From 2013: Private Eye on Energy Miss-selling and Connections to Banks

One of the other scandals to have hit this country is overcharging and miss-selling by the energy companies. The majority of people in this country would like to see the power companies renationalised. It has, however, become the modern economic dogma that as much of the economy should be in private hands as possible, ever since they were privatised, along with gas and water, by the Tories. Nevertheless, public outrage has been so intense that Cameron recently made a few gestures towards getting energy prices. Much more optimistic is Ed Miliband’s pledge to lower electricity prices and to make sure that they stay down and affordable.

In their edition for 19th April – 2nd May 2013, Private Eye published this article on Scottish and Southern Energy’s miss-selling. They also revealed the involvement of senior bankers, including officials from the Bank of England, who should have been guarding against such fraud.

Energy Miss-Selling
Fried Rice

The shockwave caused by the record £10.tm fine for Scottish and Southern Energy (SSE), punished by regulators for lying to customers about non-existent savings, has reached all the way to the Bank of England.

According to Ofgen, there was a “woeful catalogue of failure” by SSE managers, who allowed “a culture of miss-selling to continue. They weren’t doing enough to prevent sharp selling practices from their selling agents. They actually provided misleading sales scripts.”

All this is very embarrassing for Lady Susan Rice, SSE Group’s senior independent director, who has been on the SSE board since 2003 – and since 2007 has also been a director of the Bank of England where, somewhat alarmingly as a seasoned blind-eye turner, she chairs the audit and risk committee.

“Independent” directors are meant to ask uncomfortable questions that puncture “groupthink”. But this clearly didn’t happen at SSE, which caused “substantial harm” to its customers, Ofgem says. “Failings did not just take place on the doorstep but also in the management.”

Attempts to rein in misbehaviour were also ineffective. While “SSE terminated doorstep sales in July 2011, failure in telephone and in-store sales persisted”. SSE staff were given sales scripts which claimed that switching to SSE was “just like the government intended”. One dishonest spiel ran: “What I’m here to do today is show you a government thing called deregulation which results in your energy prices being lowered by doing nothing at all.” The false claims actually led to bigger bills for customers.

“Lady Susan Rice is, and will continue to be, a highly valued director on the Court of the Bank of England,” was the reply when the Eye asked if the SSE scandal meant she should perhaps resign from her Threadneedle Street Post.

Rice was appointed at SSE thanks to her other job as managing director of Lloyds in Scotland, which she fits in between sitting on Scottish first minister Alex Salmond’s council of economic advisers, chairing the Edinburgh Festivals forum and the city’s book festival, chairing the Chartered Banker Professional Standards Board and sitting on the Oxford Said Business School advisory council. Not to mention the National Galleries Scotland’s patrons committee and something called the Finance Group on Climate Change.

Busy bee Rice isn’t the only member of the miss-selling SSE’s board with a banking background. Chairman Lord Robert Smith was a director of Standard Chartered, which was fined $340m for money laundering in deals with Iran – and like Rice he has a government job, too; last May Nick Clegg announced that he would lead the government-funded Green Investment Bank. He is also chairing the 2014 Commonwealth Games Organising Committee.

Also paying less attention that he should have been as SSE was Richard Gillingwater, a director (£54,000 last year) since 2007. Eye readers will remember him as chief executive of the government’s Shareholder Executive when it oversaw the sale of taxpayer-owned development fund CDC’s fund management arm, Actis, to its former managers for a pittance. Gillingwater is now chairman of CDC itself and has just retired as dean of the Cass business school, teaching up-and-coming suits, er, how to run businesses properly.

In other words, the culture of miss-selling in the banking sector, which led to the collapse of Northern Rock, and the present global economic crisis, spread to the energy companies, on whose boards bankers sat. Contributing to the banking crisis was the fact that the ‘independent’ directors there, who were supposed to check miss-selling and misconduct there, did no such thing. They turned a blind eye, just as Rice turned a blind eye to miss-selling by Scottish and Southern Energy.

Deregulation has not caused energy prices to come down, just as it the deregulation of the banks did not lead to improved and responsible trading. Anything but. It’s time these sectors were cleaned up. And Miliband is a far better bet to do this, than either the Tories or their Lib Dem sycophants. They won’t do anything at all.

