Viva El Presidente!

Gerson Lehrman News

Off topic, I write articles covering business issues for Gerson Lehrman News, and am an Accounting & Financial Analysis Council Member (AFA Council Members include CFOs, former top regulatory body officials, partners from the world's leading accounting firms, academics, forensic accountants, and other financial executives).

The news articles can be accessed via this link Gerson Lehrman News.

Protests Over Healthcare Reform in The US

President Obama's proposals for healthcare reform have set off a wave of protests at town hall meetings across the US, and have even spurred British politicians to enter the fray as the NHS comes under fire from certain quarters in the US.

In reality the healthcare issue is being used as the touchstone by the rabid right to stir people up. The rabid right are fanning the flames of protest, using fear of change as their fuel.

The US, like it or not, is changing:

1 It is broke, thanks in no small part to the ruinously costly wars that it started under Bush

2 It owes China, an emerging superpower, $1.4 trillion

3 The GOP is leaderless/rudderless and has its agenda "driven" by dangerous loons such as Palin and unscrupulous "news"/media networks such as Fox

4 The white majority face becoming a minority in "their own" country (as they see it)

5 God doesn't exist, whatever GOP might have you believe

People's fears are being whipped up by unscrupulous networks such as Fox, uneducated politicians such as Palin and retarded bloggers.

Given the number of people with sizeable personal arsenals, this presents the government of the US with a serious problem.

The rabid right may well end up provoking a civil war.

Met Office Fails

The hapless and hopeless Met Office has failed again with its "forecasting".

In April the Met office predicted that we were in line for a hot, dry summer.

No surprises for guessing that, given the lack of "summer sizzle", the Met Office is now changing its forecast and is predicting "unsettled" weather.

In 2008 they got their summer prediction wrong, and indeed in 2007 they also screwed up.

The Met Office head of forecasting, Brian Goulding, said:

"Seasonal forecasting is a difficult thing to do and this places some limitations on our forecasts".

I have two suggestions for the Met Office:

1 Given the "difficulty" and inaccuracy of long term forecasting, why bother?

2 Why not fine the Met Office everytime they get things wrong? Inaccurate weather forecasts cost others money, why not focus the minds of the Met Office a little more by charging them for their mistakes?

Sugar Backs Brown

Sir Alan "The Apprentice" Sugar has publicly backed Gordon Brown today.

However, is this endorsement really worth the media hype given that the "reality" "business" show The Apprentice shows that Sugar allows people into the final five of his show who have lied on their CVs?

Vile Politicians Stoking The Flames

The attack on Sir Fred "The Shred" Goodwin's home by a self proclaimed "anarchist" group of "banker hating" trouble makers, may well be excused by the media as the work of the lunatic fringe.

However, the flames of the "lunatic fringe's" anger have been fanned and given fuel by the less than restrained outpourings of our political "leaders" (Brown, Harman et al) and a compliant ignorant media who have jumped onto the bandwagon of banker bashing.

Doubtless the banks and their boards have screwed up royally. However, this country's economic plight has been brought about not just by the actions of "greedy bankers", but by a profligate government that wasted billions during years of plenty and the failed tripartite regulatory system that oversaw the years of lax credit and greed.

Those politicians and members of the media who happily divert the public's attention, by blaming the bankers solely for this mess, should remember that in the 1930's in Germany bankers and others were also used by the media, and those that controlled the media, as an effective scapegoat and means to whip the public up into a frenzy.

Those politicians that continue with banker bashing, without acknowledging their own responsibility for this financial mess, are little better than the Nazis of the 1930's.

Congrats To Tony Blair

Congratulations to former Prime Minister Tony Blair for earning the Presidential Medal of Freedom for his role in backing the US in the so called "War Against Terror".

Such a pity that his role as Middle east Peace Envoy appears to be not quite working out quite so well!

The Bush Resume

GEORGE W. BUSH
1600 Pennsylvania Avenue
Washington , DC 20520


LAW ENFORCEMENT:

* Arrested in Kennebunkport , Maine (1976) for driving under the influence of alcohol. Plead guilty, paid fine; had driver's license suspended for 30 days. Texas driving record 'lost' and is not available.

MILITARY:

* Joined the Texas Air National Guard. Went AWOL. Refused to take drug test or answer any questions about personal drug use. Able to avoid combat duty in Vietnam .

EDUCATION AND EXPERIENCE:

* Graduate of Yale University with a low C average. Cheerleader.

PAST WORK EXPERIENCE:

* Ran for U.S. Congress and lost.
* Began career in the oil business in Midland, Texas (1975.) Bought oil company but couldn't find any oil in Texas . Company went bankrupt shortly after selling personal stock.
* Bought the Texas Rangers baseball team in a sweetheart deal that took land using taxpayer money.
* With the help of my father and friends in the oil industry (including Enron CEO Ken Lay) elected governor of Texas .

ACCOMPLISHMENTS AS GOVERNOR OF TEXAS :

* Changed Texas pollution laws to favor power and oil companies, making Texas the most polluted state in the Union . Houston replaces Los Angeles as the most smog-ridden city in America .
* Cut taxes and bankrupted the Texas treasury to the tune of billions in borrowed money.
* Set the record for the most executions by any governor in American history.
* With the help of my brother, the governor of Florida and my father's appointments to the Supreme Court, become President of the United States after losing the popular vote by over 500,000 votes.

ACCOMPLISHMENTS AS PRESIDENT:

* First President in U.S. history to enter office with a criminal record.
* Ordered invasion and occupation of two countries at a continuing cost of over one billion dollars per month. Am the first President in U.S. history to order an unprovoked,
preemptive attack and military occupation of a sovereign nation.
* Spent inherited U.S. surplus and effectively bankrupted the U.S. Treasury.
* Aided in shattering the record for the largest annual deficit in U.S. history.
* Set an economic record for most private bankruptcies filed in any 12-month period.
* Helped set the all-time record for most foreclosures in a 12-month period.
* Oversaw the all-time record for the biggest drop in the history of the U.S. stock market.
* First year in office, over 2 million Americans lost their jobs and that trend continues.
* Proud that the members of my cabinet are the richest of any administration in U.S. history. My 'poorest millionaire, 'Condoleezz Rice, has a Chevron oil tanker named after her though.
* Established the record for most campaign fund-raising trips by a U.S.
President. Am the all-time U.S. and world record -holder for receiving the most corporate campaign donations. My largest lifetime campaign contributor, and one of my best friends, Kenneth Lay, presided over the largest corporate bankruptcy fraud in U.S. History at Enron.
* My GOP used Enron private jets and corporate attorneys to assure my success with the U.S. Supreme Court during 2000.
* Have successfully protected friends at Enron and Halliburton against investigation.
* Created the Ministry of Homeland Security, the largest bureaucracy in the history of the United States Government.
* Help break more international treaties than any President in U.S. history.
* The first President in U.S. history to have the United Nations remove the U.S. from the Human Rights Commission.
* Withdrew the U.S. from the World Court of Law.
* Refused to allow inspector's access to U.S. 'prisoners of war'
detainees and thereby have refused to abide by the Geneva Convention.
* Established the record for fewest press conferences of any President since the advent of television.
* Set the all-time record for most days on vacation in any one-year period.
* After taking off the entire month of August 2001, I presided over the
worst security failure in U.S. history.
* Have the all-time record for most people worldwide to simultaneously protest me in public venues (15 million people), shattering the record for protests against any person in the history of mankind.
* Am the first President in history to have a majority of Europeans (71%) view my presidency as the biggest threat to world peace and security.

RECORDS AND REFERENCES:

* All records of gubernatorial tenure as governor of Texas are now in my father's library, sealed and unavailable for public view.
* All records of SEC investigations into my alleged insider trading and my bankrupt companies are sealed in and unavailable for public view.
* All records or minutes from meetings that I, or my Vice-President attended regarding public energy policy are sealed and unavailable for public review.
* These sealed documents will not be available for 50 years.

Spot The Difference

The person on the left resigned over a trivial matter, involving a Satanic Slut and Russell Brand, blown up out of all proportion by the media.

No one from Haringey Council has resigned for the death of "Baby P".

Inside The Brown Bunker

Exclusive footage of life inside Gordon Brown's bunker in number 10.

The True Colours of The EU

The EU showed its true colours this weekend when faced with the clear rejection by Ireland of the Lisbon Treaty.

Ireland voted "no" by 53.4% to 46.6%. The referendum result against the Lisbon Treaty has thrown the European Union into turmoil because the treaty, which aims to streamline EU decision making, has to be approved by all states.

Were those running the EU in any shape or form interested in the views of the citizens of the EU, this rejection should cause them some period of reflection about where they are trying to take us.

However, it is very clear that those in charge of the EU have no interest in the views of its citizens.

European Commission President Jose Manuel Barroso insists the Lisbon Treaty is still "alive", and has urged other countries to continue ratifying it. French President Nicolas Sarkozy said:

"The others must continue ratification... so that the Irish incident does not become a crisis."

France's European affairs minister Jean-Pierre Jouyet said that Ireland should hold another vote, so that the people vote in the correct way:

"The ratification process must be completed.

And during this period, the Irish will have time to think and see whether, with a few mediations or a request from their part, they can revote."

The EU is only a democracy when the voters vote the way that their leaders want.

Cherie's Memoirs

Those of you who have bothered to read Cherie Blair's excruciating memoirs about her husband's time in office, in which she uses words such as "unmentionables" and "contraceptive equipment" when detailing their sex lives, may be wondering why she brought forward the publication date originally scheduled for October this year.

The answer is simple, it's the money stupid.

Cherie believes, as do many, that Gordon Brown will be out of office by then. She knows that her book, given its tittle tattle expose of the shenanigans at number 10 during the Blair/Brown years, will not sell well once the Blair/Brown years are consigned where they rightly belong, to the dustbin of history.

Ironically Cherie, by exposing her true nature in this book, has provided the world with the clearest insight into the "moral base" of Nu Labour; money focused, self centred and lacking in any form of integrity.

Cherie is to be congratulated for that at least!

Contingency Planning

Given the threat of fuel shortages brought about by the stoppage at Grangemouth.

Given that this stoppage has been well publicised in advance.

Given that, according to the government, we live under daily threat of a major terrorist incident.

Given that the UK has been pumping oil from the North Sea for decades.

Why is that there is not a contingency plan in place, that covers the Grangemouth stoppage and its negative impact on fuel supplies throughout the UK?

The Crocodile Tears of Labour MPs

The current furore erupting within the Labour party over the abolition of the 10p tax band is causing Gordon Brown a few headaches.

Labour MPs are rushing to the media to proclaim their disdain for the abolition of the 10p tax band, and are claiming that they will do everything in their power to stop it.

All very nice and heartwarming.

There is one small fly in their ointment.

The announcement about the abolition of the 10p tax ban was made last year, front page in the media, the day after the budget.

Why have these MP's taken a year to raise the matter?

Could it be that the local elections are less than a fortnight away, and they are worried about their seats?

Whilst the abolition of the 10p band may well be a foolish move, the crocodile tears shed by these MP's carry no weight.

Their constituents should be more than a little concerned that it took a whole year for these people to wake up to the fact that this change was to be made.

They are not fit to hold office.

Hillary Clinton and Heather Mills

"God Bless Heather Mills"

The Hillary and Bill Show

Those members of the Democratic Party who are contemplating their choice of presidential candidate, Hillary or Barack, may think that the desire of Hillary Clinton to fight on until the bitter end reflects her burning ambition to lead the USA as president.

In some respects this may be true. However, her prime motivation and that of her husband is that they have nothing else in their lives other than the desire to hold high political office.

They made a pact decades ago to stick together to gain high office.

In the event that Hillary loses the nomination, she and Bill will be forced to confront the reality of their lives; namely that they have nothing else.

Such is their fear of being forced to confront their inner demons that they will move heaven and earth to avoid them, even if it means destroying the Democratic Party in the process.

Those contemplating which candidate to vote for need to bear that in mind as they make their decision.

To Hillary and Bill it's not really about the presidency, it's about Hillary and Bill.

It always has been.

The Value of Non Doms

Whilst the government, the treasury, HMRC and those with an axe to grind against wealthy foreigners do their best to drive them out of the UK, they would do well to remember that the two people chosen to lead the newly nationalised Northern Rock out of its crisis (Ron Sandler and Ann Godbehere) are both non doms.

How's that for irony?

Snouts in The Trough

MPs often bemoan the fact that the public don't take them seriously anymore, don't trust them and are apathetic about voting.

However, before lecturing us about our shortcomings, they should look closer to home and address their own shortcomings.

The current scandal involving Derek Conway, who claimed £50K allowances for his son (the self proclaimed "Queen of Sloane") to do bugger all, is a fine example of why people have little time or respect for politicians.

MPs need to get their noses out of the trough, then people may show them a little more respect.

McCafferty's Cat II

It seems that Peter Hain must have read my advice of last week, he has now resigned.

Our Heroic Home Secretary

Congratulations to our heroic Home Secretary, Jacqui Smith, who having got herself into a real pickle the other day by saying that she didn't feel safe to walk the streets of London at night tried "valiantly" to dig herself out of the quagmire.

One of her aides helpfully gushed to the press that Ms Smith only recently went out one evening, and bought a kebab in Peckham.

Great!

Except for two small facts:

1 Ms Smith has armed police protection 24/7

2 She went out at 5PM to buy this much reported kebab. Hardly "night" is it?

As said, in Jacqui Smith we have a true hero leading us in the fight against crime.

McCafferty's Cat

Gordon Brown lives up to his reputation of being McCafferty's cat today, by supporting the embattled Peter Hain yet also noting that Hain's fate lies outwith his hands.

Hain may as well give up now, his leader has deserted him.

Why We Don't Need The Royal Mail

As the Royal Mail descends further into chaos (strikes, post office closures and late deliveries) it is time for the long suffering customers to step back and ask themselves if they really need the Royal Mail.

In truth, none of us needs the Royal Mail. Here are a five reasons why we no longer need the Royal Mail:

1 There are other companies to deliver mail and packages

2 The service is at best unreliable, and is currently subject to the whim of the unions

3 We have email, mobile phones and the internet, all of which can be used to send messages

4 Bills can be paid online, or via the telephone

5 Large amounts of "snail mail" is in fact junk mail, and it therefore unwanted and unnecessary

The unions and management need to wake up to the fact that their services are no longer necessary; failure to do so will mean that they will all be out of work.

The Yob Epidemic

The British media is making much of the current "yob" epidemic, that is allegedly engulfing towns and cities throughout the UK.

Scarcely a day goes by when the media, and publicity seeking politicians, aren't "tut tutting" about yobbish drunken behaviour perpetrated by youths on the streets of Britain.

Whilst it may vent their spleens to "tut tut" about it, very little constructive solutions are produced as to how this behaviour is to be curtailed and controlled.

The refrain is usually:

1 Something must be done

2 Society is to blame

3 The parents are to blame, and

4 Let's ban something (eg drinking under 21, yet we are still happy for 18 year olds to die in Iraq)

The root cause of the problem is varied:

1 Lazy parenting

2 The granting of "human rights" to an ill disciplined, moronic mass of teenagers who have yet to develop intellectually or socially

3 Too much money being given to children by over indulgent parents

4 Lousy role models in the media

5 Invisible policing from the local police forces

The solution is difficult, but not impossible:

Those yobs that create a disturbance and a nuisance on the streets should be punished in a way that hurts them the most, ie hurt their egos. They should be sentenced, not to prison where they learn nothing more than how to commit more crime, but to a period in the stocks where they can be humiliated by their fellow citizens.

Drunken yobbery can be resolved by a session in the stocks, and by the tattooing (for say a month) on the foreheads of the yobs the following phrase:

"I am a drunken yob"

Any shop or pub found serving people with said tattoo on their heads, would immediately lose their licence.

Parents should stop giving their children so much pocket money. A child/teenager with too much money in their pockets will simply buy shit or booze/drugs. Therefore take their spending power away from them, and they won't be able to buy booze.

Parents should be made fully responsible for the behaviour of their brats, up until the age of 18. When their brats are caught breaking the law, the parents should have what is most dear to them confiscated by the state; namely their TV's, CD's, pc's and mobile phones. Should that not work, then their benefits should also be targeted.

Like it or not, they should be made to take responsibility for their brats.

Local police forces that seek to remain invisible, in spite of complaints by residents of yobbish behaviour on the streets, should be sued for failure to provide adequate police cover.

None of the above will be easy to implement. However, it will produce results.

The Rushdie Affair

There are three questions that arise from the recently announced award of a knighthood for Salman Rushdie:

Firstly, given the comments by Pakistan's religious affairs minister, Mohammed Ijaz ul-Haq, in the national assembly in response to the knighthood:

"if somebody has to attack by strapping a bomb to his body to protect the honour of the Prophet, then it is justified."

Why does the West call Pakistan an ally in the so called "war against terror"?

Secondly, it would seem that the committee that recommended Rushdie for the knighthood did not think that the award would provoke the furious reaction that it has done in parts of the Muslim world.

Additionally it seems that that English Pen, the writers' organisation that organised the lobbying for Rushdie's knighthood, had thought that the honour would lead to better relations between Britain and Asia.

What planet do these people live on?

Thirdly, why was Rushdie given the award in the first place?

He decamped from London to New York in 2000.

There are many excellent writers who are physically based in Britain, what is so special about Rushdie?

The award was made on the basis of a recommendation by English Pen. They provide an answer to the third question.

As per their website:

Salman Rushdie is a major writer whose works of imagination have engaged and galvanised society as important writing does. International PEN takes no position on the honours given by any government but celebrates writers being honoured and opposes those who would, through intimidation and inflammatory statements, try to curb freedom of expression. The 144 Centres of International PEN in 101 countries worldwide may however, choose to recommend such honours. Rushdie was honoured for services to literature and that service has also included his own defence of freedom of expression for writers around the world.

Therefore it would seem that they wanted to have Rushdie knighted, not so much for his writing, but for the fact that it would make statement to the world about freedom of expression.

Maybe the award was not so much made on the basis of Rushdie's literary talents?

A Child is Born

The current furor in the evangelical wing of the Republican Party, over the pregnancy of Mary Cheney is highly revealing.

It underlines the tragic collapse of the Republican Party from being merely a right wing party, to being one infested with and controlled by Christian Fundamentalists (who are one goose step short from wearing a swastika and burning down mosques).

Religion and politics should be kept as far away apart from each other as possible. When they mix, tragedy and disaster is bound to follow.

Let us hope that the putrid vitriol being unleashed by these so called "Christians" finally wakes the American people, and the ordinary members of the Republican Party, up to the dangers of allowing a political party to be taken over by intolerant extremists.

McCarthy almost destroyed the Republicans, so will the Christians if they are not stopped.

Joining The Dots

Tony Blair and George Bush are very keen to join the dots, and persuade us of the "connectivity" between certain threats and events. They seek to use this "connectivity" to persuade us to support the so called "war against terror", being waged against the "crescent of evil" (previously known as the "axis of evil").

Joining the dots is a very simplistic and dangerous approach in use a complex situation. Mankind often sees connections and patterns, where often there are none.

Were we to believe it there are patterns in the sky that resemble Great Bears and Ploughs, yet on close examination there are nothing but unconnected lights in the sky with no resemblance at all to these objects.

The same can be said for the patterns and connections that Blair and Bush see on planet earth. Invariably the "connections" are not as strong as they would have you believe, the dots are being joined to promote their particular political fetish/objective.

Joining the dots is a dangerous political simplification, and should be treated with extreme caution.

Advice To Bush and Blair

Gentlemen,

In order for there to be a meaningful and effective solution created that will address the current turmoil in Lebanon, it is essential that there is a ceasefire first.

Think about it.

The Real Reasons for the "Low" Level of Unemployment

The "low" levels of unemployment in Britain are due to the following factors:

• 7 million people work for the state (ie the private sector supports them)



• Unemployment is regularly being redefined as "sickness"



• Large numbers of under 25's are now in full time "educashun", learning nothing useful at "pretend" universities. They will not be able to find work when they leave, but will be saddled with a lifetime of debt.

We are allowing ourselves to be deluded by a dishonest and untrustworthy government, and are sleepwalking towards disaster.

CIA Airlines



Click the image to see a larger version.

The Cricket Test Revisited

In the aftermath of the revelation that lthe recent London bomb attack was carried out by British Muslims, there has been an earnest volley of questions fired off at British Muslims by the media; as to what possessed these young men to murder their fellow countrymen.

Rather disturbingly many of those questioned, whilst saying that they do not approve of or condone murder, were quick to say that many Muslims are angry about British foreign policy. Whilst not explicitly saying that this anger should be an excuse for murder, those questioned imply that it may be a reason for the attack. This clutching at straws for a reason has provided a "shroud of respectability" to cover the decapitated corpses of the bombers.

This attempted "justification" for the bombing is absurd. There are many people in Britain who do not support our current foreign policy; ie they know that the Iraqi venture was criminally irresponsible, given the scandalous lack of thought and planning that had been devoted to the rebuilding of Iraq once the regime had been decapitated.

However, despite not approving of the British foreign policy, British citizens do not pack a rucksack with C4 and rush to the nearest tube station intent on murdering their fellow citizens.

I am afraid that the reason for the attack is far more simple, and basic, one of blind hatred for the West and its culture.

The bombers did not regard themselves as being either British, or indeed Western; they had rejected the culture and values of their birth country, in favour of their highly selective and morally reprehensible interpretation of the values and principles of Islam. In other words, they regarded their birth nation as the enemy.

How could such a state of affairs come to pass, whereby citizens born in Britain totally reject its values and democratic principles?

The answer, and the blame, lays full square at the door of the Muslim community in Britain. It is evident that the Muslim community, particularly in the North, has steadfastly refused to integrate into "mainstream" British society. They remain isolated and cut off; they appear as outsiders looking in, with suspicion and contempt for the British way of life.

This contempt is reinforced generation after generation, as the children born into the Muslim community are taught customs and practices (outwith religious ceremonies and worship) that are "not common practice" within the British way of life. In particular the role of women in Muslim society, as demonstrated by the dress code, is one area of significant difference. It has been argued by some, that the burqa is designed to show respect for women and the sanctity of the family; a cynic might ask why it is that men are not required to wear them as well. The emphasis within the Muslim community is on women being seen to be moral and modestly dressed at all times, Western women are regarded as little better than whores.

This contempt shown for the West is inevitably transmitted, in a closed community, from generation to generation. Western society is regarded as being morally decadent and degenerate. This is evidenced most aptly by the actions of the parents of one of the bombers. When, a few years ago, the teenager went through a rebellious period he was packed off to Pakistan; thus taking him away from the "corrupting influence" of the West. This action speaks volumes about what the Muslim community thinks of the West, and of British society.

Given the isolated and closed nature of many of the Muslim communities in Britain, it is hardly surprising that a generation is being brought up filled with hatred and contempt for their non Muslim contemporaries. Until the Muslim community recognises this failing and not seek "easy answers and excuses" for the bombing, such as British foreign policy, we will see more young men decapitate themselves in the name of a futile and evil cause.

Norman Tebbit was once mocked for his infamous "cricket test" analogy, whereby a citizen’s allegiance was tested by identifying which cricket team he supported. A similar, and very uncomfortable, question needs to be asked by British Muslims of themselves namely; which takes priority, Islam or Britain?

Where they answer in the former, it may be time for them to consider leaving. Where they answer in the latter, they must open up their communities; and accept that it is up to them to integrate with British society, not the other way around.

London

London has been a major city for over 2000 years.

It has survived fire, flood, plague, rioting, the Luftwaffe and the IRA.

Yesterday's attack by human scum will not destroy it, London will survive long after their intellectually and morally bankrupt theocracy has been consigned to the dustbin of history.

The EU Constitution - The Longest Suicide Note In History

Much has been written about the proposed EU constitution; there are those who claim that it is a blueprint for the future of the EU, and there are those who claim that it is the harbinger of a new European dark age.

Now that it has been placed into the deep freeze, ie killed, by the leaders of the EU I would like to add my "two cents" to the discussion. However, unlike other commentators, I will be brief and get to the heart of the matter.

The EU constitution was destined to fail for the following reasons:

• It is over 300 pages long, no voter (or indeed politician) on the planet could possibly understand it. The American Founding fathers wrote a constitution, which was a success, of a mere 20 pages.



• The US constitution begins "We the people..", the EU constitution begins "His majesty, the King of the Belgians..".



• Those countries that ratified the constitution did so via their own politicians, they did not trust their people to support it. Two of the three countries that trusted their people, France and the Netherlands, were given the two finger salute. In other words, the citizens of the EU do not want a European constitution.



• The US constitution was written with the support of the people, who had just fought the War of Independence. The EU constitution was written by an isolated political elite, who did not consult the people.



• The EU constitution attempts to impose an outdated model of state intervention on the citizens of the EU. Many of those citizens live in countries that have abandoned state intervention, in favour of free market economies. Until the member states of Europe agree as to whether they want a free market or outdated state intervention, the European project will go no where.

Any new attempt to revive a European constitution will have to take account of the above points, if it is to have any hope of success.

Make Poverty History

There is currently quite a media frenzy over the forthcoming concert in aid of the "Make Poverty History" campaign.

People are being encouraged to go along to the concert, march on the G8 summit at Gleneagles and to buy a white wristband.

The idea being that this will spur world leaders into canceling the debt owed by Africa, and to channel more aid to that region.

This is all very well and good. However, it is naive in the extreme:

• Canceling the debt will not serve the people of the region. At some stage they will need to borrow more money, those that have lent money in the past and have had that debt cancelled will not be inclined to lend more money in the future.



• Channeling large sums of money into Africa does the people of the region little good. The majority of that money goes straight into the pockets of the corrupt leaders of Africa, as they equip themselves with ever more luxurious palaces and larger fleets of presidential aircraft. Until Africa addresses its internal corruption, money sent there will never reach its target. In fact aid does nothing more than perpetuate the corruption.



• The purchase of the white wristband has turned into a nothing more than an egotistical fashion statement. People are using the band to pretend that they care, and to go along with the media frenzy that has accompanied this campaign.



