Unions Launder Support Via Unity Trust Bank
But Isn't Labour a Bad Credit Risk?
Labour is in dire financial trouble, if it were a business the lawyers would be warning the directors that they were in danger of trading whilst insolvent. In that situation directors become personally liable for a company’s debts, risking the confiscation of director’s assets and criminal prosecution for failing to observe a director’s fiduciary duty. In this time of desperate need they have sought bank financing, primarily from the Cooperative Bank and Unity Trust Bank. The financially strong Co-Op has of course a long history of supporting the Labour party and also owns 26.66% of the small Unity Trust Bank. The remaining 73.23% of the total equity capital of Unity Trust Bank plc is owned by the trade unions and they control the bank's board*. Total equity capital at 31 December 2005 was £16,429,301.
A £4 million pound loan is therefore quite a large risk for a small operation like Unity to make to a near insolvent organisation like Labour. It represents nearly a quarter of shareholders funds in the event of a default. That is not sound business practise. Guido has a few questions for Ian Morrison, Director of Credit Risk & Compliance at Unity:
How the workers pay for Cherie's haircuts:
*Important in this context that we recall how the government gave the unions a new back door subsidy of £11 million.
**£4 million is more than UTB's total after tax profits for 2005.
A £4 million pound loan is therefore quite a large risk for a small operation like Unity to make to a near insolvent organisation like Labour. It represents nearly a quarter of shareholders funds in the event of a default. That is not sound business practise. Guido has a few questions for Ian Morrison, Director of Credit Risk & Compliance at Unity:
- What security has he obtained for the trade union members and charities who have their funds at risk?
- Has a third-party guaranteed the loan? If so, who?
- Are they comfortably within the guidelines for capital adequacy? If so, by what margin?
- How does he evaluate the enterprise risk of such a relatively large** and risky loan?
How the workers pay for Cherie's haircuts:
*Important in this context that we recall how the government gave the unions a new back door subsidy of £11 million.**£4 million is more than UTB's total after tax profits for 2005.
59 comments:
And I thought I'd misheard when someone told me trade unionists were 'all a bunch of bankers'...
First, it is clearly in the interests of the shareholders of Unity Trust Bank to have a Labour Governement so they won't get screwed over by the Tories.
Second, look at the cash cycle. Whilst all the political parties are in debt at the moment from the 2005 elections, all spend far less in non-election years. Labour spend about £18 million on the general election (less than the Tories, mind), but in the preceeding year spend about £3 million.
So over a five-year cycle all political party cash flows fluctulate: in debt after elections, healthy balance in five years' time.
Watch this space by 2010.
Guido, you forgot Question 5: Mr Morrison, when are you getting your peerage?
Ex-banking lawyer in my office, when told about this, was firmly of the opinion that this type of loan from a bank to a political party was utterly improper and that the FSA would be very interested in this sort of thing. Which provokes a few questions:
(a) Are the FSA aware of this?
(b) If not, should they be told?
(c) If told, what will their reaction be?
(d) Will this increase the collar-feeling options on the PM?
(e) Will what-a-non-story, posting doubtless from Labour HQ, end up with egg on his/her face?
(f) Will this affect the ability of the Minister for Fitness to throw shapes on the dancefloor (and indeed, what will end up on *her* face)?
The mind ... boggles.
And Gordon the Grabber told us to embrace Prudence!
The whole thing stinks. This is a rotten government. They care not for their fellow citizens
but just for themselves, pals and power.
When they are removed, which they will one day, and the books are examined (IF they are not shredded)I am sure a massive fraud will be exposed. Blair will be in the USofA and untouchable and Brown and the others will claim 'They only followed orders!"
Perhaps each one of us should send an email to the FSA and ask them to investigate this.
also important is how national assets where sold off by thatcher and major to their mates, who later made massive donations to the tory party.
i'm thinking, British oil and petroleum, BT, BR, British steel - or rather British "Steal".
I predict another up coming scandal, as the labour party shed employees due to voluntary redundanc, I would wager that most if not all will end up on the public payroll as "advisors"!?
