Tuesday, March 31, 2009

Ex Royal Bank Chairman McKillop says Myners knew of huge Goodwin pension

Another round of accusations as to who told what to whom and when and who actually took it in or not … this time its back to the Sir Fred Goodwin pension caper, which netted the former RBS boss £703,000 a year pension … despite the bank collapsing around his ears and having to be bailed out by the British taxpayer.

BBC News reports :

Ex RBS chair insists Myners knew

Former RBS chairman Sir Tom McKillop has said City Minister Lord Myners was fully briefed about former chief Sir Fred Goodwin's pension arrangements.

There was no "elaborate ruse" to reward Sir Fred Goodwin, Sir Tom said.

"Each element of the proposed terms of departure" were discussed with Lord Myners, "including the pension", he added.

Lord Myners earlier insisted he had not been involved in negotiating Sir Fred's pension arrangements.

Sir Tom's comments followed Lord Myners' testimony to the Treasury Committee over Sir Fred's £703,000 pension.

Sir Fred left "at the request of the company with his full contractual entitlement" because of the need for a "consensual departure", Sir Tom said in a letter to the Treasury Committee.

'Full disclosure'

Sir Tom said in his letter that the he and Bob Scott, the senior independent director, made a "full disclosure" of Sir Fred's compensation to Lord Myners.

"Mr Scott is certain that he discussed each element of the proposed terms of departure set out in the remuneration paper, including the pension," Sir Tom said.

Lord Myners earlier this month told the Treasury select committee that he did know the value of Sir Fred's pension in October, insisting that he was not privy to "the thinking of the remuneration committee or members of that committee of RBS".

In his letter, Sir Tom said: "I must emphasise that there was no "elaborate ruse" by myself and Mr Scott to give Sir Fred any more than he was contractually entitled to and that we and, I believe, all the directors acted in what we judged to be the best interests of the shareholders, including the Government."

Sir Fred took early retirement from RBS last year after the bank needed a £20bn bailout from the government. The payout has been widely condemned.

Sir Fred's Edinburgh home was attacked by vandals last week.

Scottish Paraliament hears MSP's plea to drop prosecutions over sex games, bondage sessions

Well, some might argue that from the headline, Scotland has become that dark place of evil one American television evangelist once called us .. well, not among all of us .. mostly just the professional classes it seems (yes, the brickies & plumbers cant afford bondage sessions – Ed)

Anyway, the Scottish Parliament with nothing better to do, heard pleas from Green MSP Patrick Harvie to lift the fear of prosecution for assault from those taking part in consensual bondage, sado-masochism, simulated rape clubs (which apparently contain people like your children's teachers, priests, doctors, accountants and oh yes, lawyers & sheriffs) and similar practices.

However, the amendment was dropped (phew- Ed) after the Justice Secretary Kenny MacAskill and other MSPs said allowing Mr Harvie’s amendment could provide a loophole for those charged with domestic abuse and sex crimes. Tory Justice Convener Bill Aitken did however, say Mr Harvie was right to bring it to the attention of the Justice Committee …however, no word was provided on how many MSPs enjoyed out of hours bdsm sessions along with sheriffs, and several well known solicitors recently exposed in the media (ahem. more to come ! – Ed)

The Herald reports :

MSP drops law change plea over sex games

MSPs today heard a plea for the fear of prosecution for assault to be lifted from those taking part in consensual bondage, sado-masochism, and similar practices.

The plea came from Green MSP Patrick Harvie who told a Holyrood committee the present law was an "anomaly".

But he dropped a bid to change the law after Justice Minister Kenny MacAskill and other MSPs said lifting the threat of prosecution could provide a loophole for those charged with domestic abuse and sex crimes.

Mr Harvie made his plea when the Justice Committee today scrutinised the Sexual Offences (Scotland) Bill.

If passed, the Bill will radically overhaul existing law on rape and other sex crimes, and will redefine consent as "free agreement".

Mr Harvie tabled an amendment to the Bill under which the crime of assault would not be committed if consensual acts between those over 16 were carried out for "sexual gratification", if both participants agreed and where serious injury was unlikely.

He said he was tabling the amendment to trigger debate and to enable Mr MacAskill to explain why a change recommended by the Scottish Law Commission was not included in the Bill.

Mr Harvie told MSPs the practices covered by his amendment were known as "BDSM activity", a term which includes bondage, sadism, masochism, dominance and submission.

He accepted the Government feared such a provision could be misused by those accused of domestic abuse.

He argued that if the Government believed BDSM activity between consenting adults was a criminal offence, that was an anomaly.

"All other matters being equal, these situations should not be seen as a priority for prosecution," he said.

"In situations where consent is uncontested, where all the people involved agree there was free and informed consent between them, these should surely not be treated as assaults worthy of prosecution and punishment."

The present law could cause harm of the type once suffered by gay men, said Mr Harvie.

"Many ordinary people who simply have a different kind of sex life to other people can lose their jobs, their homes and their family as a result of public disapproval."

Mr Harvie said he was not talking about people like Formula One motor racing boss Max Moseley "who can put up a fight in the courts based on the principle of privacy", or those in the public eye, He said there was not clear law on privacy.

"But caught in the crossfire of that debate, people's lives can be ruined," said the MSP.

But other MSPs on the committee voiced fears that the change he argued for could provide a defence loophole in domestic abuse cases.

Committee convener and Tory MSP Bill Aitken said Mr Harvie was right to bring the matter to the committee.

Mr Aitken said there could be an argument that what took place between two consenting adults in private was a matter for them alone - but that had two key provisos.

The first was that the violence did not lead to injury, and the second was consent.

"I cannot envisage circumstances where a matter would come to the attention of police and the prosecution authorities which had not breached these caveats," said Mr Aitken.

Mr MacAskill told the committee said the Scottish Government had rejected the original Law Commissioner recommendation for reform because of "serious concerns" that it could create a loophole in cases of rape, sexual assault and domestic violence.

"If this provision were enacted, the accused might seek to argue in such cases that the complainer consented to the assault, and that the assault was for the purposes of sexual gratification," said the minister.

"In some cases, it may be very difficult for the Crown to disprove such a claim.

"Respondents to the Government's consultation on the law commission report were almost all opposed to this recommendation."

Scottish led offer for collapsed 'reckless' Dunfermline was refused

While the bickering over the collapsed Dunfermline building society continues, with who did what or offered how much & when doing the rounds, the Nationwide has taken over DBS after intervention from the FSA & Bank of England.

Its a pity DBS collapsed, but protracted discussions and talk of offers doesn't always amount to a deal ... (lessons to be learned for next time ? – Ed)

The Scotsman reports :

Scottish rescue bid for DBS 'was blocked'

Published Date: 31 March 2009
By ROSS LYDALL

COLLAPSED building society Dunfermline was offered a possible merger with a Scottish-led consortium just weeks ago, it emerged last night.

Scottish Friendly Assurance revealed an initial approach was made in the middle of this month to the ailing mutual, which was taken over by the Nationwide yesterday.

But there were claims the possible rescue bid was effectively blocked on "numerous" occasions. News of the secret approach was revealed as details emerged of the reckless spending that led to the emergency rescue of the Dunfermline by Nationwide.

The Scotsman has learned the Dunfermline offered loans of up to £20 million to an "insolvent" property firm in Lancashire, which then used the cash to provide 100 per cent mortgages on rundown terraced homes in the north of England. This was typical of about £800 million of investments made by the Dunfermline.

The building society was put up for sale on Saturday by the government after a Treasury bail-out was ruled out.

But Scottish Friendly claimed last night that the consortium had made several attempts to open negotiations with Dunfermline officials, but were not given an opportunity to meet them until Sunday, the day after it had collapsed.

In a statement, Scottish Friendly said: "Although numerous attempts were made to open exploratory negotiations with DBS, we were not given an opportunity to meet with them until Sunday, less than 24 hours before a deal was announced.

"While we are of course pleased that the position of DBS members has been secured, the announcement of (the] deal with the Nationwide precludes a Scottish-led solution that may have been a possibility if talks had been agreed between the consortium and DBS at an earlier stage in the process."

