Sunday, July 16, 2006

Natwest 3 face US Justice in corruption scandal - maybe we should send all our crooked bankers & lawyers over the Atlantic for trial !

It's not been fashionable in any part of the British media to critisise the 3 bankers charged by US authorities in the Enron Scandal dubbed the "Natwest 3" ... but that seems to be changing now that they have finally been sent to the United States.

Well, just how clean are they ? asks the Sunday Times today .. well, for one, having experienced the intricacies of 'white collar crime' in the form of crooked lawyers and accountants - along with their professional bodies, covering up massive financial scandals ... I have always believed they were dirty ... to a T.

Of course, the Natwest 3 did a brilliant public relations job on the whole affair, turning public feeling against american justice as much as they could, but you could always sense there were parts of the case which they were glossing over, and with a general lack of understanding of such complex matters in the UK by the ordinary person these days, it isn't surprising that at least until now, they got away with the story that they were the innocents being sent to the slaughter.

Not me .. I never believed that for a second. Actually, if it were the case that the Feds were to call me up and ask for info on bent Scottish lawyers and banks and how they had funneled money through american institutions, or damaging the interests of US shareholders, I would testify in a second ... because at least in the US, there is a much better chance of such cases getting to court and the truth coming out .. whatever that may be.

Look at examples we have had recently in the U.S. , where large crooked insurance companies such as Marsh - the same people who run the Master Insurance Policy of the Law Society of Scotland, (the professional indemnity insurance for lawyers) .. and similar insurance deals for other professions - even some Government Departments, being caught in a huge financial scandal by none other than New York Attorney General Elliot Spitzer charged Marsh with getting illegal payments for steering clients to particular firms .. as well as other crooked activities ... (have a look here into some insight on this case : )

Think that such a scandal would ever come to light in the UK ? No chance of that ! .. the insurers would be buying off lawyers, judges, Government officials and the rest of them .. and we would never hear of it ... so, hey, let the Natwest 3 get tried in the USA .. We should be happy that at least someone is doing something about financial crime.

Just look at some of the reasons why the Serious Fraud Office wouldn't actually prosecute them here ... one of the chief reasons being they thought the case far too complicated for a UK Jury .. and with the defence legal team being up to the job of creating quite a disgraceful perception of US justice by using bought media contacts and well placed stories, secret briefings against Government ministers, and the like ... it was a sure thing the case would never be tried here in the UK .. and well, this time anyway, good for the Government in sending them off to the States to face a measure of justice which would otherwise be unobtainable here.

It is funny, isn't it .. the way in which their legal counsel portrayed the american legal system compared with our own here Britain. You only need to read a few pages of this blog, let alone search the rest of the web or even turn on the television news to see the levels of injustice we as consumers suffer here when professionals such as bankers, lawyers, accountants etc .. rip us off. It's a bit like pot calling the kettle black, isn't it ?

Well, they always say that there's no justice like Texas justice, so it will be interesting to see what happens, and what revelations come out of this case which have so far been glossed over by the accused's legal team and friendly press agents ...

As far as I'm concerned, if I had the chance to send Andrew Penman, Norman Howitt, McMorrow, Yella,d Mill, and the rest of the crooked gang to the USA for trial, I'd be over the moon ... at least they wouldn't be able to buy off everyone or fiddle the politicians and courts to keep my case from being heard.

Here today in the Sunday Times, at least, we have a more clear impression on what has been going on ... and you know .. the average person doesn't usually use the Cayman Islands banks for honest banking ....

Focus: How clean are the Natwest Three?

To many other passengers on the plane to Houston, the men sitting in rows 43, 44 and 45 were just another group of travellers. The appearance of two television camera crews led to a flurry of speculation: there must be celebrities on board. But a trawl through faces failed to identify anyone and the excitement passed.

David Bermingham, Giles Darby and Gary Mulgrew are not sportsmen or pop stars. But they have become famous recently as they used a public relations campaign to fight extradition to the United States on fraud charges related to the 2001 collapse of Enron, the US energy company. All three deny any wrongdoing.

