TTF Blog: 22 February 2021

Police Crime Commissioner Anthony Stansfeld gave a swan song at a Transparency Task Force Symposium last week. He is retiring in three months’ time.

Standing up for whistleblowers

Victims of the HBOS Reading fraud, who were present, felt that they ‘cannot afford’ to lose Stansfeld’s voice. He was often in the course of his career the only person levelling with bank chairmen and Treasury ministers, brandishing whistleblower Sally Masterton’s report on the scandal (part 1, part 2).

Stansfeld said the bank’s internal audit and risk had authorised Masterton’s report in the early 2010s – before ‘promptly sacking’ her when they realised what she had uncovered.

His provincial police force, Thames Valley, later acted on the HBOS Reading case. In so doing it was the only police force to act on alleged crimes against consumers in the wake of the financial crash of ’08.

TTF’s founder Andy Agathangelou thanked him for ‘speaking truth to power’: “if it weren’t for you and other people like you doing what you’re doing…  the status quo would just remain the same. It’s obvious that the vested interests are that strong,” he said.

Breaking down an ‘£850 million’ fraud

Stansfeld reflects now that the HBOS Reading fraud was worth ‘probably around about £850million’ – with half impacting consumers and the rest the bank itself. His police force, Thames Valley, eventually prosecuted £245m of the fraud. “However, there was a considerable downside to doing that. … The compensation to a huge number of people whose cases were not actually directly brought up in court, were not settled, and that is still going on,” he says.

He still holds quite a scathing opinion of the bank: “Lloyds boasts about having paid out £100 million in compensation. Well, it was an odd case, it was a two way case, the bank was actually being defrauded at the same time… But that still leaves, that’s about £300 million in compensation that hasn’t been paid to victims”.

Naughties’ crime saga

Would the HBOS Reading fraud have been stopped, if watchdogs, law enforcement and indeed the bank itself had smelled the coffee in the 00’s?

Alleged victims were stonewalled for years before Masterton and Stansfeld started dissecting the crime scene.  Investigative reporter Ian Fraser  blogged about HBOS Reading a decade ago as ‘the most egregious financial scandal I’ve come across in 20 years as a business and financial journalist.’

It’s worth revisiting what Fraser wrote at the time. Victims had, in the 00’s, been shunted in a phobic roundabout between the bank and the police.

In that same entry of 2010, Fraser summed up five years’ of inaction already:

“Directors of HBOS customers whose life’s work was snuffed out and snaffled as a result of the alleged fraud have, on countless occasions since 2006, complained to the boards of HBOS and Lloyds Banking Group about this scandal

“Yet they have repeatedly been given the brush off. When one made a formal written complaint to HBOS’s entire board in August and September 2007, they didn’t even get the courtesy of a response. Instead they received a letter from the law firm Denton Wilde Sapte, suggesting they should take their “allegations” to the police or their local fraud squad.

“When the directors did so, the Cambridge fraud squad told them it would only investigate the matter if HBOS sought an investigation itself. The bank declined to do so.”

As with so many financial scandals it turned out to be a harsh cost-benefit analysis for the police. Stansfeld observed last week: “The one lesson that came out of the HBOS case was it is simply too expensive to take on a major bank, which has unlimitedly deep pockets”.

Stansfield’s Wish-List

Stansfeld said that in his view there are ‘a number of things we can do to start sorting this out’:

• The Government needs to ‘pay police back’ for fraud prosecutions

Stansfeld said “half the problem that I mentioned before is we simply don’t have the money to take on major fraud at the moment. But that shouldn’t be difficult to finance. It should be done largely through the fines that you raise through carrying out investigations. I believe it would pay for itself.”

He expands: “Over the HBOS affair Lloyds was fined sixty million pounds. And for some extraordinary reason the FCA [Financial Conduct Authority] then let them off fifteen million pounds for ‘good behaviour’. Well, I wouldn’t let them off of penny! I’d put a nought on the sixty million.”

However: “That forty-five million pounds all reverted straight to the Treasury, not a penny it came back to Thames Valley police for conducting the case, in spite of me actually asking the Chancellor [then Philip Hammond], writing to him directly and saying ‘could you pay us back?’

“That 45 million if it had gone into fraud cases would have made a huge difference across the country.”

• Fraud investigation hubs need accountants

“The first thing is we need to set up proper Fraud Investigation hubs at a regional level,” Stansfeld said. “Currently we have … counterterrorism and serious organised crime… there should be a third arm, it should be a fraud investigation.

“It won’t need many police officers. But it does need proper trained accountants and people who understand what they’re talking about. It’s no good expecting police officers who are not trained accountants really to investigate fraud. It’s very difficult for them.”

• The Government needs to have a will to act

Stansfeld said: “We need the government and the establishment to actually recognise fraud is a huge drain on the economy. If you steal a million pounds through the front door of a building, you’ll find the police are all over it. Steal through fraud a £billion and it’s absolutely totally ignored at the moment, there’s no investigation.”

Later, he alleged that Treasury Ministers ‘go native’ and refuse to act on this issue as soon as they reach office. More on that below.

• Watchdogs need clear lines of responsibility

“We need clear lines of responsibility between the regulatory authorities. No more passing the buck between each other, which goes on the whole time.

“I mean, just look at the National Crime agency and the Financial Conduct Authority, surely the clue is in the name. National Crime Agency should be dealing with crime. And if fraud involves crime, which it does, and forged signatures and documents, then the NCA should be taking it on.

“If it’s a conduct issue, then the Financial Conduct Authority should be dealing with it. But at the moment, neither seems to. When did either them last prosecute a major fraud? Or indeed the SFO [Serious Fraud Office] for that matter successfully?”

• The NECC is ‘far too small’

“We have a national economic crime centre within the NCA. But it has never taken on a fraud. It’s far too small and doesn’t have the investigatory capability to do that. It’s a start. But it needs to be hugely larger, and it needs the money behind it. Why is the City of London responsible for fraud? When did the City of London Police last prosecute a fraud – a major fraud against a bank or something? They’re the ones that are meant to be doing it, not Thames Valley police, a good old provincial Police Force down in the countryside, albeit a large one.

“The SFO again, I think is far too small actually to take on … these fairly large cases, I think it should be combined into the National Crime agency in a proper division.”

A complaint against Stansfeld

The only criticism we hear of Anthony Stansfeld seems to be that he wouldn’t mind his own business. KPMG and DLA Piper complained to Thames Valley police that he had been acting ‘outside of his remit’ in looking into a civil dispute that they were involved in, which is not in Thames Valley.

The complaints panel did not accept Stansfeld’s defence  that he was the PCC association’s portfolio holder for fraud and cybercrime. They passed the complaint to the national police watchdog the IOPC to look into. You can read more about that in the Reading Chronicle. Stansfeld is not suspended though, and will continue to act as PCC for Thames Valley until the result of PCC elections come in May.