"Free" Money - The Great PPI Giveaway

Courtesy of the greed and lack of ethics of our tainted financial services industry, there are billions of pounds to be "given away" by the recalcitrant banks and lending institutions that conned people into buying the now widely derided Payment Protection Insurance (PPI) policies.

Simon Gompertz has published the headline figures:

"The extraordinary scale of the PPI compensation grab:

£5bn compensation still to be paid out

12 million policies may have been mis-sold

800 claims management companies  trying to get a slice of the money

£2m a month being spent on advertising by these claims companies

They charge 25% or more in fees, plus VAT

Banks are making 50,000 compensation payments a week

That's around £400m a month being paid out

The payments average £2,750, some are £16,000 or more

Some say this massive cash payout could give a boost to the economy

How to claim compensation? Contact your bank, or the Financial Ombudsman Service"

Given that the banks showed no ethics in selling these now widely derided products onto their naive customers, there is no shame in asking for them to pay the money back (but don't waste money on using a claims company).

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US Launches Probe Into BAE

The US Department of Justice has launched a formal anti-corruption investigation into BAE Systems' alleged payments of bribes to a Saudi prince, in return for a lucrative contract.

The allegations concern multi-million pound payments to Prince Bandar, a leading member of the Saudi royal family, as part of the Al Yamamah Tornado jet deal.

The investigation will look at BAE's compliance with anti-corruption laws, "including the company's business concerning the Kingdom of Saudi Arabia".

BAE shares have fallen 6% in opening trading today, as a result of the announcement.

The US action follows the UK government's decision to stop a fraud inquiry, last December, into BAE’s 1980s Al Yamamah deal to supply Tornado jets and other military hardware to Saudi Arabia. The UK government cited national security interest as a justification for their decision.

BAE have issued a statement:

"BAE Systems has been notified by the US Department of Justice that it has commenced a formal investigation relating to the company’s compliance with anti-corruption laws including the company’s business concerning the Kingdom of Saudi Arabia."

BAE is one of the largest defence contractors used by the US government.

BAE has already asked Lord Woolf to carry out an independent review of the company's handling of arms deals.

The review does not include BAE dealings with Saudi Arabia.

Prince Bandar has denied receiving improper payments, and BAE has said it acted within the law.

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The Wolfowitz Legacy

Following on from the much heralded resignation of Paul Wolfowtiz from the presidency of the World Bank, questions are already being raised about the willingness of member countries to maintain the tradition that the new bank president be nominated by the American president.

The World Bank, having thrust the issue of ethics and accountability firmly into the spotlight, is also facing some very hard questions about its internal structure and procedures.

Aside from internal accountability, questions are also being asked about the accountability and honesty of those nations that benefit from loans and aid handed out by the World Bank.

It is ironic that Bush and Wolfowitz may, quite unwittingly, have done the World Bank a service by forcing these issues into the spotlight.

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Wolfowitz Resigns

Paul Wolfowitz has finally comes to his senses and resigned (effective as from 30 June) as president of the World Bank.

The World Bank board will meet later today to discuss leadership issues, including the process of selecting the new president.

However, as is custom and practice, the White House still has the right to appoint the president. US Treasury Secretary, Henry Paulson, said that he would help President Bush to identify a nominee after consultations with other World Bank member countries.

The United States, the bank's largest shareholder, has named the World Bank chief since it formed the bank over 60 years ago.

However, this time around Bush will not find the process of nomination so straight forward:

1 Wolfowitz, a Bush nominee, failed in the post becuase he was arrogant and ignored ethics

2 Bush's presidency is imploding, rocked by domestic political scandals and the Iraq failure, his power and authority is draining away

3 Bush is despised by many European leaders

The failure of Wolfowitz is symbolic of the failure of Bush. The next US nominee will find that the other members of the bank will subject him/her to intense scrutiny before approving him/her.

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The Farce Continues

The ongoing farce over Paul Wolfowitz, the embattled soon to be ex president of the World Bank, continues.

The meeting of the World Bank's executive board adjourned last night, without a decision on Wolfowitz's future.

The bank's board spent the day discussing the report on Wolfowitz, and issued the following statement:

"The executive directors of the World Bank group continued their deliberations on issues raised by the report of the ad hoc group and in their meetings with Mr Wolfowitz yesterday. They will continue their deliberations tomorrow morning."

The committee is expected to endorse the report, and call for Wolfowitz's resignation.

Wolfowitz doesn't publicly, as yet, want to go quietly. His lawyer, Robert Bennett, suggested that Wolfowitz was happy to force the board into a showdown:

"Mr Wolfowitz will not resign under this ethical cloud and he will rather put this matter to a full vote."

This show of bravado is of course a negotiating tactic, designed to maximise his payoff and public plaudits when he actually resigns later this week.

Germany's development minister Heidemarie Wieczorek-Zeul summed it up succinctly:

"...would do the bank and himself a great service if he resigned. That would be the best for all involved."

Wolfowitz's tenure is over, such is the price for breaking ethical guidelines.

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The End Game

The end of Paul Woilfowtiz's career as president of the World bank is now in sight, all that is happening now is an elaborate negotiation about the terms on which he should leave.

On Tuesday evening, after World Bank directors accused Wolfowitz of breaking ethics rules in negotiating a promotion and salary raise for his companion, Wolfowitz pleaded with them to give him another chance.