All of which now pay more in tax per month than they took in subsidies per year
One for the Advances Committee of the Board
"4. Purpose
i) To consider and if appropriate approve requests for new Loans and Advances and renewals of such facilities submitted by the Credit Committee of the Bank and where the aggregate exposure to any customer or group of customers exceeds £1.5m."
So, their exposure to an organisation under criminal investigation is nearly three times that which triggers special scrutiny for any loan or advance.
Was the loan approved at a bi-monthly meeting of the Board or between meetings after the circulaton of the relevant papers ?
A Quorum of only three was needed to approve the loan and one of them could have been from the Co-Op Bank acting under delegated discretion. How many voted on the loan ?
Good luck in getting any answers Guido. Their annual report is plastered with pictures of grinning Labour politicians and trumpets a visit from Ed Balls, quoting with approval a description of him as "the most influential unelected member of the Labour government".
Unelected influence is clearly very important to them.
I entirely agree with Mikey. This arrangement would seem to be in direct contravention of FSA rules (which could result in the loss of Unity Trust Bank's license to operate as a bank, theoreticially with immediate effect) and on top of that, being a plc, the directors of Unity Trust Bank could soon be in court explaining why they disregared their duty of care to their shareholders-- and it does not matter even if all the shareholders were trade unions and agreed to the loan; this is a plc.
To clinch this happening and since the bank is a plc, some helpful person (from CCHQ?) might like to buy one share on the market, then complain to the approriate agencies...
Ho hum... I wonder if what-a-non-story will still be so cocky in a couple of weeks time (Labour Party Conference time, perchance?) about this. It's potentially bigger than loans-for-peerages.
consumerhelp@fsa.gov.uk
Guido,
http://www.unity.uk.com/index.cfm?itemid=3858
Interesting job description
Mr Non-story (above at 11.51am) may well be correct, but you would still expect a risk premium on any loan to such a cyclical business. On a political cycle of 4yrs (NOT 5yrs: 1997-2001; 2001-2005 were 4 yr intervals - go on, count 'em) you're suggesting that Labour run through £24m (let's be generous and assume it rises gently to the figure you give for non-election year spending: £1m + £2m + £3m + £18m) or £6m pa average. If I were Unity Trust I'd be worried about Labour's ability to service a £4m loan.
The interesting thing will be to look at the provisions (if any) in the Unity Trust accounts. The next thing would be to undertake Land Registry searches against Labour Party buildings and see who has been securing charges.
Presumably Unity has shareholder consent to make political donations? Who are their auditors?
The £11m "subsidy" is such a tiresome line. In this context just how much money is given by the government to subsidise business? Why don't you start crowing about that, Guido?
I was wondering why SMILE,the CO-OP`s internet bank put up their credit card interest up by 3% even before the recent BOE interest rise.That was an almost 30% hike on their APR but I now feel bad about complaining so vociferously now I know it was to help shore up a dodgy loan.
I recently asked my trade union why it continues to subsidise a politcal party that`s watched manufacturing industry go down the pan here and actively blocked U.K. workers from getting the same rights as those in the rest of Europe.First time I got a cringeingly brown-nosing letter back from Bill Morris all but calling Blair the new messiah,that one`ll come back to haunt you one day matey,since then my letters and e-mails on the same subject have been totally ignored.
So over a five-year cycle all political party cash flows fluctulate: in debt after elections, healthy balance in five years' time.
Which rather begs the question why did they need the dodgy loans last time around, if the they had a healthy balance?
william norton
On a political cycle of 4yrs (NOT 5yrs: 1997-2001; 2001-2005 were 4 yr intervals - go on, count 'em)
1997 - one
1998 - two
1999 - three
2000 - four
2001 - five
2001 - one
2002 - two
2003 - three
2004 - four
2005 - five
From the inevitable mission statement:
Our Values
"Unity Trust Bank is a socially responsible bank and does not support organisations which are not consistent with the Bank's values. Unity Trust Bank will not work with organisations whose activities are:-
* Illegal
* Contravene basic human rights
* Discriminate on grounds of race, religion, gender or sexual orientation
* Do not recognise the rights of employees or are engaged in unacceptable working practices
* Undemocratic and/or intolerant of other political views
* Support or promote the use of violence or intimidation as a means of achieving their objectives
Unity Trust Bank reserves the right to refuse organisations whose activities fall into these categories."
