This is Brett Clark.

He’s the CEO of Australian insurance company TAL Holdings, the company that fleeced my late mother Una Ellis (https://ericellis.com/has-tal-insurance-ripped-you-off) of $1000s while she suffered through dementia.

Brett seems pretty happy.

Maybe that’s because he’s just scaled Sydney Harbour Bridge, an exhilarating experience. Or maybe because its so easy for the company he’s run for eight years to make money when it preys on vulnerable pensioners like Una. So perhaps he’s simply high on Dementia Dollars.

An average adult ticket to climb the bridge costs $A394. You buy a ticket, say, as a present to your daughter, and she climbs. That’s the deal. Everyone wins.

But by Tal’s metrics, you pay around $A7000 in ever rising monthly installments over 11-12 years, for a ticket worth just $A5000 that she can only use when you die.

And if you suffer dementia, and lose control over your life like Una did, Tal takes all your money and cancels your daughter’s climb. To get her daughter on the bridge, like Blissed Out Brett here, Una had to pay Tal still another $A1700 from the grave, to get back the original $A5000 ticket. That climb has now cost around $A9000, and only Tal wins.

I’ve asked Brett a few questions about his math, and about how his company fleeced Una but he hasn’t yet responded. Maybe you’ll have better luck. Or the many industry regulators I’ve consulted, who are also very interested in what Brett and Tal get up to. Brett’s on brett.clark@tal.com.au

Be Happy like Brett. But don’t be Brett. Nor Tal.

(please share widely)

#talinsurance#ripoff#haveyoubeenscammed

#insurance#elderlycaregiving

#ScamAlert#Scammer

DIARY OF A SCAM: DAY 3. I have obtained a recording (above) that reveals how Blissed Out Brett Clark‘s TAL Insurance deals with a policyholder after TAL discovers she suffers depression. It was recorded at TAL’s claims operation. Remember this is the insurance company that advertises that is ‘Making a Real Difference At a Difficult Time’ for ‘Whatever Life Holds.’

The recording literally speaks for itself.

It is horrific.

The woman appears to have made a claim on her policy but instead TAL unilaterally voids her policy. What further horrifies is that the customer is given the no-win choice of being closed down, as TAL did my demented mother or be referred one-step-removed-with-the-same-outcome to TAL’s ‘internal dispute resolution’ office, thus closing their vicious circle while appearing touchy-feely.

That’s the same black hole which scammed my mother. What is glaringly different is that they at least offered to return this woman’s premiums.

With my demented, vulnerable, helpless mother, Brett Clark and his brutal scammers gave her no choice. They just took the lot, then abandoned her.

#talinsurance #ripoff #haveyoubeenscammed
#insurance #elderlycaregiving
#ScamAlert #Scammer #elderlypeople #lifeinsurance #insuranceagent #australia #money

(let us know at talpredator@gmail.com)

It did to this woman, my mother; repeatedly, professionally, ruthlessly.

Her name is Una Ellis, and she passed away in Winchelsea, Australia on October 24, 2023. She was aged 82, and had suffered profound clinically-diagnosed dementia and Alzheimer’s Disease since 2020.

A few weeks before she passed, with her semi-conscious in an end-of-life care facility, my brother Barton – I am the eldest of Una’s three children – discovered that she had a funeral insurance policy with TAL Insurance, which likes to boast it is Australia’s biggest life insurer and is owned by Japan’s Dai-Ichi Life.

A private and independent woman, Una had bought that policy from a TAL associate, Apia, in 2011. She was then heavily grieving the recent loss of her husband Kevin. His funeral was expensive and, ever selfless, Una must have worried about her children, particularly her only daughter who she made sole beneficiary, having to pay for her own eventually.

Thus Una’s financial fate was sealed within the grasping reach of TAL and its associates.

By the time she died, after more than a decade paying monthly premiums, she had paid far more, $1000s more, to Tal/Apia than the designated amount they were ever going to pay for her fixed policy, that matured upon her death. Tal and associates unilaterally increased her premiums by as much as 10-11pc each year, claiming inflation, despite inflation through that decade being measured at just 1-2pc most years. If Una didn’t agree to the increase, which TAL/Apia levied by default, her cover would diminish.

But that was only part of the scam.

With her worsening dementia, Una became unable to manage for herself from late 2021. Her credit card, from which TAL/Apia extracted her premiums, expired. But Una didn’t know any of that because she had dementia. When a good samaritan eventually got her a new card so she could buy groceries, Una was by then profoundly ill. She didn’t know how or why to add her previous payees to it, whom she had forgotten anyway. Her automatic payments fell into arrears.

That’s when the predator devoured its prey.

No matter that Una, their policyholder, suffered dementia. That was inconvenient, profitless detail for TAL, a company that likes to advertise that its ‘Making a Real Difference At a Difficult Time.’ It cancelled her policy for non-payment, then abandoned her as he descended into deeper dementia. No-one knew, for 19 months until a few weeks before she passed, when the policy was first discovered by my brother Barton and his wife JT. By that time, the best that we could do for Una was to make her happy and comfortable.

TAL must know that dementia sufferers are often in denial of their condition, that they often resist and parry loved ones’ concerns, as the dignified Una did to the end. It’s part of what makes dementia so cruel. Una lost the $1000s she had paid TAL/Apia for more than a decade for her funeral. All that money Una had paid for years was now TAL’s to keep. There would be no funeral benefit windfall for her daughter, her intended sole beneficiary, as Una had selflessly intended back in 2011.

Tal had clinically fleeced a vulnerable pensioner suffering deep dementia.

My research reveals that Una Ellis was not alone. There are many similar examples in Australia, and most involving TAL. Health authorities estimate that Australian dementia sufferers will double in number by 2058, from almost 500,000 now. And for Australia read an ageing world. Such statistics seem baked into insurance industry business models. For predators, the demented present as a profitable free-for-all, proverbial lambs to the slaughter of unscrupulous enterprises making the cynical calculation that there’s a huge pool of free money to be plundered as ageing policyholders become demented, deteriorate, default and die.

Such projections must invigorate TAL’s collective dark soul as they lapse policies; the free and easy money, the profits, the executive bonuses, such a magnificent bounty of the vulnerable, the low-hanging fruit to harvest.

Many funeral policyholders think they are entering a savings plan, as if TAL was a bank. We are sure that is what Una would’ve thought it. But they are not savings plans, and TAL is not a bank. They are blithely entering a scam. It’s that simple.

Thousands of Australians are vulnerable to companies like TAL, and they lack a voice or an authority to speak on their behalf. Posthumously, Una has me, a media professional, who is speaking up for her after her death, after learning too late how expertly she was scammed.

Now, 21 months after lapsing her policy, with zero contact from them in between, TAL has suddenly decided to again take notice, but curiously doing so only after I waved my media credentials at them, after earlier spurning an inquiry from Barton and JT, who are not journalists. But most people don’t have journalists in the family to defend them, to reveal and expose scammers. And, I learn, regulation of this product sector is poor to the point of being non-existent. So predators like Tal rip off the vulnerable off at will.

I got a result of sorts for my sister, but it’s not a trade. (And it was hardly a result; to reinstate Una’s policy, TAL demanded around another 30pc of the entire basic policy value in extra premiums, on top of what my mother had already paid over the previous 11-12 years, to pay out the original policy as Una intended.)

TAL may think that placates me, and I will now go away for them to continue targetting society’s most vulnerable.

That’s not going to happen.

As I probe further how they did scammed her, TAL’s response to me so far has been to evade, obfuscate, block, delete, censor and avoid my questions while covering up their appalling behaviour.

Corporate predators like should not be allowed anywhere near the vulnerable.

If you, a friend or a relative have been fleeced upon by TAL or its competitors, let us know at talpredator@gmail.com.

Or if you are a TAL employee or agent and are uncomfortable about such predatory behaviour, be a whistleblower to that same email address. Your privacy and identity is 100pc guaranteed.

Such companies should not be allowed to do business.

(Feel free to tell TAL Holdings CEO Brett Clark – this is him below being vital, or maybe he’s just thrilled, high on Dementia Dollars, after hearing that TAL got hold of all of Una’s money, and that of thousands of vulnerable Australians like her – what you think of his management and his company’s behaviour at brett.clark@tal.com.au)

SRI LANKAN CRISIS

AFGHANISTAN’S NEW FUND

INTERVIEW WITH ANWAR IBRAHIM

Back To The Future For Malaysia

We Will Work Until Ukraine Has Victory,

Ukraine Fighting On All Fronts,

Looking Beyond The War In Lviv,

Keeping The Lights On,

Theory And Practice,

Spain banking: Unicaja swims against the stream

By Eric Ellis

October 05, 2020

As Spain prepares to digest the €17 billion merger of CaixaBank and Bankia, Andalucían lender Unicaja faces a threat to its regional dominance. While its community roots are an advantage, it also needs an answer to the calls for change.

In the heart of the southern Spanish port of Malaga, one building soars unavoidably above the bustling cityscape: the headquarters of Banco Unicaja.

Built in a severe brutalist style that seems at odds with Malaga’s summery vibe, local commerce revolves around the Unicaja tower, extending across rural Andalucía beyond. Unicaja is the sum of a 1991 merger of a regional group of centuries-old savings thrifts and credit unions, or cajas, and is today a banking powerhouse in the region. No other Spanish bank comes near it here in terms of local spread, retail business and brand recognition.