Stewart Hosie, the SNP's Treasury spokesman, said last night: "The possibility of alternative bidders – including a Scottish-based bid – that could have seen HQ functions and jobs remain in Scotland is something that all parties should have been aware of prior to the deal with Nationwide.

"The revelations over a possible bid from Scottish Friendly and the speed at which decisions appear to have been made only add to the list of questions the Treasury and the FSA (Financial Services Authority] must answer.

"Once again, a Scottish institution appears to have been sold off in haste without a thorough examination of the options. The FSA, the Treasury and the Dunfermline must reveal what offers where on the table and when."

Jim Willens, the outgoing chief executive of DBS, who will resign in the wake of the Nationwide deal, said: "I am not in a position to comment on any individual approaches. What I can say absolutely 100 per cent is that any proposition or proposal put to the society was looked at thoroughly and immediately."

Alistair Darling, the Chancellor, yesterday announced the government was sinking more than £1.6 billion of taxpayers' money into rescuing the Dunfermline.

Nationwide is to buy all of its branches, "good" loans and deposits, although the brand name will remain. However, it said some of the society's 530 employees "may not be required".

As the Prime Minister branded the stricken mutual the "author of its own mistakes", there was cross-party condemnation of the Dunfermline's board – and demands for an explanation as to why the City watchdog, the FSA, had failed to intervene as the building society's risk-taking increased.

Mr Darling called on Lord Turner, the FSA chairman, to explain its role in supervising the Dunfermline. There was also pressure on the outgoing Dunfermline chairman, Jim Faulds, and the former chief executive, Graeme Dalziel, who left the company last December.

Since 2006, the society had shed its reputation as a safe haven of 140 years' standing to embark on risky investments, such as the purchase of self-certified mortgages from two US firms – one a subsidiary of collapsed bank Lehman Brothers – and to lend to commercial property firms.

Vince Cable, the Liberal Democrats' Treasury spokesman, told MPs the Dunfermline board had been guilty of "disastrous management" and a failure of oversight in allowing it to run up a £24 million loss for 2008.

That required the Treasury, Bank of England and FSA to put the rescue package in place which has resulted in the Dunfermline's staff, retail and wholesale deposits, branches, head office and original residential mortgages being transferred to the Nationwide.

A "bridge bank" has been set up to oversee its social housing portfolio in Scotland, while accountancy firm KPMG has been appointed to sell off commercial loans, which will be used to help repay the £1.6 billion to the taxpayer.

Mr Cable told the Commons DBS made a £10 million loan two years ago to Lancashire property firm In House plc – a company that was "loss-making, insolvent and had never filed any accounts".

He added: "There were substantial numbers of loans of this kind taking place. Is this not an absolutely gross failure of regulation by the FSA? It's very difficult to see how this could have happened under the old building society regime, which kept a much closer eye on the conduct of these societies."

Papers seen by The Scotsman suggest that In House used the 2007 loan to provide 100 per cent mortgages on multi- occupancy or rundown terraced homes in Hull, Stockton and Lancashire, and an industrial unit in Scotland.

A year later, it obtained a second £10 million loan from the Dunfermline, and it has withdrawn some £3 million to £4 million for similar lending. About 25 of the properties are said to be uninhabitable because of the amount of repairs required. The firm could not be reached for comment last night.

Mr Cable, Mr Darling and George Osborne, the shadow chancellor, were united in condemning the failures of the mutual's board and its decision to purchase more than £150 million of self-certified loans from the two US firms – GMAC and the Lehman subsidiary – and embark on £650 million of commercial property lending.

Mr Darling said the Dunfermline's toxic investments were made shortly before the credit crunch that led to the collapse of the residential and commercial markets. He added that the Dunfermline was now losing money as a result of firms collapsing or defaulting on repayments.

Mr Darling said Nationwide had promised there would be no compulsory redundancies for the next three years for the 345 staff of the Dunfermline's 34 branches in Scotland. However, he could give no guarantee for head office staff.

Monday, March 30, 2009

Scottish Government’s secret talks on Lockerbie bomber’s return to Libya

After castigating the UK Government for holding secret talks on the return to Libya of Abdelbaset Ali Mohmed al-Megrahi, convicted of the bombing of Pan Am Flight 103 over Lockerbie, Scotland in 1988, it turns out the Scottish Government have been doing the same, although Justice Secretary MacAskill has ‘distanced’ himself from the ongoing secret negotiations (as he usually does – Ed)

The Scotsman reports :

SNP's secret talks may send Lockerbie bomber to Libya

Published Date: 30 March 2009
By CLAIRE GARDNER

THE SNP has been engaged in secret talks that could send the Lockerbie bomber home, it was reported last night.

It is claimed talks have taken place between SNP advisers and Libya as the Scottish Executive prepares to sign a pact on prison transfers this week.

Meanwhile the health of the man serving life for the Lockerbie bombing continues to deteriorate. Abdelbaset Ali Mohmed al-Megrahi's cancer has now spread to his spine and pelvis.

Officially, the diplomatic meetings to discuss the future of the bomber are taking place between the Foreign Office and Libyan officials, because Scotland is not a sovereign state. But Kenny MacAskill, the justice secretary, has asked Robert Gordon, director general of the Executive's justice department, to play a major role in the discussions.

Meetings between Mr Gordon and a Libyan delegation began last October and included discussions with US senators.

Megrahi's legal team are being encouraged to apply for a prisoner transfer agreement (PTA) that would see him serve the remainder of his 27-year sentence in Libya.

The appeal is expected to take up to a year but Megrahi's health has deteriorated so much he may be forced to abandon the fight to clear his name.

Further calls for debate on single Scottish Police force

The recession might end up forcing Scotland to accept a single Police Force, as Chief Constables ponder their future in the small regional forces (savings on the top brass’ pensions if it comes ? – Ed)

The Herald reports :

Police chiefs urge debate on case for single force in Scotland

Exclusive by LUCY ADAMS, Chief Reporter March 30 2009

Leading chief constables have made unprecedented calls for an immediate debate on whether Scotland should move towards a single national police force.

Stephen House, chief constable of Strathclyde, believes the economic situation and growing challenges from serious and organised crime make it vital to have the discussion about whether Scotland should be policed by eight, three or one force.

His calls to address national threats and review the current position are backed by Kevin Mathieson, chief constable of Tayside, and Allan Burnett, assistant chief constable of Fife.

Their comments, after years of opposition to the idea by the majority of chief constables, come just a week after Paddy Tomkins, Her Majesty's Chief Inspector of Constabulary, called for Scotland's eight forces to be amalgamated into one to remove duplication and save money.

"There is a line of thinking in policing which says if you have strong community policing it doesn't matter what the structures are above that, because the public relate to local cops," said Mr House. "Do they really relate to their chief constable? Politicians might but the public don't.

"How many police forces there are in Scotland isn't something they're particularly worried about. We are all spending public money and ought to be doing that as efficiently as possible. Whether that is through amalgamation or closer working together, that is what I think should be debated."

Earlier this month, The Herald also revealed that Brian Sweeney, chief officer of Strathclyde Fire and Rescue, wants to see a massive restructuring of public sector services and believes reducing the brigades from eight to one would save millions of pounds.

With increasing pressure to make savings, the Association of Chief Police Officers in Scotland is now discussing the thorny issue. Kevin Mathieson, chief constable of Tayside, told The Herald that he is not "wedded" to the current structures and that the debate should focus on improving Scotland's national response to policing.

Sunday, March 29, 2009

Clients advised to remove money from Scots law firms over Guarantee Fund failures

Clients of Scottish legal firms have been advised by consumer groups and law reform campaigners to remove their funds immediately from Scots legal firms, after revelations emerged the Law Society’s Guarantee Fund (which is supposed to compensate clients for financial losses) has no money left in it.

Law reform campaigner Peter Cherbi placed an advisory to clients on his law blog A Diary of Injustice in Scotland, which in the current financial crisis affecting many legal firms, clients may well be advised to proceed on the advisory, and take the steps advised to protect their money and bank it somwhere else, before it disappears along with ailing law firms (or a lawyer runs off with it !– Ed)

“A Diary of Injustice in Scotland” reports :

Advisory : Clients must protect their money from unsafe legal firms as Law Society's Guarantee Fund fails.