Wolfowitz urged directors to separate the specific mistakes he may have made in handling his companion's reassignment, and larger questions about his contentious two-year tenure at the bank.

"If you want to have a discussion about my leadership, my management style and the policies I support, let's do it.

That's fair. That's legitimate. But let's get past this conflict-of-interest matter that was resolved over a year ago."

This last minute plea is unlikely to save him, as President Bush has now signalled that he is prepared to "allow" (in Bush's mind he has the power to keep Wolfowitz in situ - he does not) Wolfowitz to resign.

Bush has let it be known, that he would "allow" resignation if the bank board dropped its insistence to declare him unfit to remain in office.

However, as with many "new initiatives" and "changes of mind" that Bush proposes, this is too little too late. The majority of the countries who fund the bank are absolutely against allowing an easy opt out for Wolfowtiz, partly this being a reaction against Bush and his administration's unilateralism over the past 6 years.

It seems that the board will endorse the findings of a special committee that Wolfowitz broke bank rules, ethics and governance standards in arranging for, and concealing, a pay and promotion package for his companion, Shaha Ali Riza, in 2005.

Now is the time for Wolfowtiz to bring his lawyers in to discuss his severance package.

Another mess caused by the ineptitude of the Bush administration, that will have consequences for America's relationship with the rest of the world.

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Tick Tock

The end days for Paul Wolfowitz, the embattled President of the World Bank, are now in sight.

A panel of seven directors investigating the Wolfowitz scandal, stopped short of saying he acted in bad faith. However, they have given him until May 9 (today) to respond. The group also faulted the bank's ethics committee for giving him insufficient guidance on how to avoid a conflict of interest.

The findings will next be considered by the bank's full board, which may meet this week.

Support for Wolfowitz has all but disappeared in Europe, and is fading fast in Washington. President Bush will have to engineer a face saving exit for his former deputy defence secretary.

Germany's director at the World Bank has been instructed by his government to co-ordinate a board campaign against Wolfowitz.

Wolfowitz, for the moment, has vowed to stay.

President Bush, having publicly supported Wolfowitz, has now backtracked by allowing White House spokesman Tony Snow to say that Bush "has confidence" in Wolfowitz.

Wolfowitz is finished, the longer he stays the more damage he does to the credibility of the World Bank.

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The World Bank Fiasco

I hold my hands up to mistakenly saying on Friday, with confidence, that Paul Wolfowitz would be out of his job as president of the World Bank by the end of the day.

Monday morning, and he is still there vowing to stay on.

However, whilst I may have got the timing of his departure wrong, I am confident that his position is now untenable and he will soon be gone.

Unfortunately for the World Bank, and those hapless impoverished nations that rely on it, Wolfowitz's dogged determination to stay on and the rancour and negative publicity that this pig headedness is causing does the institution and those that it serves no good whatsoever.

The final nails in the coffin of Wolfowitz's career were driven in on Sunday, when the oversight committee of the bank delivered a public rebuke of his leadership, expressing "great concern" about the institution's future and the need to preserve its credibility and staff morale.

In simple terms, they want him to fall on his sword and go.

Unfortunately, Wolfowitz just doesn't seem to get it; he is working under the delusion that it is alright for him to act outwith the ethical requirements of the bank in the time honoured tradition of "do as I say, not as I do". He is also naively trying to ride the storm out.

The simple fact is that this storm will not die down, the European countries that contribute to the funding of the bank (such as the UK) want him gone. His only support comes from his friends President Bush and Dick Cheney, as the old saying goes "with friends like those..."

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Sex, Power and Money

Sex, power and money are a heady combination; as any seasoned politician, member of the media or hooker will tell you.

Paul Wolfowitz, Head of the World Bank, has also learnt of the power of such a combination.

His position within the World Bank now looks untenable, as he was publicly booed and heckled by his own staff at a meeting, and forced to leave.

His crime?

Wolfowitz personally intervened to obtain a pay rise for his girlfriend, Shaha Riza, who works at the bank. he got her a nice little earner from $132,660 to $193,590 tax free.

Aside from the obvious ethical issues surrounding the merits of this pay rise, the bank rules actually forbid couples from working together.

Ironically Wolfowitz, who was an advocate of the Iraq war when he was Deputy Defence Secretary for President Bush (who appointed him to the bank), is a strong advocate for tough rules on corruption and corporate governance.

He has forgotten the cardinal rule, lead by example. Those at the top of an organisation must not only be ethical, but must be seen to be ethical.

He will be out of office by the end of the day.

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Migrants Better Than Natives

The Institute of Directors (IoD) has conducted a survey that concludes that migrant workers to the UK are seen as harder working, more reliable and better skilled than natives.

The survey found that employers believe immigrants outperform UK employees by “a large margin”.

Workers who have come here from abroad are believed to have better skills, education, work ethics and reliability.

Miles Templeman, director-general of the IoD, is quoted in the FT as saying:

"The UK workforce has got to raise its game on skills and performance."

This means that UK workers are going to find their current terms and conditions of employment under a strong downward pressure, as shortages and skill gaps are made up by employing in migrant labour.

The socio economic consequences of this to Britain will be serious, as to whether our current government has the abilitdesirere to manage this issue is another question.

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