Yes, Mr Lehrer, satire is still dead.
Horse Badorties
Do you work at the UTB?
Only I would love to invest my money in one of your 5 year savings plans. You know, the one that ends in 4 years time?
a non story.....sorry to say so...though Mr Fawkes knowledge of matters financial is clearly apparent.
From Unity Banks website...
Our Values...
Unity Trust Bank is a socially responsible bank and does not support organisations which are not consistent with the Bank's values. Unity Trust Bank will not work with organisations whose activities are:-
* Illegal
* Contravene basic human rights
* Discriminate on grounds of race, religion, gender or sexual orientation
* Do not recognise the rights of employees or are engaged in unacceptable working practices
* Undemocratic and/or intolerant of other political views
* Support or promote the use of violence or intimidation as a means of achieving their objectives
Unity Trust Bank reserves the right to refuse organisations whose activities fall into these categories.
Hmmmm... surely The Labour Party are in contravention of at least three of the above criteria?
LW was reporting yesterday that there had been a fortuitous purchase of the Old Queen Street HQ:
... for £6m to stave off their financial crisis - but have not divulged who to. LW hears rumours it's been sold to a prominent Labour supporter/donor.
but so far no more details there?
Oh bugger, just noticed sero beat me to it!
BAH!
Horse Badorties
I too would be very keen to invest based on your ability to calculate dates properly.
However compound interest is something clearly way beyond you, just as the compound interst on their loans will be beyond the Labour Party to pay without the brothers bankrolling them.
keen investor/king bongo
I suppose your new millennium started in 2001?
Anon-story 11.51am
"it is clearly in the interests of the shareholders of Unity Trust Bank to have a Labour Governement so they won't get screwed over by the Tories."
The interests of any shareholders are to see a return on capital. A Tory Government could scarcely hamper business profitability more than the current Labour one. Or do you mean it is in the shareholders' *political* interests? The FSA would certainly be interested if that were the bank's agenda.
"also important is how national assets where sold off by thatcher and major to their mates, who later made massive donations to the tory party."
Get back in your Tardis.
"In this context just how much money is given by the government to subsidise business? Why don't you start crowing about that, Guido?"
Certainly a relevant point if those businesses then give the money back via political donations. Nevertheless you wouldn't find the Tories giving money to their backers in the name of "business modernisation".
Well done Guido for exposing this. Unity Trust Bank is just a front to enable the Unions to lend money to Labour.
Does this contravene any Electoral Commission rules?
horse badorties
yes my new millennium (alongside everyone else's) began on Jan 1 2001.
I have just finished teaching my 2 year A level courses - they began in 2004 so, with your logic, they were three year courses
here are the years: count 'em
2004
2005
2006
How on Earth did I manage to squeeze an extra year in? I must be cleverer than I thought.
Please engage brain before commenting in future
You're obviously on to a strong, substantial, and very damaging story Guido; you can tell by the number of Labour lickspittles who are posting comments like, 'it's a non-story', and, 'what about privatisation?'
So it seems that not only power corrupts, but also money. In my opinion, the banking sector is just as untrustworthy as politicians are. For more points of view on banks, there is a blog I read regularly at lifetheloonyverseandeverything.blogspot.com - all banks are just as bad. The real question is though: what is worse? This or "cash for peerages"? NuLab are definitely no longer "whiter than white".
All you non storiers, are you out of your minds?
The party that governs this country (badly)is bankrupt, trading whilst insolvent, and probably implicated in yet more fraud, this time hopefully provable this is a very serious matter indeed, not just for legal reasons but for what is left of our democracy, three main parties that the majority of us cannot be arsed to either join or vote for.
Not healthy.
On a positive note I was pleased to see comrade Dave has jumped onto the Nelson Mandella bandwagon, that twats lack of originality never ceases to amaze me.
king bongo
2004 - one
2005 - two
2006 - three
I figured you were the type of person to miss the fireworks on 1/1/2000 (when nearly everyone else was celebrating) like you missed the original joke!