Indeed, in many of Andalucía’s characteristic pueblos blancos, the area’s famous white villages, Unicaja is the only game in town. To many locals, Unicaja is simply ‘El banco.’

But Unicaja’s Malaga edifice reveals a deeper truth about this purely retail bank – its limitations, both geographical and in the business it does. And that has implications in the ever-changing Spanish banking sector, as the industry prepares for further consolidation following the announcement in September of the €17 billion acquisition of Madrid’s Bankia by Barcelona-based CaixaBank to create Spain’s biggest lender.

Since Spain’s crippling banking crisis of the early 2010s, the number of savings banks has contracted through failure and takeovers from around 45 to 12 today. Most of them are active in Malaga. From the Unicaja building’s upper floors, at least 10 other banks are visible along Malaga’s main Avenida de Andalucía; Spanish and foreign, all hungrily pitching for business – Unicaja’s business.

These deep-pocketed usurpers include Spain’s big five – the now-to-be-combined CaixaBank and Bankia, BBVA, Sabadell and Santander – as well as ING Bank and Deutsche Bank.

All are of them bigger, more sophisticated entities with broader franchises than Unicaja, though pointedly not in Andalucía, Spain’s most populous region. In this ancient land Unicaja’s HQ seems like a defiant citadel keeping well-armed aggressors from storming its ramparts.

Unicaja’s Oxford-educated chief financial officer, Pablo González Martín, doesn’t dispute the metaphor.

“Yes, they are getting close,” says the 25-year veteran of Unicaja, who is widely expected to be its next chief executive. “We know that it is competitive out there. That just makes us work harder and be as best as we can. In order to have a profitable retail banking franchise, you need to be among the top two to three players in the region where you are.”

Which Unicaja plainly is in Andalucía, a clear number one with about 25% of the market and as much as 30% in the sparsely populated central Spanish region of Castile and Leon, where in 2014 it bought another combination of cajas, the struggling EspañaDuero, in what was Unicaja’s only big sortie beyond Andalucía.

González says Unicaja’s strength is because it is a regional champion and a prudent one that boasts a common equity tier-1 ratio of 15.8%, the highest among Spain’s listed banks.

But as the industry consolidates, Unicaja’s dominance at home is also its problem, one heightened by the imminent CaixaBank-Bankia deal.

Unicaja is largely unknown beyond its two home regions, indeed, in the wider Spanish market, it is a relative minnow. Analysts calculate Unicaja’s national market share at around 3% in customer funds and 2% in loans.

With around €63 billion in assets, it floats between seventh and 10th spots on the national league table with Galicia’s Abanca, Zaragoza-based IberCaja and the Basque Kutxabank.

Madrid’s industrial-focused BankInter is at six. Then there is clear air to fifth place nationally, the Catalan bank Sabadell, which took over the UK’s TSB Bank in 2015 and is three to four times bigger in assets than Unicaja. The new Spanish leader, the prospective Caixa-Bankia, is nearly three times bigger again than Sabadell and around 10 times the size of Unicaja.

Citi bank analyst Stefan Nedialkov says Unicaja is “a big fish in the small pond of Andalucía, but a small fish in the big pond of Spain.”

The CaixaBank-Bankia merger has roused Unicaja’s management because it poses a direct challenge in western Andalucía around Seville and Cadiz, where Caixa is already Unicaja’s main competitor following its €1 billion purchase in 2012 of Banca Civica, which included the Andalucía-centric CajaSol.

For smaller banks like Unicaja, the deal raises questions of response and highlights the likelihood of more mergers and takeovers.

Unicaja is solely a retail bank – it doesn’t do big-ticket syndicate loans and has no fee-generating, deal-making investment bank in Spain’s equity capital markets.

“And we don’t want to be one,” says González.

Unicaja’s space to expand might seem limited, but González makes no apologies for its lack of national girth and clout.

“The problem is everyone was thinking to go beyond their home region because they wanted to diversify, so everyone was chasing that strategy,” he says. “We decided that wasn’t the right strategy because it was too expensive.”

González dismisses funding growth through corporate acquisition, which is a popular strategy among many of the country’s larger banks (Caixa was able to fund growth through large stakes in firms such as Telefonica and Repsol). Not only would this take too long, but, he says, it is not the right approach for the bank.

“It is a national thing when you go to corporate banking, but in household banking it is local; you need to know the people, the small and medium-sized enterprises, the suppliers, have ATMs close to where they work for the payrolls that we do for a lot of local companies.

“It is where we can make the economies of scale, to be more profitable,” he says. “We still have to deliver banking to all customers. They can have small banking needs, but still they need to have their pension, do payments and do some investments.”

González takes his counsel from the heady 2000s, when he remembers Unicaja being criticized by ratings agencies as not being competitive enough as Spanish markets took flight during frothy times.

“They said you’re not doing structured lending, that sort of thing,” recalls González. “We had double-digit growth, but I told them we didn’t want that kind of risk. And we were right. We want to be here through the cycle.”

The Costa del Sol became Spain’s bubbliest and then most seriously impacted property market during Spain’s banking crisis, which swallowed up household banking brands, led to a €40 billion bailout by the European Central Bank and even threatened Spain’s membership of the euro.

Unicaja was one of the few Spanish banks that did not receive state aid – a point of pride for González, which he puts down to the bank’s conservative culture. He says that Unicaja was seen as boring, but as things turned out, it was prudent.

Unicaja never went to shareholders for support, unlike BBVA, Caixa and Santander.

“We maintain our ties with the local communities because it helps us to have a prudent approach,” he says.

Being entrenched within local communities means “you know who is trustworthy, you have a strong relationship with the local business community, you know their customers, their suppliers.”

Expansion opportunities

Unicaja’s survival of the crisis opened expansion opportunities elsewhere in Spain, and in 2014 it took one, acquiring an ex-caja combine with a city-rural mix profile similar to itself, the struggling Salamanca-centred Banco CEISS, which dominated the Castille and Leon region as Unicaja did Andalucía.

CEISS had been bailed out by the Spanish state during the crisis but was barely breathing when Unicaja arrived with a bid. The deal took three years to absorb; today the expanded entity operates solely under the Unicaja marque.

Much of the €688 million raised by Unicaja’s 2017 IPO went to pay back Madrid’s handouts that kept CEISS afloat during the crisis.

But there are now fewer opportunities like that in Spain.

Unicaja was in protracted talks during 2018 and 2019 with Spain’s 12th biggest bank, Liberbank, which operates on Unicaja’s flanks in Extremadura and Castille-La Mancha, until Unicaja walked away from what would have become Spain’s sixth biggest bank.

But that was before the Caixa-Bankia deal and analysts believe it’s time for Unicaja’s proverbial Rolodex to be dusted off again.

González says: “We remain open to analyze any option in M&A that could be positive for earnings per share for our existing shareholders. We don’t believe in getting bigger just for the sake of getting bigger.”

Since 2017, when Morgan Stanley and UBS Group took Unicaja public, Unicaja has a new constituency to answer to: the stock market.

Francisco Riquel, senior banking analyst at Madrid brokerage Alantra Equities sees consolidation among Spanish smaller banks as key to their growth if not survival. He says the Caixa-Bankia deal is Spain’s big banks telling the country’s smaller banks that they are not interested in buying them, that there is little to gain from them.

With its vast network of branches, Riquel says Unicaja has a higher cost base than other Spanish banks.

“Its profitability could be much better,” he says, “its returns are poor.”

He describes Unicaja’s franchise as old-fashioned and traditional, lacking diversity and dynamism. He says Unicaja, as a listed bank and with a healthy balance sheet, has an opportunity to drive consolidation among Spain’s smaller banks.

Citi’s Nedialkov agrees that Unicaja is well placed to play a key role in the “in-organic growth” of lower-end market consolidation. Nedialkov says “we like that it’s risk-averse”, and has Unicaja rated as a buy.

But could Unicaja be bought?

Unlikely, say analysts, as it depends on its controlling shareholder, the Unicaja Banking Foundation. Some observers describe that as Unicaja owning itself.

Independently directed, the foundation is a charitable collection of regional interest groups and identities crucial to the creation of Unicaja and its caja predecessors. The foundation now controls 49.7% of Unicaja, with the family office of Andalucía’s richest family, the fashion-based Domínguez de Gor, owning around 6%.

Marbella-based shopping mall billionaire Tomas Olivo Lopez has around 3% to 4%, as does the Santander asset management group, the investment arm of Norway’s central bank and US fund manager Fidelity.

Riquel says the Unicaja foundation could be an impediment to Unicaja’s growth.

“It needs to be more dynamic,” he says. “Caixa is also controlled by a foundation, and look what it is doing.”

The bank was floated at €1.10 per share in the 2017 IPO; the share price peaked at €1.63 in June 2018. But since then it’s mostly been a steady slide to a low of €0.42 in May this year at the depths of Spain’s Covid-19 pandemic.

As Euromoney went to press, the stock was trading at €0.71, valuing the bank at just over €1 billion, about 70% of its 2017 IPO valuation.

