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On this day in 1991: BCCI closure sends shockwaves through financial community



Twenty-two years ago today, after the Bank of England’s Operation Sandstorm inquiry uncovered “widespread fraud and manipulation”, the Bank of Credit and Commerce International (BCCI) was forced to close. The decision had serious consequences for the taxpayer and, until the financial crisis, was arguably the biggest banking scandal in history.

By 1991, BCCI had grown to an unmanageable size. It was shut down after accusations of a whole host of misdemeanours, including fraud, arms trafficking, prostitution, bribery, spying, money laundering, kidnapping, and according to some, murder. In the months and years after its closure, the unsettling details began to emerge about how the bank was being run.

But a few people saw it coming.

Arguably the first sign that something less than respectable was rumbling away behind the counter at the bank appeared in 1982. An internal memo, sent to Bank of England staff, said the BCCI was “on its way to becoming the financial equivalent of the SS Titanic!

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Its rapid expansion in the 70s had unnerved the Bank of England, which held off giving it deposit-making status until 1980. Two years earlier in 1978, amid its legal wrangling with officials on Threadneedle Street, BCCI’s Pakistani founder Agha Hasan Abedi told Euromoney, “The Bank of England probably hasn’t given permission because of the atmosphere surrounding the BCCI and the propaganda that has been spread about us […] It is not only the Bank of England that is against us, but the Club.”

In 1985, auditor Price Waterhouse (before its 1998 merger with Coopers & Lybrand, when it became PricewaterhouseCoopers) was tasked to investigate losses at BCCI.

A US branch of BCCI was shut down in 1988 amid money laundering claims. Then, in 1990, another Price Waterhouse investigation uncovered financial losses straying into the hundreds of millions of pounds. Serious irregularities and illegalities began to unravel. This was not a one-off; this was dangerous banking embedded at the very core.

Accusations of fraud, manipulation and money laundering were rife. Price Waterhouse said that BCCI needed a major rescue. When it went bust in 1991, it had debts stretching into the billions.

Until the financial crisis of 2007 and 2008, Lehman’s collapse, and the Libor manipulation more recently, the BCCI scandal was the biggest crisis witnessed in banking across the world. But even compared to the events of the last six years, its sheer scale of corruption and illegal activity is unmatched. Writing in Time magazine in the months after the bank’s closure, Jonathan Beaty and SC Gwynne said, “Never has a single scandal involved so much money, so many nations or so many prominent people.”

Around 28 local councils and thousands of depositors in the UK lost millions because of its collapse. Colin Jones, then-leader of Bury council which had lost £6.5m in the closure, told the BBC at the time, “We don’t know where we stand.”

Meanwhile, the Bank of England was sued by creditors, who alleged it knew of BCCI’s illegal workings, to the tune of £1 billion. Accountancy firm Deloitte & Touche described the Bank’s role as “misfeasance” – a transgression or a violation of a law or a duty or moral principle.

At its peak, BCCI ran over 400 branches in over 70 countries. Its headquarters were split between Karachi and London. The career of its Pakistani founder Abedi spanned across six decades. He was often famed for his philanthropy, initially setting up BCCI as a “bank focused on the third world”, according to the Guardian.

However, a description of him from a former colleague tells a different story. Massihur Rahman, one-time chief financial officer at BCCI, said in a 1991 interview, “I remember looking into his eyes and seeing God and the Devil balanced equally in them.”

While a number of BCCI officials were jailed in the aftermath of the bank’s closure, Abedi himself died before he could face charges. The legal battle that ensued included a 119-day opening speech by Nicholas Stadlen QC in 2005, and it wasn’t until 2012 that the case was finally closed.

The collapse of US investment bank Lehmans in 2008 sent similar shockwaves around the globe, and had even greater implications. The unravelling of Lehmans’ deals still takes place today. More recently, HSBC has become embroiled in a money laundering scandal and the likes of Barclays, the Royal Bank of Scotland and UBS have been fined for their involvement in rigging Libor – the rate at which banks lend to each other.

These events, despite happening in the shadow of the BCCI saga, suggest global finance has not learnt its lesson. It will continue on its irresponsible and unsustainable path for as long as there is profit in that.

But if these events have proven anything, it’s that ultimately, these routes are full of legal obstacles. And eventually, even the biggest banks will be found out.

Further reading:

High street banks still susceptible to money laundering, claims regulator

What’s gone wrong with finance?

‘Shocking and widespread malpractice’ should land bankers in jail, says commission

There was criminality in the City – but not one prosecution

The Guide to Sustainable Banking 2012


New Zealand to Switch to Fully Renewable Energy by 2035



renewable energy policy
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New Zealand’s prime minister-elect Jacinda Ardern is already taking steps towards reducing the country’s carbon footprint. She signed a coalition deal with NZ First in October, aiming to generate 100% of the country’s energy from renewable sources by 2035.

New Zealand is already one of the greenest countries in the world, sourcing over 80% of its energy for its 4.7 million people from renewable resources like hydroelectric, geothermal and wind. The majority of its electricity comes from hydro-power, which generated 60% of the country’s energy in 2016. Last winter, renewable generation peaked at 93%.

Now, Ardern is taking on the challenge of eliminating New Zealand’s remaining use of fossil fuels. One of the biggest obstacles will be filling in the gap left by hydropower sources during dry conditions. When lake levels drop, the country relies on gas and coal to provide energy. Eliminating fossil fuels will require finding an alternative source to avoid spikes in energy costs during droughts.

