PFI ‘Committed Fraud On The People’ – Says Chairman of RBS – A Leading Participant In the Fraud

Sir Howard Davies – The current Chairman of RBS has labelled PFI “a fraud on the people” during the BBC’s flagship BBCQT political show.

Approached for comment on Davies statement, Ian Fraser – journalist and author of RBS Shredded said:

“My question to Howard Davies is this: if he thinks it is “a fraud on the public”, when will the bank that he chairs compensate the British public (and indeed the public in all the other markets where RBS’s infrastructure finance division foisted rip-off PFI/PPP contracts on governments) for having been a key perpetuator of this fraud?”

It’s not immediately clear why Davies, once dubbed the “super regulator” as former Chair of the Financial Services Authority which regulated City of London financial firms and former head of the Audit Commission – which audited public bodies, until its closure in 2015, did not articulate such concerns in a more timely fashion, during his previous tenure in these regulatory roles?

PFI has been various labelled a “racket,” “corrupt” a “Ponzi scheme” and “a fraud.”

None of this, however, is news. The general public consistently opposed PFI by a two-thirds majority, with the UK Government ignoring calls for moratorium on UK PFI contracts in 2002. Polling by Yougov in 2016 showed 68% of Brit’s wanted PFI contracts banned, climbing to 73% in Scotland, where PFI contracts are most concentrated.

Journalists, academics and public commentators who have spoken out publicly on PFI fraud including Allyson Pollock, Jim and Margaret Cuthbert, Ian Fraser, Richard Brooks, George Monbiot, Dexter Whitfield, Nick Hildyard, Paul Foote, and Malcolm Fraser (not to mention this campaign) have been frequently ignored or attacked by the corporate media.  

Questions must now turn to why this fraudulent model of infrastructure financing was ever implemented and continued and the role of HM Treasury and its corrupt, policy and delivery organ Partnerships UK – stocked full of PFI racketeers from the Big 4 banks and accountancy firms, in order to force PFI on public authorities, via conflicted advice on PFI contracts which were never in the public interest.

If, as RBS Chair Sir Howard Davies claims ‘PFI is a fraud’ then RBS was a lobbyist for, shareholder investor in, and leading lender to – that fraud. Not just in the UK, but globally.

RBS was a 6.1% shareholder in HMT’s privatised PFI advice and delivery unit Partnerships UK – which gave public sector bodies advice to enter PFI’s, despite applicable interest rates being 2x alternative Government loans, and PFI contracts never providing value for money.

In simple terms, RBS was an active shareholder in Treasury sanctioned, fraudulent mis-selling.

Journalist and author Ian Fraser continued:

“It is quite refreshing that someone of Sir Howard Davies’s stature is now telling the truth about PFI.”

“Some people, including the likes of Professor Allyson Pollock, have been warning that PFI/PPP was a “fraud on the public” for nearly two decades. Red flags included that its primary purpose was not better value for taxpayers but Enron-style accounting – i.e it enabled the UK government to dupe the credit-rating agencies and fixed-income investors about the UK’s national debt, in much the same way as Arthur Anderson’s labyrinth of SPVs enabled Enron to dupe investors – for a while.  

“The warnings made by Pollock and others, including the Scotland’s ex finance minister John Swinney in April 2009, included that PFI/PPP gave private sector players a licence to gouge the often gullible public sector. Often, and especially in the early days of PFI/PPP, public sector organisations like local authorities were like “lambs to the slaughter” when negotiating the complex contracts involved, and they were often led by conflicted advisors, including the “big four” accounting firms such as PwC, Deloitte, EY and KPMG.

“What’s worse, the whole shabby episode will culminate in a whole string of assets which are still not taxpayer-owned but will remain in the ownership of shady tax-avoiding, offshore based special-purpose vehicles in places like BVI and the Cayman Islands.”

“Organisations including private sector corporations, investment banks and banks, “big four” accounting firms, Partnerships UK, HM Treasury and Scottish Executive, as well as the key high level individuals who have promoted and prospered from this now discredited infrastructure-funding mechanism now need to be properly held to account. In any just country, I suspect that would include criminal prosecutions.

“My question to Howard Davies is this: if he thinks it is “a fraud on the public”, when will the bank that he chairs compensate the British public (and indeed the public in all the other markets where RBS’s infrastructure finance division foisted rip-off PFI/PPP contracts on governments) for having been a key perpetuator of this fraud?”