The case of the NatWest Three, as the former bankers are known, has united civil liberties groups and City magnates. It has also brought opprobrium on the British government, damaged America’s reputation in the UK over a flawed extradition treaty, raised questions about whether British law enforcement controls white-collar crime adequately — and might have led to the apparent suicide last week of a fourth banker.

Having lost their four-year battle against extradition, Bermingham, Darby and Mulgrew reported to Croydon police on Thursday at 6am, after tearful goodbyes from their families. They were taken in a van with blacked-out windows to Gatwick airport. Six US marshals led them onto Continental Airlines flight CO35 before other passengers boarded.

For nearly 11 hours they sat in separate rows at the back, with marshals on either side. Darby mostly slept. Bermingham read a paperback. Mulgrew sat upright, his tall frame towering above the seats, his face expressionless.

They knew what awaited them in Houston, the Texan city where Enron was based until it collapsed in 2001 in the greatest corporate scandal of recent times.

Proportionately far more Americans than Britons are shareholders, which is why the US Department of Justice takes a strong line on corporate crime. Unlike some Britons, Americans do not regard white-collar crime as “victimless”. Just ask the many former Enron shareholders and employees.

When Ken Lay, Enron’s founder, died this month — before being sentenced for his part in the scandal — some wondered if his death was as questionable as his accounting. On the Houston Chronicle website, one resentful Texan wrote: “I think they need to bring (Lay’s) body back down to Houston and prop him up in front of the big building they built for Enron so we can all make sure he is really dead.

Also, maybe sell like tickets to smack him around a bit and give the proceeds to charity.”

It was no surprise then when the three suspects were taken into Houston’s federal courthouse shackled hand and foot. The “perp (perpetrator) walk” has become standard procedure when executives are charged. Seven big fraud cases have led to convictions in the past 18 months alone.

The trio were fingerprinted, strip-searched, kitted out in green jumpsuits (indicating foreign nationals) and escorted to detention — not the poky cells that their PR men had predicted, but a Houston hotel.

When they appeared in court next day — in their own clothes — the judge granted bail but confiscated their passports. Yesterday they were allowed to go shopping. On Friday the judge will consider whether they can return to Britain pending trial.

In all the furore over the extradition, the question of their innocence or guilt has been pushed to one side. What are they accused of?

They are alleged to have colluded with Andrew Fastow, Enron’s chief financial officer, and Michael Kopper, his right-hand man, to defraud their employers.

Put simply, the three were accused of selling an offshore company belonging to NatWest at a low price, buying into it themselves and selling it on at a much higher price to Enron. They shared a profit of $7.3m. Fastow and Kopper, having allegedly duped their own employer into paying too much for this nebulous asset, trousered an even larger sum.

The NatWest Three were charged four years ago — early on in the wider Enron investigation — in the hope that they would give evidence against Enron executives. But Fastow and Kopper themselves agreed to co-operate — and now could be star witnesses against the trio.

Deanne Simpson, an FBI special agent assigned to the Enron taskforce, puts the case against the three in an affidavit seen by The Sunday Times. She quotes from a number of e-mails they allegedly sent each other.

In February 2000, before travelling to Houston to propose the allegedly fraudulent transaction to the Enron executives, Bermingham wrote to Mulgrew: “I will be the first to be delighted if (Fastow) has found a way to . . . steal a large portion himself. We should be able to appeal to his greed.”

The alleged fraud is fiendishly complex. But Mulgrew said he could understand it. “It’s so much easier to focus when it’s your own dough.”

In another message, Bermingham wrote to Darby and Mulgrew: “Large numbers of people are asking what we are up to. I hate lies.”

To try to avoid trial in America — where they face a possible 35 years in maximum security jail if found guilty — the men fought extradition through the British courts and did everything they could to be prosecuted here.

A trial in Britain would take precedence over the extradition, as they saw in the case of Abu Hamza, the former imam at the Finsbury Park mosque in north London.