• The white wristbands have been made by sweat shop labour in China, the purchase of these fashion items in fact does more harm than good; by lining the pockets of the sweat shop owners.

The solution to Africa's ills lies in the hands of Africans, not ours.

The Top Ten Reasons Why ID Cards Are Bollocks

I went down the pub last night, for a drink or two; and it is fair to say that, in the spirit of annoying our elected representatiaves, an elegant sufficiency of booze and cigarettes were consumed.

During last night’s celebrations, we mused on the top ten reasons why ID cards are bollocks (how sad is that?). Here is our top ten:

• ID cards are the tools of choice of dictators, during peacetime. Don’t take our word for it ask Churchill, Bush or Thatcher; all of whom have said the self same thing.



• ID cards can easily be forged, eg visit www.myoids.com



• The alleged purpose of ID cards is to prove someone’s identity, this can already be done with ease via eg; passports, NI numbers, driving licence or birth certificates to name but a few. Therefore ID cards are unnecessary.



• Foreigners passing through Britain do not have to hold ID cards.



• Proof of identity is no deterrent to terrorism, the determined "loon" is perfectly happy letting the world know his/her real name in a suicide bombing.



• Whilst we may be "waging war" against others, we are not "at war"; there is no external threat to the existence of this nation, aside from the internal threat posed by Labour.



• The cost of implementing, and managing, ID cards is prohibitive.



• The IT requirements, necessary to effectively manage the huge database envisaged by Labour, are not feasible. No IT project implemented by politicians, of any party, has ever worked properly or met budget.



• ID cards do not have to be carried by individuals, therefore their purpose is negated.



• ID cards will not be issued to every citizen of Britain until 2014. Labour claims that we are all in danger, yet she is taking 10 years to address that threat.

Do you not think that Labour is being a little slow here?

Could it be that we are actually not in as much danger as they would have us believe?

This list took us around 5 minutes of alcohol fuelled deliberations to create, ie it was not very difficult to pull Labour’s arguments to shreds.

If it is that easy for us "ordinary mortals" to pull her logic to threads; why does Labour still persist in her plans, and why has the "Leader" of the "Opposition" committed political suicide by supporting the introduction of ID cards?

Advice To Pope Benedict

The newly appointed Pope Benedict XVI faces the same challenge that any new CEO of a large failing multi national faces.

Namely, change management and scoring "quick wins" as he consolidates his position.

My advice to Benedict as to what his first "quick win" should be is simple; change the absurd catholic doctrine on contraception, and allow people to use condoms.

This one measure alone, will dramatically reduce the number of deaths in Africa from HIV; thereby ensuring that the Catholic church itself does not die out in this troubled continent.

The End of The Olympics

The Greek government has blamed the unchecked spending on the 2004 Olympics as being the reason for Greece's growing budget deficit.

Seemingly, because of accounting errors and "omissions", this deficit is likely to grow.

The latest figures from the EU show the deficit at 6.1% of gross domestic product, more than double the cap allowed by the EU.

Prime Minister Costas Karamanlis told the Parliament:

"The burdens we face from the past are very large..".

The cost of the 2004 Olympics is now being estimated at being $12BN. The Greek government has until the end of the month to explain to the EU how it will lower the deficit.

In a statement on the Finance Ministry website, the blame is pointed directly at PASOK, the socialist government that ruled Greece in the lead-up to the Olympics.

Additionally, there is the nagging question of what to do with the now redundant white elephants that made up the Olympic infrastructure. These are costing around $100M per annum just to maintain.

In respect of the breaching of the EU deficit rules, I would imagine that some form of political "fudge" will be made. The EU is notorious for allowing its members to break the rules, this will be no exception.

After all, if the then Greek government had been honest about the costs it would never have been allowed to join the Euro.

The EU will never admit to the fact that it had been conned.

With regard to the $12Bn cost, this is surely proof positive that the Olympics as a whole need to be totally reformed and scaled down.

No one in their right mind should even think of hosting them, if they are going to cost this much.

The trouble is that politicians' egos overrule common sense.

Maybe it is now time to abandon the Games, and for countries to spend their money on something more productive instead.

Don't Dilute The Brand

My professional body, the Institute of Chartered Accountants (ICAEW), will be launching yet another campaign to persuade its 126,000 members to approve a merger with two other accountancy bodies in the UK (CIPFA and CIMA).

The ICAEW ruling council argue that:

• The demographic skew of the ICAEW means that by 2023, half the membership will be over 55. The merger, in their view, will inject young blood into this dying organisation.



• The merged body will be larger, and better equipped to address the issues facing accountants in the 21st century.



• The merged body will be able to stand up to the UK’s other accountancy body, the ACCA. The ACCA is, for reasons that remain unclear, not participating in the merger talks.



• The ICAEW argue that we have been down this route so many times before, there have been several merger attempts in the past that have been vetoed by the membership, that it is now time to make up our minds once and for all; ie vote yes.

To quote Margaret Thatcher:

NO!
NO!
NO!
NO!

The arguments put forward represent the same, tired old mantra recited by previous ICAEW councils. They failed then, and they will fail again to convince the membership that a merger is a good idea.

We, the members of the ICAEW, do not want or need a merger of incompatible bodies. The merger will “dilute the brand value” of the FCA qualification.

Rather like a poorly conceived marriage; forcing unequal, ill suited partners together is a recipe for disaster.

The membership of the ICAEW have strived long and hard to achieve their qualifications; yet the council of the ICAEW seek to fritter away the labour of years, like a gambler “blowing his salary” at the dog track. To accept the merger would, in effect, consign the members’ efforts to the dustbin of history.

To hand over control of the governing council of the ICAEW to a new body, will denude the current membership of its right to veto who can become an accountant.

The council has wasted far too much time and money over the years, in trying to persuade the members to vote for a merger. The time has come to stop this disgraceful waste of members’ subscriptions, and stop the merger juggernaut once and for all in its tracks.

The argument about demographics is spurious, and indeed a sad indictment on the “management” by the council of the ICAEW. The decline in “youthful” members is surely down to the decline in the attractiveness of the qualification, and the out of date “fuddy duddy” image of the ICAEW. These issues should be directly addressed by the council, not swept under the carpet in the guise of a merger.

Diluting the brand is not the way to address the fundamental problems facing the ICAEW.

Vote no to the merger.

I have set up a website, dedicated to fighting the ICAEW merger proposal, it can be accessed via www.stopthemerger.org

Please tell your friends and colleagues about it.

1984 – Twenty Years On

In Orwell’s chilling vision of the future of Britain, 1984, the Ministry of Truth was responsible for propaganda. Orwell illustrates this by describing the release to the media of news about the statistics for shoe production. The statistics showed another increase in production.

However, as the protagonist Winston Smith mused, no one knew if the statistics related to left foot shoes, right foot shoes or were for pairs of shoes; indeed no one knew if the statistics were correct and, most damming of all, no one cared.

In 2004 we find ourselves to be in a very similar position. There is a rumour, “doing the rounds”, concerning the latest figures released by the government about the number of homeless people living on the streets of London.

It seems that a “directive” was issued to all the homeless care centres in London, instructing them to hold a party for the homeless of London on the same evening.

The homeless were duly “rounded up” to attend this very philanthropic event. A good time, we assume, was had by all.

On the face of it there is nothing sinister, or worrying, about giving a little warmth and cheer to those on the lowest end of the social ladder. However, there is one piece of information that needs to be added to this “Dickensian tale” of generosity.

The night of the party was the night that statisticians were walking the streets of London, counting the number of people living rough on the streets. These statistics would then be compared to the previous count, to see if the government had reached its target of reducing homelessness.

Needless to say, because a large number of homeless people were attending the special party they were not physically on the streets at the time of the count. Therefore, the statistics for the number of people living rough on the streets of London showed a marked improvement. The government had reached its target!

It seems that Orwell’s vision, although it may have missed the mark by twenty years, has become reality.

Bliar and his team of cronies in New Labour are so adept at lying, that they know that they can do it with impunity; the lies are no longer reported, even when they are no one seems to care.

The result is that Bliar no longer cares what lies are told; so long as it serves the cause of New Labour, and their desire to cling on to power at whatever the cost.

The Rotten Core at The Heart of Britain’s Financial System

It is often assumed by both the public and the politicians that, aside from the occasional scandal such as the Maxwell fraud, Britain’s financial system is well run and relatively honest.

After all, the UK has a plethora of rules, regulations and watchdogs (such as the FSA) governing; the stock market, financial advisers, pensions, auditors and all the other components that go to make up the UK’s financial system.

However, I am firmly of the opinion that this “confidence” is based on nothing more than hubris; and that, in fact, we live in country that has a fundamentally rotten financial system.

I would like to cite a number of examples that support my view:

The Endowment Mis-selling Scandal

The endowment mis-selling scandal, of the late eighties and nineties, readily springs to mind as one of the major failings of our financial system. As has been well documented, the life assurance companies used the bull market to create a totally unsuitable, and useless product, that they aggressively sold in the manner of TV sets and washing machines to over 8 million unsuspecting home owners.

The theory being that the bull market would create high yield returns on this product; that would not just pay off the mortgages of the hapless holders, but would also give rise to a modest surplus. Needless to say, what the life assurance companies did not bother to clearly tell people was that their commission charges would rob the product of much of its initial value, and that their projections for growth were totally unrealistic.

It now turns out that the 8 million holders, of these white elephants, are facing shortfalls of over £40BN. Although, in theory the policyholders can try to claim compensation, the life assurance companies are using every excuse in the book to slow the process down in order to avoid paying compensation. To date a paltry £1BN has been paid to those seeking redress.

The FSA, although they offer some fall back position for those refused compensation by the life assurance companies, do not have any intention of “rocking the boat” too hard. The FSA refuse to acknowledge the fact that the life assurance companies perpetrated the greatest financial scandal in the UK in living memory.

Pensions

Needless to say the results of the endowment policy mis-selling scandal have, coupled with the ill thought out tax raid by Gordon Brown on the pension’s industry, destroyed peoples’ confidence and willingness to invest in life assurance/pensions policies. The British people are facing a pension black hole that will leave the majority of pensioners, over the next few decades, living in penury. The politicians have failed the electorate, by allowing the electorate the self-delusion that they will forever have increasing standards of living without having to work harder. Instead of telling it straight, that people are going to have to work beyond what is considered to be the normal retirement age of 60-65, the government fiddles while “Rome burns”.

Corporate Governance

Corporate governance, so long thought of as being well established and effective in Britain, is failing lamentably. The boards of many companies are made up of directors and non-executive directors from a small clique of friends, and contacts in the City, who sit on each other’s boards. These people, instead of seeking to ensure effective and robust management in the interest of the shareholders, in fact more often than not sit passively; nodding through a host of half baked business plans, and the most greedy of executive remuneration packages.

I can certify that, more often than not, the primary qualification for being selected to serve as a non executive director (a position that in theory is meant to oversee the actions of the main board, so as to safeguard the interests of the shareholders) is that they have probably served in the same company before, or have certainly got “the right” connections. The concept of robust, proactive, independence doesn’t apply.

Directors of companies are routinely lambasted for awarding themselves, like pigs with their heads in the trough, inflation busting pay and pension packages. Politicians wring their hands, and shed crocodile tears, lamenting at this practice. However, once they have left ministerial office, each one of these “champions of the people” soon finds their way on to the boards of the companies that they were criticising.

Post Enron and Sarbanes Oxley the UK has, in its normal slow unhurried way, put together via the Higgs/Smith reports and the Combined Code a set of guidelines for companies and executives to follow with regard to corporate governance. However, it is not compulsory; all the company has to do, if it wishes to ignore these guidelines, is to write a few notes in the accounts.

Companies that are increasing their internal control and review procedures, not I may say because they want to, but because Sarb-Ox has forced them to; are complaining loudly about the increase in audit fees. It seems to me that it is not unreasonable that, because a greater amount of work is required to be done by the audit firms, they will have to charge more.

Audit Firms

Audit firms are not entirely immune from the rotten stench that emanates from the UK financial system. I well remember as a trainee auditor witnessing the booking of extra hours, that were not in fact worked, to the timesheet of a well known FTSE company; so that the audit fee could be justified to the FD of the client who, not unreasonably, had asked to see a breakdown of the hours worked.

A few years ago, audit firms, having felt the pressure of the market were forced to find ways to cut costs. Their brilliant and inspired solution was to create the concept of “risk management”, and audit only those areas that were deemed to be high risk; system compliance tests, which took up a lot of time, were thrown out of the window. The audit became a cheap and cheerful “risk management” exercise; whereby the real money was made by selling on added value services, such as consultancy.

In 2000 I attended, as an observer, an Arthur Andersen training course in Chicago; the mantra “forget about the audit, hard sell the high margin add ons” was pumped into the participants at every opportunity.

The consultancy advice usually given to the hapless client was to outsource mainstream functions such as; internal audit, tax and treasury to yes, you’ve guessed it the audit firms. I would say this, if Arthur Andersen had not been the first to “cop a fall” over lack of segregation of practices and excessive greed with its Enron and WorldCom debacle, then one of the other big firms probably would have done so.

Now they are forced to segregate services, and as such are reverting to the old “tick bash” routine in order to keep fee incomes high.

There is one other fly in their ointment. With the Enrons of this world came mega sized law suits, something that the accountancy firms and their insurance firms do not wish to pay for. This has caused something of a stand off with the government; Gordon Brown wishes for uncapped liability of audit firms, the audit firms are arguing for a cap. Their secret weapon is that if they don’t get a cap, they will dump certain “high risk” clients; this would leave the government with the responsibility for reviewing these companies’ books of account. In other words, the audit firms are holding the government to ransom; and trying to pass the risk of errors and omission in their working practices on to the shareholder and tax payer. Nice trick isn’t it?

The Stock Market

Those of you who are still not convinced that the financial system in the UK is rotten, should take a look at the stock market; and ask yourselves whether the ordinary investor, with a modest portfolio, can make money to the same degree as the big market players.

Monitor the swings and movements in the share price of any share, that you care to pick, over a few months; and watch the buys and sells preceding the announcement of any news that affects the share price, such as a take-over bid. In the majority of cases you will see that there are significant buys/sells (depending on the nature of the announcement), prior to the news being made public. That is not coincidence, but the result of the news being leaked to a few well connected “players” in the market.

When there is little news coming out about a company, more often than not the market makers will adjust the prices to shake out sellers or buyers; there is no reason for these price movements, other than to panic smaller holders into adjusting their portfolio which in turn generates commission for the market makers.

Consumer Debt

I will take as my final example the house price bubble that has grown over the last few years. As I write this, the effect of the recent interest rate rises by the Bank of England seem to be slowing the price rises down or indeed may even have pricked the bubble. The fact that this unsustainable rise could be allowed to continue for so long is damming in itself. However, the real issue is what has been sold on to the unsuspecting, and financially illiterate, consumers on the back of the bubble.

In the eighties, as already noted, we had endowment polices; now we have equity release schemes designed to consolidate credit card debt to encourage borrowers to borrow more, and spend on short term consumption. Borrowing long to spend short is recipe for disaster, as Weimar Germany and the world discovered to its cost in the 1920’s.

Loan companies have been allowed to aggressively target their advertisements at the most vulnerable, financially illiterate, people in society; without any regulatory interference. The interest rates on many of these debts bear no correlation to the risk profile of the loan. Instead they reflect the lending company’s “greed pricing grid”; which is the in house pricing model utilised by the lender to identify the maximum rate of interest that it can charge without losing customers to other lenders.

The result is that consumer debt in the UK now stands at over £1 trillion, which in my view is unsustainable. As house prices start to deflate many people will find themselves in a situation with negative equity; unable to move house, or restructure their finances. They will be saddled with an unsupportable level of debt for the rest of their lives.

Now, taking all of the above into consideration, do you feel that the financial system in the UK is well regulated and honest?

The Diana Memorial Fountain – A Monument To New Labour

After considerable delays, and at considerable cost (approximately £3.6m), the Diana Memorial Fountain was recently opened in London amid much hyperbole and razzmatazz.

Its design, we are told, is unique and “cutting edge” in the world of fountains.

However, as with all “unique” and “cutting edge” architectural designs, the fountain has had its fair share of problems.

It has had to be shut several times since its recent opening; owing to leaves blocking the water outlets, and people falling over in it.

A minister in the Labour government rushed to the fountain’s defence, and blamed the public for not using it properly. Plans are now being considered for extra park patrols and inspections, in order to prevent people and dogs from paddling in the fountain.

This “mini fiasco” bears all the hallmarks of the New Labour approach to government:

• The project was expensive and unnecessary, but it went ahead anyway.

• When problems emerged, Labour sought to blame others; in this case they blamed the public.

• The fountain design has not been well thought through, and is unsuitable for the environment in which it has been placed. There are numerous New Labour projects with that as an epitaph; the Dome, the invasion of Iraq, the PFI initiative and elected mayors readily spring to mind.

• The fountain is a memorial to an individual who was famous because of her connections and celebrity status, rather than her contribution to society. New Labour attach themselves to vacuous celebrity icons, like a barnacle to the hull of a ship.

• The solution to the fountain’s problems is to increase inspections and patrols. How very New Labour; when presented with a problem, such as education or health, their response is to smother it with inspections and statistical analysis and to regulate it to death.

In my view, the fountain has become a memorial to all that is shallow and inept about new Labour.

I suggest that it be renamed “Tony’s Folly”, a lasting monument to the architect of New Labour.

The Butler Report

Lord Butler’s report has, much like the earlier Hutton report, exonerated the government and individual members of the government from blame; in relation to taking the UK to war on the false premise of Iraq possessing weapons of mass destruction (WMD).

Butler has achieved this neat side-step by working on two mistaken assumptions:

• He has assumed, that with respect to the evidence on WMD; all parties and processes connected with the collation, processing and dissemination of the evidence functioned unsatisfactorily. Therefore, if all were to blame, no one individual could be held personally responsible or singled out for blame. He assumes that the UK government still operates under the principle of collective Cabinet responsibility.

Unfortunately, the pretence of collective responsibility has long since been abandoned by Prime Minister Blair; who has little interest in the seeking the approval or counsel of Parliament, or his colleagues in the Cabinet.


• Butler also noted that if Prime Minister Blair had not really believed that there were WMD, then he would never have used that as an excuse for war. Butler holds to the belief that once the lie had come out, after the war, the Prime Minister’s position would have become untenable; ie it would have been irrational for the Prime Minister to lie.

However, Butler ignores one very salient point, that is exactly what has happened. There were no WMD, and the Prime Minister is having to explain how this “error of judgement” occurred.

Butler’s reasoning is honourably based, for he believes that public servants and politicians should act with honour and integrity.

Unfortunately they don’t.

Protecting individuals from specific blame is the act of an honourable man. Unfortunately, the politicians that he protects are not honourable; and have readily in the past sought scape goats to protect their own positions, when errors of judgement and incompetence threaten their privileged positions.

The argument that it would be irrational for Blair not to tell the truth, shows how little Butler understands Blair. Blair did not care whether there were WMD or not, the possibility of there being WMD was enough to use in his argument to take the UK to war.

Blair, as a lawyer, knew that whatever the outcome of the search for WMD he would always be given the benefit of the doubt; ie that he acted in the best interests of the country. It could never be proven that he had deliberately lied, it is after all still an essential part of the law that you are innocent until proven guilty.

I am afraid that Lord Butler, being a man of honour and integrity, inhabits a world that has long since ceased to exist; which is exactly why he was chosen to prepare the report.

An honourable man cannot be accused of deliberately colluding with the government in a cover up.

Confidence in the Financial System

Sir Richard Sykes, a "big player" in UK business circles and a leading government adviser, has published a report entitled "Restoring Trust; Investment in the 21st Century".

Sir Richard, worried about the small amount of money that people are putting away for their retirement, is trying to persuade investors to return to the UK stock market.

With the melt down in share prices in the first few years of the 21st century, the £40BN shortfall on endowment policies and the Enron and WorldCom scandals to name but a few; investor confidence has taken a battering over the past few years.

Sir Richard ought, in some respects, to be able to count on the help of the Financial Services Authority (FSA). Their primary function is to maintain confidence in the financial system in the UK.

One significant piece of the jigsaw that forms the financial system is the trading of shares on the stock market. Confidence in the working and price mechanisms of the market will minimise investors’ fears about investing in that market.

I have been watching the activities surrounding one particular share, with a degree of fascination over the past few months.

The share, which shall remain nameless, is highly volatile. Its trading range, in pence, has moved from below 10p to the high 70’s then back to the mid 30’s. All of this, in spite of the fact that the company has yet to earn single penny in revenue from its activities.

The main driving force behind the price swings have been:

• Optimistic news releases via RNS and AFX notes.



• Speculation by gullible fools.



• Ramping and de-ramping (talking it up and talking it down), on the bulletin boards of financial websites.



• Optimistic conversations, and emails, between the CEO and shareholders. The subjects of these "private exchanges" are then published, by the same shareholders, on the bulletin boards.

To some extent this will always happen in a free market. However, the degree to which this has happened with this share has given me much cause for concern.

Matters came to a head recently when a false AFX note, containing information that would have caused the share to leap, was posted on a bulletin board. On discovery that it was a fake, the poster claimed to have posted it as a joke.

Following on from that, the CEO in an email to a shareholder (the contents of which were naturally posted on a bulletin board), noted that he was fed up with the volatility of the share price; and that news flow would be staunched in order to stabilise the price, and remove the speculators from the share.

There are two possible scenarios, but only one conclusion, wrt this email.

• The posting of this email, if false, means that the poster was trying to manipulate the market.



• However, should the email be genuine; then it means that the CEO was trying to manipulate the market, via news management.

Either way, this is a very clear example of market manipulation; something which the FSA has an interest in stamping out, in order to maintain confidence in the financial system.

I applaud Sir Richard’s intentions. However, before trying to persuade investors to return to the market, he needs to ensure that shenanigans such as this are stamped out. In other words he needs to ensure that the FSA are proactively investigating occurrences such as the one I have just described, and taking action where deemed appropriate.

The Price of Petrol

The recent rise in the price of oil, to around $40 a barrel, has once again brought the price of petrol in the UK into focus.

There have been threats by various action groups to blockade the roads; in a repeat of the chaos that ensued a few years ago, when petrol prices hit new highs.

It seems that the hard pressed British driver, so we are told, will not tolerate petrol at 80p or more a litre. The argument is also made that, since over 50% of the price is tax, it is up to the government to keep the price down by reducing the tax.

Some politicians have jumped on the “petrol price bandwagon”, and expressed their support for the British motorist.

However, in my view, far too much time and effort is expended by politicians and the press in trying to placate the motorist.

Let us take a look at a few facts:

• In real terms the price of petrol has remained, more or less, constant over the past 30 years. In other words, the motorist is no worse off now than 30 years ago.



• Britain is a small overcrowded island of 58 million people. It seems that, despite the congestion of the roads and cities, everyone feels that it is their God given right to own and operate a car. Newsflash, it isn’t!



• Oil is a dwindling resource, the more we use the less there is; by definition there will have to be some from of rationing. The most effective form of rationing is via the price.



• Taxation on petrol is required to support the ever increasing demands of the electorate for better schools, hospitals and, dare I say it, more roads. It is time for the motorist to wake up, and realise that these thing have to be paid for. Therefore it is not unreasonable for the government to tax motorists, given the fact that they (the motorists) insist that every inch of the country be covered in motorways.



• Cars are a blight on the environment, high petrol prices are a good way to make people think twice about using them.



• The use of cars in the UK at the moment can be said, in many cases, to be unnecessary. The “school run”, in the mornings and afternoons, sees a multitude of unnecessary car journeys; as “little Johnny” is driven the few yards to school by his overprotective and doting mother. We are breeding a generation of fat, lazy and spoilt children. It seems to me that they, and the environment, would benefit immensely from them walking to school each day; rather than being chauffeured.

I am therefore very happy to see petrol prices rise in line with the price of oil.

The Current Situation in Saudi Arabia

The recent attack on the foreign workers in Saudi augurs ill for the future. Saudi Arabia, despite earning a good income from oil production, has a number of significant social/political problems that it needs to address.

These include the following:

• Demographics, over 40% of the population are under 25 years old



• Reliance on a single revenue source, oil is the sole revenue source for the Kingdom. Saudi has failed to develop any other form of revenue earning economic activity



• High unemployment, Saudi relies on 6 million foreign workers to run its key industry. The result being that its own citizens are unemployed



• Security, Saudi’s security services and armed forces are not “top rank”. This was very clearly demonstrated by the events over the weekend. Saudi relies on the USA to protect its borders



• Democracy, this is in fact non-existent. Saudi has been ruled a by the House of Saud since the state was founded in the early 20th century



• Human rights, Saudi has a very poor human rights record; eg women are not allowed to drive cars and people are still beheaded



• Education, Saudi education is religious based and highly anti Western

The social and political problems within Saudi have provided a fertile recruiting ground for Bin Laden and his acolytes.

In my view, time is running out for Saudi Arabia. The Saudi government needs to address the above issues, with urgency, in order to avoid the significant and irreversible breakdown of law and order that is inevitable.

Failure to address these issues will ensure that the House of Saud is replaced by an extreme Islamic theocracy. This will not be good for either the Saudi people, or the oil-based economies.

The European Elections for the Invisible Parliament

The citizens of Europe are facing the joys of a European election in the next fortnight, when we have the opportunity to vote for our Members of the European Parliament (MEP’s). This provides an apposite opportunity to pose a few questions, I am happy to publish any replies:

• What exactly do our MEP’s do?



• Can you name one piece of legislation, passed by an MEP, that has had a positive effect on the way of life of the citizens of Europe?



• Does anyone know the name, or party, of their MEP?

Despite the fact that the EU elections are only a fortnight away, I have not received a single solicitation or piece of information from any of the candidates standing; telling me about themselves, or their policies.

We pay these people a more than generous salary and expense allowance, and they have a far better standard of living than the majority of the citizens whom they represent. Yet they choose to remain invisible.