Still, that seems positive compared with Spain’s other listed banks. Since mid 2017, the Bolsa de Madrid’s banking sub-index has fallen by around 70%.

CaixaBank stock has fallen steadily from a peak of €4.50 in June 2017 to €1.94 after the Bankia deal was announced. Since July 2017, Bankia stock has fallen from €4.62 to €1.44.

Unicaja Banco posted net profits of €172 million in 2019, up 12.9% on 2018, and announced as dividend a healthy 45% of income, although this was postponed as Unicaja complied with European Central Bank guidance to bolster balance sheets.

Earnings in the pandemic-hit six months to June 30, 2020 were steady at €86.25 million.

But one banking analyst says Unicaja hasn’t hit its IPO growth targets.

“Organic growth hasn’t worked in the way they’d hoped,” the analyst says.

With interest rates stagnant in its core home mortgage book, efforts to expand into more lucrative corporate and SME banking means Unicaja is competing with the nationwide banks.

“They don’t have an amazing product factory,” says the analyst, “and they just don’t have the scale like the others.”

The Andalucían market is tricky for any bank.

Some of the world’s oldest cities – Malaga, Cadiz, Granada, Sevilla and Huelva – are located here and tracts of its heavily-urbanized coastline, such as parts of the Costa del Sol, are wealthy international tourist playgrounds. But move a few kilometres away from these centres and the region’s agricultural base soon becomes strikingly evident. This is Andalucía profunda (deepest Andalucía), a mountainous undeveloped region that can be very conservative and often quite poor.

Villages here have a history of their townsfolk migrating to pursue education and jobs elsewhere in Spain because of the lack of economic opportunity at home.

With three million customers, about a quarter of the total population of its two main regions, Unicaja has deep roots in these communities. They are its legacy customers, carried over generations as the bank evolved through a series of mergers of village savings societies and thrift co-operatives, a network that partly arose because they were shunned by metropolitan banks.

A big chunk of Unicaja’s franchise remains in these rural communities and helps define the bank’s culture – of pensioners with passbooks, of over-the-counter deposits and withdrawals, where cash very much remains the preferred medium.

“This still belongs to our DNA,” says González. “Our very roots are in very strong local community ties. That’s where we come from, and we come with a plain vanilla product offering.”

González believes that the ever-continuing finessing of his deeply entrenched rural franchise may also prove Unicaja’s best defence, in part because Unicaja’s traditional customers are loyal, channel much of their financial needs through the bank and still value a physical branch.

But far-flung branches are expensive to run and staff, and Unicaja has 1,028 branches and 6,300 employees across Andalucía and the central region of Castille and Leon, the buildings split about 50-50 between Unicaja-owned and rented.

González wants fewer branches and staff but knows that his customers don’t always agree.

“You have to ask for a balance and we are closing branches,” he says, adding that Unicaja today has 20% fewer branches than four years ago.

Technology is helping bridge that divide – and trim Unicaja’s costs and headcount – but it can be a struggle to convince Unicaja’s rural base.

A feature of management life at the bank in recent years has been fielding petitions from remote communities anxious that their village is losing its bank, at least their physical one, and not being comfortable online.

For González and colleagues, it’s a diplomatic dance between the rigours of a stock-market listing and soothing a customer base that can be wary of change to lure them online.

“Though people are getting more used to online banking, they still need to sometimes go to a physical branch,” he says. “Your online life relates to your offline. The trend [to online] is unstoppable, but we don’t want people to be left behind. We have to try to maintain local interest.”

In its urban markets, González says, tech take-up has been as solid as any metropolitan market anywhere.

Unicaja invested strongly in technology, and its online offerings are intuitive and up-to-the-minute, run from a state-of-the-art data centre outside the tourist town of Ronda. The bank has even made royalties from licensing its tech backbone to banks in Latin America.

Although banks remained open during Spain’s strict Covid-19 lockdown, González says there was a sharp jump in Unicaja’s online users. Branch teller staff were re-assigned to online and telephone services during the pandemic.

Nevertheless, González thinks Unicaja’s local network is its true fortress. “When you go to another area, you don’t get the best-quality loans because the incumbent doesn’t know the nitty-gritty, good quality real-estate developer, the household situation,” he says. “In order to deliver financial services to these people, you need to have a local presence. [People] need to trust you, a branch manager that is known in the town.

“We still have to deliver banking to all customers. Our challenge is not to withdraw from these places but improve our services.”

TROUBLE IN THE SIERRA

Unicaja’s experience in Ronda – a town that has seen its economy transform from agricultural services to tourism – provides a model for the bank.

The magnificent headquarters of Caja de Ronda, a savings collective with religious roots, stood on Ronda’s main street for decades.

Caja de Ronda was one of the strongest of Unicaja’s component cajas and, in a land of intra-regional rivalries, initially resisted the push to merge.

A first among equals, Ronda’s culture infused the newly merged bank.

Pablo González Martín, Unicaja’s CFO, says: “It took quite some time for people to forget saying: ‘I am from Ronda, I am not Unicaja.’ Some people still say: ‘I am Unicaja Ronda,’ ‘I am Unicaja Almeria.’”

Ronda’s ornate banking hall – opposite one of Spain’s oldest bullrings – was a source of civic pride, a place to be seen. But that building was closed as a bank in 2016 and has since been transformed into a five-star hotel, the building rented from Unicaja. A utilitarian branch remains next door, but the banking chamber is now the hotel lobby.

While locals lament no longer banking in such grandeur, they are pleased the building has been faithfully maintained and that new jobs have been generated in the hotel. The hotel’s outlets are patronized by Unicaja customers. The outcome is seen as a win-win by locals and by Unicaja, which also banks the new business.

But deep in the sierra 50 kilometres south of Ronda in the village of Gaucin, opposition highlights Unicaja’s delicate dance with its client base. Local councillors last year launched a ‘Save our bank’ campaign after rumours spread among townsfolk that Unicaja was shutting the only bank in a town of 1,500.

Village mayor Pedro Godino set up posts around town imploring villagers to petition Unicaja to keep the branch “as crucial to our economy.”

Godino told villagers that Unicaja seemed “on the way to becoming a dividend-counting machine, forgetting what the essence of a savings bank is.”

He promised to help ensure “this basic service continues to be provided in our town”, one which had just been upgraded to high-speed fibre internet.

Suggestions that the council encourage tech-illiterate townsfolk to bank online and that, like Ronda, the Gaucin branch could be transformed, perhaps into a hotel or restaurant generating more local jobs than the three the Unicaja branch did, were not considered.

Unicaja deploys an agency model in such towns; in Gaucin it contracted a part-time out-of-town lawyer who fields much grumbling from locals feeling abandoned.

Is Unicaja’s agency banking model the half-way house to eventual closure?

“Probably,” says González. Branches in buildings that Unicaja owns are being sold and leases halted in branches it doesn’t own. “If you have a fixed cost, it’s hard to maintain good quality.”

González says he is sympathetic to customer concerns: “We are not leaving the customer without a bank. We try to fill the gap so the transition is smooth.”

But Alantra Equities analyst Francisco Riquel says Unicaja is being “too politically correct” to placate sentiments such as those of the Gaucin mayor.

“The world is changing,” Riquel says. “Online banking is inevitable and people need to understand that.”

The trials of Schapelle

There are braying reporters, dozing judiciary members, colourful lawyers and assorted hangers-on basking in the limelight and baking in the Indonesian heat. Centre stage, an Australian woman’s life is at stake..

Judgement in Denpasar
The Bali expats and intelligentsia are disgusted by Australia’s racist reaction. The other 230 million Indonesians ask, “Schapelle who?”

The Whingers of Oz

Eric Ellis on the weeping, xenophobic hysteria in Australia over the conviction of Schapelle Corby for smuggling drugs into Indonesia

SCHAPELLE Corby, the 27-year-old daughter of a fish-and-chip shop proprietress from Queensland, is not your usual Australian heroine. She is a drug smuggler, and was last month sentenced by a court in Indonesia to 20 years in prison. Back home, however, they won’t hear a word against her. According to the polls, something like 70 per cent of Australians are either members of her fan club or keenly sympathetic to her. One can understand the sympathy — 20 years does seem a bit rough — but the hysterical and uncritical adulation is bewildering, and very Old Australian..

Law of the Bling

AT 27, SCHAPELLE CORBY IS probably a bit too young for Warren Zevon but, given her present predicament, she would doubtless appreciate the American singer’s sentiments. Which are surely appropriate now that Jakarta’s most flamboyant lawyer, Hotman Paris Hutapea, has stepped into her troubled life, well practised as he is in law, guns and, particularly, in money.

When Indonesians lament their legal system is the best money can buy, possibly it is advocates such as Hotman, a 46-year-old Australian-educated Sumatran with an impressive mullet, that they have in mind

Last September, a small news item in China’s official media, that in less skittish economic times might have sailed through unremarked, revealed a disturbing truth about this suddenly most essential of nations – that too often its official statistics are bogus.

Portents and truths sprung from China in recent times include the New York Times’ coverage, and our own story in collaboration with the International Consortium of Investigative Journalists (ICIJ) which exposes the ill-gotten fortunes of China’s faux-communist leaders. But among the more revealing of tales for anxious economic crystal-ball gazers is this one from China’s remote southwest.