Furthermore, it is notoriously difficult to secure a fraud conviction in Britain — and even in the unlikely event of a guilty verdict, the punishment is never more than a brisk spell in one of the famously accommodating open prisons.

When Roger Levitt admitted fraudulent trading in the mid-1990s, his sentence was 180 hours of community service.

Forcefully arguing that NatWest, the principal victim of their alleged crime, is British, the three took the Serious Fraud Office to court for failing to prosecute them. But Lord Goldsmith, the attorney-general, ruled out a British prosecution.

They even tried to provoke NatWest — now owned by Royal Bank of Scotland — into pressing charges here. Royal Bank of Scotland refused, perhaps because it is implicated in another strand of the Enron saga. Neil Batson, the official examiner appointed by the US bankruptcy court, has found that “RBS aided and abetted certain Enron officers in breaching their fiduciary duties” in transactions connected to a power plant in Teesside.

With the legal route failing, the three mounted a PR campaign, shrewdly presenting themselves as victims of an overweening America.

Specifically, they blamed their problems on the flawed 2003 extradition treaty that was negotiated in the aftermath of the terrorist attacks on the United States. This allows US prosecutors to extradite British subjects without showing prima facie evidence of a crime. British prosecutors are denied the same access to alleged criminals in America, however, because Congress has not ratified the treaty.

In the light of the CIA’s use of “extraordinary rendition” to move suspected terrorists around the world at will, the treaty looks like further evidence that America is a law unto itself. As Richard Lambert, director-general of the Confederation of British Industry, put it: “Whatever the guilt or innocence of the NatWest Three, the current extradition arrangements are an affront to natural justice.”

As the trio’s PR campaign reached its crescendo last week, the Commons erupted in an indignant three-hour debate. Opposition parties urged the government to suspend British obligations under the extradition treaty. Rather than do that Tony Blair sent Baroness Scotland, a minister, to Washington to ask senior US politicians to ratify it.

Two days before the three were extradited, their fight was thrown into relief by the death of a former colleague, Neil Coulbeck, who was chief operating officer at NatWest’s investment banking division when they worked there. His body was found on Tuesday in a wood near his home in Chigwell, Essex.

Officers believe that Coulbeck, a 53-year-old father of two, committed suicide. He went missing five days before his body was found. It is understood that he had made an earlier attempt on his life.

He was interviewed last month in his solicitor’s office as part of the Enron investigation. Supporters of the NatWest Three have claimed that he was put under immense pressure when questioned by FBI investigators. But the FBI says he was considered a witness, not a suspect.

Before leaving Britain, Bermingham said he “hoped to God” that the death of Coulbeck was not related to his case: “One day, when this is all over, I’m going to be coming home to my wife and children and some poor guy is not and my heart goes out to his wife and family.”

That night Essex police, having been in contact with the FBI, raided the Chigwell recycling centre in case Coulbeck had disposed of papers linked to the alleged fraud.

Quite apart from the Coulbeck tragedy, the NatWest saga does nothing for the reputation of British justice.

The real scandal, say American lawyers, is not the extradition treaty but the hopelessness of our own legal system in prosecuting white-collar crime. Despite lengthy and costly trials, British courts have consistently failed to secure convictions after financial scandals — as the thousands of people who lost money thanks to Blue Arrow, Lloyd’s insurance and Asil Nadir can testify.

The government’s proposed solution is to scrap the 800- year-old safeguard of jury trials. John Coffee, professor of law at Columbia University in New York, thinks the real flaw lies with British prosecutors. “The fact of the matter is that the Serious Fraud Office has never been able to successfully prosecute insider trading, whereas the US authorities have been very successful at it,” he said.

The NatWest row was also an eye-opener on City ethics. A partner at one of London’s leading commercial law firms, who preferred to be anonymous, said last week: “We operate in an area where you constantly have to make judgment calls about whether something is right or wrong or in a grey area. And that grey area gets greyer all the time.

“On any given deal we have to respect the law, and accountancy and tax practices in our own country and in the United States — and also in anticipation of future American regulations.

