No Questions Asked : Why were UK Local Authorities so keen to invest in Iceland’s Landsbanki Bank ?

Judgement lacking : Tory-Libdem controlled Scottish Borders Council invested & lost millions of pounds of taxpayers money in Icelandic Banks with links to Russian organised crime gangs. In the wake of a distinct lack of political will to ask tough questions of local authorities up and down the land, particularly in the case where millions of pounds were lost in now bankrupt Icelandic banks by Scottish Borders Council, renowned Scotsman journalist William Chisholm, who was awarded an MBE for his services to journalism and is now retired, asks why were the UK’s local authorities so eager to invest in a bunch of dodgy banks in Iceland, some of which appear from other online sources & reports, to have enjoyed connections to & investors from, the Russian mafia.

WHY WERE UK LOCAL AUTHORITIES SO KEEN TO INVEST IN ICELAND’S LANDSBANKI BANK?

By William Chisholm.

A total of 91 UK local authorities and other public bodies have claims in excess of £400 million against Landsbanki Bank in its winding up in Iceland. Between 5th May 2006 and 25th July 2008 my local authority (Scottish Borders Council) deposited a total of £58 million in Landsbanki in 31 separate transactions. These were short-term deposits. When Landsbanki went bust in October 2008 my council had £5 million of council taxpayers’ money trapped in the bankrupt bank.

No-one seems able or willing to produce copies of the credit checks and background checks made on Landsbanki, its owners and its executives before many of this country’s local councils rushed headlong into a multi-million pound gamble with council taxpayers’ money. Why did none of the highly paid officials in charge of treasury management or the specialist advisers such as Butler’s – Scottish Borders Council’s advisers - know about the serious flaws in the management and make-up of Landsbanki as outlined in the report below? Questions were being asked about this bank as early as 2005. It had only been “privatised “in 2002, so surely extra safeguards should have been sought before any money was deposited.

Landsbanki’s new owners from 2002 were father and son BjorgolfurGudmundsson (BG) and Bjorgolfur Thor Bjorgolfsson (BTB). They were joint owners of Samson Holding Company, the largest shareholder in Landsbanki.

If Scottish Borders Council’s treasury management team (or any other council’s finance officers for that matter) had run a check on BG they would have discovered that after amassing his vast wealth from shipping in the 1980s he faced 450 charges relating to the 1985 collapse of a shipping company. He denied the charges, claiming they were politically motivated.

But a few years later he was convicted of five bookkeeping (surely a vital requirement when running a bank) offences which carried a 12-month suspended prison sentence. After that conviction BG left Iceland for Russia where he founded the Avion brewery in St Petersburg.

When BG and BTB returned to Iceland from Russia they had sold their brewery to Heineken for $400 million. It is claimed that when in Russia they had to make a deal with the Russian mafia in order to survive. In a radio interview in Iceland BG said that they had made a deal with the Russian mafia which meant they had to pay mafia members “a protection fee” as a part of running the brewery. Apparently this is normal practice in Russia.

The acquisition of Landsbanki allowed father and son to make full use of other people’s money. It is now clear beyond question that money deposited with Landsbanki funded massive loans to BG and BTB via companies they controlled. So that is where Scottish Borders Council’s money went along with deposits made by other local authorities.

The father and son also had the luxury of being able to channel money into two off-shore companies owned by Landsbanki which were conveniently based in the British Virgin Islands. The assets of these two companies represented 13.2% of Landsbanki’s shares by 2006.

By the time of Landsbanki’s collapse in October 2008 the money owed by the pair to their own bank was phenomenal. The eye-watering statistics are contained in a report prepared for the Icelandic Parliament by a Special Investigation Commission (SIC).

There were sizeable loans to both BG and BTB and companies they owned like Eimskip which BG controlled. These loans amounted to 850 million Euros from mid-2007 alone. And just before the collapse of the bank Landsbanki extended a loan to BTB for 153 million Euros. This brought the total debts of BTB and related companies to Landsbanki to almost 1 billion Euros in October 2008.