Engage sense of humour before commenting in future!
Fab story, Guido.
With maths skills like those above, I hope that none of the "Labour lickspittles" (good one, machiavelli) work for the Treasury.
Can I sign up to Horse Badorties 5 year investment plan that matures in 2010?
Anyway keep at this one Guido - stuff like this is more important that Prescott's grubby sexlife yet isn't as headline grabbing so no "newspaper" will push it.
is this the "who can brown nose Guido" competition?
Can a political party go bankrupt like an idividual, or call in the receivers and eventually be wound up like a plc or ltd?
I think it depends on who actually owns the party?
Is there limited liability, or are all individual members exposed to unlimited liabiiity? Or just the 'management'?
What sort of collateral has Unity Trust Bank for its loan? I'd be surprised if any property owned by Labour is not already mortgaged up to the hilt, so what other assets are worth anything as collateral? If the loan is issued without collateral, is that acceptable responible behaviour by the direcors of the bank?
Do you think Jabba has called a COBRA meeting to discuss these questions yet?
Do you think when Tony gets back from his hols, Jabba will have to say (translated from the Hullese) Sorry boss, I dropped the party and it broke into little pieces.
horse badorties
Engage sense of humour before commenting in future!
make comments funny and sense of humour will be engaged.
assertion that I didn't get legless and set off fireworks in 2000 is slanderous. The scorched roof of my garden shed is testament to my firework lighting abilities.
http://www.unity.uk.com/index.cfm?itemid=1006
Unity Trust Bank will not work with organisations whose activities are:- ...
Support or promote the use of violence or intimidation as a means of achieving their objectives
Would anyone with the time and inclination like to check which Muslim organisations Unity may be supporting? If so, would at least one fail the above criterion? Worth a look. Time the moonbat chickens came home to roost, methinks.
Is the Bak aware that Prudence has no knickers?
Of course a loan from a bank doesn't have to be reported.
But, it begs the question as to just how independant are the directors of the Bank making the loan.
As Unity is part of the union empire and therefore allied to Labour it is not independant and this can be seen as corrupt.
Let's call in Knacker of the Yard and the Dept of Timidity and Inaction.
A 4mn loan representing 25% of UTBs shareholders equity to an insolvent coporate (or near insolvent) isn't just unsound business practice, it is potentially criminal. A good read of the Basle II principles and the FSA guidelines will show that the directors of UTB may receive an uncomfortable knock on the door and I hope that all their personal assets are in their wives names! I would be willing to bet a drink or two that the debt has been collateralised against some assets therefore does not break BasleII...have some trade unions provided collateral for the debt? If so then that is a governance issue as the same trades union is a shareholder in UTB providing the loan. Inspector Knacker should be interested in all this, but they are perhaps too busy looking into other NuLab corruption to get around to another episode of dodgy funding. Any Slaughters or Cliffords partners reading this care to comment?
oh another point...if the directors of the bank UTB are not independant of the creditor (Labour) as Penfold succinctly suggests...then Inspector Knacker should investigate under anti-money laundering regs. A 4mn loan to Labour does not have to be reported under party finance law, but a 4Mn cashflow (however phased) does have to be reported by the remitting or clearing bank under anti-money laundering and prevention of organised crime law....
'Can a political party go bankrupt like an idividual, or call in the receivers and eventually be wound up like a plc or ltd?'
Yes, then change it's name and move on to a new territory I guess. Hang on didn't this happen in 1994?
I think what will happen is that the backers in the city and especially in Hedge Fund Alley will pledge allegience to the tories once they have negotiated party policy.
Then again given the animosity between the city and Hedge Fund Alley the city might save their cash and Hedge Fund Alley get everything they want in exchange for a small payment to tory party coffers.
Or the city might have a big whip around out of their mega-bonuses this year and try to get Hedge Fund Alley screwed with tighter regulation - though I can't see this happening with the current pensions crisis.
'...wound up like a plc'? No chance. Labour will force through state funding of parties 'in the name of democracy'. Hang on to your wallet.
