Lloyds Bank “covered up” fraud, says Thames Valley commissioner

In Blog by Ian Fraser

19 February 2017

Police commissioner Anthony Stansfeld. Photo: BBC

Lloyds Banking Group has been accused of “covering up” a massive fraud which destroyed up to 200 companies and cost the bank an estimated £1 billion in losses by the police and crime commissioner for Berkshire, Buckinghamshire and Oxfordshire.

The massive fraud, which mainly took place between 2003 and 2010, last month saw six people, including two crooked former senior HBOS bankers, sentenced to jail terms ranging from three-and-a-half to 15 years.

Speaking on BBC Radio 2  last Thursday (starts at one minute 28 minutes), Thames Valley police commissioner Anthony Stansfeld accused Lloyds of obstructing Thames Valley Police’s £7 million ‘Operation Hornet’ probe into the fraud. He said the bank’s behaviour had been “unbelievable”.

“It’s one of the biggest disgraces I have ever seen,” added Stansfeld. Lloyds acquired HBOS in January 2009, and therefore assumed responsibility for the Edinburgh-based bank’s past sins.

Stansfeld insisted that, over and above the two senior HBOS bankers — Lynden Scourfield and Mark Dobson — who have been jailed, many others inside the bank must have been complicit in the crime or else turned a blind eye to it. “It required a lot of complicity, or looking the other way, by a considerable number of people [both inside and outside HBOS] for this to happen,” he told Radio 2’s Vanessa Feltz.

This echoed statement Stansfeld issued on 30 January, highlighting the responsibilities of HBOS top management, one of whose roles is supposed to be ensuring systems are in place to stop such crime waves occurring.

In that statement he said “that a fraud of this size could have taken place either displays complicity or incompetence, a lack of corporate governance, complacency, and an absence of proper safeguards.” His claims are very serious and go to the heart of the rottenness and extraordinary lack of accountability of the UK’s banking culture, which has barely changed despite the sector’s near-death experiences of 2007-09.

Stansfeld told Feltz “I’ve been watching [the HBOS fraud and subsequent cover up] very, very closely, and I think it’s one of the biggest disgraces I have ever seen — not only the behaviour of the bank to start with, which was criminal, but also I believe the cover up that followed and the lack of support that the bank, Lloyds, gave to the police investigation. I just find the whole thing unbelievable.”

A former Army officer who commanded army helicopters during the Falklands war, Stansfeld added that Lloyds/HBOS was “also a victim”, as it had lost hundreds of millions in the fraud, but had refused to admit its status as part of a “cover-up”. He earlier told The Sunday Times’ Tom Harper that Lloyds “made every effort to make it difficult for the police to investigate … Everything was put under legal privilege — it required a host of barristers and lawyers to untangle it and get it out of the bank.”

In his earlier statement Stansfeld wrote: “It is important to remember that this was not a victimless crime, the shareholders [in the bank] are largely pension funds, which most of us have a stake in, and companies which have been bankrupted, along with the livelihoods of their owners and employees.”

Speaking on BBC Radio 2, on what is normally the Jeremy Vine slot, Stansfeld said it was “up to the bank” to ensure that the many corporate victims of the fraud — including businesswoman Joanne Dove, who was interviewed by Feltz before Stansfeld came on air (starts at one hour, eight minutes) — receive compensation for the destruction wrought.

Thames Valley is one of the UK’s largest non metropolitan police forces and the largest one overseen by a Conservative police and crime commissioner. It encompasses three major counties, Berkshire, Buckinghamshire and Oxfordshire, covering a population of 2.3 million. The area it covers is diverse, including major towns and cities such as Milton Keynes, Oxford, Reading and Slough, as well as large rural areas such as the Chilterns, Cotswolds, Lambourn and Berkshire Downs.

Read my long read on the fraud and subsequent cover up by Lloyds What the HBOS fraud tells us about the state of British banking