Law SocietyYour money is no longer safe with your lawyer. £50 million plus of money belonging to clients of Scottish legal firms is at considerable risk of loss, after revelations the Law Society's Guarantee Fund has less than £2 million left in its coffers to cover the millions held by Scottish solicitors on behalf of their clients in everything from house purchases & sales to the administration of wills, investments & settlement payments.

AdvisoryMy advice : Clients should immediately withdraw their funds from any legal firm or solicitor who may be holding monies on their behalf. If you have funds being held by your solicitor, make it your priority this week or as soon as possible to ensure the safety of your wealth, or you may end up losing it.

There is simply no way the legal profession can guarantee the safety of your money in the wake of the financial downturn. You will have to be the best judge yourselves as to how to safeguard your own wealth, but trusting it to your solicitor who lacks any protection for its loss, is no longer an option.

While the news is filled with reports about banks & building societies having to be bailed out by the Government, little attention has been paid to the rate of legal firms heading for disaster, and not forgetting the huge rise in fraud cases involving solicitors falsifying banking records and financial transactions, usually for their own benefit. It is the Guarantee Fund which would cover such frauds on client’s funds, but the compensation scheme run by the Law Society which is supposed to repay defrauded clients, has been unmasked as little more than a theatre spectacle, offering nothing to victims of ‘crooked lawyers’.

I reported earlier on the Guarantee Fund’s problems and client’s attempts to claim from it here : Law Society's 'Guarantee Fund' for clients of crooked lawyers revealed as multi million pound masterpiece of claims dodging corruption

A legal insider at the Law Society said when asked about the Guarantee Fund problems said : “We are going to end up in a situation where there wont be enough money coming in from Solicitors to the Guarantee Fund to keep adequate levels of money available to cover failed legal business or lawyers taking their clients money for themselves.”

This claim is backed up by revelations that reserves in the Guarantee Fund only amount to a paltry £1.7 million at this time, and with significant outstanding claims standing at £4.3 million, together with incoming claims expected to reach double figures in the millions this year over buy-to-let & mortgage fraud schemes, there seems little prospect of clients recovering anything from solicitors who decide to take the money for themselves.

As an example to emphasise the lack of safety of clients funds, a client who contacted me who entered into a house purchase transaction with a legal firm now faces a total loss of £185,000, which was handed over to his solicitor who was holding it in the legal firm’s client account on a short term basis while the client’s property transaction went through.

Eleven weeks later, the deal had still not been completed and it emerged the solicitor had taken £47,000 of the clients cash to prop up his legal firm’s huge debt. The solicitor then told the client the seller had made off with his money, and had refused to hand over the titles.

The client uncovered what had actually happened through his bank and an ex member of staff from the legal firm in question, but the Law Society did nothing. The client is still seeking legal representation to sue the Law Society and the solicitor concerned, who continues to represent unsuspecting clients in property transactions.

It is reported that discussions have taken place at the Law Society of Scotland on the idea of seeking external funding to the Guarantee Fund, or even asking for Government assistance of some kind, if the situation arises, as looks the case that the Law Society will not be able to meet its ‘official’ commitment to ‘safeguard’ clients funds – a commitment in reality it has never managed to achieve in the Society’s entire history.

However, fears were expressed by some lawyers that the public might not be too receptive to millions of pounds of taxpayers money being used to keep legal firms and lawyers afloat, given a general antipathy towards the legal profession for their poor regulatory conduct and overcharging of fees over the years for very poor legal services.

During discussions on how best to proceed with the flagging Guarantee Fund, officials warned that any external bailout of the compensation scheme would open up the actual workings of the Guarantee Fund & Master Policy to unwelcome public scrutiny, where questions would arise over the suspicious nature of how client claims for compensation are ‘managed’ and transferred back & forth between the two schemes to delay, deceive and generally thwart payouts to genuine victims of ‘crooked lawyers’.

A leading accountancy firm gave comment last week, claiming there may be up to £100 million of private & corporate clients money held by Scots legal firms which may well now be in unsafe hands.

An accountant with the firm who declined to be named said : “You would be correct in assuming there is a significant risk to funds held by your solicitor or legal firm in current market conditions. The advice we could only offer just now is to bank it and look after it yourself. After all, it’s your money, why let anyone else hold it or manage it in this financial climate.”

So, there you have it. If you currently have money with a lawyer, for any reason at all, take it out of their hands and ensure you put it in a safe place where you control it, not someone else who will only use it to further their own financial gain at your expense.

Scots Law firms in crisis as trainees names ‘picked from hat’

As the financial crisis continues to hit the legal profession, many of Scotland’s legal firms are shedding staff and partners, however trainee solicitors expecting to start work are also being hit.

One company, McClure Naismith apparently picked the names of trainees out of a hat to decide who would say on and who would be let go … (must have been a small hat – Ed)

Scotland on Sunday reports :

Law firm pulls names out of hat to pick trainees

Published Date: 29 March 2009

TRAINEE solicitors at a Scottish law firm expecting to start work in September had their fate pulled out of a hat, after the company announced it could only take half of them.

McClure Naismith, which has offices across the UK, Europe, America and the Far East, told four trainees heading for its Glasgow head office only two could join the company. Faced with cutting costs during the recession, it will force the other two to defer employment for a year, without compensation.

The action has been criticised by members of the legal community, who accused McClure Naismith of destroying employee morale and damaging the company's reputation.

Legal firms usually select trainees years in advance while they are at university. Due to staffing cuts many multinational firms, including Clifford Chance, Norton Rose and Lovells, this year reduced their trainee number by asking them to defer employment for a year. Most deferment schemes are optional and trainees receive a sweetener of up to £15,000.

But McClure Naismith picked people's names out of a hat to decide who would not be taken on, and unlucky candidates were offered no money until September 2010. A spokesman said: "The trainees were fully involved and all of them thanked the firm for the fair and open process.

"Both deferred trainees will start with the firm next year, with one employed in another capacity and the other planning to take a gap year."

Matthew Rhodes, a director at legal community website www.rollonfriday.com , described it as "like some cruel version of Pop Idol without all the singing".

Solicitors may have known of client's false 'slopping-out' claims

It has emerged that lawyers who represented prisoner clients making claims for ‘slopping out’ may have been in on deals where prisoners were using identity fraud to falsely claim their human rights had been breached over having to use portable toilets in Scottish jails.

The Sunday Herald reports that over £2.9 million had been paid to 1373 prisoners so far before the problem was identified … (so a few audits of legal firms should be in the offing ? – Ed)

The Sunday Herald reports :

Bogus slopping-out claims may have cost six-figure sum

By Tom Gordon

Scottish Prison Service report highlights risk of identity fraud by inmates

HUNDREDS OF thousands of pounds in public money may have been paid to bogus slopping-out claimants because the prison service failed to check who was getting the compensation, the Sunday Herald can reveal.

An internal audit report by the Scottish Prison Service (SPS) admits that for years there were "no definitive formal checks to confirm the identity of each claimant", resulting in an "increased risk of identity fraud".

By the time the problem was identified last year, £2.9 million had been paid to 1373 prisoners who claimed their human rights had been breached by having to use a portable toilet in their cell. The average pay-out was around £2100.

The report also reveals the prison service "considerably underestimated" the number of claims it would face, then failed to assign enough staff to process them.

The SPS was last night unable to say if had fallen victim to fraud, but claimed it was "pretty confident" that pay-outs were valid.

Bill Aitken, the Tory justice spokesman, said it was an "extraordinary" oversight. "Hopefully no money was given to even less deserving cases than those who made legitimate claims, but with the type of person with whom they were dealing, many of whom have convictions for dishonesty, it would seem obvious to check their identity."

The audit report, titled Review of the Administration Scheme For Slopping Out Claims, was released to the Sunday Herald under freedom of information.

Based on a review of "systems, procedures and controls" between April and June last year, it found a "reasonable level of assurance" that the scheme was operating efficiently. However, this was one level below "substantial assurance", and meant avoidable "weaknesses" were present, namely a lack of identity checks, but also the "volume of claims and current staffing levels".

On the latter, it said that although claims were "subject to rigorous administration checks to confirm their legitimacy", the volume was such that a "dedicated team should have been formed to process the claims."