In a rare, perhaps even unwitting, moment of candour, the state news agency Xinhua described how the good burghers running Luliang county in far-flung Yunnan Province had been very naughty. And dumb too, in being caught being naughty.

Xinhua explained how China’s official National Bureau of Statistics (NBS), an institution whose quality of bookkeeping hasn’t always enjoyed the most dependable of reputations among China watchers, had discovered a “serious case” of fraud among the economic statistics filed by Luliang officials to their masters in faraway Beijing.

So far so, well, so what? Since Mao’s Great Leap Forward, provincial mendacity about how well the boondocks are doing, and how communist party edicts made in Beijing backrooms are dutifully obeyed, has long been a national sport in China.

For ambitious apparatchiks anxious to be seen singing to Beijing’s hyper-growth tune, fudging the facts is a convenient tactic for getting noticed, getting promoted, perhaps even getting richer. And distant Luliang is a long way away from China’s main action, closer to Bangkok than to Beijing, nearer to Hanoi than even to Chongqing, the booming one-time bailiwick of disgraced party pin-up, Bo Xilai.

But even by the standards of China’s notoriously elastic official numbers, Luliang’s overstatement was a doozy.

Some 28 local companies had reported what appeared to be a healthy 6.34 billion yuan increase in industrial output over 2012, a stellar performance that Luliang county officials passed on to approving higher-ups. In the first half of 2013, another 25 companies booked 2.74 billion yuan worth of work, claimed Luliang.

In step with many other Chinese provincial counties, Luliang seemed to be thriving. Importantly, Beijing’s economic edicts were being out-performed. China’s spinners are happy to deploy such outlier heartwarmers to illustrate that prosperity isn’t just a city or coastal phenomenon, but that the party delivers its mandate of heaven for all Chinese.

But when a more assertive NBS decided to crunch the numbers around Luliang Inc, it turned out that the real figure for 2012 output was about 56 per cent lower than the county had officially reported. In 2013, Luliang’s fudge was even more outrageous – the NBS found that just 39 per cent of the officially recorded industrial output number was the grimmer reality.

Chinese outposts are also required to report their inward investment numbers, and it turned out that Luliang had faked those as well. Local companies described how they had been “coerced” by county functionaries to inflate their numbers, because if they didn’t “their reports would be returned by local government departments”. Far better for all, it seems, to nod off a dodgy report than a correct one; better numbers mean bank loans can more easily be secured.

Glossed-up numbers, easy bank loans, spiralling debt; at about this point, places like Luliang start sounding rather like Middle America circa 2007-08, just before the sub-prime loan meltdown kicked in.

Official window-dressing has been refined to a careerist art in China. China’s long-ruling Communist Party, with its 82 million-plus membership – near equal to the population of Germany – today resembles less an ideological movement than it does a chummy chamber of commerce to be navigated to personal advantage. The mendacious mandarins of Luliang simply did what has often come easily to too many Chinese officials – they made stuff up.

Indeed, as Xinhua wrote, “the National Bureau of Statistics did not specify the reasons behind the county’s faking of data but it is a well-known fact that local government leaders are assessed for their performances based on economic data”.

And lest one believe that such fabulism was a one-off, Xinhua put readers straight: “Nice-looking data sheets mean promotion opportunities,” it noted. Xinhua didn’t elaborate on what has become of Luliang’s perfidious penpushers, but one suspects a round of enforced “re-education through labour” may loom in their immediate future.

China’s one-party system, increasingly built on upstream patronage and personalities, doesn’t help to mitigate such practices. With uncommon exceptions, it sorely lacks the self-cleansing checks and balances of a sceptical media, of genuinely independent law enforcement and regulation protected by robust regional and national parliaments and institutions. Although bodies like the modernising NBS are developing teeth and steadily being reformed, the starting point – the current benchmark of transparency – is low. Even new Premier Li Keqiang once famously warned that China’s “man-made” GDP numbers should only be read “as a guide”.

This matters because of the many groups who rely on official Chinese information and must work with what’s served up to them — economic and business analysts and decision-makers of important trading partners such as Australia whose national forecasts, budgets and futures crucially depend on a China’s sustained economic health.

Perhaps more credulously, they are also expected to accept that after barely a generation of xiahai (to ‘jump into the sea’, meaning to go into business), China Inc follows world’s best practices for ensuring the accuracy of its official data, as filed in company prospectuses, as reported to stock exchanges, and as provided to the International Monetary Fund et al.

No-one likes a party pooper, though, and China’s rubbery figures mattered less while the wider global economy was motoring along, and everyone was getting richer. But times changed and the trans-Atlantic financial crisis from 2008, and Europe’s sustained stagnation since, is seeing the end of such magnanimity. China is now a crucial driver of global growth, and important people are starting to demand better standards.

A year ago the American Congress’s influential US-China Economic and Security Review Commission published an extensive study into China’s dodgy numbers, that was hardly complimentary. “The reliability of China’s statistics is also a crucial challenge for the world economy,” it wrote. “Because China is now the world’s second-largest economy, and is suffering from economic imbalances, the debate carries more weight than in the past.”

The commission noted that Beijing’s “attempts to conceal the poor quality of air in China’s largest cities, and the subsequent loss of public confidence in the government’s credibility, illustrate the pitfalls of official mendacity.

“China remains a very open economy heavily reliant on both exports and imports,” the US government study also said. “It is also the primary destination of foreign direct investment worldwide. Countless firms, not to mention their shareholders and creditors, depend heavily on accurate statistics to make decisions.”

But Geoff Raby, a former Australian ambassador to Beijing, cautions against getting too antsy about China’s official statistics.

“More importantly, the broader trend-line analysis is in the right order of magnitude,” he says, adding that Luliang-style fudges are immaterial in the wider national analysis. “I tend not to bother with provincial data. The simple self-evidently supportable fact is that the broader Chinese economy is twice the size as it was seven years ago and is tracking to double in size every decade. That’s what really matters to economies like Australia.”

Raby is now on the board of resources billionaire Andrew Forrest’s Fortescue Group, one of Australia’s biggest exporters to China. He admits he’s been “a self-confessed China bull for 30 years – and I’ve been right to be one”. Even so, as Australia’s man in Beijing, Raby often met with the NBS and with senior economic decision makers who were inquiring after the official numbers. “Much as many outside China like to talk it down, as if there is some national confidence trick underway, the people that matter are very much aware of what is going on, and they do their checking. It’s not like these people wander around with their eyes closed.”

He says China is “several diverse economies” taken as one. “People forget that China remains in many respects a poor developing economy.” In mature sub-economies such as Shanghai, for example, growth is around three to four per cent – levels more in keeping with advanced economies – while in backward areas, growth is ticking along in double digits. “The gaps are being filled in,” Raby says.

Since 2007, around the time Raby became ambassador, China has vaulted to the top spot on the league table of Australia’s export partners. In 2012, China bought 31.6 per cent of Australia’s exports; $84.635 billion in products, and some $78 billion of that designated as ‘goods’, which really means the iron ore and coal extracted by Rio Tinto, BHP-Billiton and Fortescue, among others. In 2007, a year former Australian Treasurer Wayne Swan refers to as ‘Mining Boom Mk I’, Australia sold $23.8 billion in goods to China, which was almost a fifth more than in 2006.

MIKE CURTAIN/RIO TINTO

In 2012 China bought $78 billion of Australia’s ‘goods’, which really means iron ore and coal.

Today, China buys three times the value of Australian exports than it did six years ago. China’s increasing importance to Australia’s economic prospects broadly mirrors the period since the global financial crisis that felled the still-stricken Atlantic economies. Swan cites his massive fiscal-stimulus package of 2008-2010 as the panacea that shielded Australia from the GFC, but it was handy to also have a similarly stimulated China – ‘Mining Boom Mk II’ – booming into the national hip pocket.

But how much longer can Australia rely on Chinese demand? In recent months, it’s become de rigueur among international economists to predict the China bust – much as it was, just a year ago, to forecast when a thrusting China would take over from the US as the world’s biggest economy. Back then, the venerable magazine The Economist even turned China’s march to the top of the global economic table into a game, and challenged the bearish American economist Michael Pettis of Peking University to bet on when it would happen.

Now the experts are lining up to portend gloom. Billionaire investor George Soros argued last week that China has taken over from Europe as “the major uncertainty facing the world today”. Today, there’s more criticism of the country’s rotten stats as pundits fret about how China’s economy is unbalanced, with way too much emphasis on asset investment; and about the resultant alarming rise in official municipal debt, now massing around $3 trillion (some $1 trillion less than Beijing’s foreign reserves); and that too much of the country’s money is secreted off-the-books in China’s ‘shadow banking sector’, or concealed by unreliable numbers.

“[China’s] growth model responsible for its rapid rise has run out of steam,” Soros wrote.

The IMF warned last October that Australia’s was the most vulnerable economy, apart from that of China’s neighbour Mongolia, to a China slowdown. Australia got another reminder of its heightened exposure when Beijing claimed slightly lower growth in GDP of 7.7 per cent in 2013, almost its slowest year since 1999, which prompted the Australian dollar to tumble.