“Professionals trying to make a profit and doing innovative things are always in danger because three years down the line some tw*t in Texas with an axe to grind might come after you.”

Coffee believes the NatWest Three should face trial. “It is clear to me that there is a case to be answered in America.”

Additional reporting: Bob Graham in Houston

The case against them# Gary Mulgrew, David Bermingham and Giles Darby are accused of defrauding their employer, NatWest, in 2000

# The US accuses them of conspiring with two executives at Enron, which collapsed in the biggest recent US corporate scandal

# They flew to Houston to propose scams. One was rejected as “too obvious”
# They persuaded NatWest to sell an offshore company for $1m, knowing it was worth much more

# The three bought a stake in the company themselves, unknown to NatWest, for $251,993

# Enron executives Andrew Fastow and Michael Kopper persuaded Enron to put $30m into the company

# The British men shared a profit of $7.35m

# They deny wrongdoing. They say Fastow offered them the investment opportunity only after NatWest sold the asset

# E-mails allegedly sent between them look bad: “We should be able to appeal to his greed,” Bermingham told the others before meeting Fastow

# And later Bermingham wrote: “Large numbers of people are asking what we are up to. I hate lies”,,2088-2272058,00.html

An American court is the right place for the NatWest Three
Simon Jenkins

Three former NatWest employees extradited from Britain were bailed on Friday by a court in Texas on charges related to the Enron affair. The relevant law, the Extradition Act 2003, is deficient and should be changed but that is not reason enough to stay their trial. They are a bad example of the act’s failings since there is a clear case for them to answer, and in America. The Enron scandal, one of the biggest frauds in history, ruined the lives of tens of thousands of people. No British court found in favour of the trio’s plea to stay at home.

Britain is widely regarded as liberty hall to financial malpractice, as its auction houses long knew to their advantage. Yet Britain’s treatment of foreigners in its legal system is a disgrace, holding them in prison for long periods without trial and jailing 500 West Indian women, almost all first offenders, for being dupes of Jamaican drug dealers. Britain can hardly criticise American courts on these grounds. Nor do most of these people have “pro bono” public relations firms depicting them as humble citizens with tear-stained families. They have no costly lawyers or sudden parliamentary concern or “white-collar crime” epithets to launder their case. They cannot cry “civis Britannicus sum” and work Fleet Street’s financial pages into a lather of righteous indignation.

*Extradition makes hard law because legal systems differ and proceedings can turn into prejudicial pre-trials. Yet terrorism and commercial crime are so international that some framework is required to avoid states becoming havens for each other’s crooks. Hence the extradition treaty passed in the illiberal aftermath of 9/11.

The act is depicted by the British government as an even-handed adjustment to what had been a dilatory process, when judges and Home Office played ping-pong with people’s lives for an average delay of 30 months. The old requirement that a court hear prima facie evidence of a case before allowing extradition was scrapped for the signatories of the European Convention on Extradition in 1991. What happened in 2003 was that America and 20 other countries joined the convention. It was not another case of Tony Blair’s subservience to Washington. The same fast-track procedure applied across Europe and even to Russia.

The hiccup in the treaty is that it gave America special treatment because its constitution protects its citizens from summary arrest without good cause proven in court. This means that while an American court can merely demand, with documentation, a person’s extradition from Britain, it will hold hearings into requests for extradition from America.

Defenders of the NatWest Three — a bizarre coalition of City figures, Tory MPs, anti-Americans and liberals — are incensed by this manifest asymmetry. They see it as a licence for the ever-lengthening arm of American regulators to trawl the world for anyone who might have breached their laws. They point out that almost all international finance now touches America, and extradition abroad is not just another trial but interim punishment without prior hearing. While financiers may summon publicists, win bail and be guaranteed a fair trial, others may enjoy no such privilege and suffer long periods of hardship away from home when possibly innocent.