Resources were "inadequate given the volume of claims being handled and the levels of expenditure involved", leading to "additional pressures on staff" and "an increased risk that claims will not be processed timeously".

The claims began in 2004 when Robert Napier won a landmark court case after being forced to slop out at Barlinnie. The practice was deemed a breach of his human rights. His £2450 compensation award led to a flood of similar cases.

In Scotland claims could be backdated to 2001, raising the prospect of taxpayers having to pay £67m in compensation.

However, earlier this month it was announced that legislation would be hurried through Westminster to amend the Scotland Act and create a one-year time-bar by summer, limiting the claims bill to around £17m.

The SPS said that since the audit a dedicated team had been set up to handle claims, and had now gathered more information on claimants. However, it had not checked the validity of past claims, and could not guarantee that it had not been a victim of fraud.

A spokesman said: "No evidence exists to suggest that any fraudulent claim has been paid.

"Nevertheless, we are confident that we now have processes in place to mitigate the risk."

Scotland's financial services market ‘toxic’ as building society crashes

There’s never been a worse time to invest in Scotland by the looks of it, as the country’s financial sector faces meltdown and collapse, primarily due to poor regulation which allowed banks, building societies and other financial institutions to do as they pleased with clients money and huge levels of unsustainable debt.

Today, its the turn of the now collapsed Dunfermline Building Society, which had to be rescued by Westminster & the Bank of England, after long winded deals talked about by the Scottish Government came to nothing … (SG deal would never have worked anyway ! – Ed)

Scotland on Sunday reports :

Scots building society collapses

Published Date: 29 March 2009
By Eddie Barnes Political Editor

SCOTLAND'S beleaguered financial sector suffered another body blow last night after it emerged the nation's biggest building society has effectively collapsed and will be put up for sale this week.

The Dunfermline Building Society seems certain to be merged with another institution after attempts to prop it up with a taxpayer bailout were judged to be doomed.

Taxpayers will take on millions of pounds' worth of the Dunfermline's 'toxic assets', while profitable parts of the society will be offered to a new buyer.

The deal is a further dent in Scotland's reputation as a centre of financial probity, coming so soon after HBOS was merged with Lloyds and Royal Bank of Scotland was part- nationalised.

Last night, SNP ministers said they were "disappointed" with the Treasury decision to back a merger, while the local Liberal Democrat MP warned that the plan puts "hundreds of jobs" at risk.

The Dunfermline deal will mirror that which saw Bradford & Bingley split up last year and sold to the Spanish Santander group. Government officials claimed the move would not lead to job cuts and insisted that the building society's 250,000 savers and 35,000 borrowers would not be affected.

Chancellor Alistair Darling yesterday morning informed First Minister Alex Salmond about the plan. Prime Minister Gordon Brown, speaking in Chile yesterday, pledged that savers in the building society would be protected.

Scottish Secretary Jim Murphy blamed "reckless" decisions by the Dunfermline's previous management for its position. Last night, Murphy said: "The Treasury wanted a long-term, rather than a short-term, solution for the Dunfermline. The Government's priority is to protect savers, jobs and social housing and keep the society's branches in place while putting an end to uncertainty."

He added: "The solution should provide a stable and secure future for Dunfermline Building Society members and is one which acts in the best interests of the taxpayer."

The Dunfermline has been on life support after it emerged two weeks ago that it was about to make a significant loss as a result of writedowns on property investments made before the credit crunch. A disastrous IT project also cost millions. Well-placed sources suggested last night that those losses – predicted to be around £26m – were actually going to be far higher.

It was hoped that the building society could continue with funding from the Government of between £60m and £100m. But UK Government sources said yesterday that as the true scale of its losses became clear, regulators decided that the only "permanent solution" would be a merger.

No partner has been formally announced, but the Co-operative, Britannia, Nationwide and Yorkshire building societies have been linked to the Dunfermline in recent weeks. As with the HBOS takeover by Lloyds, there was mounting concern last night that the head office functions of the society would be lost by Scotland.

Salmond had proposed a package in which the Scottish Government would boost the Dunfermline's capital and guarantee its valuable social housing book. That deal remained on the table last night, but the Treasury insisted it would be pressing ahead with a merger.

A Scottish Government spokesman said last night: "We are deeply disappointed that the Treasury now believes it is not possible to sustain the society as an independent institution, given the importance to Scotland of HQ jobs and functions."

He added: "We hope that the Treasury has not closed its mind to the idea that, both in terms of employment and in terms of value for money for the public purse, maintaining Dunfermline Building Society as an independent and ongoing concern could well be the strongest option, and in the interests of its members and depositors."

Lib Dem Dunfermline MP Willie Rennie said: "Forcing the break-up of the Dunfermline Building Society would be a betrayal of its thousands of savers and borrowers over 130 years."

Other mutual societies could still step in to keep the Dunfermline afloat, Rennie insisted. "I ask the Government at this late stage to defend Scotland's largest mutual. If ministers refuse, this could put hundreds of jobs at risk."

There was no comment from the society last night. Senior staff were understood to have been taken by surprise by the sudden announcement.

The news of the Dumfermline's effective collapse comes six months after its troubles were first unveiled. In September, it announced it was to cut a fifth of its workforce in the wake of falling mortgage sales. In December it said it expected this year to be "difficult".

The Dunfermline was one of the last lenders to pull out of the 100%-plus loans market, while it also had a considerable exposure to buy-to-let loans and lending to commercial property borrowers. While on a far smaller scale to HBOS and RBS, the 130-year-old mutual is still one of the country's main financial brands.

Scottish Parliament staff beat credit crunch with £1.5m pay-off deal

No signs of any credit crunch or financial meltdown at the costly $1billion Scottish Parliament as the Sunday Herald reveals a mere 8 members of staff are up for a massive £1.5m pay-off after one of the 8 (Carol Devon) recommended management cuts, including her own post, which netted Devon up to £270,000 (sounds like we all should be working at Holyrood ! – Ed)

The Sunday Herald reports :

Holyrood boss under fire as eight staff share £1.5m pay-off

By Paul Hutcheon

HOLYROOD CHIEF EXECUTIVE PAUL Grice has been criticised after eight senior parliament staff shared an early retirement pot of at least £1.5 million. The deal is worth the equivalent of £190,000 for each of the Holyrood bosses.

The redundancy round was sparked after Grice accepted recommendations from his colleague Carol Devon to cut the number of senior management posts. Devon ended up as the main beneficiary of the plan after her application for redundancy landed her up to £270,000.

Holyrood's head of personnel Ian Macnicol, head of security Bill Anderson and Ian Perry, head of the external liaison unit, all negotiated deals. Patsy Richards, head of the parliament information centre, and three clerk team leaders will also benefit.

These seven include two employees at grade seven, who earn up to £71,327, and five at grade six, whose salary reaches £58,022. Devon's salary, according to parliament accounts, came in at up to £95,000.

The £1.5m is a combination of lump sums and pension payments. If Devon's sum is taken out of the equation, the seven others stand to benefit from an average gain of £175,000. The Sunday Herald understands one of the seven had a short length of service and is unlikely to have received a large sum.

The payments have led to criticism of Grice, who approved the early retirement applications, although the parliament insists the plans will yield savings. Grice has already been rebuked over his role in the cost overruns surrounding the Holyrood project.

The payments raise further questions about public-sector bodies paying out hundreds of thousands of pounds to senior staff in pay-offs. North Lanarkshire Council has spent almost £2m on early retirement and severance since 2007, while Scottish Enterprise (SE) paid over £20m in lump sums. Within that total, four individuals received severance lump sums of over £250,000.

Glasgow City Council paid almost £19m in similar deals, while NHS Lothian confirmed spending around £1.3m in redundancy payments since 2007.

Matthew Elliott, chief executive of the Taxpayers' Alliance, said: "At a time when many taxpayers are having to postpone their own retirement, or have seen their private pension reduced out of recognition, these pay-outs are totally unjustifiable. Mr Grice has some serious questions to answer."

John Wilson, an SNP MSP for Central Scotland, said: "While large sections of the workforce are concerned about their future, senior parliament staff are leaving with golden goodbyes prior to their normal retirement age. No doubt they will end up on other public bodies, picking up other salaries."