Nouriel Roubini, the New York University economist widely credited with having predicted the 2008 meltdown, frets about asset bubbles, while the well-followed former Morgan Stanley economist Andy Xie argues that a hard landing for the Chinese economy will ultimately be healthy. And that China will eventually overtake the US, just later than most had expected, if the numbers can be believed.

Swan and Raby, two of the Australians most intimately involved in monitoring China’s economy, agree that such gloom is mostly ill-founded – a “phase pundits are going through”, as Raby puts it.

Raby says the municipal-debt drama that has China watchers fretting is ultimately sovereign debt that is “more than covered by the state’s capacity”. The emergence of the shadow banking issue simply indicates how China’s conventional – Raby says conservative – banking industry isn’t responding to market demand.

Raby admits that if China’s slowdown does turn into a hard landing, Australia will be affected, and “our living standards could face a big cut”. But his view of the China horizon doesn’t include that. China is now Australia’s leading trading partner, and that’s irreversible, Raby says; “No country will ever replace China at number one in economic importance to Australia.”

Raby adds that China’s challenge now is to nail its re-balancing between investment and domestic consumption as its economic driver and, yes, smarten up its books.

Australia’s best defence against a future, sputtering China, he says, “is to make China as dependent on us as possible”.

Apparently in international law as in life, the most important things get hidden in plain view.

And so it was that on Tuesday in The Hague, an International Court of Justice judge from Somalia – a tiny impoverished land that in recent times has come to know a thing or two about how people get away with nicking other people’s stuff – cut to the chase in the case being heard over Australia’s raid last month on the office of East Timor’s Canberra lawyer, Bernard Collaery.

Dr Abdulqawi Ahmed Yusuf’s question was clear and simple: “To whom did the individual items listed in the ASIO property seizure record of 3 December 2013 and their content belong at the time of the seizure?”

Posed amid the rarefied climes of The Hague’s Peace Palace, at the end of two long-winded days of submissions from a barristocracy reaching for all manner of arcane international precedents to support sharply polarised arguments, Judge Yusuf’s question was refreshingly uncomplicated, and almost naïve among ‘learned friends’ who make their living spouting hundreds of words when a few would suffice.

To an Australian ear, the innocence was made all the more so by Judge Yusuf spelling out the acronym for the Australian Security Intelligence Organisation as “Ay-Ess-Eye-Oh”, a moniker by which the organisation is unknown in Australia. Surely some ICJ legal intern could’ve told him our bumbling spooks are most commonly referred to as “Ayseo”, and sometimes “Arseo”.

But Judge Yusuf’s was the right question, and the polyglot judge could’ve asked it in any of his five official languages – Somali, Arabic, Italian, French or English. Basically, he was asking whether big, rich Australia had pinched stuff that belonged to tiny, poor East Timor.

The court gave the combatants the rest of this week to answer the Somali judge.

While East Timor will doubtless reiterate that Australia did pinch its stuff, Australia provided some idea of its response before Judge Yusuf had even asked the question.

Australia’s Solicitor-General Justin Gleeson had already told the court that East Timor may have perpetrated a little pilfering of its own, by allegedly obtaining Australia’s classified information from a rogue former spy from the Australian Secret Intelligence Service, ASIS, who has claimed that Australia bugged East Timorese officials during 2006 negotiations over oil and gas resources in the Timor Sea.

He said this had prompted ASIO’s December 3 swoop which is at the core of the matter, a raid which Gleeson said had been authorised in a well-considered “personal decision” by Australian Attorney-General George Brandis. “We do not believe in ambush,” Gleeson said.

“To place classified information in the hands of a foreign state is a serious wrong to Australia,” Gleeson told the court. “Timor-Leste may be encouraging the commission of that crime.”

It’s believed that the material – a laptop, USB-stored files and reams of documents – seized from Collaery’s office last month, details allegations heard in court that Canberra bugged and spied on Dili during the treaty talks.

Dili wants that 2006 treaty voided because, it claims, Australia obtained advantage by espionage. It brought that grievance before The Hague’s in camera Permanent Court of Arbitration (PCA) last month, but launched this more public case before the ICJ following the ASIO raid, which occurred two days before the related PCA case was to commence.

On Monday, East Timor’s counsel told the court it was concerned Australia would improperly use the seized material in any new negotiations between the two countries. But in yesterday’s lawyerly session that contrasted to Monday’s relative courtroom bonhomie, Australia yesterday dismissed those concerns as unfounded and, indeed, offensive.

Gleeson told the court that Brandis had made a new and broader undertaking overnight to contain the seized material, vowing he would not even read them himself. The documents and data, Gleeson claimed, would not be available to anyone in government for any purpose apart from the protection of national security.

Gleeson continued by saying that East Timor’s chief advocate, the British silk Sir Elihu Lauterpacht, had impugned Brandis’s integrity and conduct with his “inflammatory” questioning of Brandis’ sincere intention to abide by this undertaking over the seized documents. Sir Elihu’s remarks were, Gleeson claimed, “frankly, offensive”.

It would also be a “quantum leap” by the court, Gleeson said, to agree with East Timor’s assertion on Monday that ASIO’s seizing of the documents was akin to an invasion of sovereign territory.

As for Sir Elihu’s Monday observation that Australia’s sovereign regard for accepted international standards in law and behaviour had deteriorated dramatically since he worked as a lawyer for Canberra in the mid-1970s, John Reid, Australia’s formal agent before the court, said that assertion was “wounding”. Brandis, he said, had given the matter his “most conscientious attention”.

The case continues in The Hague on Wednesday, when both sides submit their second and final round of oral evidence in open court.

PERHAPS it was a glow emanating from the Mandela bust outside the court, or from the bronzed Gandhi next to it, but an unexpectedly gentile civility pervaded The Hague’s baronial Peace Palace on Monday, as the United Nations’ International Court of Justice (ICJ) began hearing a case that outwardly seems anything but civil.

Courtesies were evident from the outset in the matter of the Democratic Republic of Timor-Leste versus the Commonwealth of Australia, for this is no courtroom thriller of grandstanding egos and preening beaks – at least not yet.

As extravagantly robed judges from countries as diverse as Slovakia and Somalia filed in from the winter grey of a Dutch morning to take their seats, they discovered counsel and juniors, ministers, diplomats and aides from both sides of the case warmly and genuinely embracing each other as old friends, as doubtless they are in the common recent history of the two nations.

That would be the history before December 3 last year. On that date about a dozen agents of the Australian Security Intelligence Organisation (ASIO) raided the Canberra offices of East Timor’s lawyer in Australia, Bernard Collaery – who has also journeyed to The Hague this week – and carted off a laptop computer, legal documents and a USB memory stick. Australian Attorney-General George Brandis justified the swoop on the grounds of “national security”.

East Timor claims the material is crucial to a separate case it has brought before another international court in The Hague, over who has rights – and in what proportions – to the billions in oil and gas under the Timor Sea, which separates East Timor and Australia.

Dili wants the seized material back and has petitioned the ICJ to rule in its favour, to stop Australia using it; Timor contends that Canberra bugged its negotiators during the talks that led to the disputed 2006 oil and gas deal, and the ASIO-seized material may include details of a witness who would testify to that. The ghosts of Mandela and Gandhi may have been about, and amidst claims of espionage, a whiff of Snowden was also evident in the room.

This opening day belonged solely to East Timor putting its case – Australia will get its chance on Tuesday. The cordial tone was set on opening when Joaquim Fonseca, Dili’s ambassador, told the court how close Australia and East Timor are, how much East Timor appreciates the role that Australia played in the country attaining its independence from Indonesia in 2002 and what immense respect East Timorese have for Australians; he said he couldn’t imagine that this case, whatever its outcome, would change these feelings. The Australian bench, rather more numerous in its representatives – and portlier too – than the opposite side, graciously nodded back.

And then entered Sir Elihu Lauterpacht, the bewigged octogenerian Queen’s Counsel leading the Timorese team. At 85, he wasn’t quite a tour de force, but his performance was nonetheless arresting, as he scythed through the Australian actions.

Head theatrically bowed in sorrow, he first explained to the serried rank of robes in sitting judgment how profoundly disappointed he was to find himself arguing in a case against Australia, a country he said he bears a particular fondness toward.

It was in Australia, Lauterpacht once told a biographer, that he had spent “probably one of the best periods of my life”, the three years of the mid-1970s when the 40-something Elihu worked in Canberra as an international law specialist.

The Whitlam government – the same government that in 1974 told Indonesia’s President Suharto that Canberra wouldn’t oppose Indonesia’s seizure of what was then Portuguese Timor – had appointed him to represent Australia in international legal fora.

With a growing reputation as an expert in international law, Lauterpacht then fronted for Australia in bodies such as the UN General Assembly and at the Law of the Sea conferences that established maritime boundaries and protocols – rather like the treaty between Dili and Canberra over regional oil and gas spoils that East Timor now wants to tear up.

Indeed, Lauterpacht was on the Australian team in the first ever case Canberra brought before the International Court of Justice in The Hague. He fought Australia’s corner in 1974, as the country’s then diplomatic David sought to stop the French nuclear-testing Goliath, not long after Whitlam met Indonesian President Suharto in Java to tell him that “East Timor was too small to be independent.”