Netanyahu Scaremongers again about Iran Nuclear Threat

Netanyahu has been at it again today. According to the I, he criticised Obama’s attempts to make an agreement with Iran over the country’s nuclear programme. He told a meeting of AIPAC – the American Israeli Public Affairs Committee – yesterday (2nd March) that Iran’s nuclear project threatens Israel’s very existence. He accused Iran of ‘threatening to destroy Israel’ and that it was ‘devouring country after country in the Middle East, that is exporting terror throughout the world and is developing as we speak the capacity to make nuclear weapons.’

This isn’t the first time Netanyahu has raised fears of a nuclear attack on Israel by Iran. Three years ago in 2012 he told the UN that the Iranians were only a year away from developing an atomic bomb, that would be used against Israel. He came complete with a diagram showing Iran’s growing nuclear capability, shaped like the stereotypical bomb from thousands of old cartoons.

He was lying. About a fortnight ago, the Guardian revealed that, according to leaked documents from Israel’s spy service, Mossad, and their internal security agency, Shin Bet, no such threat existed. The head of the Iraeli army, in much more guarded language, actually cautioned Netanyahu against taking any military action against Iran. The Young Turks discuss these revelations in the video below.

Iran’s Nuclear Power for Generating Electricity Only

Others have come to the same conclusion. Shirin Ebadi, a left-wing critic of the Iranian regime, who has its oppression of women and its exploitation country’s ordinary, working people, made the same point. In her book Iran on the Brink, she argues against an invasion of Iran. According to her, the mullahs governing the country aren’t interested in developing atomic weapons. Their claims that they want to develop it simply as a domestic power source are true. The country is indeed an oil producer, but they use it primarily for export. They intend to build nuclear power plants so that less oil is consumed by the country itself. The oil saved can then be exported, boosting the country’s economy and their own profits.

Netanyahu’s Claims of Iranian Terrorist Threat Exaggerated

Now let’s examine Netanyahu’s claims about Iran exporting terrorism, and ‘devouring country after country’. It’s true that Iran has exported terror around the world. In the 1990s the Iranian secret services were responsible for a massacre of Kurdish separatists meeting in a German restaurant. As for militaristic expansionism, it has been suggested that the Iranians are, or have, given military support to the Shi’ah minority in Iraq. The majority of Iranian Muslims are Shi’ah, and so they wish to support and bolster the power of their co-religionists in Iraq. There have also been claims that they would like to take control of the country. I can also remember reading articles in Private Eye speculating that British forces in Iraq or Afghanistan have also come into contact with Iranian troops there.

Iran has not, however, taken control of Iraq and has absolutely no links to the Taliban or al-Qaeda in Afghanistan. In fact liberal Iranians went to the polls in 2008 to vote out Ahmedinejad as a religious hard-liner who, they feared, would turn their country into a ‘Taliban state’. Afghanistan is a Sunni Muslim nation, a different form of Islam to Shi’ism. As for al-Qaeda and ISIS, they are militant Sunni, and so hostile to Iran and its political ambitions. Given the brutal intolerance of ISIS, the Iranians probably have good reason to fear them.

The mullahs in Iran are deeply hostile to Israel, and much of their rhetoric is poisonously genocidal. However, they aren’t the danger that Netanyahu is presenting them as.

Western Invasion of Iraq Responsible for Increased Persecution of Religious Minorities

If anything, Netanyahu’s rhetoric is also extremely dangerous, and likely to make the tense situation in the Middle East much worse, especially for its ethnic and religious minorities. Twenty years ago the Likud party with the Republicans in America drew up plans for the invasion of Iraq. Likud wished to see Saddam Hussein overthrown as he was supplying arms to the Palestinians. The invasion instead destabilised the region, and made possible ISIS’ emergence. About ten years ago, Dan Cruikshank journeyed to Iraq as part of a BBC TV series looking at the world’s great architectural heritage. He spoke to the patriarch of one of the Eastern Orthodox Christian churches. The interview was strained, with ominous silences where none of them spoke. The patriarch said that previously, relations with Muslim Iraqis had been quite harmonious. They had since become much worse, largely because of the invasion. The Islamic state has butchered the Christian population in the areas they’ve overrun. Iraq’s ancient Christian people, who speak Syriac, a Semitic language descended from Aramaic, have been forced out of their ancient homelands, like Mosul.