In a letter dated 22 March 2007 Iceland’s financial watchdog (FME) reached the conclusion that Landsbanki’s exposure to BTB and related parties amounted to at least 51.3 billion Icelandic krona (ISK) or 49.7% of the bank’s equity at that time.

But BG was also looking after at least one other member of the family. Landsbanki loaned just under two billion ISK to employees and their holding companies. Around 40% of those loans went to GudmunderPeturDaviosson. He just happens to be BG’s nephew. The loans to Daviosson and his holding company Brimholt totalled just under 800 million ISK by the end of September 2008.

Landsbanki –like every other bank – liked to make lavish bonus payments to its top staff. In the autumn of 2007 bonus payments to security brokers totalled 194 million ISK but the department’s earnings for the same period were only 178 million ISK. Was anyone in the UK checking Landsbanki’s accounts on behalf of those UK local authorities who were depositing vast sums of money in this bank? It would appear not, for many councils continued with multi-million pound transactions well into 2008.

On 30^th September 2008 – just a week before Landsbanki collapsed – the bank granted that loan of 153 million Euros to BTB. According to the SIC report: “It is therefore apparent that the principal owners of Landsbanki were not interested in or capable of helping the bank out of the difficult situation that had arisen.”

Previous coverage of Scottish Borders Council’s Icelandic Banking losses can be viewed on Scottish Law Reporter here : Icelandic Banks and Scottish local authorities losses - The story so far

Justice Secretary MacAskill opens legal ‘charity’ LawWorks Scotland in tie up with Musselburgh CAB, complex cases & picky clients to be passed over?

Providing pro bono access to justice for people is fine as long as it doesn't involve suing public services, hospitals who commit medical negligence, accountants who cook the books, or possibly even your own lawyer who makes off with your loot, all of which are subjects which may be off the scale of free advice offered by legal ‘charity’ LawWorks Scotland, whose first legal advice clinic was opened by the Cabinet Secretary for Justice Kenny MacAskill in Haddington today, Monday, 26 September.

LawWorks Scotland was launched earlier this year to promote and facilitate the provision of pro bono services by the legal profession in Scotland, with its first legal advice clinics taking place last month at Haddington and Musselburgh Citizens Advice Bureaux.

The new LawWorks Scotland clinics have opened with support from Shepherd + Wedderburn, one of the charity's founding member firms.

Justice Secretary Kenny MacAskill said: "Providing access to justice for people who need it remains a priority for the Scottish Government and I am delighted the first LawWorks Scotland Clinic is now up and running in Haddington.

"This clinic will provide pro bono legal advice to people in a range of circumstances, including in relation to matters such as housing disputes, consumer issues and debt. Practitioners around Scotland have already signed up and I encourage others to follow their example, to help ensure quick, accessible advice is available for those in need."

The charity's chairman, Ian Moffett, said: "We are delighted that the Justice Secretary is supporting LawWorks Scotland and will officially open the new East Lothian clinics.

"We have been very encouraged by the support we have had so far from the legal profession. By continuing to work with front line agencies, such as Citizens Advice, we hope to build upon the success of these clinics and attract more law firms to work with us to develop a network of similar clinics across the length and breadth of Scotland to respond to a presently unmet need.

"While LawWorks Scotland is at an early stage, we have made great progress since our launch in March which was supported by our patron, former Lord Advocate, Dame Elish Angiolini. An increasing number of leading law firms have signed up to join LawWorks Scotland, which in addition to providing them with a tangible expression of their CSR commitment, makes a difference that counts on the front line. It's our aim to emulate the success of LawWorks in England and Wales which has seen many of the bigger firms sign up to the scheme."

Cameron Ritchie, president of the Law Society of Scotland, said: "The new LawWorks Scotland clinics shows real progress in the charity's ambitions. The Society is very supportive of LawWorks Scotland and providing pro bono legal advice to those who need it is a deep rooted tradition within the Scottish legal profession.

"While LawWorks Scotland's work can never be a substitute for a properly funded system of legal advice, the reality is that there will always be cases and situations which are not covered by the legal aid system. Solicitors working through LawWorks Scotland will play a vital role in plugging this gap, meeting the needs of those who require legal advice and widening access to justice."