UN Photo/CIJ-ICJ/Frank van Beek

Australia’s legal delegation.

Four decades on, a rueful Sir Elihu told the court on Monday that in its raid on East Timor’s legal material, Australia has “fallen so far short of the standards” expected of a law-abiding nation that “it defies understanding”.

Sir Eli described the raid as “undoubtedly a violation of the national security of Timor-Leste”, and also argued that ASIO’s seizure of the documents was akin to an invasion of sovereign territory.

“What’s required is a clear, firm and severe condemnation of what Australia has done,” he said. The raid, he said, doesn’t just violate long-established diplomatic norms and international law but possibly Australian laws as well.

These documents, he said, are of the “utmost sensitivity” in informing a matter “crucial to the future of Timor-Leste as a state and to the welfare of its people”.

The matter continues Tuesday.

CIC, Thaksin and BlackRock: how PCP tried to pull other investors into Mansour’s part of the Barclays deal by Clive Horwood, Eric Ellis Euromoney can reveal that advisers to Sheikh Mansour were courting other strategic parties to invest in Barclays at a time when the bank was marketing the importance of the cornerstone Abu Dhabi investor, raising questions about market confidence and disclosure. The revelations also shed light on the frustrations of China Investment Corporation about the transaction and the fund’s approach to dealmaking. Further reading Revealed: The truth about Barclays and the Abu Dhabi investment How David Mellor fought Staveley for his slice of the Barclays pie Barclays needs to come clean about its Gulf investments Euromoney’s article reveals for the first time the misleading information that was given out about the actual ownership of the securities that Sheikh Mansour was supposedly investing in during the Barclays capital raising. But the documents seen by Euromoney also show that a number of other investors were almost dragged into the deal by PCP and Staveley – for reasons that are not clear, and that there were discussions about which Barclays might have had little or no knowledge. Thaksin Shinawatra, former Thai prime minister, pictured with Mansour adviser Khaldoon Al Mubarak It appears that negotiations between Barclays, Mansour and PCP began in earnest in mid to late October 2008. On October 26, Barclays’ head of corporate legal counsel, Matthew Dobson, emailed Staveley and Eadie with a detailed schedule for the capital raising, on which due diligence was due to be completed on October 28 and an RNS announcement two days later. Dobson also circulated draft term sheets for the MCNs, the RCIs and the warrants. Within a week, PCP had sent out the documentation to a host of other potential investors. On October 27, PCP emailed its ‘Project Mandolin’ presentation to Pairoj Piempongsant, a key aide of the former billionaire Thai prime minister Thaksin Shinawatra, who was then exiled to Dubai after being ousted in a 2006 military coup in Bangkok. Pairoj had been intimately involved in the September 2008 sale by Thaksin of football club Manchester City to Sheikh Mansour, on which Staveley had also advised. The well-connected Saudi banker and royal fixer Abdulaziz Barakat Al-Hamwah was also emailed Staveley’s Barclays dossier on the same day. A day later, Staveley’s Barclays proposals were sent to Ken Griffin, the president of BGR Capital & Trade, which he had set up in 2008. BGR C&T is part of the leading US lobby group BGR, which was established by Ed Rogers and Haley Barbour in 1991. And on November 5, the Barclays material was sent to Larry Fink, head of New York-based investment house BlackRock. Larry Fink, head of BlackRock It is not clear why Staveley sought out these investors. Given there were, at the time, apparent doubts about the ownership of the PCP Gulf Invest vehicles through which the investments would be made, and which Staveley and Eadie were the official owners of, she might have been concerned about the possibility of not having sufficient funding in place. Or it might simply have been that Mansour and his advisers were, at that stage, unsure if they wanted to make a commitment for the whole £3.5 billion to Barclays, no matter what statements had been made publicly around the capital raising. It also raises questions about market practice and confidentiality. Sensitive market information was sent out to third parties before the official announcement of the deal eventually took place on October 31. Did Barclays know this information was being spread? And what steps were taken to ensure that people receiving it did not act on the information? BGR’s Griffin was certainly quick to pick up on a potential opportunity. A week later he contacted Staveley with his own take on the Barclays transaction. In this version, BGR Capital & Trade would be “allocated up to 50% of Sheikh Mansour’s pending investment in Barclays to resale [sic] to targeted investors”. For this, BGR would earn a 1.5% commission on £750 million of RCIs; and 3% commission on £1 billion of RCNs. PCP would pay these commissions to BGR, which could also charge investors an additional 1% to the fees earned from PCP. BGR “would endeavour to place units in slices valued at £100 million or more”. That meant big-name investors. In the post-financial crisis world they do not come much bigger than China Investment Corporation. And CIC wanted in on the deal. Porter Bibb, managing partner of US merchant bank MediaTech Capital Partners, contacted Fei Zou, managing director of the equity investment department at CIC in Beijing, on December 4 to say: “Because it was more than a little difficult for Amanda and PCP to put together [the deal] with Barclays, Sheikh Mansour, and the Qatar Investment Authority, it has taken longer than expected to firm up. She is in Dubai, sorting out which pocket the securities will come from, but will call you as soon as possible with confirmation of your request for £500 million of 14% RCIs plus warrants and details regarding costs and closing.” But this wasn’t the news that Zou wanted to hear, and clearly it did not go down well with his bosses. On December 5 he wrote to Staveley: “As expected, the senior management who were previously briefed on the potential deal with Sheikh Mansour and QIA regarding Barclays were more than frustrated by the current outcome. As an organization that is already over-weighted in the financial sector, our primary motive to entertain this potential opportunity is very simple – trying to establish strategic relationship with our counterparts in the Gulf region. We believe [,] in a world that is in desperate need of capital, our alliance will prove to be powerful and profitable. “The sequence of how things developed since we were first approached proved to be troublesome. From our perspective, the entire engagement is more about relationship than economics or profit maximization. Although we were offered to take on the entire allocation of the 750 million pounds of RCI and attached warranties for free, we only considered to take a portion of the allocation from the beginning. I believe the reason why you decided to approach us was also for long-term relationship. However, if we let things sit where it stands today I am afraid it will have serious long-lasting negative impact to the relationship between CIC and the organizations you are representing. That will be worse than if we never had any contact with each other.” Zou delivered a tough parting shot: “As the highest profiled investment organization out of China, and an organization with a deep pool of capital and unmatched connection in China, we take credibility seriously, and we only value people and organizations what [sic] think and behave alike.” Griffin advised Staveley that the “situation can be repaired if done with gentle tact and charm”. That only seemed to buy a little time. By December 14, Zou had written to Staveley’s PCP colleague, Jonathan Mowatt – who told Zou that Staveley was unavailable with “visa issues” at the time – to express strongly that matters had been handled inappropriately, and that on December 16 CIC would pull out of the investment if it had not yet been completed.

