Labour Party Triangle is like the Bermuda Triangle where public subsidies are milked and disappear. One corner of the triangle, the Labour controlled Glasgow City Council has been damaged but may be only some replaced with like minded SNP suits. However The Co-operative ‘Ethical’ Bank will not be reincarnated as the funder of this triangle.
Now that the £700 million Co-operative Bank rescue package has been accepted then this marks the beginning of the end of their ‘ethical’ subsidisation of their favourite social(ist) sporting wing.
The Co-operative Group will end up with only a 1% interest in the bank which means that it will be run completely by Hedge Funds on a true profit basis with no low interest loans or overdrafts for favourite interests.
The Co-operative Bank’s Financial State
On 18 March 2017 The Telegraph reported that Bank of England regulators asked the PRA (Prudential Regulation Authority) to start drawing up contingency plans for The Co-operative Bank due to 5 years of losses and erosion of capital required to back the bank’s balance sheet.
In an earlier Telegraph report from 9 March 2017 the perilous financial state of the Co-operative Bank was clearly laid out:
Treasury Select Committee Report 2014 says Governance structure not fit for a Bank
This major point was issued by the Treasury Select Committee report in 2014. The bank’s board was dominated by members who had no financial expertise and the chief executive reported directly to the Co-op society group directly.
We remember Paul Flowers, whose expertise seemed more to lie in negotiating the price of ketamine and rent boys while being Chairman of The Co-operative Bank. No wonder their Risk Management processes were non-existent.
Again from The Telegraph report from 9 March 2017 current chairman Dennis Holt admits how much they had to do:
So how long has The Co-operative bank been running with poor Risk Management? As we shall see below in Celtic’s case since May 2000.
So how did Celtic PLC obtain cheap loans and overdrafts from the ‘ethical’ bank? Likely through Labour Party connections including former ministers John Reid, former Celtic director & chairman and Brian Wilson, who is still a Celtic director. Also with Glasgow City Council of the period being run by Labour councillors who spent every other Saturday enjoying hospitality at Parkhead would have helped too.
Note: With the resignation of Ian Livingston as director for ‘work reasons’ as at 30 June 2017 the Labour party has consolidated power at Celtic.
What is the link between the Labour Party and The Co-operative Group? Money and Politics. Many Labour MPs in Westminister and MSPs in Holyrood are also sponsored Co-operative Party members. Plus The Co-operative Group has also always made donations to the Labour party for many decades. Both work very closely together for their ‘common’ causes.
Labour and Co-operative Political Party
It is not well publicised but as well as being politically close to the Labour party, The Co-operative Society and Bank also fund MPs, MSPs and Lords.
The Co-operative Party does exist and their MPs are designated “Labour and Co-operative” since they are closely affiliated with the Labour Party. From Wikipedia:
Here are the current MPs and Lords currently serving the Left wing and co-operative values & principles. From Wikipedia:
In the Scottish Parliament they have the following MSPs. From Wikipedia:
Former MP, government minister and Prime Minister Gordon Brown was a Labour Co-operative Party member as was former government minister and MP Ed Balls. MSP James Kelly, currently trying to repeal the OBFA is also a Co-operative Party MSP.
So it can be seen that the Labour party had undue influence on The Co-operative Bank such that in their quest to make ‘ethical’ investments perhaps the bank overruled their risk management.
Was the Celtic loan and overdraft one of those ‘ethical’ projects?
Celtic’s Co-operative Bank Loan and Overdraft
James Salmon’s report in November 2013, the year before the Treasury Select Committee reported on governance problems with the bank in 2014, highlighted the ridiculously low interest rates on the Co-operative Bank loan and overdraft that the bank gave Celtic, even cheaper than the Labour Party’s own loans:
Some people will say that as long as Celtic’s loan and overdraft were secured against Celtic Park and the Glasgow City Council land like Westthorn bought in 2009 then it’s ok.
But the original initial Co-operative Bank loan & overdraft was given to Celtic in May 2000, and Eric Riley, then Financial Director, reported in Celtic’s annual report for year ending June 2000 that both the loan and overdraft were UNSECURED:
So here is a commercial bank loaning a total of £30.5 million pounds UNSECURED to their favourite ‘ethical’ football club while the regulators wonder why this bank has been in financial trouble for the last 5 years.
A year later in June 2001, someone at The Co-operative Bank woke up and realised that the £30.5 million was unsecured and then secured it to Celtic Park. Doh!
The big question from that point onwards is this: If that land was enough to secure a £30.5 million then why has The Co-operative Bank taken every parcel of land that Glasgow City Council sold to Celtic plus the NHS Greater Glasgow & Clyde sold Lennoxtown as security as well?
Demonstrating Celtic’s favouritism is the fact that their loans & overdrafts are the only commercial ones connected to a football group that The Co-operative Bank has on it’s books.
Combined with the Treasury Select Committee condemnation of the Co-operative Bank’s poor management there appears to have been a complete lack of Risk Management practices at The Co-operative Bank for which the taxpayer appears to be the back stop. The government only allows certain corporate entities to obtain a banking licence as well as supplying bank deposit guarantees. Really they are semi-public enterprises. We seen in the GFC that government steps in to bail them out with our taxes because of the alleged threat to the economy by a run on a bank. This is known in economics as a moral hazard – taxpayers pick up the losses and bankers the profits/bonuses and leads to high risk & poor lending practices.
From 2000, when the initial low interest rate loan and overdraft supplied by a Labour controlled Co-operative Bank started, these funds have allowed Celtic to buy cheap land from a Labour controlled Glasgow City Council to be used as security for the said loans. Rinse and repeat.
The only other occasion this has been seen, albeit on a larger scale, was when the oligarchs in Russia were able to buy cheap assets using cheap state funds.
Maybe if the Co-operative Bank had charged Celtic market interest rates then they would not have needed a £700 million rescue package? Question: Why do banks associated with Celtic seem to end up losing their reputations and for banks reputation is everything.
When Celtic’s Co-operative ‘Ethical’ Bank facilities have to be repaid in 2019 (see below) then which bank is going to take on their loan and overdraft?
Hmmm ….. Rietumu ‘Ethical’ Banka?
From Celtic accounts for year ending 30 June 2016: