In Your Face

In Your Face
Thought provoking opinions on topical issues.

Saturday, January 31, 2004

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.

    Thursday, January 22, 2004

    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

    Tuesday, January 20, 2004

    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.

    Wednesday, January 14, 2004

    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 in the form of a pack of six greetings cards.

    These are available from The Emporium

    Saturday, January 10, 2004

    The Electric Commode

    Following the request by the USA that passengers are to remain seated whilst flying in US airspace; the designers at 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

    Wednesday, January 07, 2004

    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!

    Monday, January 05, 2004

    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.

    Sunday, January 04, 2004

    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.