Secret Sectarianism in Justice System ? Public Petition ‘was dumped’ by Holyrood MSPs to give Scottish Govt anti-sectarian bill an easy ride

MSPs closed sectarianism-in-justice-system petition so Scottish Govt’s anti-sectarian-at-football-matches bill faced less questions. LEGAL INSIDERS have today alleged a public petition lodged at the Scottish Parliament FOUR YEARS AGO by a retired businessmen, calling on Holyrood MSPs to “investigate and establish the reasons for the apparently disproportionate number of Catholics in Scottish prisons” may have been dumped on orders from the Scottish Government so the new anti-sectarian legislation currently being considered by the Scottish Parliament’s Justice Committee would not have to face questions the Justice system itself and many elements within it including the Police may be subject to sectarian elements.

Sources close to the Scottish Government indicated the petition in question, Petition PE 1073 which had been considered at numerous meetings of the Scottish Parliament’s Petitions Committee since first being lodged on 14 September 2007, gaining 131 signatures and significant levels of written representations had become a thorn in the side of the latest version of the current anti-sectarian bill, the Offensive Behaviour at Football and Threatening Communications (Scotland) Bill which is now going through the Justice Committee, principally being aimed at stopping sectarian behaviour at football matches in Scotland and online bigotry.

Scottish Parliament’s Equal Opportunities Committee ‘given orders' to dump petition to make way easier for Scottish Govt’s own anti-sectarian laws on football violence (click to watch video)

Scottish Law Reporter has already reported on the mess that is currently the Offensive Behaviour at Football and Threatening Communications (Scotland) Bill, where at one stage, it looked like singing “God Save The Queen” would be criminalised, while others wanted the bill to focus on homophobic issues, reported HERE

Sources indicated there was concern “at the most senior levels of the Scottish Government’s Justice Directorate” that a research report which was commissioned for the petition, could put the new bill in a sticky position because evidence from the report appears to suggest the justice system and decisions taken within it, from criminal charges to verdicts, sentencing and imprisonment may have evidence of sectarian bias.

A legal insider said earlier today : “Clearly the very fact the Justice system may itself be sectarian or have sectarian elements within it according to the report commissioned by MSPs, must be raised during the passage of the new legislation, otherwise we are going to be piling a poorly drafted sectarian bill onto a sectarian justice system.”

During the four year term of Petition PE 1073 at the Petitions Committee, msps widened the scope of the petition to include other ethnic minorities, and commissioned research by Dr Susan Wiltshire of the University of Glasgow who produced a final report backing up the petition’s claims. However upon receiving Dr Wiltshire’s completed report, the Petitions Committee considered keeping its findings secret and withholding publication. However, after a private meeting, the Committee agreed to meet again and the report was finally published, four days before Christmas on 21 December 2010.

Dr Wiltshire’s report confirmed there are a disproportionate number of Catholics in Scottish jails, concluding : “There is certainly no available research on sentencers’ attitudes to sentencing faith groups in Scotland, however, the statistics do confirm that there are a disproportionate number of Catholics in Scottish jails, which is especially pronounced in the west of Scotland, and further that this disproportionality is evident in long term sentence length.”

The research, undertaken by Dr Susan Wiltshire of Glasgow University for the Petitions Committee, can viewed online or downloaded from Scottish Law Reporter, here : Offender Demographics and Sentencing Patterns in Scotland and the UK: Research commissioned by the Public Petitions Committee in consideration of PE1073 (203KB pdf)

Participants in the debate on the petition and legal observers had expected the Petitions Committee to send Petition 1073 onto the Justice Committee, particularly in the light of recent events where letter bombs were sent to figures associated with Celtic Football Club amid a rash of sectarian incidents across Scotland.

However, on 28 June 2011, instead of sending the petition onto the Justice Committee, the Petitions Committee bizarrely referred the petition to the Scottish Parliament’s “Equal Opportunities Committee”, who after a brief debate promptly closed the petition, stating : “The Committee noted the findings of recent research showing that more than one faith group was affected in this way and drawing a link to deprivation. The Committee agreed to close the petition and to write to the Scottish Government inviting it to conduct further research on the link between deprivation and regional imbalances in the prison population.”