Business NZ’s executive director John Carnegie told Bloomberg he believes Ardern needs to balance her goals with affordability, stating, “It’s completely appropriate to have a focus on reducing carbon emissions, but there needs to be an open and transparent public conversation about the policies and how they are delivered.”

The coalition deal outlined a few steps towards achieving this, including investing more in solar, which currently only provides 0.1% of the country’s energy. Ardern’s plans also include switching the electricity grid to renewable energy, investing more funds into rail transport, and switching all government vehicles to green fuel within a decade.

Zero net emissions by 2050

Beyond powering the country’s electricity grid with 100% green energy, Ardern also wants to reach zero net emissions by 2050. This ambitious goal is very much in line with her focus on climate change throughout the course of her campaign. Environmental issues were one of her top priorities from the start, which increased her appeal with young voters and helped her become one of the youngest world leaders at only 37.

Reaching zero net emissions would require overcoming challenging issues like eliminating fossil fuels in vehicles. Ardern hasn’t outlined a plan for reaching this goal, but has suggested creating an independent commission to aid in the transition to a lower carbon economy.

She also set a goal of doubling the number of trees the country plants per year to 100 million, a goal she says is “absolutely achievable” using land that is marginal for farming animals.

Greenpeace New Zealand climate and energy campaigner Amanda Larsson believes that phasing out fossil fuels should be a priority for the new prime minister. She says that in order to reach zero net emissions, Ardern “must prioritize closing down coal, putting a moratorium on new fossil fuel plants, building more wind infrastructure, and opening the playing field for household and community solar.”

A worldwide shift to renewable energy

Addressing climate change is becoming more of a priority around the world and many governments are assessing how they can reduce their reliance on fossil fuels and switch to environmentally-friendly energy sources. Sustainable energy is becoming an increasingly profitable industry, giving companies more of an incentive to invest.

Ardern isn’t alone in her climate concerns, as other prominent world leaders like Justin Trudeau and Emmanuel Macron have made renewable energy a focus of their campaigns. She isn’t the first to set ambitious goals, either. Sweden and Norway share New Zealand’s goal of net zero emissions by 2045 and 2030, respectively.

Scotland already sources more than half of its electricity from renewable sources and aims to fully transition by 2020, while France announced plans in September to stop fossil fuel production by 2040. This would make it the first country to do so, and the first to end the sale of gasoline and diesel vehicles.

Many parts of the world still rely heavily on coal, but if these countries are successful in phasing out fossil fuels and transitioning to renewable resources, it could serve as a turning point. As other world leaders see that switching to sustainable energy is possible – and profitable – it could be the start of a worldwide shift towards environmentally-friendly energy.


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How Going Green Can Save A Company Money



going green can save company money
Shutterstock Licensed Photot - By GOLFX

What is going green?

Going green means to live life in a way that is environmentally friendly for an entire population. It is the conservation of energy, water, and air. Going green means using products and resources that will not contaminate or pollute the air. It means being educated and well informed about the surroundings, and how to best protect them. It means recycling products that may not be biodegradable. Companies, as well as people, that adhere to going green can help to ensure a safer life for humanity.

The first step in going green

There are actually no step by step instructions for going green. The only requirement needed is making the decision to become environmentally conscious. It takes a caring attitude, and a willingness to make the change. It has been found that companies have improved their profit margins by going green. They have saved money on many of the frivolous things they they thought were a necessity. Besides saving money, companies are operating more efficiently than before going green. Companies have become aware of their ecological responsibility by pursuing the knowledge needed to make decisions that would change lifestyles and help sustain the earth’s natural resources for present and future generations.

Making needed changes within the company

After making the decision to go green, there are several things that can be changed in the workplace. A good place to start would be conserving energy used by electrical appliances. First, turning off the computer will save over the long run. Just letting it sleep still uses energy overnight. Turn off all other appliances like coffee maker, or anything that plugs in. Pull the socket from the outlet to stop unnecessary energy loss. Appliances continue to use electricity although they are switched off, and not unplugged. Get in the habit of turning off the lights whenever you leave a room. Change to fluorescent light bulbs, and lighting throughout the building. Have any leaks sealed on the premises to avoid the escape of heat or air.

Reducing the common paper waste

paper waste

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Modern technologies and state of the art equipment, and tools have almost eliminated the use of paper in the office. Instead of sending out newsletters, brochures, written memos and reminders, you can now do all of these and more by technology while saving on the use of paper. Send out digital documents and emails to communicate with staff and other employees. By using this virtual bookkeeping technique, you will save a bundle on paper. When it is necessary to use paper for printing purposes or other services, choose the already recycled paper. It is smartly labeled and easy to find in any office supply store. It is called the Post Consumer Waste paper, or PCW paper. This will show that your company is dedicated to the preservation of natural resources. By using PCW paper, everyone helps to save the trees which provides and emits many important nutrients into the atmosphere.

Make money by spreading the word

Companies realize that consumers like to buy, or invest in whatever the latest trend may be. They also cater to companies that are doing great things for the quality of life of all people. People want to know that the companies that they cater to are doing their part for the environment and ecology. By going green, you can tell consumers of your experiences with helping them and communities be eco-friendly. This is a sound public relations technique to bring revenue to your brand. Boost the impact that your company makes on the environment. Go green, save and make money while essentially preserving what is normally taken for granted. The benefits of having a green company are enormous for consumers as well as the companies that engage in the process.

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