
To say Mr Darling has over-interpreted it and put the worst possible construction on what was really just a statement of the obvious i.e RBS’ success was important for Scotland and the UK.
RBS and its partners came late to the takeover of ABN and did not carry out due diligence. If they had they might have found out about ABNs exposure to sub-prime etc. Many commentators at the time were advising RBS not to bid for ABN but to concentrate on consolidating the businesses it had already taken over. But they were ignored and the rest as they say is history.
You can see the letter here:
channel4.com/…/…
O/T but also on the CH4 news website is an interesting article about Rangers tax problems by Alex Thomson
blogs.channel4.com/…/850
O/T 2 Herald has front page story on Megrahi trial and SCCR report which the Herald has apparently seen.
“English would bomb our airports”
from the looks of things they have had a trial run on Princes Street
HUNDREDS of youths will descend on Troon to protest against Prime Minister David Cameron.