A legal source commenting on the '”well timed” closure of the controversial petition said : “Well how do you think it will look if some people start asking the judiciary, the Police and the Crown Office why some people who are locked up appear to be there on account of anti-catholic, anti-muslim or some other form of prejudice in the justice system itself ?”

He continued : “It might start to look like people were being prosecuted and judges were locking them up just because they didn’t like their religion or race. It wouldn’t be much good giving the justice system new anti-sectarian laws to throw people in jail if the people in the justice system were already taking decisions on cases based on their own sectarian prejudices, would it. That's why this petition was shut down.”

This past weekend, an interview in the Sunday Mail newspaper reported how a former Strathclyde Police detective was shocked by bigotry in the Police Force. An excerpt from the Sunday Mail article states : FORMER detective Gerry Gallacher yesterday described how he was sickened by a senior officer’s casual bigotry after an Old Firm game. In his book, Gallacher, a Catholic, describes a ­Monday morning briefing at a Glasgow police station after Celtic had won the league in May 2001.

A Rangers-supporting detective inspector announced to the room that there were “a lot of Catholics locked up at the weekend”. Gallacher was disgusted because he worked and played football with the senior officer over many years and did not realise he was a bigot.

He added: “I was also disappointed that no one spoke out at the time. “I don’t care about someone’s religion or orientation, so long as they can do the job. That is the most important thing.”

After the incident, disillusioned Gallacher was granted a transfer to Coatbridge police station, in Lanarkshire. The dad-of-two had declined an offer to join the Masons earlier in his police career. He believes that other officers were promoted thanks to their membership of the secret organisation.

The Vatican has ruled that Catholics should not join the society, which the church regards as un-Christian. Gallacher said: “Some of the best officers I worked with were Masons. “But they do have the power to affect progression in the police.”

Speaking today to Scottish Law Reporter, the Petitioner, Mr Tom Minogue said : “Four years ago today I lodged my petition PE 1073 with the Scottish Parliament to investigate and establish the reasons for the apparently disproportionate number of Catholics in Scottish prisons.”

“I did so because over 6 years before this, in January 2001, Jim Wallace, then Justice Minister, had promised to investigate the anomaly raised by Pauline McNeill MSP that Catholics were twice as likely to end up in prison as their Protestant peers; but Jim Wallace never kept his promise. In the 3+ years that the petition was with the PPC there was little more than an hour of public debate on the petition and it was obvious to see that the members were dealing with an issue they were not comfortable with. It was as if they were handling a parcel of rotten fish keen to pass it on to someone else.”

“The obvious distaste that members of the PPC found in dealing with this topic was exacerbated when the PPC passed the parcel to an expert on the matter, Dr Susan Wiltshire of Leeds University. The good doctor’s diagnosis was that this imbalance might be caused by anti-Irish racism or sectarianism in the justice system and further research was needed to establish the causes. This was too much for the PPC and as a last act in the previous session of parliament and with elections looming they passed the parcel on to the next session of parliament, referring it to the to the Equal Opportunities Committee (EO) instead of the Justice Committee where it should, as a justice matter have went.”

“The EO like their predecessors found this petition a distasteful matter and yesterday after 11.48 minutes (from 48min 15sec to 60.03 on this tape) closed the petition on the basis that the reasons for the petition had been fulfilled. Now perhaps I am stupid, but as the person who asked the question “why are there so many RCs in prison” I cannot see where or by whom this question has been answered. Perhaps the EO committee thinks that RCs have more than an equal opportunity to experience the inside of Scottish prisons?”

“Scotland and our justice system is under world-wide scrutiny because of the bombs sent to Neil Lennon and other Irish or Irish descended RCs and the astonishing jury decision in the sectarian attack on Neil Lennon yet the politicians choose not to examine apparent evidence of societal anti-Irish/RC bias. Instead our last two justice ministers and a host of MSPs keep repeating the mantra “there is no evidence of bias in our justice system” without having the guts to examine this anomaly that their own commissioned expert reported might exist and needed further research.”