The staging of the elections for the “invisible parliament” costs the European taxpayer a very large sum of money. Yet we see no return on our “investment”.

I, for one, intend to register my protest at this insult to democracy; I do not intend to vote.

I recommend that every like-minded citizen of Europe follow suit.

Iraq, What Needs to be Done

The situation in Iraq is, to put not too fine a point on it, a real mess.

Despite President Bush proclaiming, “mission accomplished” in 2003, the ongoing bombings and attacks on coalition personnel prove otherwise.

The situation has not been helped by the disclosure of USA troops abusing prisoners. Quite how the military and politicians thought that this was a good way to extract information is beyond me.

It is fair to say that as a result of this, the American brand image is at an all time low.

The USA and coalition are now faced with some tough decisions. The easiest option would be to cut and run. In the short term, this would save coalition lives. However, in the long run it would be disastrous:

• Iraq would descend into even more chaos, and many thousands more Iraqi civilians would die; as various factions fight it out for control.



• The temptation for other countries in the region to interfere would be great. Before long, the Middle East would dissolve into chaos and war.



• The oil supply to the rest of the world, would be threatened; and the world economy would sink into recession.



• The terrorists would be emboldened by the withdrawal, and step up their attacks elsewhere.

In short, withdrawal is not an option.

Here’s what needs to be done; it is neither palatable, nor easy:

• Stop abusing prisoners.



• Punish those responsible for the abuse, and those who gave the orders.



• Get the power back on in Iraq.



• Remove the military control of the procurement and funding allocation process in Iraq.



• Install a civilian administration as soon as possible in Iraq.



• Leave as soon as all the above have been done.



• Reduce the West’s reliance on oil.

It’s going to be a long summer!

The Photos of Torture in Iraq

The pictures coming out of Iraq, alleging the torture and abuse of Iraqi prisoners by British and US servicemen are a matter of great concern and shame; if they are proven to be true.

The US and British governments are currently investigating the accusations; and have let it be known that should the accusations be proven, the perpetrators will be punished.

The question is how far up the chain of command will the recriminations go?

No doubt the men and women on the field, who are in these photos, will be punished. However, it is extremely unlikely that they were acting without the direct encouragement of more senior personnel and other agencies.

Will these people and agencies be investigated and punished?

There is also a more troubling question; the young men and women in the US and UK armed forces were sent into Iraq on the pretext of stopping the spread of WMD, and reducing the risk of terrorism spreading.

The senior politicians in the US and UK, specifically President Bush and Prime Minister Blair, made it very clear that the mission was one of “Good vs. Evil”. Those sent into Iraq were, in my view, “pump primed” by Bush and Blair to believe that in effect they were fighting for the very existence of the West’s way of life.

Under those circumstances it is quite possible that, many miles from home in an inhospitable country, the young men and women of the armed forces may act with an almost zealous fervour to achieve their mission.

In other words, they were acting out the roles scripted for them by the politicians.

Bush and Blair need to keep this in mind when they next make moralistic pronouncements about events and countries.

Additionally there are a number of uncomfortable questions arising from this disgrace:

• If the scenes of abuse have come as a total surprise to President Bush and Prime Minister Blair, then the chain of command and control has suffered a catastrophic failure. The responsibility for this failure rests with those at the top of the chain.



• If the scenes of abuse have not come as a surprise; then it means that either these acts were being perpetrated on the express/implied orders of Bush and Blair, or that they were informed of it some weeks/months ago before the newspapers published the story. In which case Bush and Blair are guilty of suppressing a scandal that should have been placed in the public domain, as soon as it had been discovered.

Either way Bush and Blair need to consider their positions. The credibility of the coalition forces, and the last shred of justification for the invasion of Iraq, have been blown away by this scandal.

Meanwhile the people of Iraq must be wondering if they are, in fact, any better off.

The Penny Has Finally Dropped

I see that there was a “dust up” this weekend, at the G7 talks, between the President of the European Central Bank (ECB) and the finance ministers of France and Germany.

The leaks from this meeting suggest that the finance ministers are more than a tad “peeved” at the ECB’s refusal to cut rates.

The finance ministers know that they are unable to kick start their sluggish recession bound economies, as long as Europe’s interest rates remain at the current levels.

Jean-Claude Trichet (President of the ECB) knows that as long as it is the ECB’s mission to take a European wide view with regard to inflation, he cannot reduce interest rates at the behest of France and Germany.

Gordon Brown (the UK’s Chancellor of the Exchequer) can look on with a smile of smug self-satisfaction. The UK remains outside of the Euro, and therefore outside of the remit of the ECB.

I have noted before that the European Union cannot succeed in micro managing the economies of its member states (see The Impact of The Euro); as long as there is a single currency managed by a central bank. In my view the EU, in its present form, is destined to fail.

It seems that the finance ministers of France and Germany have only just realised this. The “penny has finally dropped”.

Preventing Cheque Fraud, It’s Not Rocket Science!

This week in the UK, Joyce De-Laurey was found guilty of stealing £4.4M from Goldman Sachs.

It transpires that the former secretary accumulated her “nest egg”, over a period of 14 months, by forging the signatures of two senior members of Sachs on cheques and wire transfers.

The money was used to finance a lavish lifestyle enabling her to purchase, amongst others, a villa in Cyprus for £750K, £56K of Cartier “goodies” and £20K of items from Harrods.

I have had many years international experience running internal audit departments, and investigating frauds (see resume); and am constantly surprised as to how lax some companies’ cheque authorisation procedures are.

It seems an opportune moment to remind those in business of some of the basic controls that should be in place, in order to minimise the risk of fraudulent payments (note this list is not exhaustive):

• There should be a hierarchy of cheque signatories. The larger the amount, the more senior the level required to sign.



• Cheques over a certain predetermined limit should have at least two signatures.



• Cheques should never be drawn without a cheque requisition being signed by a responsible official, who does not sign the cheque.



• Cheque requisitions should be supported by documentary evidence, eg invoice/purchase order.



• Transaction summaries of cheque payments should be routinely reviewed by internal audit.



• Transactions over and above a predefined norm should be checked by internal audit.



• An up to date cheque signatory list should be maintained, showing limit/authorities etc.



• The bank should be encouraged to proactively query suspicious transactions.



• Bank reconciliations should be performed regularly, and be up to date.



• All directors’/senior managers’ personal accounts should be thoroughly reviewed by internal audit on a regular basis.



• Finally, and this really ought to have rung alarm bells at Goldman Sachs, where an employee starts to display ostentatious signs of new found wealth; identify the source of this wealth.

As you can see, the above points are not rocket science. However, I would bet good money that many companies, not just the hapless Goldman Sachs, may not have all of these procedures in place.

What Use Are the Olympics?

The Olympics are soon to be foisted upon us again. I confess that I have little interest in sport, and find the “over the top” enthusiasm and saturation coverage by the media of this four yearly event to be tedious in the extreme.

This time it is the turn of the “lucky” Greeks to host this sporting extravaganza.

The modern Olympics, a far cry from the games envisaged by the ancient Greeks, are in my view a complete waste of time and money:

• The hapless cities that host them are turned into a traffic congested hell on earth.



• A media circus descends on the city and occupies every hotel, bar and restaurant; displacing the local citizens.



• Despite the hype and media splurge, those that host the event rarely see a profit.



• The security risks these days far outweigh the benefits; viz the pipe bombing in Atlanta in 1996, and the terrorist atrocity in Munich in 1972. Goodness only knows what is being planned by the fanatics and scum for the 2004 games.



• The athletes themselves, instead of being fine examples of the human body in its natural form, are in fact pumped up products of illegal steroids and substances. So much for promoting health, fitness and vitality!



• Some athletes so grotesquely abuse substances and their bodies, in order to make their mark on the Olympics; that even their gender is called into question.



• The games, originally designed to promote friendly competition between rival nations, are used as a massive propaganda tool by the host countries to promote their own vision of society. Witness the Munich Olympics of 1936, or the tit for tat boycotting of the Olympics by the USA and USSR in the 1980’s.

I for one will be doing everything possible to avoid reading about them, or watching them, when they start later this year.

They are, in my opinion, of little value or purpose.

You Get What You Ask For

I note that my previous article, "The Merging of the Customs and Inland Revenue", seems to have been rather prophetic; with regard to the inability of politicians to manage IT projects.

An article in Wednesday's Times notes that owing to the slipshod vetting of tenders; the UK tax payer has been landed with a cost over run of £150M, relating to a contract with an IT agency that vets people working with children and the vulnerable.

It seems that the number of people using this service was massively underestimated. A classic mistake often made when defining the usage requirements of new IT systems.

The politicians thought that they were being clever in contracting with the company that offered the lowest bid.

However, that bid was based on low usage figures which were in fact wrong. The actual figures, which were much higher, have resulted in a significantly higher variable running cost.

Be careful when vetting tenders, you get what you ask for!

The Merging of the Customs and Inland Revenue

Gordon Brown, in his recent UK budget, announced that the offices of Customs and Excise and the Inland Revenue would be merged. The timescale for this is estimated, by KPMG tax chief Laughlin Hickey, to be around five years.

The disruption and chaos to the UK tax and VAT systems, that it will undoubtedly cause, is beyond measure. Needless to say, the overburdened tax payers will bear the brunt of the chaos.

One area that will undoubtedly cause the most difficulty will be the merging of the departments’ computer systems. As anyone who has managed an IT changeover knows, the process of upgrading or changing an IT system needs to be carefully planned controlled and monitored.

Many private sector firms find IT system changes to be unexpectedly costly, both in terms of time overruns and money expended trying to fix “bugs” etc; which were not expected at the planning stage. The history of public sector IT changes is littered with even more expensive failures, the IT upgrade of the air traffic control system is one such example of poor planning and control.

This seems an apposite time to remind IT managers (and the Treasury) of the basics of planning, and managing, a successful IT change.

Here is a very generic checklist, which can be used when reviewing the merits/demerits of a new IT system. Note, it is very basic, and is not intended to be comprehensive.

General

System/user specification - compared with standard Internal Control Objectives. Is the package in conformity with company recommendations?

• Is the system being taken "as delivered" or is it being customised?


• if so, additional development costs and timescale


• if so, implications for system size and response time


• use of PC packages to replace or supplement larger systems


• are features being lost which will have to be replaced e.g. inputs to planning at head office level.

Cost rentability/payback savings:

• what are the alternatives?


• have all costs been identified and included e.g. incremental licence fees?


• has the in house IT department been permitted to bid for service and have cost-comparisons been prepared on a rational basis?


• downsizing risks.


• cost implication for remaining users.

Interfaces to other systems

Organisational issues:

• user profiles set up to reflect organisation.


• discipline in manufacturing environment.


• is integration within the package matched by an integrated approach to the implementation?


• is system ownership/module ownership clearly defined?


• is the role of Data Administrator defined?


• is there sufficient local expertise for a stand-alone IT dept. especially if there is a change to unfamiliar hardware and operating system?

Controls

• Security and disaster recovery.


• what is covered by a Service Contract with the in house IT department, and what is a local responsibility e.g. order desk terminals?


• Maintenance/support:


• costs of third party support

Internal Control Checklist

This checklist covers the key issues which will arise from the initial review of the application.

Access controls:

Validation checks:

• both within the system and by responsible officials e.g. credit referral


• All points of data entry identified/controlled


• Clearance of rejected data/dump accounts:


• clearly defined who should receive the data


• timescale for reacting to that data


• escalation procedure if a serious problem manifests itself


• log for registering error reports and their disposal

Processing/proving checks (closed loop):

• goods movement:


• consider all aspects of logistics chain e.g. is material removed by Quality Control?


• identify exit and entrance points.


• Are transactions registered in correct chronological sequence e.g. if work in progress is back flushed before stores issues are booked, there will be an apparent negative consumption.


• Does opening balance plus each class of transaction produce an amount equal to sum of closing balances on stock file?


• Does opening balance of debtors plus each class of transaction produce an amount equal to sum of balances on sub-ledger?


• Does same logic apply to accounts payable sub-ledger?


• Batch thinking can be usefully carried over to modern packages when considering completeness of processing.

Exception reports:

• responsibility for acting on them


• Authorisation of sensitive transactions e.g. special discounts, credit notes, write offs/ons, adjustments. VAT implications.


• All physical points of despatch identified and controlled, including direct deliveries. Proof of despatch to and receipt of goods at remote sites e.g. telecommunication infrastructure project.

Exceptional transactions outside normal system parameters:

• one-offs, manual dockets, specials, projects, tooling charges.


• Cancellation/reversal of transactions. Authority and method of booking e.g. tends to be basic data capture as distinct from system-generated transactions. Effective communication of effect on net net turnover.

Master data file maintenance:

• customer, product, price files, vendor record, classification of accounts.
  

Bill of Materials:

• completeness and accuracy.


• Processing/job dependency sequences control. Quality of user manual - are dependencies explained?


• Interface/reconciliation of operational system with financial accounts - nominal ledger:


• order processing, goods movement, accounts payable, accounts receivable, cash


• Month end/year end procedures. Closing off and archiving procedures.


• Ability to restore. Initialisation of new accounting period.


• Initial transfer/loading of files from previous system including manual systems. Are front-end validations/checks being used or by-passed? If latter, will copied over data be regarded as corrupt by new package?
  Watch for reversible entries when transferring over a trial balance.
  

Goods Received Note/Receiving Report clearance:

• age listing and price difference analysis.


• Audit trail/history records:


• days/months available on screen?

Back-up/contingency planning:

• risks prioritised


• disaster recovery plan


• Control of change management. Implications for software and organisation. Will home-grown changes make it impossible to take new releases of third party software?


• Is there an ability to fix problems locally or is all technical expertise in, say, the USA of Germany? If overseas, what is response time?

EDI links with suppliers and customers:

• cost benefit of reducing goods movement pipeline but need to minimise exposure to hacking.

System reporting

• Do people get the reports they need and does the IT department know the distribution list?



• Does the package provide an addressing facility; do not take it for granted that it will.



• Are the reports acted on and/or do staff know what to do with them?



• Training of operators and users. Are features understood and are they being used cost-effectively? Are staff working around the system e.g. is it in danger of migrating to PC spreadsheets?



• Control of charges from software houses for maintenance and development. Proper contracts in writing and proper system for screening orders for change requests.

The Lesson of History

I understand that Tony Blair is “dismayed” that President Bush has rejected the UK’s call for an American led monitoring force, to be deployed as a buffer zone between Israel and the Palestinian Authority.

The rationale for Tony Blair’s proposal was based on the knowledge that Israel would never accept a UN led force.

However, he ignored the other side of the equation; namely:

• The USA already has large numbers of its forces committed around the world, eg Iraq to name but one place, these commitments are overstretching its resources.



• President Bush is standing for re-election, and will do nothing to antagonise the Jewish vote.

In view of the above, the USA would not have deemed Tony Blair’s proposal to be in its interest; no matter how well intentioned. Therefore it rejected it.

PM Blair felt, that after his support for the US invasion of Iraq, he was owed some form of payback. He ignored the lesson of history, that when dealing with the USA, the USA will always do whatever is in its own national self interest.

This is as true today, when dealing with President Bush; as it was in the Second World War when dealing with FDR, or during the Suez crisis when dealing with Eisenhower.

I do not understand why Blair is “dismayed”, ignore the lesson of history at your peril.

Parmalat, a Warning to Directors

I recently wrote an article entitled “Parmalat, Europe’s Enron”, about the Italian dairy company which is accused of falsifying its accounts.

Since that article was written the wheels of Italian justice have been set into motion, with a fast track prosecution being initiated.

However, what is of more interest is the action being taken by the creditors of Parmalat. They are not content with waiting for their own country’s legal system to bring them justice, and more importantly compensation, for the money that they claim that they have lost as a result of the alleged fraud.

Instead they have initiated a class action using, not an Italian firm of lawyers, but an American firm Milberg Weiss (details of the class action can be viewed via this link Milberg Weiss). Even more interestingly the class action is citing American law, not Italian law. The rationale being that as Parmalat traded in the USA, and allegedly presented falsified accounts, then USA law has been breached. A case can be made by non US creditors for compensation, using the US legal framework and lawyers who are vastly more experienced at bringing class actions.

This, in my view, is a natural development of the Sarbanes-Oxley legislation (introduced post Enron); which imposes tough reporting requirements on directors of US companies, and those companies that have US subsidiaries or listings in the US.

Directors who believe that they are not affected by the tougher regulatory regime in the US, simply because their company is listed in Europe, are deluding themselves. The less robust legal framework of Europe will no longer protect those who, either deliberately or through incompetence, cause investors and creditors to suffer significant financial losses.

The Parmalat case should be seen as a wake up call to those directors who are in denial about Sarbanes-Oxley. Lax reporting, poor internal controls and weak corporate governance will no longer be tolerated; you have been warned.

Characteristics of an Effective Audit Committee

I read with interest the “goings on” at Shell last week. The Chairman, Sir Philip Watts, was forced to resign on Wednesday. This was the culmination of a chain of events that started when Shell announced, on 9th January, that it had reduced its proven oil and gas reserves by 20%.

Various groups and events led to the departure of Watts. However, it is reported that the final push came from the internal audit committee; which advised the board that management changes were needed.

During my career (see my resume), I have set up a number of audit committees around the world, and have been involved with others. I was therefore pleased to see an audit committee proactively asserting itself, and being listened to.

I would like to take this opportunity to remind those less proactive audit committees, and less supportive boards, as to what in my opinion (based on my experience) constitutes the top ten characteristics of an effective audit committee:

1. The audit committee must be independent, members should not have previously held executive positions in the company for which they sit on the audit committee; eg the chairman of the audit committee should not have previously been the finance director. The company should not use the audit committee as a paid retirement home for previous directors.

2. The audit committee should be suitably qualified and experienced, at least one member should hold a relevant financial qualification; so that they can at least understand the intricacies of the company’s accounts.

3. The audit committee should present a report in the year end accounts, as to the quality and effectiveness of the internal controls and risk management process.

4. The audit committee should be prepared to take a stand against the board on matters of significance, and resign if the board does not take the appropriate corrective action.

5. The members of the audit committee should be up to the job, they should not hold an excessive number of other positions. Those that, through age, fall asleep during the meetings should be retired. Do not think that this is an exaggeration, I personally have witnessed this occurrence.

6. The audit committee should have free and unfettered access to the internal auditors and external auditors of the company, as well as the board and management of that company.

7. The role and scope of the audit committee should be laid down in a charter, which should be signed by the board and distributed within the company.

8. The internal audit department should report directly to the audit committee. Dual reporting lines, to eg the Finance Director, do not work.

9. The audit committee should be responsible for assessing the quality and effectiveness of the internal audit department and external auditors. The committee should be able to make changes, as and when required, to the scope and providers of the audit (both internal and external) coverage.

10. The audit committee should be responsible for the budget of the internal and external audit coverage. I have witnessed a situation where neither the board nor the audit committee held the budget; needless to say this did not work.

This list is not intended to be exhaustive. However, it can be used as a starting point to establish an effective and respected audit committee that adds value to the business.

A Simple Guide to Investing

I have been reading the posts on one of the threads of a bulletin board, hosted by a popular UK financial website, with interest and alarm over the past few weeks.

The thread relates to a company that listed in the last year. The shares of the company have enjoyed a dramatic 3000% rise in value over this period.

Needless to say, the thread relating to this company has been very active as of late; as more people are drawn in by the idea of making a "fast buck".

There are a number of people posting on this thread who, by the grace of God, seem to feel that they have been gifted with second sight.

They routinely, via goat's entrails and runes (I assume), make bold predictions as to the upward price movement that they expect the stock to make over the coming days. In the last fortnight or so, as the speculative bubble begins to burst, these predictions have been wrong.

The price has started to dip, and there are a number of "investors" who (I suspect bought in at much higher levels) will get their fingers "badly burnt".

This is a more extreme example of the daily ebb and flow of share prices around the world. However, it serves to highlight a number of common characteristics of some "investors" and the "techniques" that they apply when investing money in companies:

It is apparent that many of the investors in this share have not the slightest understanding, or knowledge, about the company or the industry in which it operates.

The slightest hint of positive news concerning the company, or its area of operations, is seized upon as an omen that the stock will double in value.

Individuals who post warnings about the risks involved are shouted down with vitriol, and denounced as "de-rampers" (people who deliberately seek to drive down a share price, in the hope of making money).

Certain posts pertaining to contain "facts" and information are, at best, dubious and worst dishonest.

The average investor appears to have a limited time horizon, extending no further than 2 weeks. This is usually the length of time that they have to pay for the shares that they have purchased.

The desperation to make a "fast buck" suggests that some are in serious financial difficulties.

The atmosphere on this bulletin board is more akin to a casino or racetrack, rather than an investors?f discussion forum.

In short it is apparent that these people have not a clue about what they are doing. They are no better than an ill informed, and reckless, gambler staking all on the spin of a roulette wheel.

My advice, for what it is worth, to those seeking to invest in companies is as follows:

Never make any investment without consulting a suitably qualified independent financial adviser.

Never invest what you cannot afford to lose. Investments can go down as well as up!

Do not put all of your eggs in one basket; spread the risk.

Never invest for short-term gain. Life is full of uncertainties; you must assume that you may have to hold for two or more years before seeing a decent return.

Be prepared to cut your losses and sell, before you lose everything.

Research, research, research; learn all there is to know about the company, and industry in which it is operating in, before you part with any of your hard earned money.

Test your investment policy first, before putting down hard cash; see if you really do know what you are doing.

Note that this advice is based purely on my own opinions, observations and experience. It is not exhaustive, and should not be used solely as a basis for any investments that you may be considering to make in the future.

Paranoia Over the Enlarged EU

As from May 2004 the EU will be joined by a number of countries from the old Soviet Bloc including; Latvia, Lithuania, Estonia and Poland.

Predictably, certain elements of the British press have whipped up a frenzy of fear and loathing.

We are told that we can expect thousands of economic migrants "swamping" our overstretched infrastructure, and taking our hard earned benefits away.

Well, let me shine a little light of reality on this "paranoid claptrap". I have travelled many times to many of these countries, including the Baltic States, on business. In my opinion, this country could do a lot worse than have a wave of immigration from the population of these countries.

The people of these countries have a number of admirable characteristics, including:

A high level of education

A good grasp of English, among many

A desire to shrug off the restrictions of the old Soviet era, and a welcoming attitude to change and progress

A desire to work hard to better themselves

An inspired entrepreneurial streak, that the UK could most certainly do with

Aside from the benefits of the citizens of these countries choosing to make their homes in the UK, there are other benefits of enlargement:

The enlargement of the EU will open up previously closed markets, hence creating an opportunity for economic growth.

The ex Soviet economies are ripe for Western entrepreneurs to set up businesses, and earn healthy revenue streams which benefit all.

It may be that given the opportunities available in these countries, some British citizens will emigrate there instead.

I certainly enjoyed my time when I was there and, if a good opportunity arose, may well do the same myself.

Something that Really Scares Me

I am, like all other humans, subject to feelings of wariness about certain behaviour traits that do not necessarily fit in with my own.

Taking a look at my own habits, and traits, I categorise the following as causing me “mild” wariness:

· I am a sociable person, who enjoys a sociable drink; consequently I am a little wary about people who do not drink socially.

· I am not a religious person, and although I respect everyone’s right to follow and practice their own religious beliefs; I am wary of those who inflict their beliefs on others.

· I am of the school “work hard, play hard”; consequently I am wary of those, fit healthy adults, who habitually retire to their beds early.

It is publicly recorded that President Bush:

· Does not drink

· Holds compulsory morning prayer meetings for all his staff

· Tries to be in bed by 21:30

Now, that really scares me!

Scandinavian Airlines-an Object Lesson in Management Motivational Techniques

Scandinavian Airlines (SAS), like many other airlines around the world, have been having a tough time recently. Sales revenues have fallen as a result of a number of factors, including:

· The world economic slowdown

· Declining travel due to the impact of 9/11, and repeated terrorist threats

· Competition from cheap fare budget airlines.

In response to the decline in revenues, SAS have been looking for ways to save money. One particular initiative was to ask their loyal staff to take a pay cut of 10%.

One the face of it this, if the situation warrants it, is a sensible measure. Far better for individual members of staff to take home less in their pay packets, than to find themselves un-employed.

However, although the pay cuts were to be for all levels of staff from the most junior to the most senior; there was a glaring anomaly, which made this gesture of communal Scandinavian self sacrifice not as altruistic as it first may appear.

For you see the senior management were, despite the fact that the airline is losing money, still going to receive their bonuses; which, in some individual cases, would be more than the salaries of some of the lower ranks. It would seem that some, as the saying goes, “are more equal than others”.

This cost cutting measure has not, from what I understand, been enough. It seems that the staff at the call centre office in Stockholm have been told that it will be closed. They have not, at the time of writing, yet been told what will happen to their jobs or what severance pay they will receive if there is no alternative offer of employment.

Needless to say morale in the office has hit an all time low, uncertainty over the future of your job is a very soul destroying emotion.

Recognising this SAS senior management, in their infinite wisdom, organised a meeting on the 12th of February. The hapless staff, needless to say, should have been given some more factual information about their fate.

Apparently, this was not the case. Instead they were treated to a course on how to handle personal crises and the effects of stress, eg loss of sleep and anxiety. These effects they are undoubtedly aware of already; although maybe the directors of SAS have yet to feel any stress, and would have benefited from attending the course instead.

However, the ever sympathetic and employee focussed management of SAS did show some empathy towards their employees. It being so close to Valentines’ day, they gave each member of staff a piece of Valentines cake.

Now there’s an example of a great management motivational technique!

Don’t Be So Cocky

The Hutton report, the gestation period of which was almost akin to that of an elephant, finally entered the public domain on Wednesday. Readers of The Sun were treated to a sneak preview a little earlier.

Hutton, as we all know, kept very strictly to the parameters of his enquiry; and did not comment on the reasons as to why the British government decided that Saddam Hussein was a greater threat to world peace than say, North Korea, Iran or Osama.

He exonerated the government from any wrongdoing over the death of Dr Kelly; instead he laid significant blame on the BBC’s handling of the reporting of the alleged “sexed up dossier”.