A parliament spokesman confirmed that £1.5m had been allocated for eight staff, adding: "The full expectation is that the team changes will pay for themselves within five years and thereafter deliver annual savings."

Bankers in fear : Ruined global finances will bring no public forgiveness

Now that bankers have joined lawyers as some of the most vilified, hated and disrespected professions around the world, some are starting to wonder if they should ever be forgiven for ruining the global financial markets, not to mention the lives of many ordinary people who are now paying for the way that bankers and their kind ‘ruled the world & lives’ with money which was not theirs … (no, bankers wont be able to get forgiveness from a deservedly angry public – Ed)

Scotland on Sunday reports :

Abused in the streets, their homes under attack, will Edinburgh's bankers ever be forgiven?

Published Date: 29 March 2009

By William Lyons, Rosemary Gallagher and Terry Murden

AS THE world's media gathered outside the vandalised stone villa of Sir Fred Goodwin, sympathy for the former chief executive of the Royal Bank of Scotland was in short supply. With pictures of his home in Edinburgh's salubrious Grange district being beamed across the globe, one passing man in a waxed jacket suggested the best course of action would be to "burn it to the ground".

Such comments were unthinkable only a year ago when he was announcing record profits at the world's fifth-biggest bank, but the attack on Goodwin's home and the threat of more violence against bankers has been met with a surprising level of tolerance.

Outright condemnation has been matched by a sense of indignation over the way in which bankers – in particular Edinburgh bankers – have been identified as the guilty men who have plunged the country into recession. Some have spoken of "Edinburgh's shame" that the city's big two banks have helped bring Britain to its knees.

It has clearly affected the standing of one of the country's most important professions as public respect has given way to general disgust. Last Friday, as two Scottish bankers walked through Haymarket station, a Big Issue salesman who they brushed past shouted after them: "I may be homeless, but at least I'm not a banker."

The mood is now turning ugly, with serious implications. A group calling itself Bank Bosses Are Criminals claimed responsibility for the attack on Goodwin's home and in a statement to the Edinburgh Evening News said: "This is just the beginning … We are angry that rich people, like him, are paying themselves a huge amount of money and living in luxury, while ordinary people are made unemployed, destitute and homeless."

The attack came as protesters plan to hang effigies of Sir Fred and other bankers from lampposts ahead of this week's G20 summit in London. Protest organiser and University of East London anthropology professor Chris Knight warned that "things could get nasty" as public anger with banks boils over.

"We are going to be hanging a lot of people like Fred the Shred from lampposts on April Fool's Day and I can only say let's hope they are just effigies," he said. "They should realise the amount of fury and hatred there is for them and act."

Max Clifford, one of Britain's most influential PR gurus, said: "If I was in his shoes, I would be a very worried man. He is in danger. That man should be genuinely frightened."

At the sprawling £350m Royal Bank of Scotland headquarters on the outskirts of Edinburgh, death threats aimed at the former boss arrive regularly through the post. On the internet T-shirts have gone on sale depicting Goodwin in a gun's crosshairs with the words: "public enemy number one." A picture of Goodwin enjoying himself has shot to number one on many freelance photographers' wish lists. It would fetch around £100,000.

Goodwin is understood to have fled the country. His exact whereabouts are unknown with reported sightings in the south of France, mainland Spain or Mallorca. He was last seen boarding a budget airline from Edinburgh to Nice with his wife and two children more than 10 days ago. According to one onlooker he checked in wearing dark glasses and sat in the departure lounge away from most people. Meanwhile his children have been taken out of their private school for their own protection after being bullied over their father's disgrace. His wife Joyce is understood to have been shouted at in the street.

The crisis is causing rising tensions across Europe. In France last week, workers burned tyres, marched on the presidential palace and held the manager of a US manufacturer hostage in the latest protests against job losses and executive payouts. In the US there have been protests outside the homes of executives of bailed-out insurance giant AIG.

While security is stepped up and all bankers feel a collective sense of guilt about leading the world into recession, those who believe Edinburgh has suffered a public beating are attempting to rebuild confidence. There are moves to restore the city's pride and battered reputation with a multi-million-pound initiative and a drive to deliver the message that a city famed throughout the world for its careful management of money can be restored to health.

But first it has to cope with almost daily reminders of its failings, not least its unwanted booby prize as home to the company that recorded the biggest loss in British corporate history.

When Goodwin was helping RBS post record profits, turning a provincial bank into a global powerhouse, the world lined up to shake his hand. Forbes, which once named him Global Businessman of the Year, has subsequently retitled him the world's worst banker.

With HBOS also being forced into a merger to save it from going bust, 2008 turned into an annus horribilis for Edinburgh banking. The city that was once home to Adam Smith – author of The Wealth Of Nations, the first modern treatise on economics – built an economy and a global reputation on financial services. But with its two major banks lying in ruins, many are now asking whether the financial crisis leaves Edinburgh's status in tatters. "The world has fallen off a cliff," said Ian Jones, executive chairman of the independent Edinburgh-based merchant bank Quayle Munro. "We are still picking up the pieces."

Publicly, the City's financial community is pulling together to argue that the Scots are resilient and will learn from mistakes and turn it around. But privately it is a different matter. Many claim the reputation of the city has been permanently damaged. They talk about the embarrassment of being associated with two failed banks and point to the chaos surrounding the ongoing tramworks as symbolic of the difficulties facing it. Aware of the deep public disgust towards Goodwin and Andy Hornby, his counterpart at HBOS, many in the banking sector feel decidedly uncomfortable.

"It is a bit difficult to maintain a reputation as a traditional high-probity country when your biggest bank, which is the fifth-largest bank in the world, goes spectacularly bust, is bought by the Government for a song and then hands its failed chief executive a £20m payoff," said one Scottish economist. "I feel a little embarrassed to be Scottish."

Another director of an Edinburgh brokerage said: "We do a lot of business in Bahrain, and Scotland – Edinburgh in particular – had always been a big selling point as we were highly regarded and respected. The city's reputation abroad has been tarnished by the likes of RBS."

Graham Bell, of Edinburgh Chamber of Commerce, agrees: "The traditional reliance on Scots as good financiers has been dented because two of the major banks that have collapsed have Scotland in their title, and although they are big international companies they are regarded as Scottish products."

On Friday, Chancellor Alistair Darling urged the banks to clear their balance sheets in a bid to regain public trust against an anti-banking backlash, echoing comments earlier this month by Ian Luder, the new Lord Mayor of London, who told a meeting of Scottish Financial Enterprise that there was a need to end "banker bashing".

But their comments arguably add to the growing sense that the banking sector has been irreparably damaged and may even incite further reaction.

Now Edinburgh is preparing to fight back. In the next few weeks the city council will launch an Economic Resilience Action Plan designed to revive the city's flagging fortunes. It will be backed by a 25% increase in the economic development budget, with contributions from Europe bringing the total to £8m, the highest it has been.

In sectors barely touched by the crisis, such as fund management, an industry that manages £580bn of funds directly from Scotland, the mood is refreshingly upbeat. "I simply don't agree with the suggestion that Edinburgh is in some way 'damaged goods' following the banking crisis," said one London-based commercial lawyer. James Will, of Shepherd & Wedderburn, said: "The financial services industry in Scotland is not just about banks.

Scots are resilient, will learn lessons and will refocus on traditional values of prudence and innovation. With such traditional values – and ability to adapt – engrained in our heritage, Edinburgh should find it easier than perhaps many other financial centres worldwide to make the changes necessary to compete effectively in the new environment."

Others, such as Tom Miers, an independent public policy consultant, argue that more important to Edinburgh's economic success is not a reputation for financial prudence but the quality of life in the city. "It is more important for the council to build beautiful buildings than to meddle with the financial sector, which will take care of itself on the basis of the quality of its product."

Colin McLean, the fund manager who sounded the alarm over HBOS and RBS a year before their demise, remains sanguine. In his office overlooking Princes Street, the managing director of SVM Asset Management argues that most of his clients recognise the banking problem is distinct.

"It's not a helpful thing for Edinburgh," he says, "but given there have been banking problems in Switzerland and in other financial centres I don't think anyone comes out of it very well."

