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The NatWest bankers controversy

In case anyone missed it, here is a fine article summing up what I think is the truth behind the case of the three NatWest bankers who are to be extradited to the United States on charges related to the collapse of Enron. The author, business writer Jeff Randall, fingers what he sees as the reason why the banks have been so coy about defending their employees from the U.S. legal authorities.

Unlike Stephen Pollard, who huffs and puffs about how this controversy is largely a matter of anti-Americanism, I do not like the smell of this case at all. I think Pollard’s argument – which has its merits – misses the point of how one-sided the operation of U.S. extradition powers are. These men are not regarded by the British authorities of being guilty of any offence. The U.S. authorities appear not – to the best of my knowledge – to have given even the semblance of a prima facie case justifying the extradition of this trio. And yet as the article points out, while the U.S. can use these powers – supposedly justified by the War on Terror – Britain has no corresponding right to extradite alleged U.S. wrongdoers (powers associated with terrorism have a habit of branching out).

As with the British blogger Clive Davis, I am a pro-American who also thinks the U.S. authorities sometimes do a lousy job at treating what they should regard as their close allies. Okay, I can hear the comments coming that even if they did a great job, it would make no difference. I am not so sure. While I agree with Stephen Pollard that U.S. authorities are arguably right to get nasty on financial wrongdoings and are often tougher than we Brits, this use of extradition powers looks a step too far. It does not strike me as smart diplomacy or right law, and I hope, perhaps naively, that the British government shows rather more backbone on this case than hitherto.

Here is more on the story, and more here.

UPDATE: And of course let’s not forget the continuing outrage of the EU arrest warrant. I should have mentioned this fact earlier, in case our American readers think I am picking on them.

33 comments to The NatWest bankers controversy

  • Freeman

    I too am very pro-American and have studied and worked there. However, the one-sided extradition agreeement is a disgrace and is typical of the sloppy administration of Blair’s government. The agreement should be unilaterally suspended immediately while formal renegotiation is initiated.
    Having said that, I should (with your forbearance) like to comment separately on a hypothetical situation.

  • Freeman

    A Hypothetical Situation.
    Suppose a colleague and I own privately between us a small company worth around £1m (say), based on what we paid for it fairly recently.
    Suppose then we get into a friendly discussion with a senior director of a large listed company and allow him to buy personally into our company, with a side understanding that he will then persuade his board to buy out our company for an attractive sum (say £10m). We go ahead and all three of us make a substantial personal profit.
    Unfortunately, this profit comes at the expense of the shareholders of the listed company, who then feel they have been cheated. Legal actions follow against all three original owners of the private company for conspiracy and fraud. Should I feel mad for having participated in this scam?
    Of course, nothing like this could ever happen in real life; it’s just a story.

  • Aside from questions about the extradition treaty, this sounds like another case where the Feds want to charge someone from another country with breaking US laws for something that was done outside the US by a foreign citizen who did not break the laws of the country where the “crime” actually took place.

  • Pete_London

    Ken Hagler

    That sounds about right, from what I’ve read. I’ve also read that the treaty hasn’t been ‘ratified by congress’. Can the President enter into binding agreements with foreign powers without congress ratifying them?

  • Saif

    Congress hasn’t ratified the treaty because of fears that the British might ask for the extradition of Irish Republican sympathisers/suspects.

    As a treaty intended to bring terrorists to book, let alone those accused of economic crimes, it’s pretty one-sided.

  • Pete_London

    Saif

    It is one-sided, and provides a little more fuel for the anti-American loons. The fault of course lies with a British government and Parliament which increasingly seems to protect the interests of everyone but the British. My question is, though, without Congress ratifying the treaty, what force does it have? Can the President enter into binding agreements without the consent of Congress? Famously, the Kyoto Accord never applied in the US because Congress never ratified it even though Clinton agreed it.

  • Congress hasn’t ratified the treaty because of fears that the British might ask for the extradition of Irish Republican sympathisers/suspects.

    Which is the whole point for the UK. If the US wants Arab suspects from the UK, well…

  • Pete, in theory the treaty has no force unless it’s ratified. At least, that’s what the Constitution says. I’m sure you can guess just how concerned the US government (and particularly the President) would be with abiding by the Constitution.