“The research Dr Wiltshire suggested might have looked into the membership of organisations such as the Orange Order or Freemasons, groups hostile to RCs and Muslims, among members of our justice system that would explain—or go some way towards explaining—the disproportionate number of RCs in prison. Research might have found that juries are selected from the Old Boys network and this might have explained the Edinburgh jury’s verdict in the Neil Lennon assault case if research found they all belonged to the same lodge.”

“So where do I go from here? I will ask the Convenor of the EO to give me a clear answer to my question in one sentence. “What is the reason for the disproportionate number of RCs and Muslims in Scottish prisons?” I expect to get a long winded answer about criminality in socially deprived areas with large RC/Muslim populations. This will probably lead me on to my next petition; “why are RCs/Muslims disproportionately represented in Scottish slums.” Or “why, one and a half centuries after the potato famine are the Irish Scots still living in slums”

No msps offered comment on the claims in this article.The Scottish Government has also given no comment.

Scotland’s Lord President, Lord Hamilton announces retirement date of 08 June 2012, First Minister goes on-the-hunt for new head of Scotland’s courts

Scotland’s Lord President, Lord Hamilton, has announced he is to retire on June 8 2012. While it is up to the Prime Minister, currently David Cameron to recommend a replacement to the Queen, that person must be recommended by the First Minister, currently Alex Salmond who in turn cannot make a recommendation until the panel constituted to find a replacement for Lord Hamilton makes its own recommendations.

Lord Hamilton was first appointed as a Senator of the College of Justice in 1995 and was promoted to the Inner House of the Court of Session in 2002. He was appointed to the offices of Lord President of the Court of Session and Lord Justice General of Scotland in 2005.

Under the Judiciary and Courts (Scotland) Act 2008 the First Minister will now establish a panel and invite them to make recommendations of individuals who are suitable for appointment to fill the vacancy.

The panel will comprise Sir Muir Russell, the chair of the Judicial Appointments Board for Scotland; one other lay member of that Board nominated by Sir Muir and two judges who will be nominated by the First Minister.

Mr Salmond said: "Lord Hamilton has given outstanding public service both in his role as a judge and as the Lord President and Lord Justice General.

"He has presided during a time of considerable change with the enactment of the Judiciary and Courts (Scotland) Act 2008 - legislation which he played in active part in promoting. It is in his role as both the first Head of the Scottish Judiciary and the chair of the Scottish Court Service that Lord Hamilton has demonstrated his leadership skills and willingness to take on a whole range of new responsibilities which are delivering an improved court system.

"Despite his substantial non-judicial responsibilities, Lord Hamilton has maintained a strong commitment to his judicial work, continuing to preside regularly in the most demanding and complex civil and criminal appeal cases. He will leave behind a substantial contribution to the development of Scotland's distinctive civil and criminal law."

The Rt Hon Lord Hamilton will be retiring after 17 years as a judge. It is for the Prime Minister to make a recommendation to the Queen on who should replace Lord Hamilton, but he may not recommend any person who has not been nominated to him by the First Minister. The First Minister may not nominate any person until the panel has made its recommendation and the First Minister must have regard to the panel's recommendation.

The Judiciary and Courts (Scotland) 2008 Act brought about the creation of the Scottish Court Service as a new statutory entity, governed by a judicially led corporate body as well as giving the Lord President the role of Head of the Scottish Judiciary with important new responsibilities for the disposal of business and the leadership of the Scottish judiciary as a whole.

Lord Hamilton is a graduate of the Universities of Oxford (BA, Worcester College) and Edinburgh (LLB). He was admitted to the Faculty of Advocates in 1968 and was Standing Junior Counsel to the Scottish Development Department (1975-78) and the Inland Revenue (1978-82). He served as an Advocate Depute from 1982 to 1985. From 1988 to 1995 he was a Judge of the Courts of Appeal of Jersey and Guernsey, and from 1992 to 1995 he was President of the Pensions Appeal Tribunals for Scotland. He was appointed as a Senator of the College of Justice in 1995 and as Lord President in 2005. In June 2003 he was elected an Honorary Fellow of Worcester College, Oxford and in January 2006 an Honorary Bencher of the Inner Temple, London.

(A good bloke like Arthur will be missed around the courts – Ed)