And they haven’t been the only people ISIS have persecuted. They’ve also attacked the Yezidis, a faith which contains elements of Sufi Islam and Zoroastrianism.

Iran also has its non-Muslim religious minorities. About 3 per cent of the population are Armenian Christians. Like the Syriac-speaking churches, these are one of the most ancient branches of the Christian faith. There is also an Anglican church in Tehran. These churches have also suffered persecution at the hands of extremists and bigots. Iran was also the ancient home of Zoroastrianism, the state religion of the Persian Empire. Zoroaster was the prophet, who reformed the Iranian religion and instituted the worship of the god Ahura Mazda, the good deity responsible for the creation of the world and its good creatures. I think there are even one or two Jews left in Iran, for all that most of them emigrated when the Ayatollah Khomeini declared they were free to leave after the 1979 Islamic Revolution.

Netanyahu’s belligerent rhetoric threatens to make the situation worse in Iran for all its religious minorities, and for liberal Muslims wishing to create a more open, tolerant and modern country. It stands to provoke even further suspicion and resentment. And by making such claims, Netanyahu also makes the situation worse for Israel by increasing international tension and the possibility of further violence.

Conclusion: Netanyahu’s Rhetoric Cynical Electioneering

But as The Young Turks point out, Netanyahu really isn’t interested in promoting peace or securing Israel’s safety. He wants to stoke fears of an Iranian nuclear threat in the hope of gaining further domestic votes. It’s a cynical attitude that threatens the safety of everyone in the region. Especially as the leaked documents to the Guardian have shown, it’s based on lies.

Obama reassured AIPAC that he had no intention of allowing the Iranians to build nuclear bombs. He should be believed, as should the Iranians, when they say that it really is all about generating electricity. The real liar is Netanyahu, and his lies threaten everyone.

The Sansculotte Programme of 1793

D.G. Wright’s Revolution and Terror in France, 1789-1795 also contains the address the radical sections of the Sansculottes sent to the National Assembly on 2nd September 1793. The sansculottes weren’t all working class, nor were they Socialists, and the address was the closest they ever came to a programme of social and economic reform. Nevertheless, it shows a profound and extremely radical commitment to social equality and is marked by demands for limits to be placed on wealth in the interest of providing for the poor. It runs:

Mandatories of the People – Just how long are you going to tolerate royalism, ambition, egotism, intrigue and avarice, each of them linked to fanaticism, and opening our frontiers to tyranny, while spreading devastation and death everywhere? How long are you going to suffer food-hoarders spreading famine throughout the Republic in the detestable hope that patriots will cut each other’s throats and the throne will be restored over our bloody corpses, with the help of foreign despots? You must hurry for there is no time to lose … the whole universe is watching you; humanity reproaches you for the troubles which are devastating the French Republic. Posterity will damn your names in future if you do not speedily find a remedy. … You must hurry, representatives of the people, to deprive all former nobles, priests, parlementaires and financiers of all administrative and judicial responsibility; also to fix the price of basic foodstuffs, raw materials, wages, and the profits of industry and commerce. You have both the justification and the power to do so. To speak plainly! To talk of aristocrats, royalists, moderates and counter-revolutionaries is to draw attention to property rights, held to be sacred and inviolable … no doubt; but do these rogues ignore the fact that property rights are confined to the extent of the satisfaction of physical needs? Don’t they know that nobody has the right to do anything that will injure another person? What could be more harmful than the arbitrary power to increase the price of basic necessities to a level beyond the means of seven eighths of the citizens? … do they not realize that every individual in the Republic must employ his intelligence and the strength of his arms in the service of the Republic, and must spill his blood for her to the very last drop? In return, the Republic should guarantee to each citizen the means of sufficient basic necessities to stay alive.