  • I wrote about this whole shambles last week here:
    http://billcameron.blogspot.com/2006/07/dictatorship-britain-us-uk-extradition.html

    One thing I didn’t know until today however was that, according to Lady Scotland speaking in a radio interview (Radio4) at lunchtime today WE HAVEN’T RATIFIED THE TREATY EITHER – I must say that surprised me because I had understood we had.

    However, what has certainly been passed is the Extradition Act 2003 which basically renders effective in domestic law the provisions of the parallel Treaty – so we are, in law (however crazy that is!) required to permit extradition to the US on a simple request, without any requirement to produce prima facie evidence.

    Another thing the good Lady Scotland said was that, despite what everyone else believes, the Treaty was never intended to be restricted to terrorist cases, whereas the Conservatives say they only agreed to it because they had that assurance – the LibDems have always been opposed.

    Absolutely scandalous! But quite typical of this shoddy Labour government – I can’t help feeling that the lack of official interest in halting this is because it affects alleged white-collar ‘fat cats’.

  • permanent expat

    Shame is of no great
    consequence to those who lack
    a sense of honour.

  • dearieme

    “Irish Republican sympathisers/suspects”: not quite the right phrasing – suspected IRA terrorist murderers is perhaps what you mean.

  • Julian Taylor

    Another very interesting slant to this entire sorry debacle can be seen here in Barrie McKenna’s article. I’m particularly intrigued by the ruling from the U.S. Fifth Circuit that if,

    … a defendant dies before he has exhausted all his appeals “everything associated with the case is extinguished, leaving the defendant as if he had never been indicted or convicted.”

    If Lay now has an effective ‘carte blanche’ for his actions, by dint of his demise, then how does this play in the actions of the Natwest 3 case (well done Tony Blair by the way for being the first man in history to evoke public sympathy for bankers of all people)?

  • I was just reading about another of these extradition cases today; here’s the link.

    Basically, it was a hacker who had snooped around some government computers looking for UFOs, but he’s a UK citizen who was hacking from inside the UK. As far as I know this actually is a crime in both countries–I guess the Feds don’t want him standing trial over there because it’s a case of lese majeste or something.

  • permanent expat

    Hacking someone else’s ‘domain’ (in its widest sense) is the equivalent of breaking & entry. The judicial responsibility lies with that country in which the criminal is a citizen. If that country doesn’t act then a wet-orientated hit-squad should take over.

  • castillon

    Pete_London,

    Can the President enter into binding agreements with foreign powers without congress ratifying them?

    Yes.

    See the cases associated with the “sole organ” theory.

  • guy herbert

    Like Ken Hagler I’m worried about extraterritoriality too. And it is a more general problem, though the US is the worst offender. Extraterritoriality is as repugnant to the rule of law as retrospectivity in my opinion.

    However on the extradition point, what’s wrong with this treaty/Act is much more than that it is one-sided. I would oppose it for any crime at all, wherever committed, even if it worked both ways.

    The issue is that you should not be exposed to arbitrary imprisonment/punishment without a case being made against you. Almost anyone extradited abroad is removed by force from their chosen life, deprived of means of making a living, removed from the support of friends and family, and may well be treated – as in the NatWest case – as likely to flee and therefore remanded in custody when otherwise they would not be for an extended period. Before any of that happens to you, there ought to be good reason established that you have a case to answer and that there is prospect of fair trial without delay. (And why in such cases that a case is made and the manner of trial is deemed likely to be fair, should there not be scope to make extradition orders with bail, deportation being suspended until the date of trial? Why should the subject of extradition proceedings be committed to a foreign gaol in circumstances when they wouldn’t be remanded in custody in the UK?)

    There is also a question of the fundamental duty (as one of its few legitimate purposes that all liberals recognise) of government to protect its citizens, at home or abroad, from agression. If it will hand them over to the servants of foreign governments (any of them) without question, then that duty is abnegated.

  • Julian Taylor

    If it will hand them over to the servants of foreign governments (any of them) without question, then that duty is abnegated.

