20140416 A stranger in my own land

I’m in the UK. It’s surprising how quickly one becomes an alien in one’s own land: putting petrol in a car at a Sainsbury’s filling station, I stood trying to work out where to put my card for prepayment. Then I found the sign: “at pump payment coming soon.”

The sign reminds me how retarded so many things have become in the so-called first world as the developing world capitalises on recently developed technology without having to consider sunk cost.

Presumably, this is cyclical: as developing countries buy or develop today’s tech, the older tech in the developing world will reach the end of its life cycle and will be replaced with the latest which, at that point, the developing countries will not invest in because they have so recently invested so much in what was then new stuff.

It’s like I recommended in Beijing in 2001, speaking to senior bankers, representatives of the central bank, regulators having been invited by the chap who would, not long afterwards, head the banking regulator: I pointed out that the banking system had a tremendous opportunity to jump paper-based payments such as cheques and move straight to the latest secure (insofar as any are secure) payment card systems. China did, indeed, jump to chip and pin – a move that the USA is still dithering over. On the internet, Americans complain that some Chinese shops don’t know how to process their non-chip cards.

Driving around the UK, I’m reminded of how, 40 years ago, country lanes were a source of pride for local councils: trees were clipped and verges trimmed, roads were immaculate and, in summer, in some counties, surfaced with gravel that sunk into soft tarmac providing a perfect surface.

None of that happens now: the trees are ragged, the verges are not maintained, the roads are potholed and showing signs of digging up for pipework after which there is a lumpy patchwork of non-matching tarmac that throw cars, and more dangerously motorcycles, off-line.

It’s ridiculous to me that I can drive around country roads in supposedly backward Malaysia that are in much, much better condition than the country roads in the UK.

And as developing countries invest in light rail and other services, the UK undertakes review after review of airports while presuming that expansion of capacity at one hub is the only solution: it’s not.

Sensible proposals to remove freight from LHR to e.g. Manston are dismissed, with the prospect that Manston, only recently commissioned as an international airport, might be turned into a housing estate in an area where there are no jobs for the people who live there to do.

A single, high-speed rail link from London Gatwick via Heathrow to Stansted, perhaps with a spur to Luton, would release more capacity than even the most pessimistic projections say are driving the demand for a new runway in West London.

Much of the developed world criticises countries in the developing world for censorship and control of the media yet it is becoming clear that developed countries are guilty of much more than control – they are guilty of manipulation and subversion.

Equally, there is criticism of developing countries in respect of the lack of independence of the judiciary while developed countries have adopted measures of control that are at best insidious and at worst corrupt. As, now, an outsider, it seems to me that, in the dozen or so years since I left, UK governments have spewed forth a diatribe of “transparency” and “moving forward” while hiding their actions and adopting regressive policies.

What I do for a living, developing risk management strategies that go beyond the immediate question of compliance, inevitably raises questions of politics.

For example, it was me that pointed out almost 20 years ago that the primary purpose of the FATF was to control tax evasion.

The public focus on, then, drugs trafficking was important but it was a smokescreen, a device to bring in means and methods to control tax evasion. It was always going to be thus: members of the FATF are, mainly, represented by Treasury departments.

Don’t get me wrong: I’m all for effective control of tax evasion, and even more so for targeted investigations and prosecutions.

What I’m against is governments using subterfuge to obscure what they are doing.

If the FATF is instrumental in harmonising the way that intelligence is gathered in relation to all financial crime, including tax evasion, that is a very good thing.

Note, however, that I am not saying that the FATF should be instrumental in harmonising tax regimes: I stand firmly in the camp that taxation is a sovereign issue and that countries should not be bribed or, worse, coerced into creating a specific tax regime because others want them to.

Since the arrival of the Labour government in 1997, and under successive governments including the rather schizophrenic Conservative-Liberal Democrat coalition, there has been a wilful policy of equating tax evasion with tax avoidance with those who avoid tax being harangued as failing to “pay their fair share.”

This is nonsense: those who earn more do not consume more state resources – in fact, they consume far less because they use private education and healthcare, they will use private pensions, healthcare and their accumulated capital to pay for the expenses of old age. They do not receive benefits.

The higher paid pay more in indirect taxes because their expenditure is, proportionately, slewed towards more expensive goods and services and therefore ad valorum taxes per purchase are higher. Often they drive bigger cars and commute over longer distances therefore paying more taxes on the fuel they consume. And they pay more tax on car ownership because they drive bigger cars.

The UK media is on the attack: it’s been found out as being, not to put too fine a point on it, behaving in ways which are criminal and despicable.

And in their defence, they are releasing more and more information that shows that governments have done the same.

A large report in The Daily Mail, a tabloid, details how, for several decades, successive governments used the security services (“MI5”) and special branch, plus “D Notices” (orders addressed to newspapers that they must not report specified matters) to routinely prevent investigations into and prosecutions of extensive child abuse by Cyril Smith.

Smith, a Liberal MP, got onto the boards of child-related institutions and used the access that gave him to commit homosexual abuse on children over a period of decades. Politicians of all colours colluded to ensure that Smith was never formally questioned much less prosecuted. Like so many other criminals, he disguised his crimes behind a façade of apparent good citizenship.