As at the time of writing, three central characters in this sorry tale have resigned; Gavyn Davies (Chairman of the BBC), Greg Dyke (Director General of the BBC) and Andrew Gilligan (the reporter who wrote the dossier story).

I do not propose to comment on the quality of the Hutton report, its conclusions or on the actions of the BBC.

However, I will make a few observations:

Within 48 hours of the release of the report; we see that three people have resigned, of their own accord, and with as much honour as one could expect under these circumstances.

Alastair Campbell, Tony Blair’s’ ex spin doctor, rushed to the airwaves (almost punching the air with joy) to decry the BBC; and to express an almost gloating satisfaction over the report.

Tony Blair managed to restrain his comments, but his grin said it all.

The Labour Party in the House of Commons on Thursday did not contain their utter glee at the outcome; and barracked Michael Howard (leader of the Conservative Party), hissing and booing as he tried to speak.

We see here two contrasting outcomes; resignation with honour at the BBC, cockiness and arrogance from the Labour Party.

I would remind the Labour Party of the following:

How many politicians have resigned with such good grace, and with such speed when their judgement/performance has been criticised? Normally they have to be dragged, kicking and screaming from office.

Arrogance and cockiness tend to come before a fall.

Beware Tony, don’t be so cocky.

Lions Led by Donkeys

We are George and Tony’s army posted far away,
We are fighting for their democratic way.

We are lions led by donkeys

Sent off to a country called Iraq,
Told by our leaders we would make our mark.

We are lions led by donkeys

Saddam was a man of great cruelty,
We were told he sought WMD.

We are lions led by donkeys

We went into battle brave and bold,
Never shirking or moaning, but doing as we were told.

We are lions led by donkeys

Planning was perfect, aside from a key element,
There was a fatal shortage of equipment.

We are lions led by donkeys

We have lost some friends and comrades,
As hope of finding those weapons of destruction fades.

We are lions led by donkeys

We are here to help the Iraqis, so they say,
If so, why do they shoot at us night and day?

We are lions led by donkeys

Post war planning, if any, has gone awry,
And day to day more are condemned to die.

We are lions led by donkeys

Now tell us Mr Bush and Mr Blair,
How long are we to be involved in this affair?

We are lions led by donkeys

To view the picture which accompanies this please click Lions Led by Donkeys

If you would like to buy the T shirt please visit The Emporium

It’s a Dirty Business

Geoff Hoon, the ever popular and well respected UK Defence Secretary, finds himself in a rather unusual position.

He is being called upon to resign by Samantha Roberts, widow of Sergeant Roberts (who was the first British casualty of the Iraq war), for failing to ensure that there were sufficient supplies of body armour and other pieces of kit for the troops.

However, despite this, Hoon still “enjoys” the support of the Prime Minister. Indeed, he has a guarantee that he will not be called upon to resign.

This guarantee, in political terms, lasts a very long time; one week to be precise. In one week’s time (on the 28th of January), the Hutton report into the suicide of Dr David Kelly will be released.

It is widely expected that the report will be less than “flattering” to the government. In view of this, Tony Blair knows that there will have to be a fall guy; who will have to resign and take the blame.

Heaven forfend that it would be Tony himself!

Therefore, Hoon has been lined up to take the blame and resign. Obviously he can’t resign if he has already resigned over the Sergeant Robert’s affair. Hence the one week guarantee.

This sorry little episode proves the point that politics is a dirty business; but that is more of a reflection on those who seek power and high office, rather than on the concept of public service.

The Tax Gluttons

Gordon Brown, Chancellor of the Exchequer, is faced with an ever widening gap between tax revenues and fiscal expenditure.

We provide an exclusive insight into the regular discussions, about this issue, between him and Tony Blair.

Please click Tax Gluttons to take a look behind the scenes.

This exclusive image can be purchased from KenFrost.com in the form of a pack of six greetings cards.

These are available from The Emporium

The Electric Commode

Following the request by the USA that passengers are to remain seated whilst flying in US airspace; the designers at KenFrost.com have come up with a revolutionary seat design to accommodate both the needs of passengers and the US requirements.

To view the design, please click the Electric Commode.

You can buy a set of six postcards featuring this design from The Emporium

Tony Blair’s Great Political Wheeze

First a little history lesson; back in 2000 London was about to elect its first ever mayor. At that time one of the prominent candidates was Ken Livingstone, who was a member of the Labour party.

However, all was not well between Ken and Labour; after some internal “discussions” Labour decided to expel Ken. Tony Blair then appeared on TV to make a statement robustly extolling the virtues of a “Ken free” Labour party; he noted that it was absolutely the right thing to do.

Undeterred, Ken decided to stand for mayor as an independent candidate; Labour put up the hapless Frank Dobson as their candidate. Needless to say Ken stormed home, and has been in office for the past four years.

Faced with a new election, Labour initially put up a non entity whose name escapes me. However, Tony and his team knew that Ken was most likely to win again as an independent; therefore they had to find a solution.

An idea came to them that was brilliant in both its simplicity, and effectiveness; why not make Ken a member of the Labour party again!

Arms were duly twisted, the non entity Labour candidate gracefully stepped aside (no doubt she will appear as Ken’s running mate); and Ken was readmitted to the Labour party yesterday. However, not all were happy, I understand that at the vote John Prescott (who actually has some principles) was said to resemble a man eating a mouthful of wasps.

Tony and his chums have said that Ken is now back in the fold, and “on message”. Ken, in a rather Delphian manner, said that the mark of loyalty is being able to tell someone when they are wrong. In other words he will, quite rightly in my view, continue to do and say exactly what he wants.

This political wheeze by Tony, may in fact be the straw in the wind of something much larger. If you can make the likely winner of the position of London mayor a member of the Labour party; why not apply this to a larger event, such as a general election?

In other words, why not make every Conservative and Liberal Democrat a member of the Labour party as well?

This will have the effect of nullifying the need for any future elections, and making Britain a one party state; something that Tony has in fact wanted all along.

Nice one Tony!

The Hidden Dangers of Offshore Companies

As I noted in my article “Parmalat, Europe’s Enron”, I am highly suspicious of organisations that make use of offshore companies in their company structure.

During my years as an accountant, head of audit and head of fraud investigation (see my resume) I have come across numerous examples of offshore structures based in eg; the Caymans, Bermuda, Luxembourg and Jersey.

As far as I can see there are only five reasons why an organisation would wish to use an offshore company:

1. The “less than demanding” accounting rules, and reporting requirements, of the offshore base enable the company to “hide” transactions and relationships that it does not wish the outside world to see.

2. The tax regime of the offshore base enables the organisation to avoid tax that it would have to pay if it resided elsewhere. Note, tax avoidance is perfectly legal.

3. The tax regime, and the “less than demanding” accounting rules, of the offshore base enables the organisation to evade tax that it would have to pay if it resided elsewhere. Note, tax evasion is illegal.

4. Loading the organisation chart with numerous offshore companies, which have complex cross holdings in each other, leads to an unnecessarily complex and difficult to understand organisation. This enables the organisation to hide fraudulent transactions.

5. Offshore organisations, if the share holdings are engineered in a particular way, can be excluded from the organisation structure which is disclosed in the public accounts.

I have the following advice for investors, regulators, employees, auditors and tax investigators:

 Carefully study the structure of the companies that you are dealing with, ask if there are offshore companies.

 Where there are offshore companies, make sure you understand their role and their place in the organisation as a whole.

 If you do not understand the structure of the company, or the role/purpose of its offshore holdings then treat it with extreme caution.

I have the feeling that the regulatory environment will tighten over the next few years, making it increasingly difficult for companies to use these dubious structures.

Parmalat, Europe’s Enron

The fraud at Parmalat (once Italy’s largest dairy company) is said to be Europe’s Enron. It seems that payments were siphoned off from Parmalat to prop up a failing travel business, which was owned by the founding family.

The fraud was “hidden” from the gaze of the outside world by using two sets of books; and by falsifying the accounts of Bonlat, a Cayman Island subsidiary (I really do not trust companies that use offshore accounting; take a very long hard look at any company that employs this practice see "The Hidden Dangers of Offshore Companies").

Bonlat claimed to have £2.7BN deposited with the Bank of America; however, this turns out to be no more than false accounting.

One interesting aspect of this case is the order alleged to have been given by Luciano Del Soldato, a Finance Director in Parmalat, to Gianfranco Bocchi a Parmalat executive. By all accounts, Soldato ordered Bocchi to destroy the computer that housed the false accounts of Bonlat with a hammer.

At first sight this may seem “a tad extreme”; after all, those denizens of probity at Andersens and Enron only ordered that documents be shredded when the outside world started to investigate their nefarious activities (see In Place of Strife). However, as an experienced fraud investigator I can tell you that this was in fact an eminently sensible order.

Computers have an annoying habit of recording all activity on their hard disc. Although they possess delete buttons which, when the innocent user presses them, “delete” the file from the visible area of the system; the reality is that the crafty computer still stores the information on its hard disc. Any self respecting IT hacker, or professional can resurrect this data in a matter of hours.

To counteract this problem, anyone who wishes to erase traces of data from their computer systems must destroy the hard disc with hammer and fire; ie crush the hard disc then burn it. Soldato’s orders were not extreme, he knew exactly what he was doing.

How to Waste Tax Payers' Money

I am told that Ken Livingstone, the Mayor of London, has sent every councillor in the Greater London area a Christmas card.

Call me an old Scrooge, but what a waste of the tax payers' money.

On that seasonal note, festive greetings to you all.



Ken

WMD Found in Tikrit



You can buy one of my T shirts with this design from The Emporium

Signs of Life

Back in mid October 2003 I wrote an article, “The Only Party in Town”, which castigated the disunity of the UK Conservative Party and the fact that there was no credible opposition to Tony Blair.

I forwarded it to Central Office and my local Conservative Association, I heard nothing.

Since then the Party has changed leader, and seems to have “pulled itself” together. Evidence of this renewal came to me on Sunday; in the form a belated response to the article, from my local Association.

Whilst this response may be some weeks late, and events have moved on since the article was written; it does give me hope that there are signs of recovery in the Conservatives.

This bodes well for the UK, whatever one’s political persuasion, as the current Administration most definitely needs a credible and visible opposition in Parliament.

What’s Your Definition of Freshness?

Those of you who are familiar with my website and background know that I have a passion for good, wholesome, fresh, unpretentious food.

I endorse the saying that “you are what you eat”; those of you who choose to live entirely on junk food are, in my opinion, doing yourselves no favours size wise or health wise.

However, there are occasions when the hapless gourmet has no option but to eat what is presented to them; eg when travelling by plane or train.

As a result of a recent trip to Sweden I awarded the British Airways Ham and Cheese Bloomer my prestigious “Worse Than Worthless” award.

However, I made a return journey via BA last week and was pleased to note that BA have taken my advice; they have replaced their bloomer with a hot sandwich. I noted in their in flight magazine that they have launched a new series of menus; and that the new food service is another aspect that sets it apart from other no frills airlines.

The photo in their magazine showed a plump, succulent croissant stuffed to the gunnels with bacon and cheese. It looked very appetising.

The reality was slightly different, the two options on offer were cheese and ham or cheese and tomato. I opted for the cheese and ham. This was a hot olive and tomato ciabatta; containing a modest portion of bland melted cheese, and a small slice of ham. I would like to note that it was a considerable improvement on the bloomer.

However, there is one aspect of this improvement that I would like to query. The onboard meal package comes under the title “All Day Deli”. Yet when I examined the plastic wrapping of the hot part of the meal, I noted that the expiry date was in May 2004 (some six months into the future). That’s quite a lengthy “day”.

I raised a query with one of the hostesses; she didn’t know about the date, and asked if she could take the wrapping. I chose instead to keep it as a souvenir!

However, on my return flight the same expiry date was on the hot food. I asked again, and got the same response. This time I gave the hostess my wrapper, she was still unable to provide an answer; I didn’t get the wrapper back either.

I assume that the ciabattas are frozen, and reheated on demand; ie proper health and hygiene procedures are being followed. However, it is sad to see that the impression of “freshly prepared on the day” is being given; when in fact the food being presented may well be up to 6 months old.

Maybe the use of the phrase “All Day Deli”, and its connotations with freshness, could be construed as a tad misleading? I suppose it all depends on your definition of freshness.

The Pentagon Boeing Affair

The Pentagon announced yesterday that it was putting its £16BN contract with Boeing on hold; whilst it investigates possible links between one of its former procurement officers, who now works for Boeing. It is alleged that the procurement officer was involved in the awarding of the contract to Boeing.

There may, of course, be nothing more to this than a simple internal review of the tendering process. However, it highlights an issue that is often overlooked by companies with respect to their internal controls and codes of conduct.

It is often assumed, falsely, that fraud and malpractice mainly occurs in the sales, stock and cash control areas of the business. Not so, my involvement over the years in fraud investigations (see my resume) proved, more often than not, that a prime area susceptible to fraud and malpractice would be the procurement and purchasing department.

Whether it involves the purchase of a few items of furniture, supplies for the canteen or a multi billion dollar contract; the procurement procedure may be open to abuse if there are weak internal controls eg:

 There is no tendering process, and quotes are only obtained from one supplier.

 The tendering process is not on the basis of sealed bids; this can allow one of the suppliers to find out the quotes of the others, and undercut them.

 The relationship between the supplier and the procurement officer is not “arms length”, and a “deal” is done between them.

 The staff in the procurement office have been in the same position for a number of years, forming close relationships with key suppliers.

Where the above scenarios occur the company, at the very least, runs the risk of paying more than it needs to for the product or service.

I would advise companies to take heed from the Boeing/Pentagon scenario, and review their procurement procedures.

The Light of Perverted Science

We live in an age where, at least in the Western World, technology affects and influences every aspect of our lives. Cars, planes, consumer electronics, the internet, pc’s and mobile phones; are but a few of the myriad of scientific wonders that were designed, and marketed, to improve the quality of our daily lives.

Little more than a century ago our grandfathers could have only dreamed of the power, and the uses, of technology that we now take for granted. Yet are we the masters of this technology, or are we adapting our lives to suit the technology?

This thought struck me the other day as I was leaving a hotel lobby, and walking into the windy wet London street outside. There, sheltering against the side of the hotel, were two businessmen earnestly talking into their mobiles which were pressed to their ears. They looked cold and wet; yet, presumably so that they could talk away from prying ears, they stood outside in the damp and wet.

The question arose in my mind; why not make/take the call at a more convenient time, and location? I suspect that like many others who possess a mobile; instead of using it only when they want, and turning it off when not required, they had become slaves to the idea that it must be left on at all times just in case it rings.

We have all seen fellow airline passengers who, when boarding a plane, have to be reminded to turn their mobiles off. The palpable look of relief on their faces when they disembark, and can reconnect to the ether, is enhanced by the cacophony of bleeping and shrill ring tones emitted by the dozens of mobiles that have all been switched on at precisely the same moment by the other disembarking passengers.

What is so urgent that they cannot wait for the privacy of their car, or home, before reconnecting? The prime example of addiction comes in the form of the gormless teenagers who walk around with mobile phones perpetually glued to their ears, discussing events of mind boggling insignificance; whilst they run up a phone bill of three digits or more.

The reason for this phenomenon is that people have lost sight of the original concept of the technology that they use. Namely, that it was designed to make their lives easier by working for people; not the other way around. People have instead adapted their lives to work for the technology.

I will give you five random examples of other technological innovations, introduced in the last 100 or so years, that we now serve instead of vice versa:

 The car, originally designed to improve the speed and comfort of travel for the individual, is now a hindrance to convenient travel and a blight on the environment. The road network in many Western countries is now so jammed, and the air so polluted, that congestion charging is being introduced to place a limit on the number of cars. Indeed in London, the speed of travel of the average car is in fact slower that that of the Victorian horse and carriage that it replaced.

 The television is a source of entertainment and information, it is now so popular that almost every household in the West has at least one TV set. Yet instead of entertaining and stimulating, it more often than not anaesthetises the viewer. The television age has seen an increase in obesity brought about by the “couch potato” syndrome; as people place themselves in front of the set for a solid four to five hours per day. Social interaction, eg eating together and going out, has declined; as people now order takeaways, and eat in front of the television in silence. Educational experts have noted that the TV generation of children are less adept at social and communication skills; as their parents use the TV as a form of childcare, rather than interact directly with them.

 Email was designed to eradicate the need for “snail mail”, and bring individuals written communication at the speed of light. The problem is, as with mobile phones, people have become addicted to the need to check their mailbox; witness the withdrawal symptoms of the executive away on holiday without twenty four hour direct access to his/her mailbox. The chances are that you will find them surreptitiously sneaking off to the hotel’s pc, and logging in to get their “email fix”. I would also point out that all of us with email are now inundated with spam offering us unwanted garbage, ranging from penis enlargements to Nigerian scam letters .

 Ready to eat meals were designed for the busy person, who does not have time to cook every day. The reality is that these culinary abominations were created (and marketed on television) so that people could spend even more time in front of the television, instead of devoting a little creative energy and thought to the preparation of a home cooked meal. Aside from the obvious stress reducing advantages of preparing food, I would suggest that the ready made meal has a number of disadvantages. It is more expensive than home cooking, it contains more sugar, salt and other nefarious chemicals than are good for you; and it simply does not taste like home cooking.

 Breast enhancements were designed to improve the psychological well being of those women who were seriously affected by their self perceived modest bust size. Now breast enhancement is a multi million dollar industry. Having a “boob job” is a must for every talentless model and actress; as they aspire to the plastic perfection of their childhood dolls.

Like anyone brought up with servants, we have become dependant on the technology that was designed to free us; take it away, and we show withdrawal symptoms. Our lives, as Winston Churchill once warned, are being illuminated by the light of perverted science.

The Role of the Non-Executive Director

We have seen a plethora of high profile corporate scandals over the past few years; Enron, WorldCom and the current SEC investigation into foreign exchange dealings to name but a few. The US administration took fright, and introduced the Sarbanes-Oxley rules; which, in very simplistic terms, mean that executives have to sign in blood as to the accuracy of their accounts. These rules apply to all US listed companies, their non resident subsidiaries and those non US companies that have listings (eg via ADR’s) in the USA.

The UK, knowing that whatever happens in the USA eventually happens here, commissioned Derek Higgs to review the role and effectiveness of non-executive directors and Sir Robert Smith to review audit committees.

These two reports were “morphed” into the Combined Code, which applies to all reporting years beginning/after 1 November 2003. In the usual British manner, unlike Sarbanes-Oxley (which is mandatory), the Combined Code allows companies to depart from its provisions; so long as they explain why.

Disregarding this opt out clause; in my view the Combined Code is a welcome clarification as to the role, and duties, of the non-executive director. There has been a feeling within the UK that the role of the non-executive director has not been clearly defined; and as such neither the Board (both executive and non-executive), nor the investor fully understand as what the non-executive should do and can do. Additionally, it has been felt that some non-executive directors take up too many positions at the same time, as a way of making an easy living; secure in the belief that only the executive directors are responsible for the strategy and management of the company.

Here is a brief overview as to the main points in the Combined Code, relevant to non-executive directors (NED’s):

 NED’s are the custodians of governance, they should challenge strategy and scrutinise performance.

 NED’s should have job descriptions, these should be prepared by the Nomination Committee.

 Appointments need to be justified.

 One of the NED’s should be available to interact with shareholders, and should attend meetings between management and major investors.

 Remuneration should be commensurate with the position, and be designed to attract the best candidates.

 The Nomination Committee should be responsible for appointing NED’s, its terms of reference should be published in the annual report.

 The training needs of current and future directors should be addressed by the Chairman.

 NED’s should be appointed from a wider range of backgrounds, based on merit.

 NED’s should be independent, and challenge the company orthodoxy.

 The performance of the Board should be reviewed annually.

 NED’s should serve two three year terms.

 Executives should hold only one NED position.

I shall watch with interest to see which companies embrace the code, and which use the op out clause.

Those of you who wish to study the subject of corporate governance in detail, should find the following links to be relevant:

 The Combined Code (2003)
 The Higgs Review (2003)
 The Turnbull Report (Internal Control) 1999
 The Cadbury report (1992), Greenbury Report (1995) and Hampel Report (1998)
 The Financial Services Authority’s Listing Rules (2002)
 Corporate governance codes in other countries
 Information on the Company Law Review (2001)
 The Myners Report on Institutional Investment in the UK
 The Tyson report on the recruitment and development of non-executive directors (2003)
 The responsibilities of institutional shareholders and agents-statement of principles (2002)

Identity Theft

Yesterday I found out, by chance, that someone had been using my address to falsely obtain credit. This particular nefarious individual had clocked up a £15K debt, claiming that my home address was his. I discovered this quite by chance, as a letter from the debt collection agency arrived threatening him with a personal visit by debt collectors, and a county court judgement (CCJ).

I rang the agency, and pointed out that I had never met or heard of the individual. I confirmed with them that no CCJ would be issued against my address. Note, if that had happened that would have negatively affected my ability to raise credit or increase my mortgage in the future; adverse credit records, even incorrect ones, stick to people like chewing gum on the sole of a shoe. I followed up the call with a letter, requesting that the agency confirm in writing the key points of our conversation. The agency are now in the process of tracking down this miscreant, and extracting the £15K from him.

This incident is the third time, in eight years, that someone has succeeded in using my identity/personal details to falsely obtain credit. The previous two occasions involved the fraudulent use of my credit card. One of which apparently involved me buying several thousand pounds worth of ladies lingerie in Harrods; if you want the full story behind that one, you can read it in my book “Accountants Can Cook”.

However, identity theft is no laughing matter for those who find their credit record besmirched and their bank accounts emptied by impostors. In fact identity theft is on the increase; witness the regular stories in the newspapers of people who find that their bank accounts and credit cards have had large sums falsely extracted, or the countless “Nigerian Scam” letters (which are a ruse to get the bank account details of the greedy and stupid) clogging up peoples’ email boxes. With regard to the latter, I now receive so many of these that I have dedicated part of my website to exposing this unpleasant practice; go to Stupid Punts! to read more on the subject.

As a victim, I thought it may be helpful to list a few hints and tips gained from my own experiences. Note, as with any issues involving money you should always seek the advice of an independent suitably qualified financial adviser and/or lawyer.

In order to minimise the chances of you becoming a victim here are a few tips; note, they are not exhaustive:

 Do not give out details of your bank account/credit card to strangers.

 Do not disclose passwords/pin numbers.

 Do not respond to “Nigerian Scam” letters.

 Do not let your credit card out of your sight, even when in a restaurant and you are paying the bill (the unscrupulous can copy the card details manually and electronically).

 If you lose your credit card, phone the card company immediately and cancel the card.

 Check your bank and credit card statements regularly; query any amounts that do not look correct.

In the event that you are unfortunate enough to become victim to an identity theft, here are a few steps (again not exhaustive) that you should take:

 Depending on the circumstances, inform the police and your insurance company.

 Contact the organisation from where the money was taken/attempted to be taken immediately. Explain the issues clearly and concisely.

 Confirm that any monies taken will be repaid.

 Ensure that they confirm that there will be no CCJ issued against you, or your property.

 Write a letter confirming the conversation, and ensure that they respond in writing.

 Where the identity theft involves a credit card, or bank account, change the account and relevant passwords immediately.

Please feel free to let me know if you have had the misfortune to have had your identity falsely used.

I await the next theft of my identity!

President Bush’s State Visit to Britain

President Bush is coming to London this week, for a three day State visit. This visit, to put it mildly, has caused quite a stir.

At the operational level, security forces (both British and the 700 US imports) and the British police will be on their highest level of alert; it is likely that there may be one or two “traffic jams” as the Presidential motorcade sweeps through a “cordon sanitaire”.

Political groups, non affiliated political groups and individuals are busy co-ordinating their protests covering all manner of issues; ranging from the war in Iraq, to general anti American hostility (which has been prevalent in mainland Europe for the past fifty years or so).

Anarchist groups are, so we are told, formulating plans to storm Buckingham Palace (some chance!); in the forlorn hope that there will be some form of popular uprising.

Added to this are the politicians, and media pundits, who are saying that it is disgraceful that President Bush should be invited here. Their reasons being that, in their opinion, the invasion of Iraq was wrong; and that the troops still occupying Iraq should be brought home.

Let me chip in my “two pennies” of thought into this morass of invective and emotion:

 People have the right to demonstrate, in a peaceful manner, in the UK. That is the benefit of living in a democracy, something that many people in the world do no have. The agitators who wish for violence would do well to remember that Bush was elected democratically; by people who live in a democracy, which was founded on the principles of liberty and justice over two hundred years ago.

 The timing of the invasion of Iraq is open to question and debate. However, the deed is done. To pull the troops out now, before initiating a road map to self government; would consign the Iraqi people to chaos, anarchy and a return to dictatorship. Therefore to demand withdrawal at this stage, on the grounds of decency, peace and anti imperialist sentiment is an absurd contradiction of logic; it shows a scant disregard for the wellbeing of the Iraqi people.

 Those that say that Bush should not have been invited imply that he is a war monger and dictator. As noted, the USA is a democracy; should we now stop inviting leaders of democratic countries where we disagree with their choice of leader and policies they implement? To my view, the people who follow this argument are displaying a stupefying level of arrogance.

 The visit will give our government the chance to raise matters of concern, such as steel tariffs and the treatment of the POW’s, in a constructive face to face manner. This surely is to the UK’s benefit.

Therefore demonstrate peacefully, by all means, but remember you are able to do so because you live in a democracy; which is hosting the President of another democracy.

Post Script to My Article on Britain’s Libel Laws

In my earlier article on the subject of Britain’s libel laws, I noted how ineffective the injunction would be in burying the allegations against Prince Charles; as the story was then published in the foreign press.

As if to rub salt into the wounds, the allegations were printed in a Scottish newspaper this Sunday. Scholars of geography will note that Scotland is physically attached to England.

How could the story be published in Scotland, when there is an injunction forbidding it? Simple, the injunction only applies in England and Wales!

As I said earlier, welcome to “lah-lah land”.