Revealed: The truth about Barclays and the Abu Dhabi investment by Clive Horwood, Eric Ellis Amanda Staveley earned an astonishing £30 million fee for her role in helping to secure Abu Dhabi’s £3.5 billion investment in Barclays in 2008, a deal on which Sheikh Mansour made a profit of more than £3 billion. Euromoney reveals the extraordinary tale behind that trade, the battle for £110 million in fees paid by Barclays to Mansour, and just how close-run a deal which saved the bank from part-nationalization was – which is currently the subject of an investigation by the Serious Fraud Office. Further reading Barclays needs to come clean about its Gulf investments How David Mellor fought Staveley for his slice of the Barclays pie CIC, Thaksin and BlackRock: how PCP tried to pull other investors into Mansour’s part of the Barclays deal Barclays’ Qatari capital-raising timeline Lunchtime on April 30 2009, and Amanda Staveley’s private banker on the Isle of Man has just emailed her with confirmation that a sum of £29.5 million ($45.7 million) has been deposited into her account. The note from Douglas might have provided a bitter-sweet moment for the Dubai-based Staveley, the Yorkshire-born dealmaker building a reputation gladhanding high-octane deals in the Gulf, after a hectic few months helping arrange one of the defining transactions of the 2008 global financial crisis: Abu Dhabi’s £3.5 billion investment in Barclays Bank six months earlier. Sweet because she had finally received a commission for the Barclays deal that she’d been sweating on Gulf potentates paying for a long time. But bitter because the amount received was some way short of what she’d initially hoped to garner for her role in the Barclays rescue, a deal dubbed ‘Project Mandolin’. The disclosure of the fees paid to Staveley and her firm PCP Capital Partners – revealed in a dossier of documents relating to the transaction and seen by Euromoney – will also stir mixed emotions among Barclays shareholders. At the time of the capital raising, many were up in arms at the highly generous terms offered not just to Sheikh Mansour bin Zayed Al Nahyan, the Abu Dhabi royal and UAE deputy prime minister, whose participation Staveley had helped arrange, but also to Qatar Holdings, one of neighbouring Qatar’s sovereign wealth funds. Euromoney’s disclosures cast the first light on what happened to the £110 million in fees paid by Barclays – and its shareholders – nominally to Sheikh Mansour, but in reality to a cast of advisers, associates and family members, of which Staveley was a big beneficiary. The documents seen by Euromoney – a collection of business exchanges, and emails written or sent by Staveley, her colleagues and her contacts from 2008 to 2009 – also show how public disclosures about the Mansour investment masked the realities of how close run the deal was, and how complex – and arguably misleading – the nature of the capital injection from Abu Dhabi was. They provide a fascinating insight into how the west meets the Middle East when it comes to doing business for eye-watering sums of money, as well as how frantic attempts to secure the money for the Barclays investment were, pulling in a range of some of the biggest names in the financial markets, from the US to China. The entire round of capital raisings by Barclays in 2008 – first a £4.5 billion injection in June by existing shareholders, principal among them the Qatar Investment Authority and Challenger, an entity representing Qatari prime minister Sheikh Hamad bin Jassim bin Jabr Al-Thani, followed by the £7.3 billion injection by Mansour and the Qataris in November – have been shrouded in rumour, mystery, intrigue and speculation. They are also the subject of investigation. Barclays has disclosed that the UK’s Financial Services Authority and Serious Fraud Office are looking into commercial agreements between Barclays and Qatari interests and if these were related to the two Barclays capital raisings in 2008. There is also an investigation by the US Department of Justice and the US SEC into whether or not Barclays’ relationships with third parties that assist Barclays to win or retain business are compliant with the US Foreign Corrupt Practices Act. Both investigations are cited in the independent review of Barclays written by Anthony Salz, a vice-chairman of Rothschild, published at the beginning of April this year. The Barclays transaction was Amanda Staveley’s ticket to a £30 million fee and a place among the Middle East’s elite In the review, Salz says that Barclays disclosed that “commissions, fees and expenses for the October/November capital raising amounted to £300 million, payable primarily to Qatar Holding, Challenger and HH Sheikh Mansour bin Zayed Al Nahyan… In view of the continuing investigations into these capital raisings, we have not considered issues concerning the sufficiency of disclosure or the commercial arrangements.” Barclays has already, and embarrassingly, been pulled up for the poor quality of its disclosure. When shareholders were given the chance to vote on the capital raising on November 24, they were told unequivocally that the investment was being made personally by Abu Dhabi’s Sheikh Mansour himself. The following day, the small print of regulatory disclosures showed that the £3 billion injection was actually in the name of the International Petroleum Company (Ipic) of which Mansour is chairman. The 2008 annual report, published in 2009, continued to refer to Mansour as the owner of the stake. Barclays says that it made amendments as soon as it was made aware of them, and that the annual report was a drafting error. But the bank was left with egg on its face when these errors were disclosed in a BBC Panorama documentary about Barclays in March this year. In fact, the documents seen by Euromoney reveal that the nature of Mansour’s investment was much more complicated than the drafting error revealed, involving a series of shelf companies called PCP Gulf Invest 1, 2 and 3 first set up in Staveley’s name and that of her partner at PCP, Craig Eadie, that were then transferred into Abu Dhabi’s beneficial ownership. But not in Mansour’s name. The transfer was into the private company of his close colleague, Khadem Al-Qubaisi, the managing director of Ipic and one of the most prominent businessmen in the Gulf. A filing posted to the UK authorities on July 8 2009 states in relation to a notification regarding a block of Barclays shares: “The option has been granted to KAQ, which is wholly owned by HE Khadem Al Qubaisi. The option is to acquire, at any time, the entire share capital (and not a portion only) of Kadin Holdings Ltd. (‘Kadin’). Kadin wholly owns PCP Gulf Invest 3 Limited, which, in turn, owns warrants exercisable into 758,437,618 ordinary shares in Barclays PLC at an exercise price of 197.775p. The expiration date of the warrants is 31 October 2013.” Staveley also claimed that she had arranged protection for Mansour against a further deterioration in Barclays’ position, and the potential for further capital raisings in that event – in effect, a well-paid free bet. A letter to Mansour from PCP, dated January 21 2009 and seemingly sent by Staveley, reveals: “When I negotiated the terms for your investment in Barclays last October, I anticipated that there might be instability in the price of the shares of Barclays and the other banks during the next few months, before the markets finally stabilised. I therefore required Barclays to give you a seven-month protection period for your £2 billion of ordinary shares, ending on 30 June 2009. During this period, any further issue of shares by Barclays, whether in the market or to the UK Government, at a lower price than the price we agreed last October for your shares (153p), will reduce the price you pay for each of those ordinary shares to that lower figure and thus increase the number of shares you receive for your original investment. An aide to former Thai prime minister Thaksin Shinawatra (pictured here with Mansour adviser Khaldoon Al Mubarak) was among third parties sent details of the Mansour investment before its announcement “The result is that if Barclays does have to issue new shares at a price which is (for example) half our agreed price, then you will automatically get twice as many ordinary shares for the money you have already invested. Your ordinary shares are thus fully protected against any issue of shares at a lower price during this time, down to a minimum price of 25p. “If this provision comes into effect, you could end up owning significantly more of Barclays Bank at no extra cost. The current UK market conditions for bank shares may therefore represent an important opportunity for you.” That wasn’t all. As Barclays was looking to secure the investment from Mansour, which it had publicly announced, Staveley and PCP were hawking the investment opportunity around to a number of other high-profile, potential investors. These were the head of the world’s biggest fund manager; the Chinese sovereign wealth fund; and the adviser to one of Thailand’s wealthiest individuals. More worrying still for Barclays shareholders was what happened to the £110 million ostensibly paid to Mansour as a fee for his participation in the deal. There is no question that the sum and calculation of this commission was properly disclosed by Barclays. In its regulatory filing at the time, Barclays said that the three principal investors – Qatar Holding, Challenger and Mansour – would each receive a 4% commission of the principal amount of the £2.8 billion of mandatory convertible notes (MCNs) for which they had respectively subscribed. Mansour’s share of this pot was £80 million. Additionally, both Qatar Holding and Mansour would receive a commission of 2% of the principal amount of the reserve capital instruments (RCIs) to which they had subscribed. Mansour’s share of this tranche was worth £30 million. The commissions would be payable even if the proposed resolutions were not passed by other shareholders at the general meeting. Contrast these sums with the figures received by the lead managers on the deal. Credit Suisse and JPMorgan Cazenove received a fee worth 0.75% of the MCNs, around £11.3 million. Their fees for the RCIs were just £900,000 each. At the time, shareholders questioned if the fees paid were appropriate, especially in light of the eye-popping interest rates that the three main investors would receive on the deal. The MCNs paid a coupon of 9.75%. And the RCIs paid 14%. At such levels, why did these already super-rich investors need further remuneration? The answer, in the case of the Mansour investment at least, was that he didn’t. Staveley was just one of a number of advisers to benefit, but at no point was it disclosed by Barclays that the fees it paid to Mansour would be passed to third parties. And these fees directly hit Barclays’ shareholders. The £110 million was withheld by the Mansour parties from the capital injection, meaning that the sum raised by Barclays was actually well short of the £3.5 billion the bank said it raised from Abu Dhabi. Shareholders might also consider exactly what Staveley did to deserve her almost £30 million bonanza, compared with the far smaller payouts received by the lead managers. Or they might compare it with the £1.1 million Barclays chief executive John Varley took home in 2008, having waived his bonus. And all of this should be taken in the context of the huge sums that Mansour and Ipic are said to have made from the transaction. Of course, Mansour should receive credit for making a savvy investment in Barclays at the bank’s lowest ebb. Barclays made it through the crisis without direct government support; its purchase of Lehman Brothers in the US was inspired; it returned to profitability; and its share price soared from its distressed lows. By June 2009, the Barclays share price had soared and it was time for Mansour to sell his MCNs. These converted into Barclays stock at £1.53; at the time, they were trading at over £3. In February 2010, Mansour reportedly exercised 626 million of his 758 million warrants at a purchase price of 197.7p when the share price was £3.02. He is understood to have exercised the final warrants in October that year. Industry estimates suggest Mansour made around a £1.5 billion profit on the sale of the MCNs and at least £750 million on the RCIs. But even these returns do not match the numbers that Staveley later claimed in an undated presentation showing the credentials of PCP Capital Partners. This document boasts: “On June 2nd 2009, Sheikh Mansour sold a large majority of his holding and generated a profit of c.GBP3.1bn, prompting the press to qualify his investment in Barclays as one of the ‘best structured and negotiated deals of the last decade’.” A handsome reward, and one for which it is traditional in the financial industry to reward your advisers. Staveley clearly made a great deal for her client, Sheikh Mansour. But the question remains: why were she and others effectively paid for that advice by Barclays, and not by Mansour? When contacted by Euromoney, a Barclays spokesman said: “In light of the ongoing investigations surrounding certain aspects of the 2008 capital raisings, Barclays is not able to comment on these matters at the moment.” Amanda Staveley and PCP Capital Partners were given several opportunities to respond to the facts in this story before publication, but failed to do so. For the then 35-year-old Staveley, the April 30 funds might have afforded her a moment of rueful reflection on what might have been if she had conducted things differently during the turbulent six months since the Barclays deal. Since arriving in the UAE in the mid-2000s, Staveley had handled a few deals while building a contact base, notably among the Abu Dhabi elite. The former Newmarket café owner, model and ex-girlfriend of the UK’s Prince Andrew had proved a skilled networker in her own right, artfully inserting herself inside the inner circles of various Gulf royals as she reinvented herself as a financier after the failure of a technology venture in Britain in 2002. But it was the Barclays transaction that signalled her arrival as a player in the region. Euromoney has learnt that the £3.5 billion Abu Dhabi investment in Barclays was no sure thing. It was a deal consummated as the UK financial system tottered; a transaction involving a key UK bank and crucial to the continuing health of the UK economy yet mostly arranged outside the reach and scrutiny of UK regulators who feared yet another taxpayer-funded bank bailout after the Lloyds, RBS and Northern Rock crises of the 2008 global banking meltdown. In the months following the Mansour deal, many in the City, Fleet Street and around the Gulf gushingly portrayed Staveley as a rainmaking superwoman, the “toast of Abu Dhabi” who had pocketed anything from £40 million to that £110 million in fees – reward for a tough year of power schmoozing, cajoling, jet-setting and seat-of-the-pants negotiating of the Barclays transaction. None of it was denied by the publicity-conscious Staveley. But the fact was that until that email from her private banker, Amanda Staveley hadn’t knowingly received anything much at all for Barclays, except perhaps the ego-boosting promotion. In fact, she and Craig Eadie were close to open warfare with the Mansour interests over the division of the Barclays spoils. Indeed, Staveley should perhaps count herself fortunate that she got anything at all for the Barclays deal. Through late 2008-early 2009 – crucially, after the Barclays/Mansour relationship had been secured – her relations with the Mansour camp had deteriorated to such a degree that as Christmas approached in 2008, Staveley was given a deadline to accept just £5 million or get nothing at all. At the heart of the argument over the fees paid to Staveley and PCP appears to be not just the advisory role that she and her company played, but also the fact that at one point her firm – or at least the special purpose vehicles set up within it – were acting as principals in Mansour’s investment in Barclays. Before the completion of the investment, David Forbes, a senior adviser to Ipic, emailed Staveley to tell her: “Further to our email of yesterday, Khadem has just confirmed that he does not envisage any requirement for PCP to be an equity investor in Project Mandolin.” Khadem is Forbes’s boss, the head of Ipic. Also addressed in the email was Ali Jassim, a close associate of Sheikh Mansour. The problem was that the three vehicles – PCP Gulf Invest 1, 2 and 3 – were originally registered in the names of Staveley and Eadie, rather than in Mansour’s. This issue appeared to be addressed in a draft letter seen by Euromoney, seemingly on behalf of KAQ Holdings – the personal holding company of Khadem Al Qubaisi. In it, KAQ offers Staveley and Eadie an aggregate fee of £5 million “in connection with your involvement in the investments to be made by PCP Gulf Invest… in Barclays as part of its capital raising exercise”. As part of the agreement, Staveley, Eadie and the company would promise not to “describe, or allow others to describe, yourselves or PCP or any entity in which you have any interests as agents of representatives of… the PCP entities”. These included KAQ Holding, Ipic and Sheikh Mansour. Nor could Staveley and Eadie “hold out… to have had any authority in relation to the PCP entities”. Finally, and in perhaps a prescient paragraph relating to Staveley’s cultivated media presence, the documents prevent her from making “any announcement whatsoever or enter into any discussions with any person, or give any interview, in any media form, to any person in relation to the transaction”. Khadem AI Qubaisi’s personal investment company, KAQ Holdings, ended up holding Mansour’s Barclays securities In all of this, the role of Craig Eadie can look confusing. Forsters, where he was a solicitor and partner, acted as legal adviser to PCP on many of its dealings. Eadie was also a founding partner of PCP. In September 2009, he left Forsters to join PCP full time. A torturous round of negotiations followed. At one point PCP offered to accept a fee of £25 million from KAQ Holding; but at the same time, it was claiming to be entitled to a fee of £41.7 million. In March 2009 and four months after Mansour’s Barclays investment, Staveley’s office prepared supporting material in advance of a rare audience with the elusive sheikh to secure the commissions she believed owed to her. Emails circulating her office describe the ill-feeling over who was paying PCP what and when. “To date we have received NO FEES regarding (the) Barclays transaction completed on 27th November 08,” her PCP adviser, Omar Hassanieh, wrote to Staveley as part of an email outlining the documents they would take to the meeting. If the reply of Staveley’s PA, Jo Mills, is anything to go by, PCP was ready for a fight: “We are going to go armed and we will get this fucking money,” she said. Eventually a compromise was reached. An agreement was made between the key players: on one side, the PCP parties, comprising PCP Capital Partners, Staveley, Eadie and former UK MP and government minister David Mellor. And on the other side the KAQ parties: KAQ Holdings, the three PCP Gulf Invest vehicles and Ipic. At no point is Sheikh Mansour himself mentioned as a party to the transaction, even though he had been presented as the ultimate investor in Barclays. The fee agreed, on the basis that all future claims against KAQ parties as well as Sheikh Mansour were dropped, was £30 million. A month later, that money less £500,000 entered Staveley’s account. The row never went to trial. It was certainly not in Staveley’s interests for it to do so; a public dispute over money with a figure as important as Sheikh Mansour would have damaged her ability to do business in the Middle East, where discretion is so highly valued. As it stands, Staveley’s position as a dealmaker to the Gulf elite is intact. Most recently, she has been looking to invest in the London property sector – in April, she revealed a near £300 million-plus bid by PCP Capital Partners and Qatar First Bank for a property in the exclusive Grosvenor Square. Staveley continues to gain attention in the media. A profile in the Daily Mail, published last September as the SFO investigation was launched, ran with the headline: “How this former waitress went on to ‘save’ Barclays…and is laughing all the way to the bank”. How close she came to real legal action against Mansour is unclear. However she did, in November last year, launch proceedings against Ukrainian oligarch Gennadiy Bogolyubov over an alleged failure to pay a £2.3 million success fee for his purchase of One Trafalgar Square. What remains least clear of all is what happened to the other £80.5 million in fees that Barclays paid to Mansour in November 2008. All the indications are that the £110 million fees were divided up on a rough-and-ready basis between Sheikh Mansour’s associates and advisers, once the fees from lawyers and bankers had been deducted. At one point, it was suggested that the remaining money be divided up between four of them equally: Staveley; Khadem Al Qubaisi; Al Jassim; and one Said, whose role or identity is not clear. The figure they had in mind? £20.7 million. Staveley, in the end, received considerably more than that.