A recent case in which a school teacher was found to have images of extreme child pornography on his computer raises questions of how judges are influenced.

At first instance, the man was sentenced to 18 months in jail: the judge found that the offence warranted a three year sentence but gave him a 50% discount for pleading guilty and because of “mitigating circumstances.” Those mitigating circumstances are not clear but it’s difficult to see what excuse there can be for such conduct: surely if there is any offence that deserves zero tolerance, it’s child abuse and those who trade in such pornography are the financiers and facilitators of such abuse. Even so, he appealed and the Court of Appeal found that the starting point should have been 18 months, therefore his sentence would be reduced to 10 months.

Who is telling judges to go light in cases of child abuse? For sure it’s not society at large and it’s not the police / prosecutors who want them locked up for a long, long time.

A politician makes dishonest claims for expenses: instead of being prosecuted, she is excused and even supported after paying back the money she had obtained by deception, the classic definition of fraud. But she’s guilty of much more: she’s guilty of abuse of public office. Or she would be if someone wasn’t protecting her from prosecution.

A man is found to have identified a hole in the railway ticketing system that allowed him to travel without any official ticket inspection for a portion of his daily commute. He’s an officer of a hedge fund, it is reported, but his identity has been kept secret. Why? He’s committed the offence of travelling without a ticket and he’s still managing other people’s money. Why?

There are other things that disturb me about the UK: one is the state of the BBC.

It’s supposed to be the beacon, setting standards to which all other broadcasters aspire, especially in news. For some time, the standard of English has been slipping but, even allowing for that, we have been able to rely on it for accuracy. But no more.

In a recent report on the disappearance of Malaysia Airlines flight MH370, a reporter in Sydney said that the water at the current search site was “four and a half thousand kilometres deep.”

Are there no editors watching? Is there no one listening to what he says and correcting such patent nonsense? Seemingly not.

It appears that facts, grammar, vocabulary and even making sense have been pushed aside in the drive to the bottom, where news is entertainment.

It’s a disgrace that the one broadcaster that has, historically, been the one people all over the world can turn to for correct and timely information has been taken over by those for whom getting something on air first, meeting the “news agenda” and being “entertaining” (as BBC News jobs advertisements say) is more important than waiting a few minutes to ensure that what is broadcast is both correct and authoritative.

Close monitoring of broadcasts in countries accused of censorship is, seemingly, more likely to result in correct, if biased, reporting.

The UK has become a country for the very rich and the very poor: those in the middle struggle as inflation, taxes and lack of decent services render them tomorrow’s poor.

The failure of successive governments to sort out the Ponzi scheme of the state pension has resulted in those expecting to start receiving a pension at 65 being told that it has been postponed and that, even then, it will not be enough to pay basic bills.

As a result they will have to resort to capital or to benefits.

The lie that workers have been sold since the 1940s is still perpetuated. The lunatic idea that the best plan is to increase the workforce of non-retiring age won’t work and it will make the problem grow. It’s time that, for new entrants to the workforce, the fallacy of the public scheme is set aside and that the UK adopts a personal account system such as works just fine in both Singapore and Malaysia.

There, the equivalent of national insurance goes into a personal scheme, not into the public pot to be plundered by politicians at will.

It’s amazing to have to say this, but the UK is in a shambles and some countries that have been independent for only a few decades have a better handle on many things than the UK. The UK needs to take a clean-sheet look at some of its issues, including its taxation and benefits structure. And it needs to focus on manufacturing. The country cannot survive on service industries and tourism alone.

The dire state of the UK’s service industry is shown by the frequent news of the closing of law firms, some of them very big firms. And in the past few days there is news that, just as in the recession of the late 1990s, City firms are calling on both equity and salaried partners to inject capital to keep them afloat. Last time, that ended badly for a number of firms when salaried partners realised they could set up their own boutique firms for less than the amounts they were being called upon to inject.

Tourism can’t work when the biggest disincentives to travel are the cost of travel. Ridiculous taxes on air fares, lunatic fuel prices for cars, prohibitive standard rail fares militate against anyone going anywhere. Filling my father’s Dinky Toy sized Toyota cost four times more than filling the Nissan barge I drive in Malaysia – and the tank on the Toyota is much smaller. How can that be sensible when the government is building housing more than an hour and a half’s drive from the largest centres of employment and rail fares cost almost as much per day as an average Malaysian worker earns in three days? How can the UK imagine that it can be cost competitive?

The UK needs to take a fundamental look at how it is structured. Taxes need to be reduced, so do duties on e.g. fuel.

The bottom line is simple: there are millions of people being driven into debt, or deprived of things that those in developing countries see as basic. When that happens, history shows, some people turn to crime. Some turn to burglary or other violent crime, some turn to economic or financial crime and some turn to tax evasion.

And that, simply, is why what I do is political. How can we act to detect and deter crime that governments are by a range of crazy policies encouraging?

And, equally, as I note in “Understanding Suspicion…”  how do we encourage those who know the circumstances in which some crimes are committed, to not say “I can understand it, so I’m not going to report it?”

© 2014 Nigel Morris-Cotterill
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