I hate the Labour party as much as the next man but this story is rubbish. UTB have £466m under management. Banks only have small amounts of equity compared to the amount they put out because thats what banks do. This loan is under 1% of their protfolio - The charity I work for banks with Unity and they are a first rate bank, much better than the big four. Why is it surprising that a trade union bank lends to Labour just like the city lend to the tories. All we need now is a Lib Dem leaning financial institution -or maybe not after the michael brown thingie!
The key to this could be how a "trade union" is defined.
If as I suspect, it is a "mutual society" as is the Co Op, then surely the members of either of those mutual societies have potentially been defrauded?
If a director of HSBC or HBOS were to make an uncommercial loan to a charity they happen to think worthwhile or an organisation they happen to have a financial interest in, I dare say they would have their collars felt.
The Conservative party will will be giving this a wide berth as they are up to their necks in sleeze.
Norman Baker, another stab at the establishment?
This story will never make the BBC or any parlimenary watchdog - one more financial scandal and it's curtains for Bliar and we'll have to fund them out of general taxation.
Is there a freudian reason why none of you can spell 'independent'?
£466 million under management? That is other peoples money, not UTBs you idiot.
Their shareholder funds and retained profits are all they have to support any losses.
This is sleaze and is no surprise is it? Be honest, who is surprised? The FSA should know about this, and undoubtedly do, but will do nothing.
Beat me to it moonbat baiter, lol.
As to the calculation of years...are you for real? Shall we make it simpler? Here goes: 1997-1998 = 1 year....with me? 1998-1999 + the previous one year = 2 years...still with me? 1999-2000 + the previous 2 years = 3 years...now concentrate. 2000-2001 + the previous 3 years = 4 years...now wasn't that painless? 1997 -2001 was four years and not five.....I theeeeeeenk yooooo. (must have done his A level maths under NuLabs curriculum)
The FSA's rules (section LE in the FSA hand book if you're interested) require
(1) quarterly reporting to the FSA of ALL individual exposures in excess of 10% of the Bank's capital base
(2) pre-notification to the FSA of any individual exposure greater than 25% of the capital base and
(3) limit the sum of exposures of 10% or more to a maximum of 800% of capital base.
Capital base is - broadly - share capital and premium, retained earnings and certain long term debt funding.
On the face of it, this loan would require reporting and possibly need prior notice. It is possible, however, that it is covered by a guarantee from the Co-op bank; while still requiring prior notice to the FSA, this would reduce the risk of grief from the FSA.
There is also a 25% capital base limit on "connected exposure" i.e. loans to persons connected to the bank. I would suspect that a loan to the Labour Party might fall foul of this as well but there probably several loopholes.
It would be interesting to take a look at UTB's Large Exposures return to see what is disclosed.
A"nonymous said...
is this the "who can brown nose Guido" competition?"
Yet another leftie upset because Labour have been caught out?
I have just emailed whistle@fsa.gov.uk
Guido be prepared for a phone call from the boys in the white shirts.
*In joyful anticipation, makes self comfy and opens popcorn*
Just canceled my amicus membership - I work in service sector and was part of the unfi trade union until it merged. Recieved a letter from amicus asking whether i wanted to be part of the political fund - They enclosed an exemption form - no pre-paid envelope or mention i note!!!
As i am a member of the tories and the amount of union dues did not alter whether you were paying into the political fund or not i thought sod them!!! My money is not going to finance labour - blair can rot in hell!!!
as I understand it you support a Party which exists for rich people to help rich people and is led by an Old Etonian twat? New Labour may be bad, but only because they seem to aspire to be like you lot. As a trade unionist (are you?) and a worker (are you?) I am happy for my union to make democratic decisions about how to support political action in our interests.
Still I am glad to see that Tories can do a good blog about tittle tattle and gossip. You just don't really get politics do you?
Nevermind keep trying :)
No i get politics- just not a dogmatic prick like you!!!
I was a member of a trade union and yes i do work. But i do not support the current government as they are a waste of space. P.s. I would not have a picture like that next to your comments as i want to punch your lights out! You have one of their faces.
The question is why is the sub the same if you do not want to contribute to the labour party as if you did. Maybe it's me been stupid, maybe they just loan them the money.......returning favours- in this case not peereges but money for access to learning???!!!
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