Britain’s Libel Laws, Welcome to “Lah-Lah Land”

This week has been remarkable, even by British standards, for showing how unrealistic our laws relating to libel wrt what may (or may not) be published in the press are.

It has been widely known within the journalistic community, royal family and certain other areas of “the establishment” that there has been a story circulating for over a year; concerning an alleged incident (of a compromising nature), between a senior royal and another individual.

Matters came to a head when a British Sunday newspaper was issued with a “gagging order”, raised by a former royal servant, preventing it from printing a story concerning the allegations; made by another former royal servant, relating to the above.

This was followed by an extraordinary statement issued by Prince Charles The Prince of Wales, on Thursday, denying that he had been involved in any sexual incident. Note this was despite the fact that the name of the senior royal, or the nature of the compromising incident, had not been published.

Needless to say this gave the story wings. I think it fair to say that the majority of the British people had been unaware of the allegations, or hint of allegations, before this; now of course they are fully aware. Human nature being what it is, many in Britain are now very interested to know precisely what the allegations are; especially since the British people are not allowed to be told by their own “free press”. Forbidden fruit can be very appealing!

At the time of writing the press and TV can, and are, reporting the statement by Prince Charles; and the fact that there are unspecified allegations by an unnamed former servant, concerning a senior member of the royal family. However, each report is tagged with the bye-line; that owing to the libel laws they cannot name the parties involved, or discuss the precise nature of the allegations.

It may be that this method for hushing up a story could have worked over 100 years ago; before the advent of telephones, TV and the internet. However, in the first decade of the 21st Century this approach is simply risible. The British are told by their “free press” that the story (with the details that the British are not allowed to know) is being widely reported in the foreign media and, of course, on the internet. There has now been an unseemly scramble by many British citizens to surf the net; in order to read the story, about their royal family, which they have been denied access to in their “democracy”.

In the thirties a very similar situation arose with regard to the affair between Mrs Wallace Simpson and the future Edward VIII. The British press knew of the story, but could not report it owing to the libel laws. However, the American press reported it freely; British citizens who travelled to America at that time were surprised to read about something that they had no inkling of. They, naturally, brought copies of the papers back to Britain; and shared the story with their friends. Eventually the story broke in Britain, and the resulting abdication crisis caused a change of King (and history) before he was crowned.

I would have thought that the lesson learnt, some seventy years ago (before TV and the internet), should have been taken on board by the legislative authorities by now. However, it has clearly not been taken on board. We wait for the inevitable leak and consequent media frenzy; which will have been stoked up by the gagging order.

The libel laws in Britain belong to a bygone age; those that seek to maintain them, and use them in this manner, truly live in “lah-lah land”.

A Note of Optimism for the Future of Relations with North Korea

I would like to put my head above the parapet, so to speak, and make a radical suggestion; contrary to the pessimism in the Western media, there may be hope for better times ahead in respect of the West's (ie the USA's) relationship with North Korea.

The sour relationship between the USA and North Korea stems from the unresolved debris of the Korean war; which was fought in the 1950's between UN troops and the forces of North Korea, who were attempting to overthrow the pro Western regime in the South.

The world was on the brink of nuclear conflict; as China sent her troops in to push the US troops back from the border, and General MacArthur threatened to use nuclear weapons on mainland China. Truman, rather wisely, pointed out that as President that decision was down to him; and consequently sacked MacArthur.

After a bloody campaign, the war was brought to a close by an armistice that divided the country into two. The North ended up being ruled by the world's last remaining Stalinist regime, and the South entered a period of democracy in the 1990’s.

As we know in Europe, armistice's are messy things; the rise of Nazi Germany and the Second World War were a direct result of the unresolved issues between the European powers emanating from the First World War armistice.

The armistice of the Korean war has left a heavy military presence of US troops in the South; whilst the North maintains an army of a million or more and seeks, so they say, nuclear weapons. The two sides glare at each other across the demilitarised zone at Panmunjon, this is one of the most dangerous borders in the world.

Whilst the South has become one of Asia Pacific's economic success stories, the North has declined and its people starve; as the USA has imposed an economic blockade for the past forty or so years.

The Western media portray North Korea in, to put it mildly, a very negative light; common stories include:

 The "Dear Leader" is an erratic, paranoid autocrat; who has a penchant for fine brandy and Marilyn Monroe films.

 North Korea already has a significant nuclear arsenal, which it will use in a first strike against the South.

 North Korea believes that the USA is ready, and willing, to invade.

 The citizens of North Korea are starving; as the harvest has failed, and what little food remains is diverted to the army.

 North Korea is a rogue state selling WMD, and associated technology, to anyone with the money to pay for them.

 The existence of the current regime in North Korea is a threat to the peace and stability of the Asia Pacific region; which has been a beacon of peace and prosperity, aided of course by the pacifying presence of American troops in many of the countries there.

 North Korea will implode economically and politically if the current situation is not resolved. Therefore, do nothing.

Now, elements of the above may or may not be true. However, there is usually more to an issue (especially one as complex as this). I would like to venture a few observations:

 The "Dear Leader" may have an eccentric taste in clothes (eg Mao style boiler suit, elevated shoes and exaggerated hairstyle), that does not necessarily mean that he is mad. On a trip to Russia by train a few years ago, the senior Russian official accompanying him had good opportunity to talk to him and observe him. He reported that the "Dear Leader" had a sound grasp of world events, and was perfectly lucid and rational.

 North Korea has had several crop failures, and its people are starving. However, this situation could be alleviated if it were allowed to trade freely with the world.

 The economic disparity between the North and the South is due, in no small part, to the fact that the North has endured an economic blockade for the past forty years. Free trade equates to prosperity, and greater understanding between countries and peoples. If you isolate a country, not only do you stifle its economic growth, you also stifle its intellectual and political development.

 Given the lack of trading partners, the economic blockade and the hostility of the USA; North Korea has been forced to adopt a siege mentality. It is highly likely that it genuinely believes that it may be invaded; it has taken the decision that the only way it can defend itself is to maintain a large army and indeed (as abhorrent and risky as it is), build up a stockpile of WMD.

 President Bush is known to totally despise the leader of North Korea; that in itself, from most peoples’ perspectives, would make it prone to a pre-emptive strike by the USA.

I am no lover of dictatorships,my articles clearly demonstrate this. However, you have to work with what ther eis, not with what you would like to be there.

I am tilting in favour of optimism with regard to the future of this area:

 The USA has, after forty years of blockade, finally started to engage in discussions with the North. Albeit diffident and via third parties, such as China. This indicates an acknowledgement, a reluctant one admittedly, that the policy of blockade has not worked.

 The situation in Iraq, which was an easy military victory, shows that winning the peace; and forcing a regime change, against the wishes of the locals, is no easy task. Defeating the North Korean army would be a very different prospect; Seoul would very likely be obliterated in the first two days of any offensive, and the level of resistance by the North Koreans would make the Iraq situation look like a Sunday picnic. I believe that the USA would be very reluctant, to put it mildly, to take military action unless forced to do so.

 The same can be said of North Korea, it would not be logical to consign oneself to the dustbin of history; without good reason. The fact that they are trying to engage in direct negotiations with the USA indicates that they wish to improve the situation, rather than worsen it.

 There are the signs, albeit very small shoots akin to a rare and beautiful orchid protruding from the earth, that North Korea wishes to emulate the Chinese in their movement to a Western style free market economy. This is a strong indicator that they wish to engage with the rest of the world, and not remain isolated.

 North Korea has brandished its nuclear threat, in my opinion, to gain the attention of the USA; in order for it to be treated as an equal in discussions, and not be ignored as it has been in the past. It should be remembered that "loss of face" in this area of the world is unacceptable. I think it fair to say that it now has the attention of the USA.

In my view, pragmatic engagement with the North can do both the North Korean people and the region nothing but good. There are some very real risks ahead. However, if both sides keep level heads there is real hope for a breakthrough; and the normalisation of relations.

Lancing The Boil

I am glad to see that the UK Conservative Party has finally plucked up the courage to resolve the question that has been dogging them for some months now. Namely, do they wish Iain Duncan Smith (IDS) to remain in the position of leader?

I noted in an earlier article, entitled “The Only Party In Town” , that the ongoing whispering campaign against IDS was doing considerable damage to the reputation and “life force” of the party. The Conservative Party was in fact in danger of being consigned to the “dustbin of history”.

Finally the Chief Whip has collected 25 letters from Conservative MP’s, asking for a vote of confidence to be called on the subject of IDS leading the party. This will be taken this afternoon (Wednesday 29 October 2003), and the result will be declared in the early evening.

The result will either be an endorsement for his leadership, in which case there will be no more challenges until after the general election; or he will be removed from office, and a new leader selected.

Either way, the end result will mean that the Conservative Party will then be able to focus on the more crucial task of forming a credible opposition; to allay the descent of Britain into a one party state.

David Mellor (an ex member of the Party and ex Cabinet Minister) put it rather succinctly, the vote of confidence will be rather like being sick; unpleasant up until the moment that it happens, but afterwards you feel great.

The “boil”, that was undermining the leadership and destroying the life force of the Party, will have finally been lanced. I am glad that the Party took my advice. The next step is to remove the power of the ageing constituency party membership to have a say in the election of the leader.

Less is More

I understand that Denis MacShane the British Minister for Europe (no, I’ve never heard of him either) has stated, on ePolitix.com, that the UK has too few Members of Parliament (MP’s).

He believes that the current malaise that afflicts the British electorate, as reflected by poor voter turnout and increasing cynicism about the effectiveness and honesty of our elected politicians, could be cured; by raising the number of MP’s from the current 1 per 1800 voters to 1 per 300, as in the USA. That would be a six fold increase in the number of MP’s!

This, in my view, is one proposal that should be swiftly consigned to the dustbin of history. An increase in the number of MP’s will have the following consequences:

 The costs of government will rise; more MP’s means more salaries, more accommodation costs, more support services and more government departments.

 Taxes will rise to fund the increase in government costs, ie we the voters will have to pay.

 More MP’s equates to more talk, and less action.

 The larger the machinery of government, the more greedy it becomes to take on more powers to justify its existence; and the more likely it is to interfere in, and over-regulate, peoples’ lives.

 Britain, as a result of an ineffective emasculated opposition party (more intent on its own self destruction), is ruled by the diktat of a Prime Minister who shows utter contempt for the parliamentary process. More MP’s will not change this disgraceful situation.

The malaise of the voters would, as a result of the above, simply increase further; democracy would be further eroded.

In my view, given the inverse relationship between the size of the government machine and its effectiveness; “less is more”.

I therefore propose that we, the voters, press for a reduction in the size of parliament and the machinery of government.

The Only Party In Town

I must confess to more than a degree of “surprise” and despair (to put it mildly), as to how one of the oldest (in historical terms) political parties in the UK can put so much public effort into consigning itself to the dustbin of history.

The recent party conference, instead of being used to showcase intelligent new policies that would form the skeleton of the future manifesto, degenerated into a well publicised “whispering” campaign about the poor leadership of Iain Duncan Smith (IDS).

This disarray was further compounded by the squalid and nasty “Betsygate” affair, whereby a journalist has submitted a dossier to the parliamentary watchdog about the alleged misuse of public money to pay for IDS’s wife to work for him in the Conservative Party. The allegation being, that she did not work as hard as she should have done to justify the salary she was paid.

Whatever the truth in this particularly personal and unpleasant allegation; it is clear to me, and the electorate, that the Party has lost the will to fight and win a general election. Much like the parrot in the Monty Python sketch, I fear that the Party has “ceased to be”.

I can personally attest to this lack of “life force”. Some months ago I wrote an open letter to Croydon Council (my local authority, Labour controlled); castigating them for the 26% rise in council tax that they imposed upon the hapless residents of Croydon. I posted this to the “Worse Than Worthless” section of my website, and emailed a copy to my local Conservative Association.

I naively assumed that my local Association might be able to use this, in some form or other, to raise public awareness of the council tax issue; and to improve their own standing in the polls. How wrong I was, they did nothing:

 No leaflet drops
 No letters to the local paper
 No evidence of life stirring within the local Conservative Association bunker at all.

They did not even have the courtesy to acknowledge receipt, or thank me for my interest in the Party.

Note to my local Party: “When something is handed to you on a plate, you do at least say thank you!”

Note to the national Party, using the vernacular of the under 60’s; “sorry guys, but what the hell are you doing?”

Here, is my prescription for restoring the body of the Party to some form of health:

 Decide now, not tomorrow or next week, as to whether you intend IDS to lead you through the next general election. If you want him to go, then for God’s sake put him and the rest of us out of our misery. If you want him to stay, then unite or die!

 Change the rules for electing the leader, the current situation whereby the constituency parties have a say does not work. The leader has to lead the MP’s, without their respect and loyalty he/she will be isolated and impotent. The constituency parties are a hindrance, not a help, in the selection process.

 Change the rules for selecting parliamentary candidates, at the moment the constituency parties hold the whip hand. This is evidenced by the debacle of the recent selection in Windsor; whereby a man of Malcolm Rifkind’s experience did not even make the short list, because the local party went into a sulk about an interview he gave (see my article “The Sulking Conservatives”).

 For goodness sake try to encourage people under the age of 60 to join the Party. At the moment the demographic skew in the Party is so heavily weighted to the over 60’s, that the “connectivity” between the Party and the real population of the UK is non existent.

 When people try to help you, even if that help cannot be used, at least show them the courtesy of thanking them. You won’t get votes, or members, unless people feel that you listen to them.

In my opinion, until these remedies are effectuated vigorously, and without mercy, Tony Blair’s recent comment will stand; namely:

“The Labour Party is the only party in town”.

Arnold Schwarzenegger’s Most Demanding Role

I see that the voters of California have recalled Gray Davis (the Governor); and placed the Governorship in the hands of Arnold Schwarzenegger, the Hollywood star famous for a string of tough guy movies (which included the Terminator series).

Mr Schwarzenegger faces quite a number of pressing problems, off the top of my head, the following top the list:

 The fact that Mr Davis (a Democrat) was recalled, as a result of Republican agitation, and then beaten by Mr Schwarzenegger (a Republican) will mean that the Democrats will be champing at the bit to “return the favour”.

 California is on the verge of bankruptcy; Mr Schwarzenegger will need to demonstrate, very quickly, that he can turn this situation around.

 The personal attacks made against Mr Schwarzenegger in relation to his alleged “groping” of women and alleged support for Hitler will, in this age of trial by media, stick to him like mud on a bear’s backside; and be difficult to shake off.

 California allows voters to pass “propositions” which, amongst other things, can determine the allocation of the state’s revenue. In other words, voters can tie the Governor’s hands before he even takes office.

Taking the above points into account, I would say that California is bordering on being ungovernable. Mr Schwarzenegger will need all the resilience and indestructible characteristics of his Terminator character, if he is to succeed in his latest role.

The Myth of Fast Food Addiction

There is a theory that is being expounded by certain experts that fast food, because of its alleged high fat content, is addictive.

This, they say, accounts for the increasing quantities of fast food eaten; coupled with the rise in obesity in the Western world.

Needless to say, lawyers are rubbing their hands at the thought of the fees that they will earn from the forthcoming litigation. This will doubtless follow, as people sue the fast food companies for their inability to lose weight; which they blame on their insatiable appetite for fries, burgers and fried chicken.

Tosh!

People are eating more fast food, and putting weight on, for the simple reason that they are too lazy to exercise or cook for themselves.

My message to them is “don’t blame others for your own indolence”.

The Stench of Corruption in the EU

An internal report recently shown, in secret, to the members of the European Parliament; has detailed the corruption, and lack of financial controls, that pervade the EU’s infrastructure.

The EU Commission, led by Romano Prodi, is so concerned about the potential political fallout; that it made the members of the European Parliament sign a declaration of secrecy with respect to the contents of the report.

Needless to say it leaked! Politicians are not good at keeping their mouths shut.

The report, by all accounts, reveals that amongst others the European Statistical Agency (Eurostat) has been falsifying accounts. It is estimated that Eurostat has lost £3M of public money, via off record bank accounts and false accounting.

I have run international audit departments, and headed the fraud investigation department of one of the world’s largest multinationals. In my experience, fraud and corruption in an organisation can only be rooted out if my “five principles of good governance” are followed:

1. Those responsible for fraud and corruption are fired, and prosecuted with the full force of the law. Note that this applies to all levels up to, and including, the CEO/President.

2. Senior management are seen to be “whiter than white”; corporate ethics are disseminated top down, not bottom up.

3. There is transparency with respect to the reporting of fraud and corruption.

4. Effective financial controls are in place.

5. There is an independent organisation that reviews and reports on controls, on a regular basis.

It would seem that the actions, or should we say inactions, of Prodi and his team go contrary to every one of my principles.

There is, in my professional opinion, the unpalatable stench of corruption permeating from the EU bunker.

When something stinks, you open the window and throw it out.

I would suggest, Signor Prodi, that you act quickly and embed my five principles of good governance in the EU infrastructure; otherwise the voters of Europe may soon wake up and realise that this stench is coming from you.

PS: Signor Prodi, should you need to "bone up" on the basics of fraud, corruption and ethics; here are three articles that you should read:

Codes of Conducts and Ethical Principles of Companies
Ten Reasons Frauds Occur
Ten Types of Fraud

Putting the Genie Back into the Bottle

MSN have announced that they will be shutting down their chat rooms. This, they say, is being done to protect children from paedophiles.

I have a number of observations:

 Whilst, at first sight, their action seems very laudable; MSN have been running chat rooms for a number of years (I don’t not know their cost/revenue stream). Shutting them down now has given them a good day’s publicity.

 There are countless other companies running chat rooms on the net. The chatters and paedophiles will simply go elsewhere.

 Aside from the internet, there are also chat rooms run by phone companies. Chatters and paedophiles can use these as well.

 Adults teach children to be wary of strangers, and not to talk to them when they are out in public. However, the very rationale of the chat room (set up and marketed by adults) is that it is a place where strangers can come together and get to know each other. This double standard is, I suspect, not lost on children.

In short, the genie is out of the bottle; you are unlikely

Pass the Sickbag

I see from reports that Carole Caplin, Cherie Blair’s “lifestyle guru”, is miffed at the way No 10 has treated her.

Caplin whose only claim to fame, prior to being involved with the Blairs, was being a topless model; had been involved with the alleged con man Foster, who handled Cherie’s purchase of an apartment for her son.

The resulting media frenzy, dubbed “Cheriegate”, caused Tony Blair to feel the need to distance himself and his wife from Caplin; lest it diminish their “brand value”.

This need was intensified when the BBC showed a fly on the wall documentary, made with Caplin’s permission, filmed during Cheriegate.

The recent magazine spread showing Caplin applying lipstick to Cherie, whilst she sat on the marital bed in No 10, did nothing to enhance Caplin’s reputation in No 10.

Caplin is now reported to be considering publishing details of life in No 10. She believes, so it is reported, that she is a victim of dirty tricks; and it is claimed that she understands how Dr Kelly felt.

Pass the sickbag!

The Sulking Conservatives

The local Conservative association in Windsor is currently in the process of selecting their prospective parliamentary candidate; after their sitting MP (a Conservative) was expelled for having improperly claimed £90K in expenses.

During the initial stages of the selection process the association has to decide who, out of the people who have put their names forward, should go through to the next stage.

The association received a large number of applications including one from Sir Malcolm Rifkind; who was a cabinet minister during past Conservative administrations, and an MP until losing his seat at the last election.

He is a most capable politician, and has a keen intellect (a rarity amongst the political classes). He is, to my view, exactly the sort of man that the Conservative Party should be desperate to employ on their lack lustre front bench.

The Windsor Conservatives selected 46 candidates to go forward to the next stage of the selection process, Sir Malcolm’s name did not appear on the list.

Why did this happen?

Were there 46 candidates who outshone Sir Malcolm? Indeed, if this were the case, the Conservatives should consider themselves truly blessed.

Unfortunately, if reports are to be believed, Sir Malcolm’s exclusion was not based on a hard nosed assessment of his abilities; but in fact the good old fashioned pomposity, and pig-headedness, of the selection committee.

It appears that during an interview with a local paper, Sir Malcolm had said that he hadn’t yet decided if he would move to Windsor. The committee, instead of talking this through with him during the selection process, gave way to the knee jerk reaction of wounded pride and, like a sulking teenager, turned their back on him.

This sorry little tale shows that the Conservative Party is still in massive sulk about losing the last two elections. It has not grasped the fundamental point, that they need to field quality candidates in the next election; not second raters who acquiesce to the single issue prejudices of the over sixties, who run the local associations.

There are two solutions:

 Lessen the power of the local associations in the selection process.

 Wait for the local membership to die of old age.

I suspect that the latter is more likely to happen, rather than the former.

The Cruise Brothers

One Simply Cannot Find the Staff

How very dis-obliging of Geoff Hoon, when being cross examined at the Hutton enquiry, not to take the traditional role of sacrificial lamb; and fall on his sword for his master Tony.

One simply cannot find the staff these days!

The Chinese Civil Service Exam

The current round of final school year exams have now been sat, and the results dispensed to eager sweaty students. As with each exam round there has been the usual chorus of hubris and backslapping by ministers over the improvement in the pass rates, and criticism from educational experts and industry leaders that the exams are too easy and that standards are slipping.

Oxford, faced with only being able to offer a few hundred places to the several thousand medical students who have met the exam grade requirements, is to reintroduce an entrance exam; designed to test candidates’ reasoning and practical application of knowledge.

This exam has in the past provided some fine examples of applied knowledge, no matter how limited that knowledge was.

In one year the question was asked; “write all you know about the role that Sir Thomas Fairfax played during the Civil War”. One hapless candidate, who felt that his knowledge was somewhat lacking in this area, wrote nothing. He was awarded 100%, and offered a place; he had answered the question with precise accuracy and written all that he knew, nothing!

I would like to offer my own solution to the problem of selecting the best candidates. This method was used by the Chinese Civil Service, several thousand years ago, when selecting candidates.

Place the candidate in a room for 24 hours; with a desk, pen and an unlimited supply of paper. Ask them to write all they know about everything.

Now that should produce some interesting answers.

Power Outages in the USA - An Open Letter to The President and Other Interested Parties


Mr President,

With respect to the power outages that seem to be affecting large numbers of people in the USA, I was somewhat surprised to see the apparent lack of speed with which the power is being restored.

That is at least how the media on this side of the "Pond" are portraying it.

I suspect that maybe the contigency plans of certain gov depts and companies have not been dusted down for a while.

A couple of months ago I wrote an article on "high level" contingency planning; which I posted on the "In Your Face" section of my website. It seems somewhat apposite under the circumstances.

Forgive me for putting my nose in where it is not wanted. However, if you are interested in reading it; and seeing what company bosses, and your elected officials should have done please feel free.

You are welcome to read it by clicking here.

By all means pass it on to Mayor Bloomberg, and the like, if you feel that the response has not been sufficiently "up to the mark".

At this stage I wish you luck and a speedy return to normal. Also, as we say here in Britain; "keep a stiff upper lip!"

Yours sincerely,

Ken Frost

Number 10 Blunders Again

The comments made by Mr Kelly (one of Number 10’s spin team) about the late Dr Kelly being a “Walter Mitty”, have plumbed new lows even by this sorry tale of character assassination.

Number 10 at first tried to cover it up. However, finally realising their “goose was cooked”; John Prescott admitted this comment came from the spin bunker, and issued a written apology to the family of Dr Kelly.

This “off record” character assassination raises a number of serious issues about the competence, and “game plan”, of the Number 10 spin bunker:

 To comment in the way Mr Kelly did was insensitive, and stupid. Even the most foolhardy of politicians (and goodness knows there are a few of them!) would know that the press would pick this up and shake it like a dog does a rag doll.

 The Walter Mitty slur is insulting. Dr Kelly, from what his friends, colleagues and journalists who knew him say was no fantasist.

 There is a possibility, only mooted quietly at this stage (but it may come out in the Hutton enquiry), that Dr Kelly was in fact working for the intelligence services. This raises an added question mark over his death, and the circumstances leading up to his public humiliation by the select committee.

 It is possible he had a very serious story to tell, and the smearing of his name by this remark and the other leaks over the last week; which have implied he was a serial leaker seem to be designed to undermine his reputation.

I believe the truth will come out, the government may find the coming weeks distinctly uncomfortable.

URGENT PRESS RELEASE TONY BLAIR TO REPLACE ALASTAIR CAMPBELL

Following the recent speculation over the future of Alastair Campbell, Tony Blair's much loved and trusted spin master, the Prime Minister is pleased to announce the appointment of a new man to this important position.

He is a high profile individual who, until recently, held a senior government position.

He will now act as spin master for Tony Blair, and will field questions from the public and media during the Prime Minister's forthcoming holiday.

To ask him a question on line, click the following link (or paste it into your browser):

http://kenfrost.0catch.com/spindoc.htm

The “Road to Nowhere”- The Delusion of the Burgeoning Public Sector

Since the election of the Labour government in 1997, the UK has experienced a decline in the levels of employment in the private sector and a massive increase in the levels of employment in the public sector. Apparently, over 40% of those employed in the UK now work in the public sector.

At first glance this may not seem to be too troubling, jobs lost in the private sector being replaced by state sector jobs; the latter deemed by many to be worthy, and necessary, for the social well being of the country. Indeed Keynes expounded the view that it was better to employ a man digging a hole, rather than to let him idle away his time.

However, this rise of the state sector gives rise to serious concerns about the future economic prosperity of the UK:

 The jobs being created in the state sector are not “front line” jobs such as; nurses, doctors or teachers. They are newly invented bureaucratic creations; risk officers, empowerment managers etc. None of these positions actually “adds value” to the quality of life in the UK.

 A private sector job, more than likely, adds economic value by directly or indirectly producing a product or service that earns money from abroad. State sector jobs, more than likely, do not. In essence we are merely passing money between ourselves, like an enclosed game of “pass the parcel”.

 The quality of the state sector, despite having billions of pounds thrown at it, has not in the opinion of any front end users improved “one jot”. Ask any parent if they feel that the quality of teaching, and the level of resources available at their child’s school has improved.