It is a view echoed by Bryan Johnston, director with private client investment manager Brewin Dolphin. "Specifically Edinburgh is no more caught up than anywhere else," he says. "Obviously what has happened to the banks is a tragedy and is disappointing, but it is not unique to Edinburgh, nor unfortunately to the UK. Things go wrong – the trick is how you deal with it." Sir Fred Goodwin would be advised to take note.

Saturday, March 28, 2009

Law Society of Scotland fumes over Abbey ditching 7000 panel solicitors in cost cutting move

The decline in the housing market has hit the legal profession in many ways, but now there is a double blow as Abbey, the mortgage lender, has dumped some 7000 solicitors across the UK including Scotland from their conveyancing business.

Letters received by solicitors, reports the BBC went something like this : "Given the low volume of transactions dealt with by your firm during the past 12 months, I regret to inform you that your panel appointment has been revoked with immediate effect"

The Law Society of Scotland claims it will damage the consumer, damage home buyers, and damage competition in the market, but in truth, the solicitors were sacked by Abbey for simply not doing enough work for the money … (even banks have to cut costs in a recession to survive, so maybe the solicitors should have charged less to stay on the panel ? – Ed)

You can read the Journal Online’s version of the story with some desperate sounding quotes from Law Society officials HERE

BBC News reports :

Abbey in snub to 7,000 solicitors

Abbey has told 7,000 local solicitors it will no longer let them handle the bank's side of the conveyancing process when they act for house buyers.

The Law Society has protested to the bank, describing its move as "grave", and is in talks with Abbey.

It means house buyers will have to pay the cost of an extra set of solicitors to look after the lender's interest.

The bank says the solicitors have not been doing enough work for it during the past 12 months.

The decision to ditch the firms from the bank's "panel" of approved solicitors came out of the blue last week.

"Given the low volume of transactions dealt with by your firm during the past 12 months, I regret to inform you that your panel appointment has been revoked with immediate effect," said an Abbey letter to one firm of solicitors in Fleetwood, Lancashire.

Extra costs

Normally, solicitors on the approved panel of any lender would act not only for the buyer who was taking the mortgage, but would be relied upon by the lender to look after its interests in the deal as well.

That would mean ensuring the mortgage money was passed to the seller or their solicitor, and ensuring that the bank's mortgage was registered as a charge on the property at the Land Registry.

If a buyer now chooses a solicitor who is not on Abbey's panel, then the bank will insist on another firm of lawyers being involved just to look after its side of the paperwork, with the extra costs being paid for by the borrower.

That could add an extra £200 to £250 to the legal costs involved.

Worried

The Law Society is trying to persuade the bank, one of the UK's biggest mortgage lenders, to change its mind.

The Society's president, Paul Marsh, said neither the Council of Mortgage Lenders nor the Building Society's Association was aware of Abbey's decision before it was announced.

"I want to assure all members of the grave importance that we attach to this matter and the actions of the Abbey National," he wrote in a letter to solicitors.

The Society said it was particularly worried about the impact on the business of small firms.

"We have written to a number of firms that have undertaken few or no transactions with us over the past year to advise them that we will be removing them from our panel," said an Abbey spokesman.

"We have put in place a process to deal with requests for reinstatement and each request will be evaluated on its merits," he added.

The slump in the property market, which has seen sales slump by more than half in the past year, has already led to hundreds of solicitors being made redundant by the conveyancing departments of some of the UK's biggest solicitors' firms.

Medical negligence soars in Scotland as NHS pays out £5.25million for birth error case

Scotland has seen its biggest NHS payout for medical negligence which is on an increasing trend in Scotland.

While the NHS paid out £5.25m in this particular case, you can bet a substantial amount so far undisclosed went on legal teams attempting to defend against the action and defeat the family’s claim, who apparently spent years battling for compensation …

The Herald reports :

NHS pays record £5.25m for birth blunder

Exclusive by MARTIN WILLIAMS March 27 2009

The family of a boy left severely disabled at birth by a hospital blunder has received £5.25m in Scotland's biggest NHS compensation payout.

News of the award comes as new figures provided to The Herald show that clinical negligence payouts have reached epidemic levels in recent years, rising six-fold in just under 10 years.

The latest payout is at least £1.3m more than the total annual negligence bill for the whole of NHS Scotland for each year between 1997 and 2001.

Compensation claims in Scotland have totalled a staggering £37.5m in the last two financial years.

The boy's family had battled for years for compensation for their son, who is now aged nine, after they made a claim against the former Argyll and Clyde Acute Hospitals NHS Trust.

The record award was made by the two health boards, NHS Greater Glasgow and Clyde and NHS Highland, which took over the defunct board's responsibilities.

Details of the boy's case only came to light when his family made an application to the Court of Session for the release of £500,000 of the payout to buy a suitably adapted house.

It has led to new concerns about the number of negligence cases that are being dealt with out of court, ensuring there is no public explanation of what happened and what lessons could be learned from any mistakes made.

In 2007 the NHS in Scotland paid out a record £23m in compensation payments because of medical blunders. It amounted to two-and-a-half times the previous record paid out the year before, described then by the Scottish Government as "exceptional".

In 1997/98 the total paid out for clinical negligence by all health boards in Scotland was just £3.5m. It fell to just under £3m in 1999/2000, before rising to just under £4m the following year.

The sums paid out began to rise over the next few years, with annual payments totalling around £9m until 2004/05.

In 2007, some 9123 people were injured or killed by NHS staff error.

The burden of the £5.25m payout will be shared between NHS Greater Glasgow and Clyde and NHS Highland.

The sum eclipses the £3m handed over by NHS Tayside in what is now the second-biggest compensation payout for medical negligence.

NHS Greater Glasgow and Clyde would not provide full details of what happened or say whether an investigation was carried out.

The trust released a short and carefully prepared statement in response to The Herald's questions. It said: "I can confirm the NHS has made an out-of-court settlement to the family following the claim against the former Argyll and Clyde Health Board regarding the very sad circumstances that surrounded the birth of the family son in 1998."

No official from NHS Highland could be contacted.

Prominent legal experts say they are not surprised at the rising number of negligence payouts and believe there are more to come.

One lawyer, who asked not to be identified, said: "All the negligence claims I have dealt with involving a health board have all at some point ended up being dealt with out of court. It is all so predictable.

"Either the family involved gets cold feet because they feel there is too much risk and they cannot afford to take it all the way, or the health board settles before the case ever comes to court."

An interesting Editorial on Medical Negligence from the Herald also accompanies the above article :

Medical negligence

Money can never truly compensate for a catastrophic injury caused by avoidable medical negligence, but it can make a world of difference to the quality of that person's life. Today The Herald reveals that Scotland has witnessed its largest ever payout to a boy left severely disabled after a medical blunder during his birth: £5.25m.

However, while the total paid in medical negligence settlements has risen six-fold in recent years, Scotland still lags a long way behind England in the number and level of payments. The notion of Scotland as a "compensation culture", with "ambulance-chasing lawyers" bringing opportunistic actions is a myth. In fact, recently the number of claims north of the border has fallen and total expenditure is only rising because of a handful of very serious cases, predominantly children with cerebral palsy and requiring lifelong round-the-clock care.

Why is the level of compensation south of the border more than four times higher per capita than in Scotland? In England, the shrinking of the legal aid budget has led to the rise of the "no win, no fee" negligence case.

In Scotland, however, pursuers are reluctant to use this mechanism because the cost of insuring against losing such cases is not included as part of the settlement.

Not that no win, no fee offers any sort of panacea. Recent publicity has revealed that the fees charged by lawyers often account for more than half of the settlement and sometimes bear no relation to the work actually done. This is not merely distasteful. It is against the interests of taxpayers. The NHS budget should be paying for doctors and nurses, not lawyers. The more spent on lawyers' bills, the less there is for treating patients.

In its manifesto, the SNP promised to reform and simplify the payment of medical negligence but may now be baulking at the cost. The favoured model is the one operating in Denmark, which is more like British criminal injuries compensation than the present adversarial system for negligence cases.

It would certainly cost more than the current system, but patients who suffer avoidable injuries at the hands of doctors deserve to be compensated by society. At present, too many of them end up with nothing because of the paucity of legal aid and fear of losing.