How David Mellor fought Staveley for his slice of the Barclays pie by Clive Horwood, Eric Ellis Euromoney reveals how former British politician David Mellor, adviser to Amanda Staveley’s PCP Capital Partners, agitated for his cut of the Barclays fee, and the role of the former head of the CBI Digby Jones. Further reading Revealed: The truth about Barclays and the Abu Dhabi investment CIC, Thaksin and BlackRock: how PCP tried to pull other investors into Mansour’s part of the Barclays deal Barclays needs to come clean about its Gulf investments The British financial system teetered alarmingly through 2008 and 2009, threatening the collapse of one of Britain’s systemically important banks and the potential ruin of millions of Britons, but for some, Barclays was a chance for serious income. David Mellor, the former UK politician Among them was the former UK politician David Mellor. An erstwhile adviser to Amanda Staveley’s firm, PCP Capital Partners, when the £29.5 million hit Staveley’s account in April 2009, Mellor had already been pestering her office for a while over his presumed cut of the Barclays fee pie. Staveley, Mellor had claimed in an insistent email to her office a few weeks earlier, “always insisted that I should stick with her, and large sums of money would come my way… on a number of transactions, but most notably Barclays, I was promised a share of the upside.” Mellor was strongly hinting at legal action if she didn’t pony up as much as £5 million he claimed she’d promised him. “Throughout the 15 months I spent with Amanda, extravagant promises were made about money, not tied to any specific outcome on transactions, as against my being available to provide all manner of services to her, which I did, intensively, at great cost to myself in terms of time and effort, and of course instead of doing other remunerative things.” Digby Jones, the former head of the CBI Staveley also enlisted the help of another pillar of the UK business establishment: the ennobled former head of the CBI, Digby Jones, to recover her monies from the Barclays deal. In an email to Jones on January 8, Staveley asks him to “take those measures you feel necessary to facilitate the return of monies owed to me in relation to the Barclays transaction. I believe that you are working with David Mellor on this matter and that he has briefed you of the situation. PCP is keen to remunerate you and your team for your hard work, and I would welcome the chance to discuss my thoughts in relation to your fees.” Later, Jones’s role came to include dealing with an irritated Mellor. As the latter says in his email of April 1 to Craig Eadie: “When Digby Jones was being briefed by her [Staveley], the sum of £1 million was volunteered to him as the amount I was due on Barclays.” On May 5, Mellor wrote to Eadie again. This time he was complaining that the VAT on his fees had not yet been paid. Mellor wrote: “I relied upon you to deal with this not only on the basis of a debt due from Amanda, but a commitment given by your firm.. I want to draw a line under all of this, and so, I thought did you. So where is the cash?” The fees, it seems, had been paid. A ledger from PCP International shows a payment of £500,000 on April 29 relating to “DMC fees”. The name of Mellor’s business? David Mellor Consultancy. David Mellor was given several opportunities to respond to questions put by Euromoney, but failed to do so.