 The state, unlike the private sector which is not shielded from economic reality, is inherently wasteful. A report issued in the last few days highlighted the fact that the state sector wastes £70BN a year; that is the equivalent of over 10p in the rate of income tax! On a personal level I can attest to this waste; on applying for a senior position recently in the state I was sent by post an information pack exceeding 200 pages, no private sector employer would ever dream of being so wasteful.

It is a matter of great concern to me and should be to the citizens of the UK that the Chancellor, despite being an intelligent individual, appears to be possessed by the old socialist disease of political dogma; namely:

“State good, private bad”.

This disease is clearly deadening his ability to see that the current path that the UK is taking, in building up the state at the expense of the private sector, is in fact the “road to nowhere”.

Dockers, Dinosaurs and Disputes

My father was a captain in the Merchant Navy. He told me story about working practices in the docks in the 1950’s, which I will relate to you.

Dockyard practices were rigidly applied, and were based on agreements between the powerful dockers’ unions and management of the docks. Should you wish to unload your cargo on a Saturday the rules were particularly inflexible.

Primarily the dockers were only on duty for 3 hours on Saturday, for which they naturally received double time. Time and motion studies had concluded that it took 30 minutes for the average docker to walk to the ship, and a further 30 minutes to walk back. This of course counted as part of the working day, and so only 2 hours were left for the docker to actually “work”.

Time and motion had also dictated that it took 45 minutes to open the cargo holds, and another 45 minutes to close them. This left some 30 minutes in which the cargo could be unloaded.

However, no doubt exhausted by the gruelling schedule, our hardworking dockers needed a break. Therefore two tea breaks, of 15 minutes each, were built into the day. The result, dockers were paid double time not to come to work.

Needless to say working practices like that ensured the destruction of the once thriving dockyards in the UK (something that Hitler had failed to achieve); as container ships moved to unload their cargoes on mainland Europe.

The power of the union dinosaurs was effectively castrated by the Thatcher governments of the 1980’s. However, their rotting corpses still occasionally twitch. Currently we are seeing such a spasm in the dispute over swipe cards between BA and three unions.

These three unions, who are also engaging in a public spat amongst themselves as to who is “head dinosaur”, brought Heathrow to a standstill last week. They are threatening to do so again.

This is sheer folly, BA like other airlines is in a parlous financial situation. Further days of lost revenue will more than likely push it to the edge of bankruptcy. The people whom the unions claim they represent, ie the members, will find themselves out of a job much like the dockers. All of this allegedly over a change in working practices.

The dockers once thought, as they gazed out to sea at the long line of ships queuing to unload their cargoes, that they had a job for life. How wrong they were. I suggest the staff of BA take heed from this, they could ask a docker (if they could find one) what their advice would be.

By the way, my father managed to circumnavigate the intransigent dinosaur; and managed to get his ship unloaded on a Saturday. How? Simple, he opened the cargo holds whilst still at sea.

Maybe the management of BA could come up with a similarly imaginative method for side-stepping the rotting corpses of union intransigence?

The Emperor’s Clothes

In 1997 Tony Blair won a sweeping election victory, he was elected Prime Minister; as the British people had finally tired of 18 years of rule by the Conservative Party. The promise of a fresh approach to the governing of the UK gave people hope that “things could only get better”. This fresh approach was emphasised by Tony Blair’s well spun phrase “trust me, I’m a straightforward kind of a guy”.

It has taken some 6 years, but now the British people have seen that the spin manufactured by New Labour adds as little value to effective, honest government and to the quality of their lives; as the emperor’s clothes did for his dignity and protection against the elements.

In a poll carried out this week, the majority of those questioned stated that they didn’t believe a single word the Prime Minister said.

Whilst politicians are known to tell the “odd porky”, it is a disgrace of the highest magnitude to find oneself governed by a Prime Minister whose every word is greeted with disbelief by the citizens of the UK.

This situation, in effect, makes the country ungovernable. Tony Blair, were he a man of honour and principle would at this point step down. However, it is evident that he is bereft of both of these qualities necessary in a leader.

With the imminent departure of Alastair Campbell (the Prime Minister’s master of spin), the situation for Blair and Labour will worsen. What little protection the spin once provided will now be removed (there will be no effective replacement for Campbell). The court of Blair, and his own peculiar personality traits (we are assured he is not psychotic), will be exposed to the glare of public scrutiny; without the distractions and deflections of spin.

Additionally, the forthcoming enquiry in to the death of Dr Kelly will be the closest the UK has come to the Watergate hearings in the USA.

Mr Blair deludes himself if he thinks he can ride this one out:

 The country doesn’t trust him.

 The Labour Party despises him.

 He will soon have no spin master.

This will turn very ugly indeed.

The Wages of Spin

As I write this, the body found in the woods has not yet been formally identified. However, it is taken as a certainty that it is Dr Kelly.

Dr Kelly was a respected professional scientist in the Ministry of Defence (MoD), who found himself thrust into the public eye as a result of the ongoing fight between the BBC and No 10; over the “dodgy dossier” on WMD, allegedly “sexed up” by No 10.

Dr Kelly had to endure a number of humiliations:

 Being named by No 10 as the source of the BBC’s story on the “dodgy dossier”; he denied this.

 Being publicly cross examined in a brusque, and patronising way by the Commons Select Committee; made up of second rate politicians, who clearly relished their opportunity to kick around someone who was not at ease with politicians or the media.

 Being put under siege by the media, who encamped outside his house.

This tragedy could have been prevented if any one of the following events had happened:

 Alastair Campbell (spin master to Tony Blair) had called off his personal vendetta against the BBC. He is now reported to believe that something has gone very wrong with the way politics and the media conduct themselves; well spotted Alastair.

 The BBC had made a statement confirming, or denying, that Dr Kelly was their source. Since the tragedy they have now offered their condolences, possibly tinged with guilt?

 The Chairman of the select Committee, Donald Anderson, had exercised some control over its members; and made them treat Dr Kelly with the respect that he deserved. Since the tragedy members of the committee have appeared on TV denying, in the weasel manner of the guilty, that they were too harsh with Dr Kelly.

 The MoD had publicly backed Dr Kelly.

 No 10 had not named Dr Kelly as the mole. Tony Blair of course now expresses public sympathy, and requests that restraint be shown. Where was that last week Tony?

None of the above happened. Demonstrating that those organisations have no feelings or respect for the rights, feelings or dignity of the individual citizen. Their only concern is their self perpetuation at whatever cost.

Tony Blair made much in his speech to Congress, about the Iraq war, over the fact that history will judge.

Very true Tony, but it won’t judge in your favour. I believe that this tragedy will be a watershed; the current Administration is finished, and will be history by Q4 2003.

In the meantime should anyone of the following people have a shred of decency, they should take my advice and resign:

 Tony Blair, for presiding over and encouraging the spin culture that corrodes government in the UK; this corrosion has now claimed a life.

 Donald Anderson, for presiding over the “witch finder” star chamber that humiliated Dr Kelly.

 Alastair Campbell, for pursuing a private vendetta against the BBC and for naming Dr Kelly.

 Geoff Hoon, Secretary of State for Defence, for abandoning a respected member of staff.

 Greg Dyke, head of the BBC, who chose not to confirm or deny that Dr Kelly was the mole.

I doubt very much that any of the above will resign voluntarily; accepting responsibility for events is not the “done thing” anymore in the UK.

The Lesson of The Million Dollar Biro

Let me tell you a little story about the space race, when the competition between the USA and Soviet Block was at its height. It was discovered that the normal biro would not work in “zero G”.

Therefore the USA, as is its won’t, spent vast sums of money (several million dollars) on research to develop a pen that would work in “zero G”. Success, they achieved their objective; and could proudly boast that they had beaten the Soviets, in this most important of technical breakthroughs.

However, over in Moscow the wily old guardians of Lenin’s legacy afforded themselves a wry smile. They had also managed to solve the problem, at zero cost in fact. The solution, well simple really; they used pencils in space.

The moral from this story is that, throwing money at something is not always the best way to resolve a problem.

I would ask that Tony Blair (UK Prime Minister, at the time that this article is being written) and his Chancellor (Gordon Brown) heed the above, and revise downwards their current multi billion pound “spending splurge” on public services.

This spending, which was announced with fanfares and the usual hubris of the government spin machine in a previous budget, is not achieving the stated aim of improving public services.

Instead it is creating a vast layer of bureaucracy, and strange titled meaningless jobs, as government departments struggle to spend what they are given within each fiscal year.

Naturally, the poor tax payer is required to foot the bill for this ill thought out largess. There have, in fact, been some 60 tax rises since labour took power in 1997.

My message to the Blair and chums is this; governments are not efficient allocators of resources, do us all a favour and cut back your spending and taxation plans.

This will allow the people at the “sharp end”, ie we the voters, more resources with which to better manage and improve our lives.

What’s the Difference Between the UK Conservative Party and 29000 Rubber Ducks?

I see that after an 11 year journey; 29000 rubber ducks, which fell off a container ship in the Pacific in 1992, are expected to make land fall in New England sometime in the next few weeks.

Now tell me, if 29000 inanimate objects can stay together whilst making an epic journey surviving all the nature throws at them; why can’t the UK Conservative party achieve the same feat for more than a few days?

Yet again, just as they (the Conservatives, not the ducks) seemed to be improving their position in the polls; they have managed to show the world their deep internal divisions in the shape of a spat erupting between the leader (Iain Duncan Smith) and one who wished to be leader (Ken Clarke), over that ever popular topic of Europe.

I guess, from the perspective of the man in the street, the rubber ducks appear to be the more unified, disciplined and durable of the two organisations.

My advice to the Conservatives is simple; remember that your role as Her Majesty’s Official Opposition is to oppose the government, not to conduct public bar brawls with yourselves.

On present form the ducks, should they choose to stand for election, would have my vote.

A Poll Tax by Any Other Name

The UK government intends to introduce a national identity card for every adult living in the UK. The rationale, it argues, is the increase in perceived security threats to the UK since 9/11.

The government argues that is has strong public support for this, well it would wouldn’t it?

We are told that the cards will contain details of individuals; including a unique identifier, such as finger prints.

We are assured that our civil liberties will not be threatened, and that the card will not have to be carried 24 hours a day. That argument fails, by default; commercial enterprises, banks, airports, local government and other areas of daily life that an individual comes into contact with will all require the card as a proof of identity.

The introduction and administration of this scheme will naturally cost money; we are advised that a charge of £39 per head will cover these costs.

I don’t doubt that there will now be a spirited debate about the civil liberty implications of this scheme. I don’t intend to cover those issues in this article; save for the following observations:

 The UK is currently governed by a party with no core ideology, save the pursuit of power for its own sake.

 The government is obsessed by spin and presentation. Any criticism of it is robustly crushed, witness the current campaign against the BBC.

 There is no effective political opposition, save for the media.

The above points raise serious concerns about the future of democracy within the UK. I would venture to suggest that given these issues; any proposal, by this government, to introduce a national identity card should be viewed with great suspicion.

However, let us not ignore the other aspect of the proposal; the charge of £39. As I have noted in another article (The Illusion of Increasing Property Values), this government is revenue greedy. This charge is another neat “stealth tax”.

Indeed since it will be levied on every adult (save for a few means tested exceptions), it is in fact the purest form of regressive poll tax that can be created.

The last time a poll tax was introduced in the UK, in the early nineties, the charge was based on the cost base of the citizen’s local council. Theoretically, the citizen could reduce the size of the poll tax by voting for a lower spending council. In reality, it didn’t work; poll tax bills soared, and Margaret Thatcher was ousted from office. The tax was repealed.

The version now being proposed offers no opportunity for electoral input. It is in effect taxation without representation.

In my opinion, this proposal must be resisted at all costs.

The Illusion of Increasing Property Values

The UK has, over the last decade, experienced an unparalleled growth in the value of domestic property; fuelled by low interest rates and demand exceeding supply. Some areas of the country have experienced annual increases of over 20%.

This growth has led to a feeling of smug self satisfaction among those who own property, and has underpinned a consumer boom; as people release the perceived excess equity in their homes, and use it to satisfy short term desires and whims.

However, the perceived increase in personal wealth has a number of drawbacks:

 The growth in prices is slowing down, and in some parts of the country gone into reverse. This has placed some of those who have borrowed heavily in the uncomfortable position of having negative equity; they have become financial prisoners within their own homes.

 The increase in prices has made it more difficult for first time buyers to fund the purchase of their first home; without borrowing excessive multiples of income, sometimes up to five times their annual salary.

 A house is a lifetime commitment, the debt that goes with it usually takes twenty five years to pay off. I know of no one who can, with certainty, look twenty five years into the future; and guarantee that income, taxes and other issues will not conspire against them to impede their ability to pay off the debt.

 The feeling of greater wealth, that increases in property values brings about, is illusory. You have to live somewhere, if your home has risen by 20% then others have done so as well. Should you wish to move to a larger property, in a few years time, the ongoing increases in prices make that more difficult.

Take the following example:

Property A is worth £100K

Property B is worth £200K

The net difference is £100K

After one year prices have risen by 20%.

A is now worth £120K and B £240K, the net difference is now £120K.

In one year it is now £20K more expensive for the owner of A to sell and buy B.

The only way to benefit from a rising market is to downgrade, and buy a smaller property or live in a cheaper area.

 Finally I would caution all to be very wary of the current Administration’s greed for tax revenue. It is eyeing the rise in property values with great avarice. It will most definitely find a way to grasp an undeserved slice of these gains for itself.

In short, don’t be seduced by the rises; you are probably worse off.

If It Ain’t Broke, Don’t Fix It

Prime Minister Blair last week accepted the “retirement” of Lord Irvine, the Lord Chancellor; and promptly announced that the position of Lord Chancellor would be abolished.

The role will be replaced by a Supreme Court, and a Minister for Constitutional Affairs.

In my opinion, there are a number of problems with this course of action:

 The post of Lord Chancellor has been in existence for 1400 years. Its primary role has been to appoint the judiciary, and oversee the efficient and impartial operations of the judicial process. Its independence, and probity, has not been questioned before; yet the “rationale” for the change is to improve judicial independence. The reality belies the spin.

 It is an ill kept secret that the Home Office has become increasingly exasperated by judges who exercise their independence, when interpreting the law. The nature of the current Administration is skewed towards centralisation and government control; they dislike independent thought. Therefore, I very much suspect that the government would prefer a politicisation of the judiciary.

 Two weeks before making the announcement, Blair was pushing the idea of an Orwellian sounding “Ministry of Justice”. However, after lobbying from the Home Secretary (who feared the erosion of his role) the idea was dropped; and the Supreme Court suggestion was “cobbled together”. The idea has clearly not been thought through.

 The man appointed to design and guide the constitutional changes is Blair’s friend, and former flat mate, Lord Falconer. This is the same man who deserves full credit for mis-managing the Dome fiasco. Scarcely someone to have confidence in with respect to a major “change management” project of this size and complexity.

 The day after being appointed, Lord Falconer was seen in the House of Lords wearing the wig and robes of the office of Lord Chancellor (a position that had been abolished some 24 hours earlier). It appears that there is a procedural requirement, laid down in 1660, that requires the Lord Chancellor to be present when the House of Lords is sitting. It transpires that no one had thought of this when putting together these “plans”.

 The judiciary needs to be politically independent if a democracy is to flourish and thrive. A State appointed Supreme Court is not independent. This idea undermines democracy.

In short, replacing a 1400 year old institution with an ill thought out “rag tag” bag of ideas; put together in a rush, is wrong. Act in haste, repent at your leisure!

The maxim, as invoked by Lord Hailsham a previous Lord Chancellor, applies:

“If it ain’t broke, don’t fix it”.

Counter Points To Militant Vegetarianism

I fully endorse the principles of freedom of speech, thought and belief; so long as one person’s beliefs do not attempt to ride “rough shod” over another’s.

To this end, although I eat meat, I am perfectly happy to accept that others may choose a way of life that eschews meat eating in favour of a vegetarian diet; indeed I support their right to do so.

However, I do not support “diet dictators” who spend their lives telling others how and what eat; and who enhance their practical dietary advice with a relentless bombastic lecture on the unhealthy, and immoral, aspects of the diets of those who do not acquiesce to their views.

“Diet dictators” are not confined to any one group, and can include the following:

 The anti fat lobby

 Those who eschew carbohydrates

 The organic brigade

 The GM lobby (pro and anti)

 Vegetarians

On a personal level, I have been fortunate enough to only have rare encounters with “diet dictators”. However, some people are not so fortunate; and find themselves confronted on a very personal level by these intolerant people.

Militant vegetarians seem to be the more prevalent, and vociferous, in Western society. Therefore I have put together four simple counter points, that can be used by anyone when confronted by a militant vegetarian:

 Mankind’s brain size and power increased as a direct result of the protein being ingested from meat eating.

 We have incisors for tearing flesh.

 Herbivores (such as sheep) eat by grinding their jaws in a “side to side” motion, the resultant wear on their teeth is counteracted by the fact that their teeth are continually growing. Human jaws work in an “up and down” motion and our teeth, once fully formed, stop growing.

 Hitler was a vegetarian.

Point taken?

The Dis-United States of Europe

There are those in Europe who are working towards a political and economic union that, they believe, would equal the USA; in terms of economic power and political “clout”.

They believe that every act that harmonises European law, such as the introduction of a single currency, brings them ever closer to realising their dream.

Yet they ignore the one fundamental difference between Europe and the USA; that prevents the free movement of labour, and places an intolerable bureaucratic burden on the European Commission and European Parliament.

The difference is one of language. The USA has one common language, the European Union does not.

Currently official documentation has to be translated into all of the languages, of the ever increasing number of member states. This creates a mountain of paperwork, and an army of translators.

A unified Europe will, if it wishes to emulate the USA, have to address the issue of language; and adopt one common language for all member states. This language will have to be spoken by every man, woman and child throughout the European Union.

Now tell me; do you really believe that the Europeans could ever voluntarily agree on which language they should speak?

My conclusion, a United States of Europe is but a fanciful dream.

The Absurdity of English Pub Closing Time

Those of you who live in England or who have travelled to England may find, like I do, the 11:00PM closing time to be somewhat absurd. Unless the publican has obtained special permission, he has to close his pub by 11:00PM Monday to Saturday and 10:30PM on Sunday’s.

This “nanny like” state of affairs arose from regulations introduced during the First World War.

Whilst assembling shells and other explosive devices; British munitions workers were often so drunk that they would, on occasions, blow themselves and their factories up. To improve the sobriety, and productivity, of the workers the government of the day sought to restrict opening times. Part of that legacy remains with us to this very day; in the form of 11:00PM closing.

Whenever changes have been proposed, these have been opposed by religious elements within parliament who raise vociferous objections.

To my view, politics and religion should be kept well apart. My views on religion are well known, and are expressed in my article “What Use is Religion?” click here to view it.

My simple message to our beloved legislators is this:

“The First World War is over, let us now move on to the 21st century”.

Does Anyone Really Care Anymore?

The Western world claims to live by the mantra “The Customer is Always Right”; companies and governments have become obsessed with building targets into almost every facet of commercial and governmental enterprise, examples of these targets include:

 Call answering time

 Complaint response time

 Outstanding corrective actions

 Customer satisfaction

 Hospital waiting lists

 Exam pass rates

 Brand awareness etc

However, it is my experience as evidenced in the “Worse Than Worthless” and “The Endowment Diary” sections of my website; that many organisations merely pay lip service to these “ideals”. When “push comes to shove”, individuals are left to fight the lengthy battle for justice alone; with whatever means they have at their disposal.

As you can see from my own experiences on my website; one often has to cajole the organisation and publicise the problem to as wider audience as possible, before any semblance of action is taken to address the issues raised.

Those of us who use the UK’s “beloved” rail network know that we are no longer referred to as passengers, but as customers. A sign, we are told, that the rail companies recognise our importance. Has that improved the quality of service? NO!

Rail operators, in fact, in order to meet their much heralded punctuality targets are changing timetables and reducing the number of trains running; in order to be able to claim to be improving.

Hospital waiting list targets, by all accounts, are now being met because the statistics are being adjusted.

Exam results improve each year because the papers being set, and the exam marking standards, are becoming less demanding.

This sorry state of affairs was predicted in Orwell’s 1984. In one passage, Winston Smith (the hero) noted that the Ministry of Truth recently announced figures about shoe production showed an increase on the previous year. However, no one knew if the numbers being quoted referred to the number of pairs of shoes, the number of left footed shoes or the number of right footed shoes.

Moreover, no one even knew if the figures were correct; and indeed, at the end of the day, did anyone really care?

Cynicism, lethargy and apathy have allowed commercial organisations and government to wear us down with meaningless targets and statistics; these are the real “Weapons of Mass Destruction”.

It is up to the individuals in society to neutralise these self induced “WMD”; and force political and business leaders to respect them as individuals and serve their needs once again.

The Search for Saddam and WMD (A Short Poem)

They seek him here,
They seek him there,
They cannot find him anywhere.

That dammed elusive Saddam Hussein!
Threatening the world again, and again.

His weapons buried in terrain,
Of sands that shift,
like politicians’ tales;
As to why so many searches fail.

Is he in Syria?
Is he in Iran?
Does he hunker, in a bunker?

With stores aplenty,
There he sits,
Musing on his future strikes;
With WMD and the like.

Be they real,
Or be they false;
Their danger cannot be doubted.

For read the papers in days to come,
To see the story outed;
That leads to Blair being routed.

Maybe not the finest piece of poetry ever written, but I think the point is clear.

What Use Is Religion?

Mankind throughout the millennia has believed in one, or many, omnipotent beings; who have the power to influence events on earth, and create a spiritual paradise or hell in the supposed afterlife.

These omnipotent beings have been given many names including; Allah, Apollo, God, Osiris and Zeus to name but a few.

The one strand of commonality that links them is that they all, according to those who believe in them, require to be acknowledged and worshipped; thereby necessitating the creation of religions, designed and instigated by mankind.

These religions, by the very fact that they are human creations, contain all the faults and weaknesses of the human character including; vanity, aggression, pride, greed, lust and envy.

Many religions claim to be tolerant; yet their actions, in asserting their own dominance, belie this assertion. Taking three “mainstream” religions as an example; Christianity has throughout the centuries sought to convert the heathen, extreme Islam seeks to eliminate the infidel and fanatical Judaism seeks sole occupancy for those of the Jewish faith of the land in and around Israel.

Throughout mankind’s history, wars have been fought in the name of whatever omnipotent being of the day was believed to be in charge.

In short organised religion, because it is organised by humans, is used as a means to extend the baser instincts and desires of human nature.

There are individuals, such as rabbis, priests and mullahs who seek to do good and to comfort those in distress. However, they do this out of their own inherent sense of decency and affection for their fellow man; not because of the decency of their particular organised religion.

Even those who claim to believe in the same omnipotent being, such as Christians, manage to find ways to use religion against each other. A fine example of this is the animosity between catholics and protestants in Northern Ireland; they so loath each other that they choose to live apart in segregated areas of their cities.

Mankind will always look for ways to factionalise itself, and fight one another; religion has given it another means to do this.

Should an omnipotent being exist, I doubt very much that he/she would wish to be associated with this.

Therefore I ask, “What use is religion?”

Euroland’s Descent Into Chaos

The European hegemony, and by that I mean those countries that eschew the Anglo Saxon principles of free markets and flexibility of employment, faces a decade of civil, political and economic chaos; as the economic reality of the global economy hits home.

The critical issues facing Euroland include:

 The overvalued Euro.

 The lack of mobility of labour between member states, due to language and bureaucratic barriers.

 The excessively high interest rates being maintained by the unelected, and unaccountable, members of the ECB.

 The self delusion of the occupants of Euroland with regard to their overpaying themselves, relative to the rest of the world, in terms of salary, benefits and pensions.

These issues, unchecked, will have the following consequences:

 Investment from the rest of the world will decline; as companies seek more flexible, business friendly economies to invest in.

 The overvalued Euro will suck in imports and suppress exports; further eroding the job market, and standard of living of Euroland.

 The high interest rates will cause the European economies to stagnate, causing job losses and reduced tax revenues.

 The level of salaries and benefits, which are unsustainable, will be forcibly corrected; either by cuts in salary/benefits or job losses.

 There will be a knee jerk reaction to non Euroland products, ideas and capital flows; causing a rise in protectionism, and the consequential worsening of the Euroland economy.

 The downturn in the Euroland economy will see a rise in racism and attacks on “non Euro” residents.

The situation that Euroland faces, with respect to its rigid inflexible working practices and economic stagnation, is similar to the situation that the UK faced in the 1970’s. The corrective actions effectuated by Margaret Thatcher, and her cabinet, in the 1980’s gave the British economy the flexibility and strength that it needed to survive the economic globalisation of the 21st century.

However, the changes pushed through the British economy in the 1980’s came at a very high price; with job losses in the traditional heavy industries and significant social unrest. The UK, as a society, managed to navigate its way through this period of social upheaval by being fortunate enough to have a Prime Minister and cabinet that had the clarity of vision and strength of purpose to maintain a course of action that they believed to be right.

Euroland, in my opinion, does not have access to such a leader; nor indeed do its political parties have the backbone to present to their voters the unpalatable truth about the situation that they are facing.

The result will be an inevitable economic decline, with Europe spiralling into a decade of social, political and economic chaos. The straws in the wind are already evident; with yet another air traffic controllers strike in France, and the recent demonstrations in Germany and France about public sector benefits and pensions.

My advice to the UK is to avoid further integration with Euroland, as the UK will only be sucked into this impending chaos.

Get Off Your Backsides

Statistics show that for the first time in history, the number of people who are overweight exceed those who are undernourished.

The ignorant amongst you may feel that this is a cause for celebration, proof that mankind is within reach of eliminating hunger.

Let us not delude ourselves, this is nothing to be proud of. The number of under nourished people in the world exceeds 1 billion, and is unlikely to fall below this in the near future.