Would you not agree that we have passed a harsh law against hoarders? Representatives of the people, do not let the law be abused … this law, which forces those with large stocks of foodstuffs to declare their hoard, tends to favour hoarders more than it wipes out hoarding; it puts all their stocks under the supervision of the nation, yet permits them to charge whatever price their greed dictates. Consequently the general assembly of the Section des Sans Culottes considers it to be the duty of all citizens to propose measures which seem likely to bring about a return of abundance and public tranquillity. It therefore resolves to ask the Convention to decree the following:

1. That former nobles will be barred from military careers and every kind of public office; that former parlementaires, priests and financiers will be deprived of all administrative and judicial duties.

2. That the price of basic necessities be fixed at the levels of 1789-90, allowing for differences in quality.

3. That the price of raw materials, level of wages and profits of industry and commerce also be fixed, so that the hard-working man, the cultivator and the trader will be able to procure basic necessities, and also those things which add to their enjoyment.

4. That all those cultivators who, by some accident, have not been able to harvest their crop, be compensated from public funds.

5. That each department be allowed sufficient public money to ensure that the price of basic foodstuffs will be the same for all citizens of the Republic.

6. That the sums of money allowed to departments be used to eradicate variations in the price of foodstuffs and necessities and in the cost of transporting them to all parts of the Republic, so that each citizen is equal in these things.

7. That existing leases be cancelled and rents fixed at the levels of 1789-90, as for foodstuffs.

8. That there be a fixed maximum on personal wealth.

9 That no single individual shall possess more than the declared maximum.

10 That nobody be able to lease more land than is necessary for fixed number of ploughs.

11. That no citizen shall possess more than one workshop or retail shop.

12. That all who possess goods and land without legal title be recognised as proprietors.

The Section des Sans Culottes thinks that these measures will created abundance and tranquillity, and will, little by little, remove the gross inequalities of wealth and multiply the number of proprietors. (pp. 118-20).

It’s very much of it’s time, but some of it is still relevant to today. There are struggling small farmers in Britain, who need support from the government if they are to survive. In the corporative 1960s and ’70s, the government did pursue and prices and incomes policy, to make sure that wages matched the price of goods. There is a problem where prices have risen while the government and industrialists have kept wages low and frozen, so that some families are finding it difficult to make ends meet. The same also applies to another necessity that didn’t exist in the late 18th century: electricity. The Labour party announced that if it won the election, it would freeze electricity prices. A few months or so ago one of the electricity companies also announced that they were not going to raise their prices due to the fact that there was so much indignation at the cost of electricity when people were finding it difficult to pay for it.

As for limits on personal wealth and the number of businesses one should own, even though governments wish to promote successful industries and businesses, the policies can still be justified. It is obscene that the pay for company directors, elite bankers and the extremely rich has risen colossally, while the majority of workers have either had their wages frozen or their pay actually cut. The Japanese have a law which expressly states that company directors and chairmen may only enjoy a salary at a set, maximum level above the average wages of their workers. Japan is now one of the very largest economies in the world, and in many respects it is a ruthlessly capitalistic culture. Yet Japanese culture also stresses the importance of harmony and consensus. The law setting a ceiling for managers’ salaries was deliberately introduced in order to create an orderly, middle-class, harmonious society with little extremes of wealth. It’s questionable whether this has been successful, given the rise in unemployment due to the massive Japanese slump, and the appalling conditions endured by outcast groups such as the ‘Village People’ and Japanese Koreans.

It’s also the case that the actual number of businesses trading in the high street is contracting as more and more local businesses are forced out or taken over by the big firms. In Stokes Croft in Bristol four years ago there were riots due to the opening of yet another branch of Sainsbury’s, which threatened to put the local grocers and supermarkets out of business. The increasing homogeneity of the high street has attracted media attention and discussion. There has even been discussion of laws to prevent too many of the same brand of supermarket from opening in the same area.

If the Sansculottes were around now, this man would not be in government.

And finally, considering the present government, you can well sympathise with the Sansculotte proposal to exclude nobles and financiers from government. The present government is, after all, composed by aristos and financiers, working on behalf of aristos, financiers and big business against the poor.

As I said in my last post, we could do with rediscovering a little bit more of the Sansculotte commitment to genuine democracy and egalitarianism.