Besides, the NatWest Three also point out that the treaty only “goes into force upon the exchange of the instruments of ratification”. While parliament has ratified it the US Congress has not, under pressure from the Irish-American lobby, long averse to extraditing IRA terrorist suspects. The law is thus lopsided in its terms and its implementation.

There is no doubt that America scores low in the league table of international legality. Indeed with American agents picking up all and sundry from foreign streets and airport lounges and “rendering” them to torturing states, the perils facing British bankers might seem merely the tip of an iceberg. Beneath it extend the horrors of Abu Ghraib, Guantanamo and other juridical limbos possibly awaiting a long line of victims of some casual FBI tip-off. Washington’s palpable double standard in matters of personal liberty has polluted the image of its judicial system.

But the British bankers are going to a system of federal justice that is not beholden to the Pentagon or the White House, indeed one struggling to recover some credibility after the Enron saga (in which a number of Britons, including Lord Wakeham, became embroiled). All who have followed Enron, seen the remarkable documentary on it and read the statement of claim against the NatWest Three would accept that they have a serious case to answer. The men themselves deny any wrongdoing.

As Lord Goldsmith, the attorney-general, said, the alleged crime was not confined to Britain nor were its putative victims only British. It involved three men pocketing $7m in the Cayman Islands in a $20m deal involving money from both NatWest and Enron. The Serious Fraud Office (SFO) and other agencies declined to prosecute, variously and reportedly because they thought the case would not pass a jury, because NatWest would not co-operate for fear of airing its dirty linen in public and because the SFO agreed that Houston would conduct Enron-related litigation. Deplorable as it may be that British financial regulation is so inadequate, these reasons seem plausible.

The NatWest Three were dealing directly with Andrew Fastow, one of the chief Enron conspirators and now in jail. With the principal evidence, including all electronic communications, collated in Texas, there was clearly prima facie evidence for extraditing the three even under the previous treaty. That America has yet to ratify the 2003 one is a good debating point, but hardly substantive to the case.

Nor were the three somehow victims of summary justice. Magistrates heard them. They were granted leave to appeal to the High Court, where Lord Justice Laws found the case “properly triable in the US courts”. They were turned away by both the House of Lords and the European Court of Human Rights. Britain would not try them, America would. I am sure if the roles were reversed Britons would take the same view. British citizens can hardly complain when American prosecutors are more assiduous at guarding their joint interests than their own regulators.

The morals to be drawn from the NatWest/Enron case are many. The 2003 treaty was undoubtedly lax in protecting individual rights. Britain and others should have demanded that foreign citizens enjoy the same right to preliminary hearing as is enjoyed by Americans. This point was made by critics of the mass of anti-terrorist legislation passed in 2003 and since. Such critics (and their columnist supporters) were accused of “appeasing terrorism”.

If ever there were an instance of democracy dropping its guard against authoritarianism at the bidding of terrorists, it was in the hysterical aftermath of 9/11. The Confederation of British Industry last week announced that the 2003 treaty is “an affront to natural justice”. Why did it not say so before?

The behaviour of the Tories now climbing aboard the bandwagon has been a disgrace. Where were they to protest against fast-track extradition in 2003? Could it be they never thought it would apply to their constituents, only to dodgy Muslims? Where were the self-righteous MPs and peers now earning City dinners by re-debating the 2003 law when they were supposedly scrutinising it three years ago? Since then, they have passed ever more draconian statutes to jail those involved in drugs and immigrant markets and curb free speech and habeas corpus. Have they no sense of double standard? That they should suddenly discover the virtues of natural justice and the horrors of imprisonment when it afflicts three men charged with “white-collar crime” is not a little sickening.

Britain should revoke and renegotiate the 2003 treaty to allow a judge to determine the place of a trans-national trial and to require some preliminary hearing to take place before extradition. This is yet another Blair law passed in emotion and haste and regretted at leisure. But such a law was passed and is in place. Even if it were revoked it would not be much help to the NatWest Three.

They were playing in a globalised market and must accept globalised justice, which in the matter of Enron means American justice. They must take the rough with the smooth and consider themselves lucky they were not charged with terrorism.

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