Those that are overweight are increasing in number (and size) and, aside from the aesthetic issues associated with obesity, face a myriad of serious health issues arising from their bulk. These include, but are not limited to, the following:

 Heart disease

 High blood pressure

 Diabetes

 Cancer

We should be ashamed of ourselves. Where over 1 billion people go hungry another billion, or so, stuff their faces like pigs at a trough.

There are a number of causes of this epidemic of obesity, including:

 The increased slothfulness and sedentary nature of peoples’ lifestyles.

 The abundance of cheap food in the West, pushing the daily calorie intake ever higher each year.

 The increased consumption of fast food and prepared food that is high in sugar and fat.

 Ignorance as to the difference between wholesome nourishment and junk stodge.

 Laziness on the part of parents who, instead of educating and disciplining their children with respect to healthy eating allow them to gorge on crisps, sweets and fries.

I enjoy food and drink, as you will read in my book “Accountants Can Cook”. However, you will see that I use only fresh ingredients; which contain a good balance of protein, fibre and vitamins.

My recommendations for reducing this obscenity of gluttony are:

 Eat less, exercise more.

 Cut out the junk food.

 Cook food from fresh ingredients.

 Learn to say no to your children when they demand junk food.

 Exercise self discipline.

To those of you who say they neither have the time, ability or inclination to follow these recommendations, my answer is simple; “Bullshit”.

Mankind has survived, and flourished, for millennia without junk food; and managed to cook and eat food prepared from fresh ingredients.

Get off your backsides and improve your lives!

Commuting Hell

Those of you in the UK who have the misfortune, like I used to have, of commuting to work by rail on a daily basis; will agree with me that it is an unpleasant, soul destroying experience. Common complaints include the following:

 The trains are often late.

 The trains are overcrowded.

 The interior of the train is often filthy.

 The safety aspects of overcrowding are, to say the least, questionable.

 The ticket prices keep going up, but there is no discernible improvement in the service.

The government claims that it intends to improve the situation; yet, from a user’s perspective, they have yet to make any discernible impact.

The question, as to why are the railways in such a mess, provokes a myriad of answers; including:

 The railways have suffered from years of underfunding.

 The government price controls prevents the rail companies from charging an economically viable fare.

 The privatisation of the railways emasculated management’s ability to manage the system.

These are all very plausible excuses. However, I offer an additional explanation. The system in operation cannot cope with peak time demand because, the number of people wishing to use it during rush hour exceeds its capacity.

This excess demand is brought about by a number of factors. In my opinion, the two key ones are:

 The population of the UK keeps growing, it is now approaching 60 million. I would suggest that this is unsustainable both in terms of absolute numbers, and the level of growth, for such a small island.

 The “desk bound” working population concentrates itself in and around the major city centres, such as London. The majority go to work at the same time each day, and consequently clog up the system.

In my opinion, the problem can be addressed by adopting a “twin track” approach; whereby the government, and the population, work together to improve the situation. I recommend the following:

 Price controls on fares should be removed. The extra revenue earned by the rail companies should then be invested on structural improvements of the network.

 The government should “fast track” planning permission for extending stations and lines in and around major cities; this will allow extra/longer trains to be used by the rail operators.

 The individual citizen, working in tandem with their employer, should cast aside the institutionalised “nine to five” mentality that pervades office culture. Why should the working day only fit into this narrow parameter? Firms should pro-actively encourage flexi-time and home working.

 Instead of clock watching, the length of the working day should be based on the completion of defined tasks. I have worked for many years in offices, and witnessed an inordinate amount of time being wasted by people taking coffee/cigarette breaks, gossiping, going to the pub for lengthy lunches and chatting on the phone. They do this because they are bored, and have little to do to fill their day. Therefore, it should be custom and practice to allow people to go home when they have completed their tasks. This will mean that people will stagger their journeys from the office; thereby easing peak time congestion.

The above suggestion also has the additional benefit of showing exactly how underemployed many office workers are; and should stimulate a much needed re-evaluation of the ways of working in the office environment.

A Busted Flush

Yesterday Clare Short, the UK International Development Secretary, resigned her post in the Cabinet. She cited her reason as being the fact that, in her opinion, the British Prime Minister had misled Parliament over the action taken in Iraq; which she believes to be a breach of international law.

Taken at face value, the resignation may seem to be a highly principled and noble action. However, I would draw your attention to the following salient facts:

 Prior to the Iraq invasion Ms Short threatened to resign, on the principle that she was opposed to any military action which did not have the backing of the UN. However, when push came to shove she chose to stay.

 Since resigning she has used several interviews to attack the non collective nature of the Cabinet, Tony Blair’s presidential style and the alleged rule by “diktat” that has, in her opinion, been omnipresent since Labour’s election victory in 1997. These may well be genuine failings of the Labour administration. However, since in her view they date back to 1997; why has she taken six years to identify them?

 She missed a crucial vote in the Commons last week, stating that there had been a mix up in her diary; adding that she would have voted for the government. She then found herself to be too busy to attend the weekly Cabinet meeting. These events, naturally, heightened press speculation about her imminent departure from government office. My view is that if you intend to resign, don’t play games in the days beforehand; just do it.

 Ms Short is calling on Tony Blair to step down before the next general election, and pave the way for Gordon Brown (the Chancellor) to take over. In my opinion, this betrays the real reason for her resignation; it is not a matter of principle, but personal antipathy towards the Prime Minister.

My advice to others, be they politicians or civilians, who may be contemplating taking the “lonely journey” of resignation is as follows:

 Don’t publicly threaten to resign then change your mind. It diminishes your credibility and dignity.

 When resigning on a matter of principle, stick to your principles; resist the urge to make personal attacks on former colleagues.

 Don’t play hide and seek in the days, or weeks, before resigning; it merely encourages speculation, and diminishes the “shock and awe” impact that your resignation has.

 Don’t go telling tales “out of school” to the media, about events that happened several years in the past. This merely diminishes your personal brand value to that of a B list celebrity; whose only source of publicity are appearances on fatuous reality TV programmes.

In short, if you really do have principles then stick to them; otherwise your resignation will have all the impact of a “busted flush”.

A Hammer to Crack a Nut

The Sunday Times reports that Network Rail has decided that the annual winter chaos on the railway network, caused by falling leaves and branches fouling the tracks, has to stop.

To this end, they have decided to take draconian measures; they will fell the trees lining the railway embankments.

Environmentalists have raised concerns about the damage that this will cause to the ecosystem. However, I would like to draw Network Rail’s attention to another possible drawback to this scheme.

I am not a civil engineer, but strongly suspect that the trees, or rather the roots of the trees, perform an unseen service; namely, they reinforce the structural integrity of the embankments.

Network Rail, by removing the trees, may well be destabilising the structural integrity of the embankments. This in turn may make them prone to slippage, and collapse; thereby causing the trains to be further delayed. I would have thought that leaves and fallen branches were easier to deal with than earth slips.

Comments from Network Rail on this matter are most welcome.

Spam

I, like everyone else with an email account, receive a daily dose of Spam (unsolicited bulk emails). Companies and individuals offer me a myriad of services and products, including:

 Penis enlargement

 Porn

 Cheap loans

 Opportunities to assist ex members of the Nigerian armed forces transfer millions of dollars to Switzerland, using my bank account

All of these “opportunities” are routed swiftly to the trash can.

I believe, as I have stated in the “Vision Thing” section of my website, that the internet is one of the greatest inventions in mankind’s history. It enables people to share ideas, interact with different cultures and to communicate; at the touch of a button. It will lead to an exponential growth in human intellectual, social and cultural development.

Governments, as much as they may wish to, have been unable to control the free movement of ideas and experiences between people and organisations. However, this freedom of communication has several downsides; Spam being one of them.

Speaking from personal experience, I have noticed that the level of Spam is increasing. This clogs up my mailbox, and wastes my time as I have to dispose of it. This increase is due to the fact that Spam has become big business. Unscrupulous individuals and organisations “harvest” the net for email addresses, and sell them on to others who program computers to deluge the hapless recipients with Spam.

Some people fear that this will lead to the eventual “log jamming” of the world wide web, and that people will simply be put off using it.

However, I believe that long before this situation is reached the main ISP’s (internet service providers) will recognise the threat that this poses to their business; and form a regulatory body that will formulate, and enforce, a code of conduct for the net.

I urge them to take action now, before governments try to stick their “snouts in the trough”; and regulate the net to death.

The Impact of the Euro

The European Central Bank (ECB), in its monthly bulletin, has warned that if the UK joins the Euro then the UK’s state healthcare system (NHS) will have to be restricted to emergencies. The ECB believes that the cost of maintaining the NHS would threaten the stability of the fiscal and monetary key performance indicators it has set the European hegemony.

The UK Treasury has expressed surprise at this; they believe that national member states have the right to set fiscal policies, monetary policies and tax levels.

I am afraid I must beg to differ with the view of Her Majesty’s Treasury. Anyone with the slightest understanding of economics should recognise that once you surrender your currency, you abrogate your right to set monetary and fiscal policy.

The ECB’s primary mission is to ensure that European inflation does not rise above a certain pre-determined range. It has a number of tools at its disposal to achieve this, including these two:

 It sets the level of interest rates in the Euro zone. The interest rates have a direct effect on the exchange rate of the Euro, and the level of economic growth of the Euro economies. Currently the Bank of England sets the UK interest rates, joining the Euro would mean that the UK interest rates would be set by the ECB. The level set would affect the level of growth of the UK economy, and the tax take of the Treasury. A high level of interest rates would lead to reduced growth, a reduced tax take and a reduced level of funding available for the NHS.

 The members of the Euro zone have agreed to certain fiscal targets, with respect to government borrowing; in order to ensure financial stability throughout the Euro zone. The ECB monitors these targets, and breaches in them results in member states being fined. Therefore increases in funding for the NHS, or changes in the tax rates, which adversely affect the level of government debt can bring about a fine. Again, a clear example of a loss of individual sovereignty over the key levers of the economy.

In addition to creating a stable fiscal and monetary framework, a European hegemony that desires a stable and robust currency will need to put into place a stable, centralised political framework. This political body will set those policies eg; defence, fiscal, social and healthcare which used to be set by individual nation states.

Taking the above, very simple, analysis into account; I fail to understand why the Treasury expresses surprise at the possible impact on fiscal/monetary policy of joining the Euro.

The fundamental issue facing the British people is whether they wish to pass economic and political sovereignty over to a group of un-elected, unaccountable European bankers.

Additionally, the British people may care to question the quality of the economic and political insight of the Treasury as demonstrated by their expression of surprise at the ECB report. The conclusion of the ECB is rather obvious to anyone who has followed the political and economic development of the EU.

The Enemy Within

I understand that certain school boards in the USA have banned large numbers of books, and study literature, from the curriculum that contain particular words and subjects. Amongst these offensive words and subjects are the following (those that are of a nervous disposition should turn away now):

 Dinosaurs-some people don’t believe in evolution.

 Harry Potter-the characteristics of curiosity and heroism are considered to be gender biased.

 Mountains-these are considered to be unfair subject matter for those pupils who do not live near mountains.

 Mickey Mouse-some people dislike rodents.

I shall stop there; however the list, apparently, goes on and on.

Why have these seemingly innocuous words and subjects become taboo?

The bodies controlling the subject matter deemed fit for stimulating, moulding and educating young minds have, in my opinion, taken the coward’s route when setting the curriculum. They have chosen to avoid confrontation with single issue fanatics, those elements of society who possess closed minds to the people and society around them.

These fanatics cannot tolerate the slightest question to be raised against their inward looking, narrow minded view of themselves and the world. When challenged the fanatics will act like a child throwing a tantrum; and through all the channels available in a free society, media litigation etc, seek to drown out the voice of the people or organisation that dares to challenge their views.

This avoidance of confrontation may give the regulators of education a short term respite from the stress of having to perform their role as educators. However, it stores up trouble for the future. I draw your attention to some of the following lessons from history:

 George Orwell, in his most insightful novel 1984, painted a terrifying vision of a society where words were erased by the state’s thought police in order to control what people could think. The restriction of thought restricts peoples’ ability to question the status quo, this in turn ensures that the state can maintain is control over the population and by definition its grip on power.

 The USA passionately believes in freedom of speech, it has demonstrated this many times, for example; fighting Nazi Germany, standing firm against communism and ousting the Baath government from Iraq. These regimes all controlled peoples’ access to literature, they were afraid of independent thought that would question their right to hold office.

 The USA has introduced a road map to peace in the Middle East which envisages the Palestinians and Israelis living peacefully side by side. This implies a belief in the principles of religious tolerance, whereby Islam and Judaism respect each others beliefs.

The cowardly policy of the education boards has the following consequences and paradoxes:

 The control of educational literature in this absurd manner is in direct contradiction to the beliefs and actions of the USA in its foreign policy, as outlined above.

 The policy of the education boards parallels that of the Orwellian dictatorship.

 Restricting the variety and choice of stimulating literature available to young minds will produce a generation of illiterate, unsophisticated and unimaginative cretins; who will oversee the stagnation of the creative drive and energy that has brought the USA to the pre-eminent position it holds in the world today.

 The lack of challenge and variety in the literature offered to pupils will produce a generation that is intolerant of other peoples’ ideas, way of life and religious beliefs. Is that not the very form of society that the Pilgrim Fathers emigrated from all those centuries ago? Indeed, is that not the form of society that the civil rights marchers of the 1960’s fought to eradicate?

I urge the people, and the leadership, of the USA to take heed and to stand up to the feeble minded bureaucrats who seek to undermine the intellectual and cultural base of the USA.

The hard lesson that the Nazis taught us was that where first you burn books, you next burn people.

The freedoms that you take for granted were hard fought for, the price of these freedoms is eternal vigilance.

The Dulwich Experiment Revisited

I see that the Masters of Dulwich, Eton, St Paul’s and Kings College are diverting scholarship money from merit to means tested bursaries. Dulwich, my old school, will reduce the non means tested scholarship from a maximum of 50% to 33% of funds awarded.

In my view, this is an excellent decision; and is well in keeping with the “radical” inclusive approach to education that Dulwich has championed in earlier generations.

In the 1940’s Dulwich was the first public school to admit pupils on local authority grants. These grants were an innovation of the then Labour government; designed to give gifted children from poor backgrounds access to a wider choice of educational institutions. In an interesting irony the then Master of Dulwich, when introducing what was known as “the Dulwich experiment”, was booed at an old boys’ gathering and called a socialist.

Almost thirty years later I entered Dulwich in 1973, and won a local authority place in 1974. This was a year of change, for Britain again had a Labour government; who this time were pushing the mantra that “all things were created equal”, and those that were not were to be made equal.

In the belief that pupils should not be given the opportunity to maximise their potential; the Labour government abolished local authority places to new applicants. I was the last of a generation to benefit, my parents would not have been able to afford the fees otherwise. I well remember seeing certain “leading” Labour politicians of the day being interviewed, explaining their doctrine as to why “elitism” was to be frowned upon. I found that to be somewhat ironic, as many of them had been to public schools themselves; indeed one was an ex pupil of Dulwich.

This doctrinally inspired abolition, needless to say, prohibited those from poorer backgrounds from entering Dulwich and similar schools. This brought about a change in the social background of the pupils, during my seven years at Dulwich, which could be unscientifically observed by looking at the parents’ cars that arrived each year for Founder’s Day. In 1973 the average car was either a Ford or Leyland, by 1980 the majority were Jaguars and Audis.

Now the wheel has turned full circle. I offer my full support to this initiative, and urge other schools and the government to “buy into it”.

Heightened Threat Levels

I am member of an internet community, and one of our group in the USA sent a message yesterday; in which she expressed her worries regarding the heightened risk of terrorist attacks.

I offered her and the group my opinion, which I have posted below.

"Take heart, speaking as a Brit whose country endured five years of Nazi bombing and thirty odd years of the ocassional IRA bomb we have learnt one or two things.

1 Heightened anxiety, so long as it does not become uncontrolled panic, improves vigilance. The price of freedom is eternal vigilance.

2 FDR was correct when he said, albeit in response to different issues, "we have nothing to fear but fear itself".

3 Act on fact, not rumour.

4 Stiff upper lip, I know it is a trite and hackneyed expression. However, when the chips are down; believe me it is an effective weapon against those that seek to disrupt your lives and cause fear.

Resolution, determination and focus are the qualities that people need to "dig deep" for during periods of increased international upheaval."

Pro Forma Guideline on Internet Usage

Introduction

There has been some discussion as to the time spent by employees surfing the net, during working time. The management of some companies are beginning to feel concerned that this is proving to be a time wasting temptation to some members of staff. These companies, in response to this perceived threat, seek to limit employees access to the internet.

I myself have had personal experience of an organisation where those members of staff who wished to have access to the internet, and email facilities, had to complete a form; stating why they needed it. This form would then be assessed by a committee, if you were lucky you may have the connection up within six weeks!

This is of course totally absurd. We live in the 21st century, the internet has become part of our lives; whether the “ostriches of 19th century management” like it or not. Specifically, it isn’t going to go away!

It is my view that knowledge of both the contents, and techniques, of the internet enhance the individual’s skill set; and hence benefit the company he/she is employed by. I do recognise that, at times, the systems offered to employees can be abused. However, if you treat people as adults; explaining where the boundaries of reasonable/unreasonable usage lie, they will in general act responsibly.

Therefore I have put together a simple, non prescriptive, pro forma guideline that companies could incorporate into their codes of conduct (to read my article Codes of Conduct click here).

Guideline

This guideline is intended to form part of a company’s code of conduct. As such breaches of this guideline would constitute a breach of the code, and shall constitute a notifiable event; requiring registration and action (as deemed appropriate) by the management responsible for implementation of the code.

The company expects that staff will use the internet, email and telephone facilities in a responsible manner. The use of these facilities is encouraged, where the use is for business purposes and supports the goals and objectives of the company.

However, the company expects the following general principles to be adhered to :

 The above systems are company assets; and as such should be used for business purposes. However, personal use of the internet may take place during non work time so long as it does not interfere with an employee’s performance and does not contravene the other rules laid out below.

 It is in the interests of the company, and its employees, that individual members of staff are fully conversant with technological innovations such as the internet.

 A cost conscious approach should be adopted by users when determining which facility to use, and when to use it, eg email is less expensive than a phone call.

 The use of the facilities to access/distribute sexual, offensive, illegal, religious or political material is strictly prohibited.

 Employees shall not allow others (including family members) to use the facilities.

 Employees shall abide by the principle of privacy with regard to other individuals’ facilities, eg unless the owner has given permission, colleagues’ email boxes shall not be read.

 The nature of the internet is such that it accessible to all (including “quacks”). Therefore, information retrieved from the internet, intended to be used for decision making purposes, should be validated for authenticity before being used.

 It is a violation of company policy for any employee, including system administrator (other than for system maintenance) to access information of the system without the employee’s knowledge. However, access without the employee’s knowledge may occur where permission has been granted by senior management when they have taken legal advice.

 The company retains the right to access and disclose information in these systems in order to protect its interests, or when required to by law. Accordingly, employees should not have any expectation of privacy regarding the use of these systems and information stored therein.

 Employees who inadvertently access information or messages that are in breach of the above should notify their senior line manager.

The Implications of the Higgs and Smith Reports

The publication of the Higgs and Smith reports, in response to the major corporate failures of 2001/2002, will add to the responsibilities of both executive and non-executive directors of companies; in relation to corporate governance issues.

A number of the key points include, but are not limited to, the following:

 The audit committee should consist of at least three people, all being independent non-executive directors.

 Fifty percent of the Board will have to be independent non-executives.

 At least one member of the audit committee should have relevant financial/audit experience. It is further desirable that this member have a professional qualification, from one of the professional accounting bodies.

 The key role of the audit committee is to monitor the effectiveness of the company’s internal audit function and to review the company’s internal financial control and risk management system.

 Another key role of the audit committee is to monitor the integrity of the financial statements and significant financial judgements.

 A senior independent non-executive should accompany the executives to the AGM.

 Non compliance with the proposals will need to be explained in the annual report.

 Companies which do not have an internal audit function should consider the need for one annually.

It is currently unlikely that companies that are not listed in London will be obliged to follow these proposals. However, it can be assumed that as a matter of best practice these principles of good corporate governance will be implemented by ethical international companies (be they listed in London or not).

I am a firm believer in the maxim “it is better to be a leader than a follower”; and as such would recommend to any company wishing to enhance its reputation, and by definition brand value, that the recommendations of these reports be implemented sooner rather than later.

It is likely that the demand for non-executive directors will dramatically increase; as companies come to realise that the current “old boys’ network,” of friends serving on each others boards, simply does not fit with the requirements of the proposals.

However, being able to find suitably qualified, truly independent directors; willing to take on the responsibilities envisaged will be a challenge.

Risk Management

Introduction

There are those in the world who would have you believe you can live your life, and operate your business, without risk. Palpable nonsense in my opinion; risk is an implicit part of life. The issue is how we handle it.

I present below a high level overview of the key components to an effective risk management system.

I will begin with a couple of simple definitions:

 Profit is the reward for risk.

 Risk is an event/occurrence that hinders the achievement of the business objectives.

Companies exist to make profits, and as such will always be exposed to risk.

Companies are exposed each day to many changes (organisational, commercial, political, technological, etc.). The speed of those changes is reducing reaction time, and increasing the types and complexity of risks. Within such an environment risk assessment is essential for an effective and efficient management process. Risk assessment helps management to focus on the issues that really matter.

The Risk Assessment

Risk assessments should be primarily a management exercise. The fact that a company is constantly facing changing risks, requires that management makes use of a proactive approach to assess those risks; as well as developing an effective, and efficient, process to reduce risks to an acceptable level. This proactive approach should address the following areas:

 Determine the risk appetite of the company - This is the responsibility of the Board, who must set the risk parameters (high, medium or low) that they are prepared for the company to operate within.

 Clear risk identification - Managers should analyse the company’s external environment, and internal processes, in order to ensure that all potential business risks and their sources are identified. The question management should be constantly asking itself is “what could go wrong?”.

 Risk assessment - Management should categorise risks on the basis of their significance (magnitude of the loss or missed opportunity), and the probability of occurrence (eg likelihood of the risk event occurring say within the next two years). When making the assessment management should take into account factors such as the size/value of transaction streams, and the financial impact on the organisation of the risk.

 Definition of critical areas - Critical areas are those areas which are of major importance for the specific business eg sales, R&D, production; coupled with the outcome of the risk assessment. Namely a high magnitude risk in the sales department, coupled with a high probability of occurrence, would mean that the sales area would be deemed a critical area. Having identified the critical areas the management now have a risk map of their organisation.

 Control of the (critical) areas - Management should review the adequacy of controls by means of a self assessment control checklist. Controls, eg hedging of foreign currency transactions, being the means by which the organisation achieves its objectives. Where control gaps are identified, necessary steps (corrective actions) should be taken to implement compensating controls that reduce the residual risks to acceptable levels. Care should be taken when implementing compensating controls; as excess controls waste scarce resources. However, it may be the case that controls will not mitigate the risk to an acceptable level; in which case alternative measures such as insurance, outsourcing or closing the activity should be considered.

 Continuous self assessment of the process - Management should review the entire process on a regular basis, to make sure that the model applied to identify risks and the business controls in place are adequate. Where necessary, management should take corrective actions in order to guarantee the quality of the entire process.

The Role of Internal Audit

I am a great believer in the maxim “what gets measured gets done”. Internal audit has a vital role to play in reviewing, and giving an opinion on, the effectiveness of the risk management process. Specifically, it should:

 Verify if a business risk assessment process is in place and up to date

 Verify the quality of the business risk assessment process in place

 Verify the quality of business controls and control self assessment

 Stimulate corrective actions

 Track the trend of improvement and deterioration

Conclusion

Risk management is not a one off exercise, but part of an ongoing process. As circumstances change so do the risks faced by organisations; it is essential that management keep there risk map “up to speed”.

Contingency Planning

Given the current world-wide tensions, and risks of terrorist attacks, I feel that it is appropriate to address the issue of contingency (disaster) planning.

This is one area often overlooked by organisations. However, it is an area which they can ill afford to neglect. A major disaster such as a fire, bomb attack or flood can threaten the ongoing activities and profitability of the organisation; either directly by destroying or incapacitating an office or factory, or by disrupting the activities of key suppliers of eg IT, telecom or raw materials.

Adequate contingency planning should ensure that the organisation can continue to function and be able to process orders and transactions etc, in the event of a disaster outside of its control; eg a fire destroying the mainframe or a bomb destroying a key piece of infrastructure.

Key features of effective contingency planning include the following:

 Ensure that members of the organisation know what procedures to follow in the event of a disaster, ie there should be a written contingency plan, copies of which are distributed to all members of personnel.

 There should be of a list of off site telephone numbers from where to obtain instructions as to what to do.

 There should be a team of managers assigned the task of managing the disaster.

 Accommodation should be available, eg spare offices or a hotel off site, where telephones and computer cables etc can be installed in a relatively short period of time.

 Spare capacity on an off site computer should be available; either using the mainframe of another unit within the same organisation, or a third party machine on which the right to access is purchased by an annual fee.

 There should, at least once a year, be a practice disaster to ensure that the plans do operate as expected. The results of the dry runs should be analysed and any improvements arising from them be implemented, and communicated, to the employees as soon as possible.

I have put together a “high level” checklist below which provides a good starting point for organisations wishing to review the effectiveness of their contingency planning. Areas which are found wanting should be addressed.

1. Have all assets that are essential to the continuation of the business been identified; eg staff, equipment, intellectual property, materials and telecommunications?

2. Have the potential costs and impact of not having a business continuity plan been identified eg lost business, legal implications, credibility?

3. Is there a disaster team (membership to include HRM, building facility manager, building security manager, communication manager, key user management representatives)?

4. Is there a list of personnel authorised to declare a disaster?

5. Are there procedures in place to mobilise the disaster team?

6. Does each member of the team have primary and secondary contact numbers?

7. Does each member of the team know his/her duties?

8. What are the notification procedures for communicating to members of staff during a disaster?

9. Does every member of staff have procedural documentation for what to do in a disaster?

10. Is there a list of contact numbers for members of staff to use in the event of disaster?

11. Is there an alternative site to use in the event of non accessibility to normal site caused through eg fire, power failure etc?