    I do get the impression, especially with the excellent Katherine Griffiths article, referenced in Jeff Randall’s piece, that the Natwest 3 case could be but the tip of the iceberg in relation to the numbers of British bankers and accountants waiting to be extradited, for what is starting to appear to be something of a shakedown by Neal Batson against anyone who might be able to alleviate the $40Bn Enron loss. At the end of her piece she writes about KPMG that,

    The accounting giant agreed with the Department of Justice and SEC to pay $456m to avoid being prosecuted as a firm for selling allegedly illegal tax shelters.

    and then,

    As part of the agreement with the US authorities, KPMG is not helping the defence of the individual partners indicted over the tax shelters. They must fight their case alone.

    Given the number of partners involved there could well be some very, very jet-lagged US Marshalls commuting regularly between Dallas and London.

  • rosignol

    Congress hasn’t ratified the treaty because of fears that the British might ask for the extradition of Irish Republican sympathisers/suspects.
    -Saif

    WTF? Why the hell are we protecting those assholes?

    Famously, the Kyoto Accord never applied in the US because Congress never ratified it even though Clinton agreed it.
    -Pete_London

    Clinton’s sense for which way the wind is blowing is much better than that- if you look at the actual document, you’ll not see Bill Clinton’s signature on it anywhere- he sent Al Gore to step in that pile of manure.

  • Jack Gannaway

    Could this situation be seen as the US Government seeking to stamp it’s great big Sarbanes-Oxley shaped boot on the irritatingly liberal and successful UK financial services market?

    How many Enron/World Com type incidents, i.e. corporate corruption, have there been involving UK firms?

  • Elizabeth Dodge

    Yesterday, I read a newspaper article from Houston quoting a US Federal prosecutor saying that they never expected to be able to extradite these 3 from the UK. It was a longshot, in so many words. So that makes the UK government look even worse, doesn’t it? They have fallen for what is really a fishing expedition.

    The federal prosecutors have achieved muct success in the whole Enron case. Their case against Arthur Andersen was thrown out, but only after they ruined the company. Now one of their big wins has died and will have his conviction vacated. The Feds have just a few convictions after all these years. If the US can prove a real case against UK citizens for actions in the UK, then let them prove it in the UK. Otherwise, let them take their fishing expeditions elsewhere.

  • How many Enron/World Com type incidents, i.e. corporate corruption, have there been involving UK firms?

    Call me a cynic, but could the reason be that UK firms are better at it than american ones and therefore don’t get caught?

  • Yes, Sen Teddy and a few of his paddy-loving allies no doubt held that treaty up for fear of having their dirty little secret terrorism support would come out in the wash. The Irish-American lobby is still very strong in states like Massachusetts, Illinois, Maryland and New York State.

    Much though I loath the British banking system this case does stink to high heaven. One wonders why the Feds can’t do this with a bit more finesse.

  • Johnathan Pearce

    Call me a cynic, but could the reason be that UK firms are better at it than american ones and therefore don’t get caught?

    Quite possibly, possibly not. It may also be that the U.S. media have more experience in covering scandals such as Enron and tend to be less coy about putting the boot in, as well as making use of the protection of the First Amendment to go after dodgy firms. In Britain, remember, our libel laws seriously restrict what can be said. Recall how long it took the media to even begin saying what was going on with Robert Maxwell and his theft of his company’s pension scheme.

    There have been plenty of financial scandals in Britain: Barings, precipice bonds, morgage mis-selling, pension mis-selling, BCCI, etc. Let’s not be cocky.

  • Jack Gannaway

    “UK firms are better at it than american ones”

    Better at what? Bending the rules? Our rules are much better than their rules (cue FSA wonk..)

  • I am guessing that sending these two off to the US might just be more in the spirit of treaty.

  • steves

    Must be honest and I am probably out of step with most people but not really sure what “laws” and what was really illegal about Enron.

    Seems to me that Enron were typical of a company without a proper operating system (not computer but how the company woked), had zero accounatbility and chased incorrect targets, ignored cashflow and profitability.

    Then as things started on the downward slide they painted a rosy picture with the intention of turning the business around, not to actually financially benefit themselves.