Courts will continue to have a role to play in serious and complex claims such as cerebral palsy cases. Many of those who are compensated have to go through a long and arduous ordeal and almost invariably end up with an out-of-court settlement. This is in nobody's interests. It lacks transparency. It encourages a culture of denial and blame. And it is poorly aligned to learning lessons from systemic failures.

For all its faults, the English system involves the early sharing of relevant information between pursuer and health authorities. This results in more cases being dropped at an early stage and also more early settlements. There is no obvious reason why such pre-action protocols could not be employed in Scotland.

Friday, March 27, 2009

Scotland must lift ban on Class Action litigation as European Parliament supports proposals on competition law

As the Dean of the Faculty of Advocates, Richard Keen QC recently said himself, its time for the ban on Class Action lawsuits in Scotland to be lifted.

Although the Dean himself seemed to be more interested in taking on the banks, the long standing peculiarly Scottish prohibition of consumers banding together to take on big business and companies that breach their rights or provide sharp practice in consumer services, should now be at an end.

Over to Justice Secretary MacAskill & Holyrood for some quick legislation to bring Scots consumer protection in line with most other countries … (not ! – Ed)

Out-Law.com reports :

MEPs back consumer class actions in competition cases

OUT-LAW News, 26/03/2008

The European Parliament has backed European Commission proposals that would allow consumers to band together to take action against companies that breach competition law.

The proposals echo some of the attributes of class action law suits, cases permitted in the US in which many people affected by a company's behaviour act together against that company and share the proceeds of a payout.

The Commission's proposals specifically say that they are not intended to create a litigation culture, but say that some action is necessary to allow consumers legal protection against companies which breach competition law.

"[Competition Commissioner Neelie Kroes] shares Parliament's view that collective redress mechanisms are necessary to give consumers and small businesses a realistic and efficient possibility to obtain compensation in cases of scattered damage, and that these mechanisms must include appropriate safeguards against excessive or abusive litigation," said a Commission statement after the Parliament vote.

Parliament had received a report on the Commission's recommendations and backed them by 498 votes to 11, with 17 abstentions.

The Commission's White Paper addresses the problem that competition law breaches often harm massive numbers of people in relatively small ways. The Commission is seeking to punish those breaches without many very small cases having to be brought.

"The European Parliament confirms the Commission’s findings that many victims harmed by EC competition law infringements are currently prevented from obtaining the compensation they are entitled to under the Treaty," said a Commission statement. "The European Parliament stresses that collective redress – with appropriate safeguards – is necessary, and that proposals to help victims gain compensation must not be delayed."

"I am delighted that the European Parliament shares the Commission’s view that something needs to be done to ensure that the victims of competition breaches finally get the compensation they are entitled to," said Kroes. "I am particularly pleased that today's resolution is based on a wide consensus across most political groups."

The Commission said that victims of competition law infringements forego billions of euros a year in compensation payouts because of the ineffectiveness of the law.

The Commission published its plans in its White Paper a year ago, saying that in most EU countries there were barriers to consumers receiving compensation for competition law breaches, such as the abuse of dominant market positions.

"The recommendations balance rights and obligations of both the claimant and the defendant and include safeguards against excesses and abuses of litigation," the Commission said.

“Consumers who are victims of illegal activities, such as overcharging, misleading advertising or outright scams, have a right to compensation," said Consumer Commissioner Meglena Kuneva when the Commission consulted on the proposals last year. "Currently, particularly where there are small scattered claims, this right is often theoretical because of the obstacles to exercising it in practice."

"There is a justice gap, a welfare gap and there are black holes in our redress system that is leaving consumers with nowhere to go. The present situation is clearly unsatisfactory. We must find a way to make the basic right to consumer redress a reality for more people," she said.

The Commission's research had found that privately brought antitrust claims for damages were extremely rare, meaning that companies that had broken the law were not being punished.

It said that it believed collective redress would encourage more cases to be brought.

It is now up to the Commission to decide what steps should be taken next to implement its plans.

Sheriff describes ‘midnight culture' of disorder in Scottish Borders

Sheriff Kevin Drummond, one of Scotland’s more well known Sheriffs, speaks out on the drinks culture affecting youths & young adults in the Scottish Borders, although his comments reflect a 'drinks culture' which also affects the rest of the country as many are aware.

In the interview, BBC News reports the Sheriff “describes it is a lifestyle in which "excessive alcohol consumption, fighting, violence and vandalism" are common features.”

Sadly, long gone are the days of Sir Walter Scott in the Scottish Borders, although even the great author & member of the Faculty of Advocates once had to flee from fighting, after his carriage was stoned in Jedburgh in 1831 (see, its always been like that in the Borders, but that’s why the rugby is good ! – Ed)

BBC News reports :

Sheriff's 'midnight culture' fears

Sheriff Kevin Drummond is at the sharp end of dealing with some of the problems caused by alcohol.

Here he describes the extent of the problem, and his view on what should be done.

Many of the cases in the Scottish Borders which come before the sheriff have a clear link to drink.

It is the number of young people involved in particular which he feels needs to be addressed.

He explains: "I have carried out a pretty unscientific trawl of my own notes and over the past three months almost precisely 80% of the cases which have come through my court have been alcohol-related."

He describes the situation with young people as "pretty depressing" and not only for the criminal consequences.

"We are seeing more and more who are having health consequences at a younger and younger age," he says.

The sheriff believes that is clear evidence that not enough is being done to tackle the problem - despite significant government spending.

"My impression, for what it is worth, is that there is not the public appreciation of the extent of the problem," he says.

"It is a serious problem in our communities."

Sheriff Drummond uses the term "midnight culture" to sum up the way of living of many teenagers and young adults.

He describes it is a lifestyle in which "excessive alcohol consumption, fighting, violence and vandalism" are common features.

"We need to do more to help to try to assist our young people in getting away from the problems of excessive alcohol consumption," he says.

'Sufficient resources'

He feels it is easy to believe that people could solve their own problems if they wanted too.

"There is probably a perception that somewhere out there there are more than sufficient resources or more than sufficient agencies to be able to deal with these problems if people want to take advantage of them," he says.

"Experience tends to suggest that that is not the case."

He is even aware of cases where people have committed crimes in order to "leapfrog the queue" to get treatment for their alcohol problems.

The only answer, he believes, is offering more assistance - particularly for young people trying to tackle their drinking.

Otherwise, his court is likely to be dealing with the consequences of the issue for some time to come.

RBS auditor Deloitte receives £58.8m fees despite bank’s collapse & taxpayer funded bailout

Despite the almost collapse of the Royal Bank of Scotland, due to the bad decision making by the board and its advisers, Deloitte, the auditor to the RBS has received £58.8million, a rise of £27.4million on the previous year …

Sounds a bit odd, yes ? Auditors of a collapsed bank receiving a massive hike in fees while the British taxpayer is forced to bail out the bank ? (yes, very odd … money for old rope & a banking failure ? – Ed)

The Herald reports :

Auditor of RBS receives £27.4m rise in fees in same year UK taxpayer rescues bank

Ian McConnell and Michael Settle

THE auditor of Royal Bank of Scotland received a £27.4m hike in its fees in the year in which the UK taxpayer had to rescue the Edinburgh institution from collapse.

The jump in fees paid by Royal to accountancy firm Deloitte, from £31.4m in 2007 to £58.8m last year, was revealed with publication of the bank's annual report yesterday.

The annual report also shows that Deloitte, which signed off RBS's 2008 accounts as giving a "true and fair view" and did not qualify its audit opinion in any way, will be proposed for reappointment as auditor at the bank's annual shareholder meeting on April 3.

Deloitte's fees for auditing RBS more than doubled from £17m to £38.6m, with this hike reflecting the accountancy firm adding to its audit work the parts of ABN Amro acquired by the Scottish bank in an ill-fated bid in 2007. Deloitte received additional fees of £20.1m from Royal for other services - up 41.5% on 2007.

In their report on the accounts, Royal's directors justify the preparation of the bank's accounts on a going-concern basis by setting out their "reasonable expectation...that the group...will continue in operational existence for the foreseeable future". They cite the government's backing.

The government took a 57.9% stake in RBS last year, and this is poised to rise to about 70.4% with the conversion of Preference stock into Ordinary shares.