12. Does this alternative site have adequate facilities for IT, telecommunications etc?

13. Do personnel have maps/directions to the alternative site?

14. Is there insurance cover for both loss of income and costs of business resumption?

15. Is there suitable power back up, eg on site generator, in the event of a power failure?

16. Are all IT back up procedures re software and hardware adequate in the event of fire, power failure etc? Bear in mind power failure may occur, when no one is on site to shut down the systems.

17. Are all key back up documents, tapes, discs etc stored offsite in fireproof waterproof containers?

18. Is there a procedure, and person responsible, for communicating to the press etc during the disaster?

19. In the event that the normal business site cannot be used during the disaster is there adequate security to prevent unauthorised access?

20. Have compliance certificates been obtained from third parties eg banks, utilities, landlords, warehouses and suppliers?

21. Are there documented procures that detail how to obtain emergency funds in the event of disaster, eg collapse of the local banking system?

Do you know what to do in the event of a disaster? Should you work for an organisation where there are gaps in the contingency plans, then draw their attention to this checklist.

Attributes of a World Class Internal Audit Department

In my roles as Head of Internal Audit and International Forensic Co-ordinator, in both Philips and De Beers, I have had many years of experience setting up and running audit departments. Based on this experience I have put together my personal “top ten” list of attributes that make up a world class internal audit department.

1. Independent – an internal audit department that is not independent, or seen to be independent, is no use to man nor beast. Independence is functionally achieved through establishing a clear, direct reporting line to the audit committee (which itself should be comprised of independent non executive directors). Additionally, independence is maintained by ensuring that reports are fair and objective (not bending to the wills of dominant CEO’s) by senior review within the department; and ensuring that audit assignments are rotated so that members of the department do not become too close to the operational management of specific business units.

2. Approachable – contrary to popular belief the internal audit department is not the Gestapo. The department should report on business operations, risks and controls in an independent, fair and objective manner. Additionally, it should be the source of best practice advice; management should feel that they can raise an issue with the members of the department and obtain constructive, informed advice on that issue.

3. Communicative – the primary role of the department is to report on the adequacy of the business controls and effectiveness of the risk management process. Therefore by definition the reports need to be clear, concise and relevant. In order to garner information for the preparation of the report auditors need to interview people at various levels within the organisation. Additionally, where a situation arises that requires the attention of the Board this should be communicated in an effective and prompt manner. Members of the department therefore need high level communication skills, both written, oral and “soft”.

4. Deadline orientated– businesses are deadline orientated and so, by definition, should be the internal audit department. Reports need to be issued on a timely basis; a report that takes six months to clear is of no use, as the events on which it has been based have moved on. At the commencement of a review the deadline for publication of the report (after clearing the draft for errors with management) should be clearly stated, and accepted by auditor and “client”.

5. Appropriate mix of skill sets– internal audit departments should be staffed by people with skill sets, and experience, appropriate to the business. This would include people with IT, management, commercial and technical experience. Additionally, the department should have an appropriate cross section of career auditors and fast track trainees (who stay no more than two years in the department before moving on to line management).

6. Technically up to date – the members of the department should be up to date with technical and other issues relevant to the business, eg corporate governance. This can be maintained by internal/external training courses, and regular meetings with other bodies such as the external auditors.

7. High ethical principles– should the members of the audit department be regarded (rightly or wrongly) by other members of the organisation as being anything other than beyond reproach, then their ability to carry out their role effectively has been nullified. To ensure that ethical standards are maintained the company’s code of conduct should be strictly adhered to, and the acceptance of gifts from management/staff within the organisation being audited forbidden.

8. Flexibility – members of the department must be prepared to travel, and work in a variety of situations; such as international assignments, frauds, special management requests and due diligences.

9. Audit charter– this is an essential requirement as this document enshrines the mission, independence, reporting lines, right of access to documents/people and modus operandi of the department. The charter must be signed by the senior members of the board, to show their commitment to an independent function, and distributed to all senior management.

10. Commercially literate– members of the internal audit department must be commercially literate; understanding the general nature of business eg, marketing, logistics, cash flow etc. Additionally, they should have a specific understanding of the nature of the business which they are reviewing eg; risks, competition, results, market, suppliers, business plan etc. This will ensure that the review will be tailored to the needs of the organisation.

It goes without saying that the audit department should possess the basic operational attributes such as budgeting, planning and recording its work.

The Added Value of Internal Audit, a Brief Overview

There is a joke which sums up some peoples’ attitudes to internal audit; it goes as follows:

“There is a pint glass, it contains half a pint of milk.

The optimistic manager says that the glass is half full.

The pessimistic manager says that the glass is half empty.

The internal auditor says that the milk is sour.”

Well I suppose, having run international internal audit departments in Philips and De Beers, I could be accused of being prejudiced. However, I firmly believe that a well run, independent and pro active internal audit department can add significant value to an organisation and its connected parties (such as shareholders).

I would point out that had the internal audit departments in both Enron and WorldCom operated in a professional and independent manner; then the gross mismanagement and corruption in these two companies would, in my opinion, not have occurred.

So how can an internal audit department add value? I will start with the basic, textbook, definition of the role of internal audit.

Internal audit provides independent objective assurance to the Board as to the adequacy of the business controls, and the effectiveness of the risk management and risk identification process.

In other words, the internal audit department should tell the Board when the company is being poorly managed, where risks are not being identified or mitigated and when the business objectives are not likely to be met.

In addition to this very wide ranging remit, a well run internal audit department adds value in the following ways:

 It acts as a training ground for future line managers, by exposing fast track members of the department to a variety of situations, activities and functions within the organisation.

 It provides a “one stop shop” for best practice advice.

 It provides an independent, objective opinion as to the quality of the business controls.

 It stimulates risk awareness throughout the organisation.

 It is a source of qualified, experienced talent that can aid management in business improvement programmes.

 It provides specialist professional independent opinions on a variety of situations; such as due diligence exercises.

 It reports on fraudulent activity within the organisation, with a view to understanding how it happened and how to prevent it occurring again.

 It ensures that the company wide initiatives, such as a code of conduct, are being adhered to.

I will expand on the subjects of business controls, risks (click here for risk article)and what constitutes a well run audit department (click here for the latter) in forthcoming articles.

Characteristics of a Well Managed Organisation

My experiences whilst working with KPMG, Philips and De Beers have given me a detailed understanding as to what constitutes a well managed organisation. I have put together my personal “top ten” list of the characteristics of a well managed organisation.

1. The organisation has a mission statement which is clearly communicated, and understood, by all members of the organisation. This will form the basis of the bsuiness plan.

2. The organisational structure is clearly defined, understood and appropriate for the activities carried out. Specifically, with regard to human reporting lines, there should be no dual/dotted reporting lines; these clutter up the clarity of the decision making process and cause conflict within the organisation. With regard to the actual organisational structure, this should be as “clean” and transparent as possible; complex off balance sheet arrangements at best confuse, and worst are deliberate attempts to obfuscate reality from interested parties (such as the Internal Revenue Service). In respect of the latter, I draw your attention to Enron.

3. The management of the organisation should clearly delegate responsibility for activities to those most appropriately qualified to perform them.

4. Targets and key performance indicators should be appropriate to the organisation’s mission, and be clearly communicated and understood. They should be stretching, but achievable; above all they should be measurable.

5. Management information must be timely, accurate, relevant and reliable. What gets measured gets done!

6. Management should take appropriate, timely, corrective actions in the event that targets are not being achieved.

7. There must be appropriate segregation of duties to ensure that one person’s ego does not take the organisation down the path to oblivion; specifically the roles of President, CEO and CFO must be separated.

8. There should be an independent supervisory board of appropriately qualified independent non executive directors. In my view, it is not merely enough for these non executives to posses titles and a string of directorships. They must be able to demonstrate that they deserve to hold office, and be proactive and “muscular” in their role; the non executives of, for example, Marconi and Cable and Wireless singularly failed in their roles.

9. There should be an independent, well qualified, proactive internal audit department which reports to an independent audit committee.

10. The organisation should have a code of conduct which is in the public arena and which is seen to be, and used as, a living document. See my article on Codes of Conduct (click here to read it) for more details.

Now, take a look at the organisation that you are dealing with/working for; does it posses all of the above? If not; then you should consider moving on, and dealing with/working for another better run organisation.

Ten Types of Fraud

In my roles as Head of Internal Audit and International Forensic Co-ordinator, in both Philips and De Beers, I have had many years of experience investigating frauds. Based on this experience I have put together my personal “top ten” list of common types of fraud. I recommend that you also read Ten Reasons Frauds Occur (click here to read it).

1. Falsification of expense claims – an old favourite with both senior and junior staff. Common “ruses” include; inflating mileage claims, entertaining friends and relatives at the company’s expense and claiming for expenses never incurred by stating that “the receipt must have been mislaid”.

2. Stealing money from the company bank account – the perpetrator having got away with this once, will usually try it again and again; until it is discovered. I personally reviewed a case where the perpetrator had been routinely helping himself to company cash for some twenty years.

3. Manipulating sales figures so as to reach target and achieve bonus – a simple version of this involves booking sales in one month (usually a quarter end) then crediting them back the next. Naturally unless the perpetrator keeps this “teeming and lading” up, the overstatement in one month will be shown as a shortfall in the next. Another, well worn, version of this involves booking orders as sales.

4. Falsifying supplier invoices – this is a little more daring, one case I have on record involved a senior manager who had some substantial renovation work carried out on his house. He then arranged for the invoices from the contractor to be sent to the company, posing as costs for work carried out on company premises.

5. Theft of stock – a time honoured way to make a “fast buck”. The perpetrator will over a period of time abscond with a number of items from the warehouse, and resell these to friends, family and members of the public. So long as the stock losses are within tolerance, then it is possible for this “scam” to remain undetected for a significant period of time.

6. Transactions that are not “arms length” – when a well run company asks for tenders for a service contract with a third party they usually obtain at least three closed quotes. The best value quote should then be selected. When the system does not run effectively, there is an opportunity for friends and relatives of the purchasing department to send in quotes that are accepted; bypassing the quotes from reputable suppliers. “Arms length” also applies to sales transactions where the purchaser bribes the salesman in return for a favourable contract.

7. Tax evasion – fraud on the corporate level. Excessively complex organisational structures are created, designed to obfuscate the revenue streams; and so hide reality from third parties, such as the Internal Revenue Service. Enron, with its complex off balance sheet structure and transactions, is a textbook example of this.

8. Fictitious invoicing – where there are poor accounting controls and insufficient segregation of duties in the F&A department the fraudster, if suitably positioned, can arrange for invoices (for services never delivered) from connected parties to be passed for payment.

9. Acquisition of company property at less than market value – this requires the collusion of at least two people (usually quite senior). Company property, such as fixed assets, offered for sale is “sold” to one of the individuals at a bargain price approved by the other. The property is then resold at market value, and the profit split.

10. Theft of raw materials – manufacturers should measure the quantities and costs of the raw materials used in the manufacturing process. Some processes use expensive materials, such as gold. When the measurement system has been compromised, or management do not investigate adverse yield variances, the fraudster has the opportunity to steal the raw material and sell it to third parties.

As I have noted this is my personal top ten, believe me there are many other types of frauds that have been, and are being, perpetrated.

Ten Reasons Frauds Occur

In my roles as Head of Internal Audit and International Forensic Co-ordinator, in both Philips and De Beers, I have had many years of experience investigating frauds. Based on this experience I have put together my personal “top ten” list of reasons why frauds occur.

1. Greed - good old fashioned human nature intervenes when an individual, or group of individuals, sees a chance to make “a fast buck”. A good example being those cases where people “adjust” their expense claims upwards.

2. Lack of transparency - complex financial transactions that are difficult to understand are an ideal method to hide a fraud. The Barings fraud was perpetrated by use of an accounting “dump account” that no one understood.

3. Poor management information – where a company’s management information system does not produce results that are timely, accurate, sufficiently detailed and relevant; the warning signals of a fraud, such as ongoing theft from the bank account, can be obscured.

4. Excessively generous performance bonus payments – the more generous the bonus, when coupled to a demanding target; the more temptation there is to manipulate results, such as year end sales figures, to reach that target.

5. Non independent internal audit department – where an organisation’s internal audit department is not independent, eg the where it does not report to a truly independent audit committee but to the Finance Director, the more likely that when there are signals that a fraud is occurring the more likely they will be ignored. It is indeed interesting to note that Cynthia Cooper (Head of Internal Audit at WorldCom) had to bypass her boss (the CFO) and go directly to the audit committee to report the discovery of the capital expenditure fraud.

6. Lack of clear moral direction from senior management – leadership comes from the top. Where the senior management indulge themselves in “semi corrupt” behaviour, eg adjusting their expense claims upwards, others will follow adopting the well worn mantra “everyone’s at it”.

7. Excessively complex organisational structure - designed to obfuscate the revenue streams; and so hide reality from third parties, such as the Internal Revenue Service. Enron, with its complex off balance sheet structure and transactions, is a textbook example of this.

8. Poor accounting controls– where the accounting controls, such as a monthly reconciliation of the bank account, are lapse the signals that a fraud has occurred will be missed.

9. Arrogance – some people believe that they are better than “the system”, and that they can get away anything. The late Robert Maxwell (of the Mirror Group) plundered his company pension scheme, arrogantly assuming that since he was chairman of the company he could get away with it; he almost did!

10. Complacency – I have met many a manager who has an almost childlike faith, based in part on the “old boy” network, in the probity of their colleagues; believing that fraud “is not the sort of thing that could happen here”. Others will, and do, take advantage of that trust.

My simple advice is, if you think that a fraud may be happening then fear the worst; because it probably is.

An Open Letter to the Non Executive Directors of Cable and Wireless

Lady and Gentlemen,

You will, I believe, soon be searching for alternative employment; as it is my belief that you will shortly be dismissed for having stood by as £22bn of your company’s cash was wasted on worthless investments.

May I suggest that, before placing your names forward for other prestigious positions, you do yourselves and others a favour; by reading, learning and inwardly digesting my article In Place of Strife (click here to read it).

There is one saving grace in this sorry saga, by presiding over the destruction in value of C&W from £36bn to £1bn you have provided a textbook example of how Non Executive Directors should not “direct”.

I trust and assume that Derek Higgs will take this into account when he presents his review on corporate governance.

Kind regards,

Ken Frost

An Idiot's Guide To Assessing Organisational Performance

The lamentable failures with the world of commerce over the past few years, eg Enron, Marconi and WorldCom, lead me to conclude that effective corporate governance is merely a phrase to be trotted out to the media; rather than, as it should be, a way of life in some organisations. Additionally, the fundamentals of what constitutes good corporate governance and effective management appear to have been overlooked by individuals (such as investors and analysts) and organisations (such auditors); when they are reviewing an organisation’s performance.

Therefore, based on many years of practical experience around the world, in the spirit of sharing best practice (teaching my grandmother to suck eggs maybe?); I have put together a basic checklist of questions that one should ask, and receive a satisfactory response to, when making a judgement as to the effectiveness of an organisation’s management. This is not designed to be a fully comprehensive, “covers all situations”, questionnaire.

However, the list should cover the key areas relevant to most organisations; be they companies, charities, political/military/scientific/educational bodies. The checklist should be tailored to fit the specific circumstances; naturally, depending on the answers received, more probing questions can/should be asked.

In my opinion, this checklist would be of benefit to a variety of individuals and organisations including, but not limited to:

 Individual investors

 Analysts

 Internal/external audit

 Non Governmental Organisations

 Politicians

 Audit Committees

 Employees

In fact any stakeholder or interested party.

I have divided it into a number of sections, for ease of use.

Finger on the Pulse

1 What are the objectives of the organisation?

2 Are these objectives translated into realistic, achievable plans with timeframes and measurable milestones?

3 Are the objectives and plans communicated and understood by all?

4 What are the risks and opportunities that will affect the business objectives?

5 What is Management doing to address both the risks and opportunities?

6 Are there/have there been any major EDP changes planned? If so what are they, and what is the expected cost, benefit, timeframe for installation and payback period?

7 Have there been any frauds?

8 Details of any litigation being taken out either by or against the organisation?

9 Obtain the latest organisation chart, both senior personnel and organisational. Are there clear reporting lines?

10 Have there been any major investments/disinvestments previously or planned?

11 Ensure that there is an audit committee, and that it is independent of the Board.

12 Does the internal audit function report to the audit committee? If not, why not?

13 Review third party and (where applicable) internal audit reports.

Management Information

1 Review the latest results and compare to budget. Ensure that management receive regular (at least monthly) summaries of results (what gets measured gets done!).

2 Are the relevant key performance indicators on target eg RONA, Debtor days (DSO), cash flow?

4 Can management explain clearly, any material deviance from budget?

5 Are there adequate corrective actions in place to arrest negative deviations from budget?

6 Discuss the results with the appropriate Manager.

Have regard to, for example :

- Products with low sales against budget.

- Negative margins

Ensure that explanations for any of the above are adequate and that there are suitable corrective action plans in place to address these issues. Where the explanation seems confusing, be on your guard; either the manager doesn’t understand it or it is deliberate obfuscation.

7 Are there any areas where costs are significantly above budget? Why?

8 What are the corrective action plans to address these?

9 Review the debtor and creditor days figures. If these are high, what is Management doing to improve the situation?

10 Review the levels of stocks and enquire into reasons for levels that are higher than budget.

11 Obtain the latest forecast for the year and enquire into any significant variances between that and the budget. Also review the adequacy of the corrective actions.

Risk Management

1 Have management performed a risk assessment? If not why not?

2 Did the risk assessment highlight control gaps? If so, is there a corrective action plan?

3 Where there is a log of corrective actions :

- Do the corrective actions have a deadline and person responsible for completing the action?

- Are the deadlines being met? If not why not?

5 Is there a team responsible for monitoring progress of the action plan? If not why not? Is the process alive?

Financial Controls

1 Review the balance sheet for unusual dump accounts and other unusual items.

2 Select a sample of accounts eg accruals, provisions etc and ensure that they are adequately supported by documentary evidence/working papers.

3 Ensure that main sub ledgers are reconciled to the General Ledger.

4 Check a sample of debtors to ensure that credit limits are not exceeded.

5 Review adequacy/necessity for any provisions held.

6 Is there adequate data relating to currency exposure? How does the unit manage its exposure?

7 Are the main accounting functions/duties adequately segregated?

8 Does the CFO regularly monitor/review the controls and General Ledger? Is this evidenced, eg by use of a checklist?

9 Does the General Ledger agree to the monthly information submitted to the head office for consolidation?

11 Ensure that there are written procedures with regard to expense claims. Select a sample of expense claims and ensure that they follow the rules, are properly authorised and supported by documentary evidence, eg invoices. Ensure that there is no self authorisation of either expense claims or travel requisitions.

Code of Conduct

1 Does the organisation have a code of conduct? If so, has it been distributed to all members of staff?

2 Do all new employment contracts contain a reference to compliance?

3 Have there been any occasions of non compliance? Details please.

4 Have the non compliance occasions been reported to a Compliance Officer? What action has been taken?

Leadership and Change Management

I have, over the years, had the “privilege” to observe at close quarters a variety of management and leadership styles. I would like to summarise these styles by using the following example, set millennia ago in a world of cave dwelling tribes.

Imagine, if you will, three tribes each living in their own set of caves. They each have a leader; A, B and C. Leader A sees that the current situation does not present a long term viable solution to the future housing, and resource, requirements of the community. A sees that in the valley, beyond the neighbouring jungle, there are resources; timber, food, pasture etc that will support a living growing community. Leader A also identifies that to take the tribe from the cave to the valley will be difficult and that there are risks involved; such as navigating their way through the jungle and feeding the tribe. However, the primary obstacle to relocating the tribe is their own natural inertia, namely the human characteristic of resistance to change. The caves are comfortable and safe, the huts that the tribe would have to build to live in the valley are a new untested idea; and after all, why put yourself in danger by uprooting and crossing the jungle?

A’s primary task is present a coherent, well researched and practical plan to the tribe; that outlines the dangers of staying put, the risks of crossing the jungle and the opportunities and rewards of moving to the valley. Leader A does not worry about focus groups, who would tell him that the tribe are quite happy to stay where they are. A calls a meeting of the tribal elders; and presents the case for moving, together with an analysis of the risks involved. The elders give their support and then communicate the message to the rest of the tribe. A sets out the details of the plan, allocates responsibility to specific elders for specific tasks and sets key performance indicators (such as daily food consumption) ensuring that they are regularly measured and action taken to improve performance where necessary. The tribe sets off and, during the long journey, A ensures that the tribe are kept “up to speed” with progress by regularly briefing them; measurable achievements are rewarded (eg by giving an extra food ration) thereby ensuring that people are motivated. The tribe reaches the valley, and development work on the huts begins.

Leader B also sees the valley and appreciates the fact that the tribe should not “stay put”. However, B does not perform sufficiently detailed research (not being a person with an interest in details) and overlooks the risks of crossing the jungle. B presents a very upbeat plan to the tribe (over the heads of the elders), no mention is made of the potential risks; after all B has not identified them! The tribe happily accept the vision of a new utopia and set off. Trouble, as it is wont to do, makes an unwelcome appearance. The lack of research into what would actually be required on the journey has meant that insufficient food was taken by the tribe. Additionally, no measurement system was put into place to monitor daily consumption (the devil is in the detail!). The food runs out, the tribe becomes disillusioned and scared. The elders wash their hands of the affair, and point out they were not involved in the decision making process. B is isolated and unsupported, there being no back up plan B starts to make panic decisions which exacerbate the situation. The tribe become hopelessly lost in the jungle.

Leader C likes the security and warmth of public approval, whilst C feels that it would be better to move the elders point out that the tribe are very happy where they are. Since there is no immediate threat to the tribe, or the leader, the decision can be postponed for a number of years. C agrees, why rock the boat? The tribe therefore stays put.

Let us now return to the scene some years later. What has happened to the three tribes. The first tribe succeeded in crossing to the valley and building the huts. They are flourishing, animals are being reared, crops nurtured and the tribe’s birth rate increasing.

The second tribe disintegrated into disarray and confusion, elders made a series of destabilising leadership bids and members of the tribe formed rival factions. In fact the tribe no longer exists as an identifiable entity. Some members made it through the jungle and joined up with the first tribe, others died, whilst some still inhabit the jungle (reverting to pre cave-dwelling status, reverse evolution in fact).

The third tribe is stagnating, birth rates are falling, the local eco system cannot support the tribe and it looks likely that they face extinction.

What does this tell us about leadership and change management? In my opinion successful leadership and change management require the following conditions to be fulfilled:

1. An effective leader must have the vision to see what can be achieved by changing the status quo. This vision must be clearly communicated and understood; if you don’t know where you are going, or why, then chances are you won’t get there!

2. An effective leader must have sufficiently researched the facts and details in order to formulate a successful plan.

3. An effective leader must understand the risks, and ensure that they can be managed to an acceptable level.

4. The plan must obtain the “buy in” of the people expected to carry it out. This requires that the rewards, risks and hardships involved must be fully and openly explained.

5. Key performance indicators should be set. These should be measured, and corrective actions taken in the event that targets are not met.

6. A reward structure must be developed to ensure that people are motivated.

7. Ongoing communication to the people carrying out the plan, as to its progress against target, must be maintained.

8. An effective leader should see the task through to completion, and not leave halfway through.

Take a look around you, at your company's management and at your politicians. Which category do they fall into? Should your answer be B or C then get rid of them, or find a place where leader type A runs the show.

Codes of Conduct, the Ethical Principles of Companies

Opening

In my article “In Place of Strife”, I discuss the need for companies to adopt a code of conduct; which states their attitude to ethical principles, covering core values such as:

1. Honesty

2. Trust

3. Respect

4. Fairness

I would like to expand on this and explain, in more detail; what the code is, why have it and how to implement it.

What is it?

Simply put, a company's code of conduct is their commitment to society as a whole to be a good corporate citizen.

Why have it?

There may be those in boardrooms, around the corporate world, who feel that implementing such a code is an unnecessary waste of time and money. I would like to draw their attention to three key reasons, which I suggest they repeat to themselves every night before going to bed, for having the code:

1. Reputation

2. Reputation

3. Reputation

The astute readers amongst you will have noticed that I have repeated the same word three times. Precisely so, I consider a companies reputation to be so important; that I believe it is necessary to repeat it as a reason three times.

Reputation affects brand value and, at a more precise level; sales, profits and cashflow. In other words, it affects the very existence of the company itself. Something that boards, employees and shareholders should be equally concerned with.

In the modern world companies are monitored by Non Governmental Organisations (NGO’s), such as Greenpeace, for breaches in a variety of issues such as; pollution, corruption, human rights abuses etc. The NGO’s act as media savvy rapid reaction forces, rallying against perceived infringements of “good corporate citizenship”. Witness the problems that major oil companies, sportswear manufacturers, mining conglomerates and even fast food outlets have had when an NGO has mounted a publicity campaign against them.

In essence, a modern company in the 21st Century cannot ignore the realpolitik of conducting business in the international environment. It must be seen to have “clean hands”, otherwise its precious brand image will suffer.

Key components

A basic code of conduct should state the company’s commitment to:

1. Society (eg environmental issues, quality of service and products etc.)

2. Shareholders (eg providing a decent return on equity)

3. Employees (eg covering issues such as harassment, discrimination and quality of work)

The code should give clear guidelines as to the company’s attitude to, eg:

1. Integrity of records, ie the accounts should reflect economic reality; and not be the Chief Executive’s fantasy.

2. Bribes and commission payments, staff and executives should neither accept or offer these; as they pollute and corrupt the business decision making process.

3. Interests outside the company leading to potential conflicts of interest, staff and executives who, for example hold shares in competitors or suppliers, should declare their interest.

4. Respecting national and international law eg obeying tax laws; viz complex off balance sheet schemes to evade tax should be disassembled immediately.

Implementation

The above list represents a b