    Got to agree that business law in the states is appalling, you get be charged with over charging, undercharging, doing too well all at the whim of the legislature.

    Then again not sure if the FSA, ASB etc are that much better.

  • Jack Gannaway

    “Then again not sure if the FSA, ASB etc are that much better.”

    The difference between the UK and the USA is that in the USA there is no non-governement organisation responsible (overlooking the SEC) for financial regulation in the same way as FSA (and OFT and Competition Commission). Competition and accounting policy is enacted at the whim of government.

    P.S. a caveat: my knowledge of this area comes only from casual reading and filial osmosis.

  • I don’t reckon that anyone thinks that you are being anti-US in complaining about this. On a post of mine on this subject, Misha of Anti-Idiotarian Rottweiler (who is not known for his toleratance of anything anti-American) wrote:

    If those wankers committed a crime on British soil and that is all there is to it, then it’s none of our fucking business and they should be tried in a British court.

    If anybody were to claim jurisdiction over OUR soil, then we’d tell the farkin’ bastards to either shut the fuck up or come get some.

    That ought to work both ways.

    DK

  • guy herbert

    Seems to me that Enron were typical of a company without a proper operating system

    Quite, but ended up being highly embarrassing to various types who swallowed the hype. There is in all this stuff a nasty political edge to the prosecutions. Nobody was very sympathetic to the amateur day-traders and “momentum investors” who got burned by the dotcom bust. However the powerful, rich, institutional shareholders, their friends in high places, and the various prosecuting authorities (on behalf of the regulators who are supposed by many to protect investors from their own folly, and their friends in high places) are still looking for other people to blame for what happened. If it was all a criminal conspiracy, then betting the pension-fund on vapourware wasn’t culpable stupidity at all and multi-million-dollar salaries, long-built reputations for sagacity, and political careers are safe.

    One more reason to suppose the NatWest three might have a difficult time getting a fair hearing. When you are looking for a calculating villain, central casting often advises an undemonstrative cold-fish Englishman.

  • James

    I’m pleasantly surprised to find an article on here in support of a common sense approach where US/ UK extraditions are concerned.

    I won’t directly touch on the subject of the Natwest Three for now, as many others seem to be doing that already, however I will pick up on your last comment regarding the EU arrest warrant.

    Even if there were Americans who felt they were being ‘picked on’ for the lob-sided US/ UK extradition treaty whilst the EU arrest warrant wasn’t mentioned, they would quite clearly be in the wrong to complain anyway. They would also be missing the point entirely.

    Whilst I disagree with it entirely, the EU arrest warrant is at least a reciprocal agreement. The agreement grants all signatory member states the same rights in respect of requesting suspects. The only significant variations are likely to be found in how the respective offence is dealt with between two members.

  • Julian Taylor

    A further update in today’s Daily Telegraph reveals the disquiet some of our most senior industry figures have with Blair and his vacuous corrupt administration, especially in regard to the Natwest 3. Take the chairman of the CBI, Sir Digby Jones’, statement to Blair:

    It is irrelevant whether the NatWest Three bankers are guilty or not… The alleged offences were committed by British people in Britain against a British bank. The British authorities have declined to take the case further. On the strength only of sufficient evidence to support an arrest… these men will be taken in shackles to a closed prison 4,000 miles from home… In the unlikely event… they are found not guilty then they have no claim for costs or damages… This is not about guilt, about business, about allies. This is about three British subjects depending on this wonderful country – depending on you, its democratically elected leader – to ensure fairness, to ensure that people are treated as innocent until proven guilty, to ensure that freedom reigns.

    Personally I think he might have spent his time better informing this vile and unprincipled individual that he was writing to all of his members imploring them not to offer Tony Blair any directorships or consultancies once this creep sums up his meagre dregs of integrity and resigns.

  • Andrew Milner

    So Britain is America’s bitch, right? In the same way as American is Israel’s bitch. Therefore, isn’t … Naw, I’m just ‘aving a laugh.

  • Johnathan

    Andrew, please save yourself from further embarrassment and post your anti-Israel canards somewhere else. Or better still,, learn a useful skill like bricklaying or digging ditches, or somesuch more suitable to a man of your intellectual abilities.

    Tootle pip!