The transfer value of former Royal chief executive Sir Fred Goodwin's pension pot nearly doubled from £8.37m to £16.63m during 2008 alone because of the bank's decision to let him retire at 50 on an undiscounted pension.

Goodwin's pension of £703,000-a-year has incurred the wrath of the public.

Last night, RBS faced another row when its 2008 report confirmed that ex-director Larry Fish retired from the bank on a £1.6m annual pension - the biggest received by a company employee in UK corporate history.

Mr Fish, 64, who stepped down last April after being the head of the bank's US operation, saw his pension pot rise from £17.5m in 2007 to £19.6m in 2008.

The report also confirmed that Johnny Cameron, who retired from Royal two weeks ago, saw his pension pot rise from £931,000 to £1.4m.

Thursday, March 26, 2009

Secret Scotland : Freedom of Information ‘revolution’ will exclude Scottish Government Ministers

The recent review of Freedom of Information legislation in Scotland, and which organisations should also be brought under the scope of FOI is causing consternation among many bodies, for fear they will be revealed to be a complete waste of space & time (we knew that anyway – Ed)

However, the Scottish Government Ministers have decided to exempt themselves from the planned changes on FOI .. so, secrecy for some, not so much secrecy for others (sounds like business as usual ! - Ed)

Ministers to 'free' all information – except their own

Published Date: 26 March 2009
By David Maddox

A REVOLUTION in freedom of information (FOI) could take place in Scotland in the next few months, as ministers mull over responses to a consultation on the issue.

But ministers have no plans to extend the powers to cover their work, and the changes, even though they could transform the way business is done in Scotland, will not lead to a single new line of legislation.

The Scottish Government wants to force housing associations, bodies set up by local authorities such as leisure trusts, contractors delivering public services and companies involved in private finance initiatives all to be subject to FOI.

It is a proposal that has brought dire warnings from business groups and a flood of protest from the private sector during the consultation, which closed on 12 January.

However this extension of FOI powers, which would make Scotland the most open country in the UK, is likely to be introduced without much scrutiny in parliament by using an order made via devolved powers with no new legislation.

The powers to introduce this extension exist under Section 5 of the Freedom of Information Act, although the move would need to be rubber-stamped by MSPs in a vote on a statutory instrument.

Attempts to do something similar with minimum pricing on alcohol caused a storm of protest inside and outside Holyrood, and led to questions over what the purpose of a Scottish Parliament is, if it does not have proper scrutiny and formulate legislation on major changes. But even more eyebrows were raised in the past week after SNP ministers showed no desire to make themselves subject to any extension of FOI.

They rejected a request by The Scotsman for the publication of Cabinet minutes from February, when the SNP decided to drop its election manifesto pledge of replacing the council tax with a local income tax.

This rejection came despite an earlier SNP attack on the UK government for not publishing minutes of the Cabinet meeting where it was decided Britain should go to war in Iraq, ignoring a ruling by the Information Commissioner for England and Wales. In both cases, the reason for refusal given was to "protect free and frank exchanges" between ministers.

The refusal was a marked difference to an exchange during First Minister's Questions a week before, when Alex Salmond responded to SNP MSP Christine Grahame on the issue.

"I certainly agree that this (Scottish] government is much more accountable and transparent than the Labour government in London," he said, to her assertion that the UK government was "secretive".

The Conservative chief whip, David McLetchie, agreed with the ruling, but accused the SNP of "politically cherry-picking" when it came to FOI. "They cannot reasonably expect to extend FOI to the private sector but not to themselves," he said.

Mr McLetchie suggested the SNP was using FOI powers to target groups it disliked politically, especially those related to PFI contracts and those contracting out public-sector work to the private sector.

He said: "While free and frank exchange needs to be protected for ministers, so does commercial confidentiality for companies."

Despite this, Mr Salmond, in his exchanges with Ms Grahame, gave a strong indication that the Scottish Government planned to press ahead with the proposal and implied he had a political motive to do it.

"One matter that is certainly of public interest and should be focused on is the previous excuses for not revealing the full extent of private finance contracts and obligations on the public sector, which are threadbare," he said.

The consultation results show almost universal support for FOI, but each agreement is almost always accompanied with a reason why it should not be extended. Only the Campaign for Freedom of Information Scotland has wholeheartedly backed the move, arguing that local government in particular avoided public scrutiny by farming out work to the private sector.

Businesses and their representatives have led the arguments against the move. Contractors, such as Balfour Beatty, warned the extension would add to costs from extra bureaucracy and raised concerns about releasing commercially sensitive information to their rivals.

CBI Scotland warned that the proposed extension would drive companies away from Scotland, claiming that, if companies were less exposed in England, they were more likely to do business south of the Border.

"An extension of FOI coverage could potentially act as a regulatory deterrent to private-sector contractors," its consultation submission read.

Housing associations and private-sector suppliers said the plans would create a new level of regulation.

The Scottish Government has said it will take its time to come to a conclusion, but the indications are that all the protests will fall upon deaf ears.

Financial woes will put squeeze on public sector

Often the last to be hit in a recession (because they usually look after their own jobs before anyone else, the public sector in Scotland will get a taste of financial hardship too in the coming months & years ..

The Scotsman reports :

Public-sector bodies will have to learn to work together

Published Date: 26 March 2009
By Gary Devlin

THOSE of us who work in and with the public sector have been looking at recent events in the financial services industry and the wider economy wondering how it all went wrong and whether the government response will be enough to put it right.

But watching from the sidelines, there is a danger we become distracted from the potentially disastrous impact the recession, and the government's response, will have on public-sector finances.

The fact is, the huge increases in government borrowing required to bail out our banks, combined with the inevitable recessionary induced reduction in the overall tax take, will mean less money to go round – potentially a lot less.

Earlier this month, this led Steve Bundred, the Audit Commission's chief executive, to speak out and alert local authorities in England and Wales to a potential "financial Armageddon".

This type of alarmist language is rare from such a high-profile figure, but the latest financial projections on public finances show that it is justified.

John Swinney, too, has acknowledged the squeeze on existing finances, forecasting near-zero growth in public sector funding in real terms over the period 2010-3.

Even this forecast is optimistic, however, as it doesn't take full account of the impact of the recession or Scotland's £500 million share of the additional efficiency savings recently announced by the UK government.

In all likelihood, we face a decline in public-sector funding of anything between 2 and 6 per cent. The higher estimate really would represent financial Armageddon.

Public-sector funding is only one side of the story. The public sector also faces increasing costs, from wage and energy inflation to the rising cost of drugs to the NHS.

As an ageing population, we also place ever-growing demands on health and care services, so the full picture is one of funding reductions at a time of increasing costs and increasing demand.

We have to face up to this challenge, and quickly, but the main political parties are currently operating in a period of political uncertainty. Politicians understand the seriousness of the problem, but also recognise that making unpopular policy decisions at a time of minority government and with elections for each of the next five years would be akin to political suicide.

Leadership, therefore, must come from our local authorities and health boards, which together account for more than 70 per cent of public service expenditure. The question is what they need to do to meet the challenge. The answer must emerge from a consensus (from all stakeholders) that the needs of citizens are paramount and transcend the existing complexity of the structures, roles and responsibilities of the myriad of organisations that make up our public sector.

With more than 240 separate organisations currently delivering public services to the 5.5 million people living in Scotland, this has to make sense.

Public-sector organisations must start to work more closely together to drive through change, become more innovative in building services around the needs of citizens, doing that in an integrated manner wherever possible, embracing private-sector practices and provision where it makes sense to do so. They also need to adopt more efficient delivery models and structures to support innovation and change.

Individual organisations cannot achieve the scale of the required reform on their own; they must be prepared to collaborate and relinquish control where it will benefit the needs of the citizen. The scale of the financial challenge dictates that there should be no red lines in transforming how our public services will be provided.

Let us not pretend that the scale of the transformation will be easy; job losses will be inevitable, structures and ways of working will change and public-sector pension arrangements will come under increasing pressure.

The specific challenge for our public-sector leaders is to have a clear vision and strategy that achieves the transformation required, and the courage and conviction to drive through the necessary reform.

• Gary Devlin is head of public-sector assurance at Grant Thornton UK LLP.